Russia has not committed to de-escalate on the Ukrainian border after two rounds of diplomatic talks this week, Deputy US Secretary of State Wendy Sherman said Wednesday, as the US acknowledged it's still unclear whether Moscow intends to use the talks this week as a pretext to claim that diplomacy cannot work.
Sherman told reporters that Wednesday's meeting between NATO and Russia ended with a "sober challenge from the NATO allies to Russia" to respond to the opportunities offered by the international community to de-escalate the situation on the border with Ukraine and choose the path of diplomacy.
But Sherman, who spoke forcefully about the West's unified message to Moscow following the roughly four-hour session in Brussels, made clear the US and its Western allies don't yet know what Russian President Vladimir Putin's aims are following the diplomatic meetings, with more than 100,000 Russian troops positioned on the Ukrainian border.
As the talks this week, the US has finalized sanctions options in the event that Russia invades Ukraine, senior administration officials said on Wednesday.
"When live fire exercises are reported this morning. What is this about?" Sherman said, referring to reports about Russian exercises. "Is this about invasion? Is this about intimidation? Is this about trying to be subversive? I don't know. But it is not conducive to getting diplomatic solutions."
Asked by CNN's Alex Marquardt if the Russians had made any commitments to de-escalate, Sherman said they did not.
"There was no commitment to de-escalation, no," she said, before pausing and adding: "Nor was there a statement that there would not be."
Sherman added that the Russians themselves may not even know how they intend to use or act upon this week's diplomatic talks with the US and NATO. She said that the US believes that progress can be made -- if Russia engages on issues where there are overlapping interests.
"There is plenty to work on, where we have places where we can enhance mutual security. There are some places we cannot. But there is progress that can be made," Sherman said.
Sherman told CNN's Christianne Amanpour later Wednesday that she believed Putin amassed troops on the border of Ukraine in order to "put pressure on Europe and the United States, to put pressure on the euro Atlantic ambition, to... intimidate, to coerce, and to say 'I've got sticks I can bring to this discussion' as well."
Russia says situation is becoming 'intolerable'
Russia's deputy defense minister Alexander Fomin issued a statement Wednesday sounding pessimistic about the talks, saying it was NATO who was ignoring Russia's proposals to de-escalate -- and warning that could lead to conflicts.
"The Russian side has repeatedly proposed to the alliance to take measures to de-escalate the situation," Fomin said. "On the part of the alliance, Russian initiatives were ignored. This creates prerequisites for incidents and conflicts, undermines the foundations of security."
Russian Deputy Foreign Minister Alexander Grushko said that the Russian side told NATO countries the current situation was becoming "intolerable" for Moscow.
"At some point, the risks associated with continuing the same course of NATO may outweigh the advantages that they want to get," Grushko said.
During Wednesday's roughly meeting -- which went longer than scheduled -- Sherman said that the US and its NATO allies once again made clear Russia's demand Ukraine never be permitted to join NATO was a non-starter. Sherman called it "hard to understand" how Russia could feel threatened by Ukraine when it has the largest conventional military in Europe.
Wednesday's session with the NATO-Russia Council was the second of three planned for this week. The US delegation led by Sherman met with the Russians on Monday, and the Organization for Security and Cooperation in Europe will hold a session with Russia on Thursday in Vienna.
NATO Secretary General Jens Stoltenberg said Wednesday that the meeting between NATO and Russia over the situation in Ukraine was "not an easy discussion" and that "differences will not be easy to bridge," but added that NATO allies and Russia "expressed the need to resume dialogue."
"We had a very serious and direct exchange on the situation in and around Ukraine and the implications for European security," he told reporters. "There are significant differences between NATO allies and Russia on these issues. Our differences will not be easy to bridge but it is a positive sign that all NATO allies and Russia sat down around the same table and engaged on substantial topics."
US finalizes sanctions options
The Biden administration has sanctions targets and implementation measures "ready to go to be issued when those tanks cross the border," a senior administration official said.
"The final package will depend upon exactly what scenario we are facing," the official said. "But we are no longer at the point where we have just a memo that lays out options. We have concrete actions that we are ready to hit the return key on."
As CNN previously reported, the White House over the last several weeks had been analyzing the impacts various sanctions options would have not just on Russia but also on the European and American economies. Biden administration officials said Wednesday the US and its allies determined that while severe economic sanctions will likely have global economic ramifications, any spillover can be managed.
"The European financial system and its overall economy are in far better health than in 2014, particularly in the banking sector," one of the officials said.
The US is also aware of the risk that Putin tries to retaliate against any economic sanctions by weaponizing the export of Russian gas to Europe, which relies heavily on Russian energy supplies. One of the officials said that if Putin went down that path, it would "stiffen the resolve of Europe to find supplies elsewhere."
"We are well aware of the potential impact of a reduction of Russian energy supply, both in the European market" and globally, the official said, adding that a range of contingency options for that scenario are being developed.
Sources familiar with those contingencies said they include fuel switching, in which certain energy sources are replaced with others to meet demands, as well as the increased import of liquid natural gas from LNG-producing countries like Norway, the Netherlands, Qatar, and the UAE. European authorities are also looking at how much of a buffer their storages would provide in the event Russia shut off exports, the sources said.
They emphasized that Russia's economy is also highly dependent upon gas export revenues.
Asked about efforts by some Republican members of Congress, particularly Texas GOP Sen. Ted Cruz, to sanction the Russia-Germany gas pipeline Nord Stream 2 and essentially kill the project, the senior administration officials said they believe doing so now would reduce the West's leverage over Russia.
Even before the latest Russian troop buildup on the Ukraine border, however, the Biden administration waived additional, congressionally mandated sanctions on Nord Stream 2, arguing that doing so would damage US relations with Germany, which sees the pipeline as a commercial project.
Russian troops conduct live-fire exercises
Wednesday's meeting comes as the two sides are stuck in deadlock, with fears mounting that Russia could launch an invasion into Ukraine.
Moscow has dismissed such claims. However, Russia has been amassing as many as 100,000 troops near the Ukrainian frontier, and on the eve of the talks, the military began live-fire drills in regions close to the border.
The United States, NATO and their allies are pushing Russia to de-escalate the situation. Moscow has demanded security guarantees from the US and NATO, including a binding pledge that NATO won't expand further east and will not allow Ukraine to join the military alliance -- something NATO is not willing to do.
"At this point, let me be very, very clear -- no one is suggesting that we alter NATO policy on enlargement," US Ambassador to NATO Julianne Smith told CNN on Tuesday.
Rather than being framed as a bilateral NATO-Russia meeting, Wednesday's gathering saw each of NATO's 30 member states and Russia represented equally, in a forum of 31. The meeting is the second of three key engagements between the West and Russia this week.
On Monday, representatives from the US and Russia sat down in Geneva for more than seven hours of discussions.
The marathon talks, which the White House described as "frank and forthright," did not produce a breakthrough. Another round of talks between Russia and the Organization for Security and Co-operation in Europe (OSCE) -- of which the US is a member -- are scheduled in Vienna on Thursday.
Ukraine said Tuesday that it was confident that the US and other NATO countries would not make a decision "on the fate" of the country "behind our backs" during the meetings.
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CNN's Veronica Stracqualursi, Michael Conte, Kylie Atwood, Ellie Kaufman, Luke McGee, Katharina Krebs, Nikki Carvajal, Alex Marquardt, Mick Krever and James Frater contributed reporting.
