German Chancellor Angela Merkel and US President Barack Obama have said they will impose further sanctions on Russia if it “continues to destabilise Ukraine”.

“The next step is going to be a broader-based sectoral sanctions regime,” Obama said at a White House press conference.

Russia’s energy and banking sectors are those likely to be hardest hit if sanctions are widened.

The two leaders declared their intention to resolve the situation in Ukraine through diplomatic means.

“The goal is not to punish Russia,” said Obama. “The goal is to give them an incentive to choose the better course and that is to resolve these issues diplomatically, and I think we are united on that front.”

Both spoke of what Obama called “the appalling treatment” of OSCE observers and their escorts in the east of Ukraine.

They called for Russia to organise the immediate release of those held, four of whom are German.

Merkel also expressed the two leaders’ joint support for Ukraine, saying the scheduled election date of May 25 was critical and “we will see to it that elections can take place”.

They showed a united front over the Transatlantic Trade and Investment Partnership and both sides agreed to collaborate closely on a cyber intelligence operation.

Stefan Grobe, euronews’ correspondent in Washington, said:
“What came out of Angela Merkel’s visit to Washington was the willingness of Germany and the United States to work even closer together on issues like Ukraine, TTIP and surveillance. A challenging agenda given the most recent problems”.

It was Merkel’s first visit to the White House since it emerged that her mobile phone may have been monitored for years by the US.

The so-called “spying scandal” was also alluded to during the conference, with both sides agreeing to work closely together on a cyber-intelligence operation – despite occasional disagreements.