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Germany's Merkel warns Russia of 'massive' consequences over Ukraine

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March 13, 2014: German Chancellor Angela Merkel delivers a speech on the Ukrainian crisis at the parliament Bundestag in Berlin, in which she warned Moscow that if it continues its current course in the Ukraine crisis, Russia risks “massive” political and economic consequences. (AP Photo/Markus Schreiber)

German Chancellor Angela Merkel said Thursday that Russia risks "massive" political and economic consequences if Moscow does not enter into "negotiations that achieve results" over the situation in Ukraine.

In an address to Parliament, Merkel told lawmakers the only way out of the crisis is through diplomacy and assured them that "the use of the military is no option."

But, she said, the European Union and other western nations would soon freeze bank accounts and implement travel restrictions if Russia refused to enter "negotiations that achieve results and aren't just a play for time."

If Moscow does not begin to "deescalate" the situation then, Merkel said the 28 European Union nations, the United States and other trans-Atlantic partners were prepared to take even stronger measures that would hit Russia economically.

"If Russia continues on its course of the past weeks that will not only be a great catastrophe for Ukraine..." Merkel said in the nationally televised address. "It will cause massive damage to Russia, both economically and politically."

She said Russia's decision to deploy troops into Ukraine's strategic Crimean Peninsula was a clear breach of international law, and that Moscow was bullying its weaker neighbor with methods reminiscent of 19th century European power politics.

She said western nations were "working on a political and diplomatic" path out of the crisis, including building a channel for talks directly between Kiev and Moscow, but said any question of Crimea breaking away from Ukraine was off the table.

"Let me be absolutely clear so that there is no misunderstanding, the territorial integrity of Ukraine is not up for discussion," she said.

Crimea plans to hold a referendum on Sunday that will ask residents if they want the territory to become part of Russia. Ukraine's government and Germany and other Western nations have denounced the referendum as illegitimate and warned Russia against trying to annex Crimea.

The EU has already suspended negotiations over a preferential visa program with Russia and other talks, and the bloc's foreign ministers will meet Monday to decide on more measures if Moscow continues on its current path, Merkel said.

"None of us want it to come to this, but we are prepared and determined" to act, she said.