Talks between U.S. Secretary of State John Kerry and his Russian counterpart, Sergei Lavrov, ended late on Sunday after four hours of negotiations to defuse tensions over Ukraine.

The goal of the meeting was to develop a proposal conceived by Kerry and Lavrov during earlier meetings to de-escalate the crisis over Russia's annexation of Ukraine's Crimea region. Both sides are expected to hold separate news conferences on the outcome of the talks.

Ideas on the table included a deployment of international monitors in Ukraine, the withdrawal of Russian forces from Crimea and the border zone around Ukraine, and the launch of direct talks between Moscow and the government in Kyiv.

Speaking to reporters after the meeting ended, Lavrov said that Moscow and Washington have agreed to work with the Ukrainian government and the Ukrainian people to overcome the current crisis and that the talks were "very, very constructive."

Lavrov also raised the possibility of a federated Ukrainian state, saying that Ukraine can't function as a "unified state" and that it should be a loose federation of regions that choose their own economic model, language and religion. 

Kerry said that he made it clear that the U.S. continues to assert that Russia's actions in Crimea are illegal and illegitimate. He also raised the issue of Russian troops reportedly massing on the border with Ukraine, saying the U.S. has "strong concerns" and that the presence of the troops is creating a climate of fear and intimidation in the region. 

Kerry and Lavrov have met several times in person and spoken by phone almost daily since the crisis began but have not yet been able to agree on a way forward.

The pair met last week in The Hague, where Kerry presented Lavrov with the proposal, which was a response to ideas Lavrov gave him at a meeting in London in March.

Top U.S., NATO general recalled to Europe 

The meeting comes as U.S. Defence Secretary Chuck Hagel revealed he sent America's top general in Europe back early from a trip to Washington in what a spokesman on Sunday called a prudent step given Russia's "lack of transparency" about troop movements across the border with Ukraine.

Gen. Philip Breedlove, who is both NATO's Supreme Allied Commander Europe and the head of the U.S. military's European Command, had been due to testify before Congress this week. He arrived in Europe Saturday evening.

Breedlove NATO commander

U.S European Commander and Supreme Allied Commander in Europe Air Force Gen. Philip Breedlove has been sent back to Europe early from a trip to Washington due to a 'lack of transparency' from Russian officials about troop movements near the Ukraine border. (Visar Kryeziu/The Associated Press)

"[Hagel]

considered Breedlove's early return the prudent thing to do, given the lack of transparency and intent from Russian leadership about their military movements across the border," Rear Admiral John Kirby, a Pentagon spokesman, told Reuters.

"More broadly, he felt it was important for Gen. Breedlove to continue our efforts to consult with NATO allies, and to discuss specific ways to provide additional reassurance for our NATO allies in Eastern Europe."

The U.S. military has also taken steps to reassure NATO allies, increasing the number of U.S. aircraft in regular NATO air patrols over the Baltics and beefing up a previously planned training exercise with the Polish air force. More steps are being considered.

Breedlove will meet with NATO foreign ministers at their April 1-2 conference in Brussels.

A spokeswoman for EU foreign policy chief Catherine Ashton said the EU strongly favoured "meaningful dialogue" between Ukraine and its old Soviet-era master Russia.

"Russian officials have been stating that Moscow has no intentions beyond Crimea. We expect to see words translated into deeds, including with regard to the military build-up at the regions bordering Ukraine," Ashton's spokeswoman said.

'No painful sensations' from sanctions

Speaking on Russian television before Sunday's meeting in Paris, Lavrov said that Western sanctions imposed on Russia in recent weeks have caused some disruption but not been too painful. 

The U.S. and EU have meted out two rounds of sanctions on Russia, including visa bans and asset freezes for some of Putin's inner circle, to punish Moscow over its seizure of Crimea, a Russian-majority Black Sea peninsula, after mass protests ousted Kiev's pro-Russian president in February.

"I don't want to say that sanctions are ridiculous and that we couldn't care less, these are not pleasant things," Lavrov told Russia's Channel One.

Lavrov Russia foreign minister

Russian foreign minister Sergei Lavrov said on Sunday that Western sanctions against Russia have not caused any 'painful sensations' and that the Russian people have been through much worse times. Lavrov is set to meet his U.S. counterpart, John Kerry, in Paris to discuss a plan to de-escalate tensions in Ukraine. (Sergei Karpukhin/REUTERS)

"We find little joy in that, but there are no painful sensations. We have lived through tougher times."

Lavrov said Western powers had put unofficial restrictions in place, urging their diplomats in Moscow to boycott meetings attended by Russian officials and lawmakers on the sanctions list.

He said Russian diplomats stationed in EU capitals had also been refused meetings with officials from EU foreign ministries.

"Diplomacy is the art of talking and making agreements," Lavrov said. "If diplomats are motivated to become instruments of the sanctions policy, then it's a totally different story."

In his interview, Lavrov made clear that Moscow believes a federation is the only way to guarantee Ukraine's stability and neutrality.

"We can't see any other way to ensure the stable development of Ukraine but to sign a federal agreement," Lavrov said, adding that he understood the United States was open to the idea.

U.S. officials have been coy about their position on a federation and insist that any changes to Ukraine's governing structure must be acceptable to the Ukrainians. Ukrainian officials are wary of decentralizing power, fearing that pro-Russia regions would hamper its western aspirations and potentially split the country apart.

However, they are exploring political reforms that could grant more authority to local governments.

Warning Moscow

Crimeans voted to secede from Ukraine and join Russia in a March 16 referendum dismissed as a sham by Western governments that say it violated Ukraine's constitution and was held only after Russian forces seized control of the Black Sea peninsula.

The West has threatened the tougher sanctions against Russia's stuttering economy if Moscow invades eastern Ukraine.

The West has refused to recognize Crimea's absorption into Russia although U.S. officials acknowledge that the takeover of the predominantly Russian-speaking region is not likely to be resolved soon. Instead, talks have honed in on warnings to Moscow not to go further into Ukraine.

'I don't want to say that sanctions are ridiculous and that we couldn't care less ... We find little joy in that, but there are no painful sensations. We have lived through tougher times.'- Sergei Lavrov, Russian foreign minister

U.S. officials are deeply worried about the massing of what they estimate are up to 40,000 Russian troops on Ukraine's border, which is stoking concerns in Washington and elsewhere that Russia is preparing a wider incursion into Ukraine.

While Moscow has said the buildup is part of normal Russian exercises only, Obama has described it as out of the ordinary that could be a precursor to other actions.

The meeting in Paris comes days before a gathering of NATO foreign ministers in Brussels on Tuesday and Wednesday that is likely to focus on Ukraine and Russia's actions.

'No intention' of invading eastern Ukraine

Lavrov, speaking on Russian television on Saturday, said Moscow had "no intention" of invading eastern Ukraine and reinforced a message from Putin that Moscow would settle - at least for now - for control over Crimea.

Lavrov, added, however that Russia was ready to protect the rights of Russian speakers, referring to what Moscow sees as threats to the lives of compatriots in eastern Ukraine.

Ukraine Crisis

Washington is increasingly concerned about an estimated 40,000 Russian troops currently amassing on the Ukrainian border, despite reassurances from Moscow that Russia has 'no intention' on invading eastern Ukraine. (Baz Ratner/Reuters)

The phone conversation between Putin and Obama on Friday was the first known direct contact between the estranged leaders since Washington and its European allies approved sanctions.

Russia has drafted counter-sanctions, barring senior U.S. officials from entering Russia. On Friday Moscow said it had retaliated against expanded Western sanctions but did not name any U.S. or EU officials affected.