Russian president Vladimir Putin has defended the Kremlin's aggressive foreign policy, saying the actions are necessary for his country's survival.
Russia annexed Ukraine's Crimean peninsula in March and was later accused of supplying pro-Russian separatists in eastern Ukraine with ammunition and manpower.
Mr Putin said in his annual state-of-the-nation address at the Grand Kremlin Palace today that national pride and sovereignty are "a necessary condition for survival" of Russia.
"If for many European countries, sovereignty and national pride are forgotten concepts and a luxury, then for the Russian Federation a true sovereignty is an absolutely necessary condition of its existence," he told a full room of Cabinet ministers, lawmakers and community leaders.
"I want to stress: either we will be sovereign or we will dissolve in the world. And, of course, other nations must understand this as well."
More than 4,300 people have been killed in eastern Ukraine in what the West and the Ukrainian government says is a conflict fuelled by Russian money.
Mr Putin once again expressed his displeasure over the toppling of Ukrainian president Viktor Yanukovych but did not offer any insight into what Russia's next actions in eastern Ukraine could be.
Although Russia is boosting its national defence budget, Mr Putin said it is not going to get involved in an expensive arms race. He said "unusual solutions" are at the nation's disposal.
"No one will succeed in defeating Russia militarily," he said.
Mr Putin defended the annexation of Crimea, describing it as Russia's spiritual ground, "our Temple Mount".
He added: "They would have been delighted to let us go the way of Yugoslavia and the dismemberment of the Russian peoples, with all the tragic consequences. But it did not happen. We did not allow it to happen."
Moscow-based analyst Maria Lipman said that despite bellicose statements toward the West in the beginning of his speech, Mr Putin "also spoke about how we are by no means going to isolate ourselves, we are interested in constructive work even with Europeans and Americans".
Striking a liberal note, the Russian president also announced measures to spur the flagging economy, saying that Russia's resurgent "geopolitical role" should be matched by a thriving economy.
Russia is expected to enter recession next year, for the first time in six years.
Mr Putin suggested a three-year freeze on impromptu inspections and tax checks for companies with a clean record, and said there should be no taxation of offshore money returning to Russia.
He praised the work of the Central Bank, which moved to free float the ruble this year even though the currency has hit a record low.
Ms Lipman said Mr Putin was trying to reassure both the liberal and conservative camps in the government, but realises his hands are tied by economic factors.
"I think his freedom of manoeuvre is limited now and many important economic factors no longer depend on him: the ruble rate, the price of oil, inflation," she said.
Mr Putin did not dwell on rising consumer prices or an expected decline in living standards but instead sought to portray the harsh economic environment as a necessary obstacle for patriotic Russians to overcome.
"This year, as in many fateful historical moments, our people clearly displayed national revival, firm resistance and patriotism," he said. "And the difficulties we encountered will create new opportunities for us, we are ready to accept any challenge of our time and be victorious."