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Russian President Vladimir Putin, right, meets with Swiss President Didier Burkhalter at the Kremlin in Moscow on May 7, 2014. (SERGEI KARPUKHIN/REUTERS)
Russian President Vladimir Putin, right, meets with Swiss President Didier Burkhalter at the Kremlin in Moscow on May 7, 2014. (SERGEI KARPUKHIN/REUTERS)

Putin cools rhetoric, but NATO disputes claims of troop pullback Add to ...

Russian President Vladimir Putin took a step back from confrontation with the West over Ukraine, calling Wednesday for pro-Russian separatists in the east of the country to postpone an independence referendum that had been scheduled for Sunday. He also said he had withdrawn troops from the Ukrainian border.

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It was unclear whether Mr. Putin’s remarks were a genuine change of heart – and, if so, why it came now. Some posited that mounting Western sanctions, and the threat of more measures targeted at the Russian President and his inner circle, had forced Mr. Putin to blink in his showdown with the West.

Russian share prices surged after Mr. Putin’s remarks, which were seen as reducing the likelihood of damaging new sanctions. However, the United States later announced that it was going ahead with moves to remove Russia from a list of countries that were allowed limited duty-free exports into the American market.

Mr. Putin’s gestures were met with skepticism in Kiev and in Western capitals, and it wasn’t clear if or how fast the situation on the ground would calm.

Leaders of the pro-Russia protesters who have seized government buildings around the Donetsk region in southeastern Ukraine claimed Wednesday they don’t take orders from Moscow and would hold a meeting Thursday to decide if they should press ahead with a referendum on the question of whether the “Donetsk People’s Republic” should break from Ukraine as a possible precursor to seeking union with Russia.

NATO also said it hadn’t seen “any signs” of a withdrawal of the 40,000 troops that have been massed for weeks just across Ukraine’s 2,300-kilometre border with Russia.

“We have been told that our troops by the Ukrainian border are a concern – we have pulled them back. They are now not near the border, but in places of regular exercises, at training grounds,” Mr. Putin said following a meeting in Moscow with Didier Burkhalter, the Swiss President and current chairman of the Organization for Security and Co-operation in Europe.

Mr. Putin did not specify where those training grounds were, or how far the troops now were from the Ukrainian border. Asked about Mr. Putin’s remarks, NATO Secretary-General Anders Fogh Rasmussen said: “I am not able to confirm that information – we haven’t seen any signs that Russia is withdrawing its troops.”

In another apparent concession, Mr. Putin said he views Ukraine’s planned May 25 election as “a move in the right direction.” But he added that the vote “will not decide anything if all the citizens of Ukraine fail to understand how their rights are protected after the elections are held.”

Just a day earlier, Russian Foreign Minister Sergei Lavrov had challenged the validity of any election held while the Ukrainian military was fighting to retake rebel-held territory in the Donetsk region. “In the situation where they use the army against their own population, [elections are] quite unusual,” Mr. Lavrov said. He also ruled out any new peace negotiations unless pro-Russian separatists were invited to the bargaining table.

The prospect that further sanctions might be imposed on Moscow has already hurt Russia’s economy by scaring investors into pulling out capital and forcing the central bank to raise interest rates to protect the ruble.

A range of European companies that do business in Russia – as diverse as Italian appliance maker Indesit, Danish brewer Carlsberg, Finnish tire maker Nokian Tyre and Swedish cosmetics firm Oriflame – announced results on Wednesday that blamed the crisis for hurting their bottom lines.

French bank Société Générale wrote down the value of its Russian arm Rosbank by $730-million (U.S.), blaming the economic uncertainty caused by the Ukraine crisis. However, after Mr. Putin’s conciliatory remarks, Russia’s main Moscow Interbank Currency Exchange, or MICEX, index shot up 3.64 per cent.

Some observers believed the economic pain inflicted on Russia thus far had caused Mr. Putin’s about-face.

“Putin announces troop pullback & endorses [Ukraine] elections right after meeting the Swiss president. Looks like banks are mightier than tanks!” Russian opposition figure Garry Kasparov wrote on his Twitter account.

Others were skeptical Mr. Putin’s words would be matched by deeds on the ground in eastern Ukraine. “Vladimir Vladimirovich [Putin] is talking through his hat,” interim Ukrainian Prime Minister Arseniy Yatsenyuk said, in remarks reported by the Interfax-Ukraine news agency. He said it would be better if Mr. Putin had called for the Donetsk referendum to be cancelled, rather than simply postponed.

The softer line from Mr. Putin was a surprising turn on a day that began with more violence in eastern Ukraine.

Ukrainian troops briefly retook city hall in the southern port of Mariupol early Wednesday, only to abandon the building later. It was recaptured by separatists. There were also reports of sporadic gunfire around the city of Slavyansk, which is under the control of heavily armed pro-Russian fighters.

In calling for a postponement of the referendum, Mr. Putin may simply have been acknowledging that no credible vote could have been staged on Sunday in the Donetsk region, which is effectively without a government, and the scene of regular gun battles between Ukrainian troops and pro-Russian rebels.

The Kremlin has waged undeclared war against the Ukrainian government since February, when protesters demanding closer ties with the European Union overthrew the Moscow-backed government of Viktor Yanukovych.

Since then, Russia has annexed the Crimean Peninsula, following a highly controversial referendum there, and has thrown its support behind pro-Russian separatists in the Donbass region around the cities of Donetsk and Lugansk. Moscow has also raised the price of the natural gas it supplies to Kiev by more than 80 per cent and has demanded the payment of billions of dollars in debts.

Russia calls the post-revolution government headed by interim President Oleksandr Turchynov illegitimate and had suggested – until Wednesday – that it wouldn’t recognize the results of the May 25 election.

Opinion polls show chocolate and media magnate Petro Porashenko leading former prime minister Yulia Tymoshenko by a wide margin in the presidential race. Both are seen as pro-Western figures, although Mr. Putin and Ms. Tymoshenko had businesslike dealings in the past.

Despite Mr. Putin’s signal that he’d like to calm the situation, it’s not clear how much events in eastern Ukraine are still under his control. Many here are nervous that Friday’s celebration of Victory Day – marking the 69th anniversary of the Soviet Union’s triumph over Nazi Germany – could spark fresh violence. Russian media have consistently portrayed Mr. Turchynov’s government as being allied to “fascists,” and pro-Russian protesters have rallied around Soviet symbols.

Mr. Putin is expected to split the day between Moscow – where a massive military parade on Red Square is planned – and newly annexed Crimea.

With a report from Reuters

Follow on Twitter: @markmackinnon

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