PARIS French President Francois Hollande said on Saturday Paris would review its military cooperation with Russia as part of a third level of sanctions if Moscow did not de-escalate the crisis in Ukraine.
On Monday the United States and European Union are expected to unveil a list of Russian officials subject to asset freezes and visa bans as Western nations attempt to step up pressure on Moscow over its intervention in the Ukrainian region of Crimea.
When asked whether France would suspend a 1.2 billion euro helicopter carrier contract with Russia, Hollande told a news conference: "As far as other sanctions, notably military cooperation, that is the third level of sanctions."
Until now French officials have shied away from discussing whether the 2011 contract for two Mistral helicopter carriers with an option for two with Russia could be suspended, a potentially awkward sacrifice to show French resolve.
The long-discussed purchase was Moscow's first major foreign arms purchase in the two decades since the fall of the Soviet Union and the carriers can hold up to 16 helicopters, such as Russia's Ka-50/52 choppers.
Russia agreed to buy the Mistrals, giving it access to advanced technology. This alarmed some of France's NATO allies at the time, especially in the aftermath of Russia's 2008 war with Georgia.
An aide to Hollande said that the Europeans would have to step up pressure on Russia once Crimeans vote in a referendum on Sunday that is likely to bring annexation by Moscow.
"There are three levels. Level one is done, then level two and level three," the aide said ahead of the Monday meeting.
Former President Nicolas Sarkozy had hailed the signing of the Mistral contract as evidence the Cold War was over. The contract has created about 1,000 jobs in France.
The first carrier, the Vladivostok, is due to be delivered by the last quarter of 2014. The second one, named Sebastopol after Crimea's crucial seaport and illustrating its importance to Moscow, is supposed to be delivered by 2016.
The Vladivostok was tested at sea for three days on March 5 after setting sail from the Saint-Nazaire shipyard in western France where a Russian crew is currently being trained.
In a phone call on Saturday, French Defence Minister Jean-Yves Le Drian and U.S. Defense Secretary Chuck Hagel discussed both nations' "reviews of bilateral military cooperation with Russia," Pentagon spokesman Rear Admiral John Kirby said.
The United States suspended all military engagements with Russia, including port visits, on March 3 and Hagel earlier this week said Washington was taking a fresh look at American reliance on Russian rocket engines.
Ukraine accused "Kremlin agents" on Saturday of fomenting deadly violence in Russian-speaking cities and urged people not to rise to provocations its new leaders fear Moscow may use to justify a further invasion after its takeover of Crimea.
Describing the referendum as having no international legality, Hollande said he would decide on Monday whether to call off long-planned Franco-Russian ministerial talks after assessing if Moscow had tried to reduce tensions in Ukraine.
The meeting of foreign and defense ministers is a regular fixture of bilateral relations between Russia and France but happens to be scheduled this year for March 18, two days after the referendum.
"France and the European Union will not recognize the validity of this pseudo consultation," Hollande said. "There will be sanctions Monday on visas and assets of a certain number of individuals if there is no de-escalation."
(Additional reporting by Chine Labbe and Elizabeth Pineau in Paris and Phil Stewart in Washington, editing by Mark Heinrich and Cynthia Osterman)