The head of Nato warned late on Wednesday that Russian President Vladimir Putin may not stop with the annexation of Crimea and said the crisis should serve as a “wake-up call” for European nations to bolster defence spending.

Nato Secretary-General Anders Fogh Rasmussen said Russia’s move to annex Crimea following a Kremlin-backed referendum on Sunday had triggered “the gravest threat to European security and stability since the end of the Cold War”.

“My major concern is that this won’t stop,” Rasmussen told a gathering at the Brookings Institution, a Washington think-tank.

“Crimea is one example. But I see Crimea as an element in a greater pattern, in a more long-term Russian, or at least Putin, strategy. So of course our major concern now is whether he will go beyond Crimea.”

Rasmussen acknowledged there were “no quick and easy ways to stand up to global bullies”, without naming Russia explicitly.

“No one wants to turn away from our cooperation with Russia. But no one can ignore that Russia has violated the very principles upon which that cooperation is built,” he said. “So business as usual is not an option.”

Since the end of the Cold War, Nato has shifted its attention to Afghanistan, Kosovo and counter-piracy operations off Somalia, as well as Libya during its 2011 civil war. The Ukraine crisis has put Russia into focus and sharpened concerns about Nato defence spending.

Austerity-hit EU countries have slashed spending, scaling back on ships, tanks and fighter jets, and increasingly relying on the US, which contributes about three-quarters of Nato defence spending. Rasmussen cautioned that European security could no longer be taken for granted and that European states needed to “step up politically and militarily” after Russia’s actions.

“The Ukraine crisis and what we have seen in Crimea has been a wake-up call and it must be followed by increased European investment in defence if we are to ensure a credible deterrence and collective defence in the future,” he said.