Pro-Russia protesters take a break inside a regional government building in Donetsk, in eastern Ukraine.
Pro-Russia protesters take a break inside a regional government building in Donetsk, in eastern UkraineReuters

Russia's Prime Minister shrugged off the threat of further economic sanctions against Moscow on Tuesday and said the country could minimize their impact.

Prime Minister Dmitry Medvedev told the Russian parliament that further sanctions would provide an opportunity for Russia to expand in other markets and reduce its dependency on imports.

"We shan't give up on cooperation with foreign companies, including from Western countries, but we'll be ready for unfriendly steps," he said in a report to legislators on the government's work last year.

"I am sure we can minimise their impact," he said. "We will not allow our citizens to become hostages of political games."

The United States and the European Union have imposed asset freezes and travel bans on a number of individuals with close ties to the Kremlin after Russia annexed the Crimea region in a disputed referendum.

Washington has spoken about the prospect of imposing deeper sanctions "within days" if Russia fails to make moves to implement the Geneva agreement reached on Thursday. These sanctions could be target sectors of the Russian economy including the mining, financial and energy sectors.

Meanwhile, the EU has discussed securing alternatives to Russian natural gas. The bloc currently relies on Russia for a third of its gas needs, 40% of which come via Ukraine.

Russian President Vladimir Putin recently wrote to European leaders to warn that their gas supplies could be affected if Ukraine does not pay its outstanding bills and commit to paying a higher price. Ukraine called the new prices "political" and refused to pay.

Speaking to Russian lawmakers on Tuesday, Medvedev said that European talk of importing gas from the US was "a bluff".

The Russian PM emphasised that Russia would seek to expand its presence in eastern markets if the harsher sanctions were imposed on its economy.

"We shall not reduce economic ties but, if our Western partners make that mistake, intensive work in other markets will reduce the losses," he said, adding that Russia was developing cooperation with countries of the Asia-Pacific region and with India and China, among others.

Putin will travel to China next month in the hope of securing a long-elusive energy deal that could see Beijing importing Russian natural gas.