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U.S. President Barack Obama and German Chancellor Angela Merkel hold a joint news conference following their meeting at the White House in Washington February 9, 2015. Obama made clear he was some way from a decision on whether to arm Ukraine in its conflict against Russian-backed rebels, saying on Monday he still hoped for a diplomatic solution.Kevin Lamarque/Reuters

U.S. President Barack Obama said he is considering sending weapons to Ukraine to help it defend itself against Russian aggression if a peace plan from Germany and France fails to stop the conflict.

Standing alongside visiting German Chancellor Angela Merkel, who will take a peace proposal to her counterparts from Russia and Ukraine on Wednesday, Mr. Obama publicly asserted that he still hoped for a diplomatic solution. But his threat was unmistakable, as were the differences dividing the Western alliance over how to deal with the Kremlin.

"Lethal defensive weapons is one of those options being examined," Mr. Obama said Monday. "I have not made a decision about that yet."

Most European countries, including Germany and France, oppose giving Kiev weapons. But critics regard the Franco-German peace plan as tantamount to appeasement of Russian President Vladimir Putin, in the most dangerous confrontation with Moscow since the Soviet Union collapsed and the Cold War ended.

With hawks gathering in Washington, Mr. Obama was already publicly musing about next steps.

Given Ukraine's ill-equipped and retreating army, better weapons – such as battlefield missiles and anti-tank grenades – wouldn't defeat a determined Russian invasion but the prospect of increased Russian casualties could change Mr. Putin's political thinking.

"If, in fact, diplomacy fails, what I've asked my team to do is to look at all options – what other means can we put in place to change Mr. Putin's calculus," Mr. Obama said.

Ms. Merkel disagreed. "I cannot imagine any situation in which improved equipment for the Ukrainian army leads to President Putin being so impressed that he believes he will lose militarily," she said.

Instead, she and French President François Hollande plan to offer a new peace plan to Ukrainian President Petro Poroshenko and Mr. Putin in Minsk on Wednesday, hoping to entice the Russian leader with an offer that allows – at least initially – Russian-backed separatists in Eastern Ukraine to hold the territory they have seized since the last Minsk ceasefire agreement collapsed.

Mr. Hollande called the proposal one of the "last chances" to avoid war. "If we don't manage to find not just a compromise but a lasting peace agreement, we know perfectly well what the scenario will be. It has a name, it's called war," he said on the weekend.

The Franco-German offer also proposed a wide demilitarized zone from which Ukrainian and separatist forces would withdraw. It would be monitored by observers from the Organization for Security and Co-operation in Europe.

Prime Minister Stephen Harper said he hoped the crisis would be resolved through diplomacy, but added that Mr. Putin has so far "rejected" diplomatic means and Ottawa will look at "all options" to address the crisis. "[Mr. Putin] seeks to move his agenda forward through military violence which is unfortunate," Mr. Harper said Monday after meeting with Ms. Merkel in Ottawa after her visit to Washington.

During a press conference in Ottawa, Ms. Merkel thanked both Mr. Harper and Mr. Obama for supporting her efforts to resolve the crisis in Ukraine.

While Mr. Obama insists there remains unity of purpose among the Western allies, it's clear that unity about how and whether to escalate the pressure is frayed. Pushing Russia – but not too hard – has emerged as the European strategy, not least because of crippling dependency on Russia for energy. For instance, Germany imports nearly 70 per cent of its energy needs and Moscow supplies about 40 per cent of German gas imports, more than one-third of oil imports and a quarter of its imported coal imports.

In Washington, the hawks are in ascendency.

"The Ukrainians are being slaughtered and we're sending them blankets and meals," Senator John McCain, a Republican and former presidential candidate, said on the weekend. "Blankets don't do well against Russian tanks."

Another Republican and Tea Party favourite, Senator Ted Cruz, told the Munich Security Conference that Mr. Obama was failing to honour security arrangements with Kiev. "When it comes to Russia and Ukraine, the path we're on doesn't make any sense," Mr. Cruz said. "We need to be providing defensive arms to the people of Ukraine."

Even hardline Republicans were puzzled by Mr. Cruz's claim that the United States has "a treaty obligation to stand with [Ukrainians]" given that Ukraine isn't a NATO member. But the growing – and bipartisan – clamour for tougher action against Mr. Putin is pushing Mr. Obama.

Both Houses of Congress unanimously passed legislation in December authorizing sending arms to the embattled Ukrainian army.

So far, sanctions haven't worked, Mr. Obama said.

"It's clear that [the Russians] have violated just about every agreement they made in the Minsk agreement [of September, 2014]," he said. "Instead of withdrawing from eastern Ukraine, Russian forces continue to operate there, training separatists and helping to co-ordinate attacks. … Instead of withdrawing, Russia has sent in more tanks and armoured personnel carriers and heavy artillery. … With Russian support, the separatists have seized more territory, shelled civilian areas, destroyed villages and driven more Ukrainians from their homes."

Moscow continues to deny any of its forces are inside Ukraine, allowing only that – perhaps – a few veterans or military personnel on leave may have volunteered to fight with the separatists.

Kiev estimates at least 9,000 Russian troops, including highly trained special forces, are fighting inside Ukraine. Senior U.S. officers won't confirm that number, but U.S. General Philip Breedlove, NATO's Supreme Allied Commander in Europe, said last month that there was new evidence of "the [heat] signatures of air-defence systems and electronic warfare systems that have accompanied past Russian troop movements into Ukraine."

Moscow has gone to extraordinary lengths to hide combat death and injuries suffered by its forces on Ukrainian battlefields.

Officially there have been none. Anecdotally, the families of casualties have been told that deaths and injuries were suffered in training accidents and warned that survivor and veterans benefits could be withheld if those accounts were questioned.

So far, Mr. Obama has limited military aid to Kiev to so-called non-lethal materiel, including gas masks, body armour and radar technology to detect incoming fire.

Canada has also supplied non-lethal military aid.

Even if he decides to send Kiev sophisticated battlefield weapons, Mr. Obama made clear that he didn't expect Ukraine could ever defeat Russia. Rather, the intent would be to force Mr. Putin to bear additional costs as well as the economic damage wrought by sanctions.

The "prospect for a military solution to this problem has always been low," Mr. Obama acknowledged.

"Russia obviously has an extraordinarily powerful military. And given the length of the Russian border with Ukraine, given the history between Russia and Ukraine, expecting that if Russia is determined that Ukraine can fully rebuff a Russian army has always been unlikely."

With a report from Kim Mackrael in Ottawa