MOSCOW, Russia (AFP) — Russian President Vladimir Putin yesterday raised the stakes in the Ukraine conflict by calling for the first time for statehood to be discussed for the restive east of the former Soviet state.

The remarks came just hours after the European Union gave Moscow — which the bloc accuses of direct involvement in the insurgency — a week to change course or face new sanctions.

“We need to immediately begin substantive talks… on questions of the political organisation of society and statehood in south-eastern Ukraine,” the Russian leader was quoted by Russian news agencies as saying.

Moscow has previously only called for “federalisation” that would grant greater rights to the eastern regions of Ukraine, where predominantly Russian-speakers live.

But Putin had sparked speculation that he may be seeking to create a pro-Russian statelet when he began to employ the loaded Tsarist-era term “Novorossiya”, or New Russia, to refer to several regions in south-east Ukraine.

His spokesman Dmitry Peskov said Sunday that the Russian leader was not talking about “Novorossiya’s” independence from Ukraine, but rather “inclusive talks”.

“Only Ukraine can agree with Novorossiya,” he was quoted as saying.

Kiev has warned that it was on the brink of “full-scale war” with Moscow over the crisis in its east, which Europe fears would put the whole continent at risk of conflict.

The EU agreed to take “further significant steps” if Moscow did not rein in its support for the rebels, with new sanctions to be drawn up within a week.

Kiev said the invigorated rebel push of the past days has included substantial numbers of Russian regular army contingents, which are now concentrating their forces in major towns.

NATO last week accused Moscow of sending at least 1,000 troops across the border to fight alongside the rebels, along with artillery, tanks and armoured vehicles.

Lithuania’s President Dalia Grybauskaite, whose Baltic nation is wary of the resurgent power on its eastern border, warned that “Russia is practically in a state of war against Europe” and called for EU military assistance to Kiev.

Ukrainian President Petro Poroshenko urged Brussels to take tougher steps against Russia’s “military aggression and terror” and warned that a “full-scale war” with Moscow is closer than ever.

“Today we are talking about the fate of Ukraine, tomorrow it could be for all Europe,” he said.

Moscow denies direct involvement in the conflict, but there have been media reports of secret military funerals for those sent to fight in Ukraine.