Elmau Castle (Germany) (AFP) – World leaders Monday warned Russia it would face stepped-up sanctions for its “aggression” in Ukraine, as they wrapped up a G7 meeting also pledging strong action to fight climate change.

At a luxury retreat nestled in the picture-perfect Bavarian Alps, the leaders of the most powerful countries also tackled threats to global security posed by Islamist extremism and risks to the global economy from Greece.

For the third time, Kremlin strongman Vladimir Putin was barred from the summit due to what US President Barack Obama termed his “aggression in Ukraine”, as the group of seven top powers closed ranks against Russia.

“We … stand ready to take further restrictive measures in order to increase cost on Russia should its actions so require,” said the leaders in a joint communique after the two-day huddle.

“We recall that the duration of sanctions should be clearly linked to Russia’s complete implementation of the Minsk agreements and respect for Ukraine’s sovereignty,” the leaders added, referring to a peace deal struck in the Belarus capital.

The tough line from the world’s power brokers came as Ukraine’s defence minister accused pro-Russian rebels — backed by Moscow — of deploying an army of 40,000 men on the Ukrainian border.

The force threatening Kiev was equivalent to that of a “mid-sized European state”, said Stepan Poltorak.

Clashes in recent days between the Ukrainian forces and the separatists have threatened the ceasefire deal thrashed out in Minsk.

Japan’s Prime Minister Shinzo Abe and Canada’s Stephen Harper on Saturday made a point of visiting Kiev on their way to the summit, to voice support for Ukraine’s embattled leaders, as a recent flare-up in fighting in the east has left at least 28 dead.

Sanctions could also be “rolled back” if Russia lived up to its commitments, the communique said.

German Chancellor Angela Merkel, hosting the talks, also noted that Russia was involved in resolving several other global crises and called for their “cooperation.”

The leaders also sought to thrash out other threats to global security over a lunch of Thai chicken soup, trout and a peach dessert with almonds.

In an unusual move, the G7 leaders invited the heads of countries threatened by jihadist groups, including the leaders of Nigeria and Iraq, both battling deadly insurgencies.

Iraq’s Prime Minister Haider al-Abadi was invited to discuss the US-led campaign to help his country fight the Islamic State extremists who launched a lightning offensive a year ago and have snatched over a third of the country’s territory.

Abadi also got one-on-one time with Obama to discuss the Washington-led campaign to help Baghdad recover territory lost to IS militants, whose self-proclaimed “caliphate” extends deep into neighbouring Syria.

Another visitor to the summit, Nigeria’s newly elected President Muhammadu Buhari, put a “shopping list” to the G7 leaders, seeking help to fight an insurgency by Boko Haram Islamists blamed for 15,000 deaths since 2009.

Buhari has been tested with 11 separate attacks that have left at least 93 dead in the week he has been in the job.

“We reaffirm our commitment to defeating this terrorist group and combatting the spread of its hateful ideology,” said the leaders, in reference to the Islamic State group.

Merkel and French President Francois Hollande, meanwhile, pushed their G7 counterparts to reach consensus on another burning global issue, climate change, ahead of a crunch year-end United Nations summit in Paris.

The leaders stressed that “deep cuts in global greenhouse gas emissions” were required with “a decarbonisation of the global economy over the course of this century.”

The aim was to send a clear signal to push other nations taking part in the Paris meeting to commit to reducing dangerous greenhouse gas emissions, which threaten to melt ice caps and glaciers, raise sea levels and bring more violent storms and floods.

Another pressing problem has been the haggling between debt-hit Greece and its international creditors — the EU, ECB and IMF — and the fear that a messy default could lead to Greece exiting the eurozone, with unknown repercussions for the world economy.

The issue arose again when the G7 leaders met another guest in their “outreach talks” Monday, International Monetary Fund chief Christine Lagarde.

Merkel warned “we don’t have much more time” to resolve the debt crisis, with Athens and its creditors — the International Monetary Fund, the European Union and European Central Bank — having been locked in negotiations for five months on reforms needed to unlock 7.2 billion euros ($8 billion) in rescue funds that Athens desperately needs.

As has become tradition at such gathering, several thousand anti-G7 protesters marched over the weekend in largely peaceful demonstrations.

There were a handful of clashes with the police and a few arrests but overall the demonstrations were colourful and non-violent.

The summit also provided some colourful moments, notably just before talks when Merkel invited Obama to have beer with lederhosen-wearing locals in a small Bavarian village.

Photo: A group photo at the G7 summit near Garmisch-Partenkirchen, in southern Germany, on June 8, 2015. (AFP / Mandel Ngan)