"He calculates from day to day," McCain said of Putin's moves, "what is the reaction to the things he does". He added that he believed Putin's ultimate goal was to "re-establish the old Russian empire".
"That includes Ukraine, that includes Moldova, that includes the Baltics. And that is his ambition to achieve that goal… And if we don't show strength, as we did during the Cold War. Then he will take advantage of what he perceives as weakness. And it could lead to very serious crises," he said.
The lawmaker has traveled to Ukraine repeatedly to voice his support for the country. In December, he addressed pro-EU protestors who wanted former Ukrainian President Yanukovych booted out of office.
McCain suggested the only reason the fragile cease-fire would hold was because Ukraine's military had "no real capability".
Read MorePutin, Poroshenko agree truce holding, for now
"That of course, makes it more difficult for them to force the removal of Russians from eastern Ukraine. And the Russians are there," the Arizona Republican Senator said.
"We need tougher sanctions, we need to give the Ukrainians military equipment, intelligence, we need to set up training program. We need a group of American military advisors over there."
He is also concerned that Europe's dependence on Russian energy could restrict the bloc's willingness to act.
Read MoreRenewed shelling intwo cities threatens Ukraine cease-fire
"I'm afraid that as long as Europeans are dependent on Russian energy, that we're not going to see vigorous response. We've heard a whole lot of talk, and very little action."
The EU, along with the United States, has imposed tough sanctions on Russia which have hit the financial, energy and defense sectors. On Friday, the EU said it was adding a further 24 people to a list of people barred from entry to the bloc and whose assets are frozen.
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