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LONDON - The United States and Ukraine's interim government could offer concessions to Vladimir Putin - but only if Russia ignores the outcome of Sunday's controversial referendum in Crimea, sources close to the talks said Friday.
The concessions would also depend on Russia not moving its forces any further into Ukraine.
U.S. officials are extremely concerned about Russia's military movements and say they will have very little warning if Russia actually moves its troops into eastern Ukraine.
Secretary of State John Kerry was in a meeting with his opposite number, Russian Foreign Minister Sergey Lavrov, at Winfield House, the U.S. Ambassador's residence in London, as of 3 p.m. local time (11 a.m. ET).
Voters in Crimea's referendum are widely expected to choose to join Russia. U.S. officials have acknowledged there is "zero" chance that the vote will be called off and a preparing for punitive sanctions, coordinated with the European Union, to start as early as Monday.
The concessions would be offered to Putin if the Duma, Russia's lower parliamentary house, does not ratify Sunday's vote. However the Russians said Friday that no action is needed by the Duma, only Putin's signature.
Germany's leader, Chancellor Angela Merkel, is reportedly now on board with proposed economic steps including freezing foreign bank accounts of key players in the Russian government.
U.S. officials say there has been intimidation against Crimeans, such as Muslim Tatars and other minorities, who may oppose annexation. This has included bullying, threats to families, other pressure tactics.
Earlier, Kerry stressed the possibility of bruising Western sanctions on Moscow.
"We all hope that we don't get pushed into a place where we have to do all those things. But we'll see what happens," Kerry said during a visit with Britain’s David Cameron in London.
He was responding to Cameron who said: "We want to see Ukrainians and the Russians talking to each other. And if they don't then there are going to have to be consequences.
"It would be “formidably difficult” for Russia and the United States to make progress at talks on Friday, Britain’s Foreign Minister William Hague said.
F. Brinley Bruton and Alastair Jamieson contributed to this report.