Speaking in Riga after talks with Latvian counterpart Edgars Rinkēvičs, Hammond condemned Russian aggression but said communication channels should remain open.
"We discussed how we as a European Union respond to the much more assertive policies we are seeing coming from Moscow over the last twelve months, most obviously in Ukraine but also we are seeing more assertive behavior in relation to other countries as well.
"We have to work closely together with European Union partners to ensure we get the balance right between strong deterrents of unacceptable behaviors such as the illegal annexation of Crimea and the continued support for separatists in eastern Ukraine and violation of the sovereignty of Ukraine with illegal movements of Russian troops in eastern Ukraine on the one hand," Hammond said.
"But on the other hand we also have to have a dialogue with Russia because we have to find a way of living with Russia and working with Russia even as we seek to contain these aggressive activities."
"I was very pleased to see British troops taking part in military exercises here in Latvia over the last few months and note that the UK has committed to supporting the Baltic Air Policing mission again in the future," the British minister added.
Rinkēvičs expressed his thanks for Britain's continued military support including by sending planes to the Baltic Air Policing mission.
"I would like to extend my gratitude to our UK partners and friends for their support in strengthening the defense of the Baltic states," Rinkēvičs said.
Other topics discussed included reform of EU institutions, free movement in the labor market and the progress of talks with Iran to secure a deal on its nuclear ambitions.
