Russian President Vladimir Putin has agreed to a proposal from German Chancellor Angela Merkel to set up a contact group on Ukraine, the German government said Sunday, according to AFP.

Merkel put the proposal to Putin in a telephone conversation late Sunday in which she also “accused the Russian president of violating international law with the unacceptable Russian intervention in Crimea,” said a government statement.

“President Putin accepted the German chancellor’s proposal to immediately establish a mission of enquiry as well as a contact group, possibly under the direction of the OSCE, to open a political dialogue,” it said.

Western allies have condemned Russia’s threat to invade its Western-leaning neighbor, which analysts say risks sparking the worst crisis since the Cold War.

Merkel told Putin the intervention was a violation of a 1994 Budapest memorandum on security assurances in which Russia committed itself to respecting the independence and sovereignty of Ukraine in its existing borders, as well as the 1997 treaty on the Russian Black Sea fleet, based in Crimea.

The memorandum was signed by Britain, Ukraine, Russia and the United States.

The statement said Merkel called on Putin to respect Ukraine’s territorial integrity.

Earlier Sunday, Ukraine’s newly-installed Prime Minister Arseniy Yatsenyuk appealed to Moscow to move its troops back, saying that the region was “on the brink of disaster. There was no reason for the Russian Federation to invade Ukraine.”

In response to the Russian moves, Ukraine ordered a full mobilization of its military. Soldiers are on “full combat readiness,” Kiev said.

Meanwhile, the BBC reported that Russian soldiers were observed digging trenches on the border with Crimea, indicating that more active military action was possible. The UK announced Sunday that it was joining the United States and Canada in pulling out of preparatory talks for the next G8 economic summit, which were to be held in Sochi, site of the recently-finished Winter Olympics.

U.S. President Barack Obama on Saturday threatened Putin with political and economic isolation” over Russia’s military incursion in Ukraine.

The White House said Obama called on Putin to pull Russian troops back to their bases in Crimea and warned that continued violation of international law by Moscow would lead to further “political and economic isolation.”

AFP reported that Secretary of State John Kerry will visit Kiev on Tuesday to lend support to Ukraine’s new interim leaders.

“In Kiev, on March 4, Secretary Kerry will meet with senior representatives of Ukraine’s new government, leaders of the Rada and members of civil society,” State Department spokeswoman Jen Psaki was quoted as having said.

Kerry “will reaffirm the United States’ strong support for Ukrainian sovereignty, independence, territorial integrity.”

He will also stress “the right of the Ukrainian people to determine their own future, without outside interference or provocation,” Psaki added in a statement.