Russia sets Ukraine aid terms as violence mounts

Russia is ready to talk about helping out Ukraine financially – but only if Ukraine recognizes the annexation of Crimea, Russia's finance minister told CNBC.

Anton Siluanov also rejected suggestions that Russia was trying to force the Ukrainian government's hand via hiking gas prices paid to Russian state-backed gas company Gazprom.

"We need to fulfil our contractual obligations. If you think this is coercion – well, I disagree," he told CNBC at the International Monetary Fund meeting in Washington, D.C.

Read MoreCasualties reported in Ukraine as offensive launched

He added that there were several conditions for Russia to help its neighbor out financially.

"These conditions are the constitutional reform that is due to be carried away in Ukraine. Presidential elections under the new constitution, recognition of the results of the Crimea referendum, and a peaceful resolution to the situation in the eastern part of Ukraine," Siluanov said.

Dimitar Dilkoff | AFP | Getty Images

Russia had started a bailout program with Ukraine under the previous administration, but this was suspended when Kremlin-backed President of Ukraine Viktor Yanukovych was ousted in February.

European Central Bank President Mario Draghi warned of the potential "geopolitical risk" of the situation on the euro zone at the meeting.

Since then, a new Ukrainian government has brokered a bailout deal with the International Monetary Fund, but is at daggers drawn with pro-Russian protestors within its borders.

On Sunday, violence erupted in several cities in eastern Ukraine, close to the Russian border, as Ukrainian military forces clashed with pro-Russian protestors.

Read MoreRisk of 'gas war' grows as Ukraine launched offensive

The weekend's developments are "really worrying" according to Tim Ash, head of emerging markets research at Standard Bank.

"The clear threat now is that further Western sanctions will be rolled out against Russia, including more individuals and banks/corporates subject to being put on a sanctions list," he pointed out."

Since the crisis has erupted, close to $70 billion has been withdrawn from Russia as international investors have taken fright at the prospect of further conflict.

"Russia is misrepresented in the market," Siluanov said.

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