Key Developments:

• Germany holds firm on refusal to arm Ukraine.
• U.S. orders families of diplomats out of Ukraine, citing the risk of a conflict.
• European economies are at risk in a clash with Russia.
• U.K. warns that Russia is plotting to install a pro-Kremlin government in Ukraine.

All times are local (CET).

Pelosi Wants Lawmakers Briefed on Ukraine (8:49 p.m)

Speaker Nancy Pelosi is requesting the White House provide a briefing to all House members amid the deepening tensions and deteriorating security situation on Ukraine’s border with Russia.

The request comes as some in the Republican party say President Biden should take a firmer position over the escalating crisis. Some Democrats are calling on Biden to impose greater costs on Russia.

Ukraine Officials Call For Calm, Spain Sees Unity (8:28 p.m.)

Key Ukrainian officials called for calm after a top-level national security and defense council meeting in Kyiv. Even with an estimated 109,000 Russian troops near its borders, plus about 10,000 support personnel, there is no reason for panic and the foreign reaction has been overblown, Oleksiy Danilov, the council’s chairman, said after the meeting.

Ukraine has enough coal in storage and will have no problems paying its foreign debt, Prime Minister Denys Shmyhal added, saying that the “key message is not to panic.”

Earlier, Spanish Foreign Minister Jose Manuel Albares emphasized that the U.S. and EU are unified in how to push back on Russia. In an interview on Bloomberg Television, Albares said sanctions in response to military aggression from Russia would be ready to go tomorrow if needed.

EU Sanctions Plan Is ‘Strong Action,’ Ukrainian Diplomat Says (6:30 p.m.)

The EU’s readiness to impose sanctions against Russia immediately in the event of a further invasion of Ukraine amounts to “strong action,” Ukraine’s ambassador to the bloc, Vsevolod Chentsov, told Bloomberg TV’s Maria Tadeo in an interview. He said any sanctions should hit individuals and sectors that “will cause real pain for Russia and the Russian economy.” So far, the EU has been unwilling to discuss specific sanctions, even behind closed doors.

The Ukrainian envoy said his government also “appreciates” that the EU is keeping its embassy in Kiev working as usual, amid reports that the U.S. and other countries are recalling diplomats’ families amid escalating tensions. “It’s a strong signal also to the rest of the embassies.”

Germany Stands Firm in Refusing to Supply Weapons (6:25 p.m.)

The German government held firm on its refusal to supply weapons to Ukraine, conceding that its stance is at odds with key allies but insisting it will confront Russia robustly in the event of an incursion.

“Of course, the German government realizes that some of its allies have a different position here,” deputy government spokeswoman Christiane Hoffmann told reporters in Berlin. “But our position has not changed.”

European Stocks Slump Amid Turmoil (6:25 p.m.)

European stocks slumped the most since June 2020 on Monday, amid fears of an escalation in Ukraine. The Stoxx Europe 600 fell 3.8% to the lowest level since early October.

“The threat of conflict breaking out on the doorstep is hanging over European indices, as hopes begin to fade that there will be fresh meaningful moves from diplomats,” Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said.

NATO Says Military Deployments Are Defensive (6 p.m.)

Jens Stoltenberg, secretary general of NATO, said the 30-nation alliance’s new military deployments in eastern Europe are defensive and do not threaten Russia.

“I welcome that allies are stepping up,” Stoltenberg told reporters in Brussels, mentioning moves including Denmark sending a frigate to the Baltic Sea and deploying fighter jets to Lithuania, and France expressing readiness to send troops to Romania under NATO command.

“This is defensive, NATO is not threatening Russia, it’s proportional,” Stoltenberg said, adding that NATO is considering deploying additional battle groups in the eastern part of the alliance.

Borrell Says Russian Response ‘Well Advanced’ (6 p.m.)

The EU foreign policy chief, Josep Borrell, said the bloc is ready to respond to Russian action if necessary.

“Should diplomacy fail, we are very well advanced in the preparation of responses to potential Russian aggression,” Borrell told reporters after a meeting with the EU’s foreign ministers in Brussels. “Certainly, it will be a quick and determined action with a strong unity not only within the European Union but also internationally.”

Biden to Hold Call With European Leaders (5:47 p.m.)

Biden will hold a secure video conference with European leaders as part of coordination efforts “in response to Russia’s military buildup on Ukraine’s borders,” the White House said in a statement.

In addition to Scholz and Macron, the call is expected to include U.K. Prime Minister Boris Johnson, Prime Minister Mario Draghi of Italy, NATO chief Jens Stoltenberg and President Andrzej Duda of Poland.

The call will begin at around 3 p.m. in Washington.

U.K. Says Pipeline Shouldn’t Proceed If Invasion Happens (5:12 p.m.)

Following Germany’s opposition to including the Nord Stream 2 gas pipeline as a vehicle for potential sanctions, U.K. Foreign Secretary Liz Truss reiterated that the project should not go ahead in the event of Russia invading Ukraine.

“I am very, very concerned about Europe’s energy dependence on Russian gas and I’m very clear that Nord Stream 2 should not go ahead in the event of an incursion into Ukraine,” Truss told reporters in Brussels.

Ukraine Tension Worsens Stock Selloff (3:32 p.m.)

The threat of armed conflict exacerbated a selloff in European stock markets, with the region’s main equities benchmark dropping by 3% on Monday. That’s the worst selloff since Nov. 26, when the omicron variant was first identified as a threat. Leisure and travel stocks were among Monday’s biggest losers in the Stoxx 600 index.

“We think that there will ultimately not be a full blown conflict, but the visibility is low and the potential for a rapid escalation exists,” JPMorgan Chase & Co. strategists wrote in a note to clients.

French Ambassador Says U.S., Europe Aligned (3:22 p.m.)

Philippe Etienne, the French ambassador to the U.S., said that European nations and the U.S. are aligned in a strategy to deter Putin from taking any additional aggressive action and to keep lines of diplomacy open to resolve the crisis over a longer period.

“The French approach is not to deal with diplomacy only,” Etienne said Monday on Bloomberg Surveillance. “It’s also a clear indication on the European side that we will take the measures to face and to answer aggression. So it’s this dual approach where I do not see differences between the Europeans and the Americans.”

Russian Central Bank Halts FX Purchases to Protect Ruble (2:14 p.m.)

The Bank of Russia said it’s halting purchases of hard currency in a bid to ease pressure on the ruble, which has tumbled amid tensions over Ukraine. The Russian currency pared losses after the announcement, trading down 1.8% at 78.6450 per dollar as of 4:04 p.m. in Moscow

Johnson Says Ukraine Invasion Would Echo Chechnya (2:02 p.m.)

U.K. Prime Minister Boris Johnson warned Russia that an invasion of Ukraine would result in a painful and bloody battle, echoing the war in Chechnya.

“Invading Ukraine from a Russian perspective is going to be a painful, violent and bloody business,” Johnson tells reporters on a visit to a hospital in Milton Keynes, England. “I think it’s very important to people in Russia to understand that this could be a new Chechnya.”

Asked if an invasion will go ahead, Johnson replied: “I don’t think it’s by any means inevitable now. I think that sense can still prevail.”

Kremlin Sees ‘Very High’ Risk of Ukrainian Offensive in Donbas (12:55 p.m.)

Russia has observed a buildup of Ukrainian forces along the frontline with Moscow-backed separatists and sees a “very high” risk of an offensive by Kyiv, Kremlin spokesman Dmitry Peskov said on a conference call on Monday, declining to provide details.

“The threat is there and it’s very high, higher than before,” Peskov said, as he blamed the U.S. and NATO for increasing tensions, saying the U.S. move to evacuate diplomats’ families from Kyiv exacerbated the situation. Ukraine has denied any plans to retake the nation’s eastern Donbas region by force.

Ukraine Distrusts Russian Denial of Invasion Plans: Ambassador to U.K. (12:36 p.m.)

Ukraine doesn’t believe Russia’s assertion that it has no plan to invade, the country’s ambassador to the U.K., Vadym Prystaiko, told Bloomberg TV.

“We do not believe what Putin is saying: He has been in Ukraine and fighting with us for the last seven years,” Prystaiko said. “So why would we believe him right now?”

EU Announces Financial Support for Ukraine (12:19 p.m.)

European Commission President Ursula von der Leyen announced new funds for Ukraine that includes an emergency macro-financial assistance package of 1.2 billion euros ($1.4 billion), according to a statement on Monday. The funds will include both grants and loans.

The commission will also start work on a second, longer-term package and plans to allocate another 120 million euros to Ukraine in bilateral assistance.

Latvia Seeks More Support From NATO (11:13 a.m.)

Latvia called on NATO to boost its presence in eastern member states, citing the “continuous” military buildup of Russian and Belarusian forces.

“It is time to increase allied forces presence in the Alliance’s Eastern flank both as measures of defense and deterrence,” Latvian Foreign Minister Edgars Rinkevics said on Twitter. NATO has announced several deployments of ships and aircraft to members, including Lithuania and Bulgaria.

Ireland Slams Nearby Russian Naval Exercise (10:36 a.m.)

Irish Foreign Minister Simon Coveney said Russia’s intentions to undertake military exercises about 240 kilometers (149 miles) off the Irish southwest coast is “not welcome and not wanted right now,” particularly given the location would effectively be on the western borders of the EU.

While such an exercise would take place in part of Ireland’s exclusive economic zone, the country doesn’t have the power to stop Russia from doing so since they would be in international waters, he said. “This isn’t time to increase military activity and tension in the context of what’s happening with and in Ukraine at the moment,” Coveney said.

U.K. Withdraws Some Embassy Staff, Dependants From Kyiv (10:36 a.m.)

The U.K. has withdrawn some of its staff and dependents from its Kyiv embassy “in response to growing threat from Russia,” according to a tweet from the foreign office on Monday.

The move comes after the U.S. announced overnight that it was ordering family members of its diplomats to leave Ukraine, while non-essential staff would be able to depart voluntarily.

Romania Urges Faster Sanctions Preparations (10:36 a.m.)

The European Union must speed up its preparations for possible sanctions against Russia, Romanian Foreign Minister Bogdan Aurescu told reporters on his arrival for the Brussels meeting.

Aurescu said “this is the most powerful instrument which the EU can use in order to deter further Russian aggression,” adding that for this reason “we have to speed up the preparation of sanctions.”

The minister said that his colleagues will in their final conclusions “state very firmly that the concept of spheres of influence is obsolete and it should not be used in the current European security context.”

So far the EU has been reluctant to discuss specific penalties for Moscow, causing some to question how firmly the western alliance would respond to Russian action.

Denmark Threatens ‘Never Seen Before’ Sanctions (9:40 a.m.)

Danish Foreign Minister Jeppe Kofod warned that the EU was ready to impose sanctions “never seen before” against Russia in the event it invades Ukraine.

“We are ready to undertake the most severe sanctions, also more severe than in 2014,” he said, referring to the measures imposed by the bloc after Russia annexed Crimea. Kofod said Putin would be “totally isolated” and would pay a heavy price if he tried to use military force to change Europe’s borders.

Ukraine Says U.S. Decision to Remove Families ‘Premature’ (9:31 a.m.)

The decision to remove families of U.S. diplomats from Kyiv was “premature,” Oleh Nikolenko, a spokesman from the Ukrainian foreign ministry, said on Monday.

There has been “no significant change in the security situation recently” because the threat of new waves of Russian aggression has been the same since 2014 and the build-up of Russian troops near Ukraine’s border began in April, Nikolenko said.

European Gas Extends Gain With Threat of Conflict (9:21 a.m.)

European natural gas prices gained as much as 7% at start of trading on Monday. Should the tensions between Russia and Ukraine escalate further, uncertainty around the impact on European gas supplies could briefly push prices to fresh records.

Western sanctions on the newly built Nord Stream 2 pipeline would “potentially end up curtailing flows to Europe for an indefinite period,” Goldman Sachs said in a note.

U.S. Mulls Sending Troops to Eastern Europe, Baltics (9:21 a.m.)

U.S. President Joe Biden is considering sending troops, warships and aircraft to Eastern Europe and the Baltics to support allies in the North Atlantic Treaty Organization, the New York Times reported.

That could involve sending 1,000 to 5,000 troops to eastern Europe, a number that could be boosted tenfold if necessary, according to the report.

EU Says Families of Diplomats Staying in Ukraine (8:26 a.m.)

Josep Borrell, the EU’s foreign policy chief, told reporters ahead of the meeting that the bloc has no plans to ask the families of diplomats in Ukraine to leave, after the U.S. took such a step.

“Secretary Blinken will explain to us the reasons of this announcement,” Borrell said. “We are not going to do the same thing because we don’t know any specific reasons.”

The foreign ministers will not approve a package of possible sanctions against Russia today, Borrell said. “Be sure that everything will be ready when needed, but we are not going to announce any concrete measures.”

–With assistance from Katharina Rosskopf, Arne Delfs, Iain Rogers, Anna Shiryaevskaya, Morwenna Coniam, Kateryna Choursina, Natalia Drozdiak, Kevin Whitelaw, Aaron Eglitis, Ilya Arkhipov, Michael Winfrey, Jennifer Epstein, Nikos Chrysoloras, Aliaksandr Kudrytski, Maria Tadeo and Billy House.