David Cameron sat out of talks aimed at resolving the crisis in Ukraine because Russia would have refused to engage if Britain was involved, according to the Foreign Secretary.
The Prime Minister was accused of being a "bit player" on the world stage after Germany and France took the lead in negotiations earlier this year with Russian president Vladimir Putin.
Angela Merkel and Francois Hollande led the talks, which culminated in a deal being struck in Minsk, because the UK is seen as "far too close" to the United States, Philip Hammond said as he denied there was any "shrinkage" in Britain's role in the world.
He told a Chatham House conference on foreign affairs: "The Russians would not have engaged in Minsk if we had been involved in Minsk.
"They see us as far too close to the US position.
"The German chancellor is clearly the right person to engage with Putin over Ukraine."
European Union leaders earlier this year agreed there would be no easing of sanctions against Moscow until it was clear the Minsk ceasefire deal was being fully honoured.
Existing sanctions against Russia will need to renewed over the course of the year.
Mr Hammond said the EU was "groping its way towards understanding just how powerful a strategic tool the sanctions weapon could be".
He added: "I say regularly to my EU colleagues, it would be a disaster if before we have even deployed it and explored fully its capabilities, the EU were to demonstrate by not renewing sanctions that it can't do this, and I think that message is resonating."