The UK and the EU have been accused of a “catastrophic misreading” of the mood in the Kremlin in the run-up to the crisis in Ukraine, the BBC informs.
The House of Lords EU committee claimed Europe “sleepwalked” into the crisis.
The EU had not realised the depth of Russian hostility to its plans for closer relations with Ukraine, it said.
It comes as European Council President Donald Tusk called PM David Cameron to discuss how the EU should respond to ongoing violence in eastern Ukraine.
The report also follows comments from Defence Secretary Michael Fallon, who has warned Russian President Vladimir Putin poses a “real and present danger” to three Baltic States.
He was speaking after RAF jets were scrambled to escort two Russian military aircraft seen off the Cornwall coast on Wednesday.
Elsewhere, shelling was reported in several parts of eastern Ukraine on Thursday, including around the rebel-held city of Donetsk.
The committee’s report said Britain had not been “active or visible enough” in dealing with the situation in Ukraine.
It blamed Foreign Office cuts, which it said led to fewer Russian experts working there, and less emphasis on analysis.
A similar decline in EU foreign ministries had left them ill-equipped to formulate an “authoritative response” to the crisis, it said.
The report claimed that for too long the EU’s relationship with Moscow had been based on the “optimistic premise” that Russia was on a trajectory to becoming a democratic country.
The result, it said, was a failure to appreciate the depth of Russian hostility when the EU opened talks aimed at establishing an “association agreement” with Ukraine in 2013.
Committee chairman Lord Tugendhat (photo) said: “The lack of robust analytical capacity, in both the UK and the EU, effectively led to a catastrophic misreading of the mood in the run-up to the crisis.”
The UK had a particular responsibility to Ukraine because it was one of four signatories to the 1994 Budapest Memorandum which pledged to respect Ukraine’s territorial integrity, the committee said.
Neither Britain nor the EU had a strategic response on how to handle Russia for the long term, it added.
A Foreign Office spokeswoman said no-one could have predicted the scale of the “unjustifiable and illegal” Russian intervention and it was for the people of Ukraine to decide on its relationship with the EU.
Shadow Foreign Secretary Douglas Alexander said it was “vital” the EU had a “united approach” and that the UK government helped to find a “diplomatic resolution” to the conflict.
Sir Andrew Wood, former British ambassador to Russia, agreed with the report’s assessment, calling the situation a “dangerous moment” because Russia’s frustrations could overspill into other areas, with increasing pressure on Baltic States.