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NATO: Russia 'attacking' Ukraine as rift widens

NATO Secretary General Anders Fogh Rasmussen opened a crucial summit meeting Thursday by accusing Russia of "attacking" neighboring Ukraine.

He also said the Western alliance would seriously consider requests for help from the Iraqi government against the terrorist group Islamic State.

"I'm sure that if the Iraqi government were to forward a request for NATO assistance, that would be considered seriously by NATO allies," Rasmussen said.

Later, the White House said NATO leaders agreed that Russia should faced increased sanctions for its actions in eastern Ukraine. President Barack Obama, British Prime Minister David Cameron, French President Francois Hollande, German Chancellor Angela Merkel and Italian Prime Minister Matteo Renzi sat down with Ukraine President Petro Poroshenko on the fringes of the summit.

"The leaders reiterated their condemnation of Russia's continued flagrant vioaltion of Ukraine's sovereignty and territorial integrity, and agreed on the need for Russia to face increased costs for its actions,'' a White House statement said.

Read MoreNATO to create new 'spearhead' force for crises

The gathering of NATO leaders in Wales is taking place at the most alarming time for geopolitics since the Cold War.

NATO Secretary General Anders Fogh Rasmussen, President Barack Obama and Prime Minister David Cameron (left to right) at the NATO summit, Sept. 4, 2014.
Peter Macdiarmid | AFP | Getty Images
NATO Secretary General Anders Fogh Rasmussen, President Barack Obama and Prime Minister David Cameron (left to right) at the NATO summit, Sept. 4, 2014.

The 28-country group had seemed in the eyes of many as being on the brink of irrelevance with the collapse of the Soviet Union. But conflicts in Ukraine and the Middle East are reviving its importance.

A NATO military told Reuters on the sidelines of the event that Russia now had several thousand combat troops and hundreds of tanks and armored vehicles inside Ukraine.

NATO had previously said that "well over 1,000" Russian troops were operating inside Ukraine, marking a significant escalation of Moscow's military involvement in the country. Around 20,000 Russian troops remain close to the Ukrainian border, he said.

"We are moving away from wondering whether NATO needs to change or develop, to try and find a reason to continue, ... to trying to decide how they best address these pressing issues," Prime Minister Sigmundur Davíð Gunnlaugsson of Iceland told CNBC.

In a commentary Thursday in The Times of London, Obama and Cameron made a high-profile call for a new "multinational rapid response force, composed of land, air, maritime and special forces, that could deploy anywhere in the world at very short notice."

"A more mobile force that can move around and respond to localized troubles to prevent them getting out of control" is likely to result, Gunnlaugsson said.

Tanks were parked obtrusively on the lawn around the NATO summit venue, a golf course in Newport, Wales.

In many ways, NATO's hands are tied with regards to the Ukrainian situation. The Western alliance has committed to not maintaining any significant military presence in the former Soviet sphere of influence after the Cold War, making it difficult to send in troops to Ukraine, even if there were domestic political will to do so. Cameron pledged on Thursday not to arm Ukrainian troops.

Read MoreUkraine: The struggle between hard and soft power

"We must use our military to ensure a persistent presence in Eastern Europe, making clear to Russia that we will always uphold our Article 5 commitments to collective self-defense," Obama and Cameron wrote.

On the other side is an increasingly recalcitrant Russia. A reported cease-fire agreement between Ukraine and Russia following a phone call between President Vladimir Putin and Poroshenko was quickly retracted on Wednesday, although some hope was gleaned from Putin's presentation of a seven-point plan for peace.

"Mr Putin is not going to allow Ukraine to move decisively westwards and he will do what it takes to prevent this from happening," Alastair Newton, senior political analyst at Nomura, wrote in a research note.

Read MoreStocks spike amid confusion over Ukraine cease-fire

Yet what happens to Ukraine could set a precedent for how much the West is prepared to intervene in disputes with Russia for years to come.

The Middle East crisis has resurfaced again, with the added twist that this time the U.K. appears to have exported terrorists born in the country to wage what they regard as holy war in the region, under the IS banner. This new generation of social media and Internet savvy jihadis has ensured front page coverage by videotaping the terrifying beheadings of two American journalists in recent days and threatening the life of a U.K. citizen next.

Methods for targeting IS, which aims to establish a new Islamic caliphate, are also top of the agenda in Wales. Obama has pledged to "degrade and destroy" the group, which sprang out of al-Qaeda, but he hasn't yet said how.

Read MoreCommitments on 3 fronts test Obama's foreign policy

By CNBC's Catherine Boyle. Reuters and The Associated Press contributed to this report.

CORRECTION: An earlier version misspelled Alastair Newton's first name.