Putin must back down, says Key

"If the situation continues or escalates further in terms of Russia's actions in the Ukraine, that may well have an impact on the progress of that free trade agreement", says Prime Minister John Key. Photo / Dean Purcell

Trade Minister Tim Groser has been ordered home from Moscow due to the escalating tensions over Ukraine just as New Zealand closes in on a free trade deal with Russia.

Prime Minister John Key yesterday said the Government and officials had been watching developments in Ukraine carefully, over the weekend issuing a strongly worded statement criticising Russia's build up of military capability.

Do you have friends or family in Ukraine affected by the escalating crisis there? We'd like to know what you think. Email us here.

Read more of the Herald's Ukraine coverage:
Russia denies attack threat
Ukraine: 10 things you need to know
Symbolic acts of defiance in face of Russian threat
Editorial: Riposte must hurt Russia, help Ukraine

Yesterday the Russian Ambassador was summoned to the Ministry of Foreign Affairs and Trade where officials underlined concerns.

"We have added our voice to others calling for steps to de-escalate the situation and for the UN Security Council to accept their leadership responsibilities here," Mr Key said. "We call on the Russian Government to enter discussions to find an acceptable pathway forward."

New Zealand has been in talks with Russia over a free trade deal for the past three years and Mr Key revealed Mr Groser had for the past few days been in Moscow reporting "good progress" on talks.

Mr Key indicated an agreement was imminent, but "if the situation continues or escalates further in terms of Russia's actions in the Ukraine, that may well have an impact on the progress of that free trade agreement".

He was still hopeful of a deal but "I don't think we could seriously, even if Mr Groser could tie up a deal this afternoon, go to Russia and sign a deal when at exactly the same time we're expressing our deep concern about the actions that Russia is taking and the breach of sovereignty we think is potentially taking place in the Ukraine particularly in relation to Crimea."

The completion of the deal was now "a matter for another day" and could be shelved permanently.

Mr Groser was to leave Moscow last night. "We've made it clear to him that we think he should have his meeting today and leave."

Mr Key said his office had been in talks with Russian officials about a visit to Moscow while en route to the Nuclear Security Summit in the Netherlands next month. But the dates offered did not suit the Russians.

Mr Key did not rule out either joining other nations in bringing economic sanctions against Russia or answering a call for assistance from Nato if the situation worsened. "We'll assess that on its merits at that time."

The Russian Embassy did not respond to requests for comment.