KIEV, Ukraine (AP) — Russia called for a national unity deal in Ukraine even as it tightened its stranglehold over Crimea, a bold combination of diplomacy and escalating military pressure. The US and European Union (EU) floundered for solutions — while global markets panicked over the prospect of violent upheaval in the heart of Europe.

Fears grew that the Kremlin might carry out more land grabs in pro-Russian eastern Ukraine, adding urgency to Western efforts to defuse the crisis. US Secretary of State John Kerry was heading to Kiev in an expression of support for Ukraine’s sovereignty, and the EU threatened a raft of punitive measures as it called an emergency summit on Ukraine for Thursday.

But it was Russia that appeared to be driving the agenda.

Foreign Minister Sergey Lavrov said at a UN Human Rights Council session in Geneva that Ukraine should return to an agreement signed last month by pro-Russian President Viktor Yanukovych — but not Moscow — to hold early elections and surrender some powers. Yanukovych fled the country after sealing the pact with the Opposition and foreign ministers of France, Germany and Poland.

“Instead of a promised national unity government,” Lavrov said, “a government of the victors has been created.”

Meanwhile, Ukrainian authorities said that Russian troops had issued an ultimatum for two Ukrainian warships to surrender or be seized — prompting the country’s acting president to accuse Russia of “piracy”.

Ukraine’s corvette Ternopil and the command ship Slavutych were being blocked by four Russian navy ships in Sevastopol’s harbour, a Ukrainian military spokesman said. Acting president Oleksandr Turchynov said commanders and crew were “ready to defend their ships. … They are defending Ukraine.”

Vladimir Anikin, a Russian defence ministry spokesman, dismissed the report of a Russian ultimatum as nonsense but refused to elaborate.

Warning of a “dangerous escalation”, the Obama Administration said Washington would hold Moscow directly accountable for any threat to Ukraine’s navy.

Russia is “on the wrong side of history” in Ukraine, President Barack Obama said, adding that continued military action would be “a costly proposition for Russia”. Speaking to reporters in the Oval Office, Obama said the US was considering economic and diplomatic options that will isolate Russia, and called on Congress to work on an aid package for Ukraine.

Still, it was not clear what the West could do to make Russia back down. The clearest weapon at the disposal of the EU and US appeared to be economic sanctions that would freeze Russian assets and pull the plug on multi-billion dollar deals with Russia. Late yesterday, the EU threatened to freeze visa liberalisation and economic co-operation talks and boycott the G8 summit in Russia if Moscow does not back down.

Already the economic fallout for Russia was being intensely felt: Russia’s stock market dropped about 10 per cent yesterday and its currency fell to its lowest point ever against the dollar. But the economic consequences of antagonising Russia were also acute for Western Europe: The EU relies heavily on Russian natural gas flowing through a network of Ukrainian and other pipelines.

By yesterday, it was clear that Russia had complete operational control of Crimea.

Russian soldiers controlled all Crimean border posts, as well as all military facilities in the territory. Troops also controlled a ferry terminal in the Crimean city of Kerch, just 20 kilometres (12 miles) across the water from Russia. That intensified fears in Kiev that Moscow would send even more troops into the peninsula via that route.

Border guard spokesman Sergei Astakhov said the Russians were demanding that Ukrainian soldiers and guards transfer their allegiance to Crimea’s new pro-Russian local government.

“The Russians are behaving very aggressively,” he said. “They came in by breaking down doors, knocking out windows, cutting off every communication.”

He said four Russian military ships, 13 helicopters and eight transport planes had arrived in Crimea in violation of agreements that permit Russia to keep its Black Sea fleet at the naval base in Sevastopol, but limits the deployment of additional forces at the base.

Ukraine’s prime minister admitted his country had “no military options on the table” to reverse Russia’s military moves into Crimea.

Prime Minister Arseniy Yatsenyuk appealed for outside help and said Crimea remained part of his country, as European foreign ministers held an emergency meeting on a joint response to Russia’s military push into Crimea.