"Vladimir Putin's ambition to restore the Russian Empire took another step forward today as Russian-backed separatists in Ukraine's Donetsk region proclaimed an independent state and adopted the tsarist-era name of 'Little Russia.' The ultimate responsibility for this latest flagrant violation of Ukraine's sovereignty lies squarely with Vladimir Putin's Russia, upon whose leadership, financing, troops, and weapons the separatists are entirely dependent," the senator said in his statement on July 18.

According to him, the declaration on the establishment of this "Little Russia" violates the Minsk peace agreements on Donbas.

Read alsoEU says Zakharchenko's "Malorossiya" against Minsk peace accords"This illegal proclamation of a Russian puppet state in eastern Ukraine also adds to Russia's serial violations of the Minsk agreements. Through its aggressive behavior, Russia has demonstrated it does not seek the peace the Minsk agreements were designed to achieve," the statement said.

"Instead, Vladimir Putin is calculating that the more Ukrainians his forces and his proxies kill, the more Ukrainian territory they will be able to seize. And the more Putin forces Ukraine to devote scarce resources to war rather than improving the economy, the more he can destabilize the government in Kiev and prevent Ukraine from realizing its Euro-Atlantic future," McCain said.

The senator insists that the United States and its European allies must honestly confront the reality that they have failed to fundamentally change Russia's calculus in Ukraine over the last three years.

"If we are serious about ending the bloodletting in eastern Ukraine and restoring Ukraine's sovereignty and territorial integrity, we must be willing to think and act anew to compel a change in Russian behavior. It is simply not enough, for example, to say that U.S. and European sanctions imposed after the annexation of Crimea will remain until Russia fulfills its obligations under the Minsk agreements. That approach has been tried, and it has failed. Acting together, the United States and our European allies need to develop a policy and strategy to escalate the diplomatic, economic, and military consequences Russia will suffer until it honors its commitments under the Minsk agreements. Here at home, we must start by sending a strong Russia sanctions bill to the president's desk and providing Ukraine the defensive lethal assistance it needs to defend itself," he said.