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US shouldn't pick war on Ukraine: McChrystal

The United States and its allies should be firm with Russia on Ukraine but should not pick a war, retired Gen. Stanley McChrystal told CNBC on Monday.

Russian President Vladimir Putin is testing the West to see how much he can get away with in Ukraine, the former commander of U.S. and international forces in Afghanistan said in a "Squawk Box" interview.

An agreement has been reached on the delivery of Russian humanitarian aid to eastern Ukraine after talks in Berlin, officials in Moscow said. But there was no deal on a cease-fire between pro-Russia rebels and Ukrainian forces.

"We don't need to pick a fight or a war," the four-star general continued, "but I think if you start to give in—particularly to somebody like Putin—then you're going to have a very bad outcome."

In Iraq, the military said its security forces and Kurdish fighters—aided by U.S. airstrikes—have taken back the strategic Mosul Dam from Islamic militants who captured it less than two weeks ago. Iraqi forces also are planning an assault on the northern city of Mosul, hoping to retake it from Islamic State fighters, the spokesman for the country's counter-terrorism unit said Monday, according to Reuters.

"In the near term, I think Iraq is suffering from some of the things that happened to it and some of things it did to itself—particularly its sectarian leadership under [Nouri al-Maliki]," McChrystal said. "In the next weeks and months, you'll see increasing resistance to ISIS."

In June 2010, McChrystal stepped down from the military after Rolling Stone ran an article quoting members of his staff disparaging top White House officials and allies. McChrystal was summoned back to Washington, where he resigned.

McChrystal is now chairman of the leadership council at The Franklin Project—an effort to give every young person in America the chance to volunteer for a year of national service in the military or as a civilian.

Millennials are volunteering at rates of over 50 percent, but the demand for their services is exceeding the supply of existing positions, according to The Franklin Project.

McChrystal told CNBC he wants to make service to the nation a matter of routine.

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By CNBC's Matthew J. Belvedere. Reuters contributed to this report.