Russian news agencies quoted the decree as recognising "the Republic of Crimea, in which the city of Sevastopol enjoys special status, as a sovereign and independent state."
The decree was issued "considering the expression of the will of the people of Crimea at the general Crimean referendum, which was held on March 16, 2014," it said.
The US and the European Union have retaliated over the Crimea referendum by targeting sanctions against Russians and Ukrainians.
European foreign ministers imposed EU-wide sanctions yesterday against 21 Russian and Ukrainian officials linked to unrest in Crimea. Washington followed up an hour later with a list of its own, targeting seven top Russian government officials and politicians and four Crimea-based separatist leaders accused of undermining the "democratic processes and institutions in Ukraine".
The European Union imposed sanctions against the self-declared prime minister of breakaway Crimea and the head of Russia's Black Sea fleet for their role in undermining Ukrainian sovereignty.
Sergiy Aksyonov and Vice Admiral Alexander Vitko were on a list of 21 names published after EU foreign ministers agreed a series of travel bans and asset freezes following an overwhelming 'Yes' vote in a Crimea independence referendum Sunday.
The "so-called referendum ... is illegal and in clear breach of the Ukrainian constitution," EU foreign affairs head Catherine Ashton said.
In the absence of any move by Moscow to de-escalate the crisis in its former Cold War satellite, the EU decided to impose sanctions on "21 individuals responsible for actions which undermine or threaten the territorial integrity, sovereignty and independence of Ukraine," Ashton said.
Along with Vitko, two other Russian officers were named -- Anatoliy Sidorov, commander of the Western military district, and Alexander Galkin, head of the Southern military district, reports AFP.
Barack Obama is to visit Europe next week for discussion of the crisis with allies. Speaking to journalists at the White House, he said the new sanctions increase the costs on the Russian government for its actions
"If Russia continues to interfere in Ukraine, we stand ready to impose further sanctions," Obama said.
He added: "We will continue to make clear to Russia that further provocations will achieve nothing except to further isolate Russia and diminish its place in the world." The White House said the sanctions were "by far and away the most comprehensive sanctions since the end of the cold war", and rejected criticism that they were too limited in scope or would be easily circumvented by asset transfers.
"We think they will be effective," one senior administration official told reporters in Washington. "No US business can do business with them – that will have impact on some or all of these individuals. If they want to transact in dollars, for example, they will be unable to do so and will tend to have difficulty in accessing financial services in Europe, the Middle East or Asia."
Another US official said the list included the "key architects and ideologues responsible for [the Crimea] policy" but they were also responsible for human rights abuses in Russia.
The White House reiterated its current opposition to extending the list to include Vladimir Putin, saying it would be an extraordinary step to target a head of state in that way, but left open the possibility of expanding sanctions in reaction to further escalation by Russia.
The US president said that if Russia did not back off, it could expect additional sanctions. Russia responded by insisting the sanctions would have little impact, reports The Guardian.
The punitive measures came on the eve of an address to the Russian parliament by President Vladimir Putin on Crimea. He is expected to take steps to formalise the incorporation of Crimea into Russia but, if he felt the need to try to slow the imposition of sanctions, he could opt for a more measured response.
The sanctions follow the referendum in Crimea on Sunday, in which there was an overwhelming vote in favour of union with Russia. The EU condemned the referendum as illegal and said it would not recognise the outcome.
Washington alleged multiple election violations during and leading up to the referendum.
"There have been broad speculation and some concrete evidence that ballots that arrived in Crimea for the referendum had been pre-marked in many cities," said a senior US administration official.
European ministers and EU officials said the 21 people – mainly political figures involved in the breakaway of Crimea rather than business figures – would face a freeze on assets as well as a travel ban. That number could be expanded later in the week, they added.
It is notoriously difficult to secure EU agreement on sanctions anywhere because they require unanimity from the 28 member states. There were wide differences over the numbers of Russians and Crimeans to be punished, with countries such as Greece, Cyprus, Bulgaria and Spain reluctant to penalise Moscow for fear of closing down channels of dialogue. The 21 named were on an original list that ran to about 120 people.
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