Sanctions against Russia will have impact: Tony Blair

Sanctions on Russia will have impact: Tony Blair

Former British Prime Minister Tony Blair believes the new economic sanctions against Russia for its aggression against Ukraine will have an effect, but said Russian President Vladimir Putin needs to know the U.S. and Europe mean business.

"The important thing is to try and make sure we engineer a situation in which you can have a peaceful and a diplomatic solution to this crisis, but it won't happen unless everyone knows there is very tough action that will follow if the situation is destabilized in the east of Ukraine," he told CNBC's "Street Signs."

On Monday, the United States imposed sanctions against seven Russian government officials and 17 companies linked to Putin.

The European Union also enacted new penalties against Russia, adding 15 more officials to its sanctions list.

Tony Blair
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Blair believes that despite the divisions within Europe, in the end the Continent will stand with the U.S. to take "a strong and determined line" against Putin.

Europe is more vulnerable to tougher sanctions that would hit the energy sector in Russia, since a large amount of its gas supply comes from Russia.

"I think what you'll find increasingly is that Europe looks for ways of releasing itself from that dependence," Blair said. "And even if short term that is difficult, I think the long-term implications for Russia are serious if Europe really sets about releasing itself from that dependence on Russian energy."

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Blair is hoping the situation will be resolved diplomatically, but doesn't know how it will ultimately end.

"I know the alternative is going to be pretty grim for all sides."

—By CNBC's Michelle Fox. Reuters contributed to this report.