Russian President Vladimir Putin called on separatists in east Ukraine on Wednesday to postpone a referendum on secession for the mostly Russian-speaking region and said Moscow had withdrawn troops from the border with Ukraine.
By potentially forestalling a dismemberment of Ukraine, Putin's comments appeared to open a way to easing the East-West standoff over Russia's role in the country's crisis.
The pro-Russian separatists behind the referendum said they would consider on Thursday whether to postpone Sunday's vote.
Putin said he issued the call in order to "create the necessary conditions for dialogue."
Reacting to the appeal, the White House said the referendum should be canceled altogether, not merely postponed.
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In another suprise announcement, Putin added that Russians troops that had been placed near the border with Ukraine had been withdrawn.
But the Pentagon says it has not seen any signs of troop movements. NATO and Ukrainian officials say they, too, have seen no evidence of any withdrawal.
The White House said it would welcome a pull-back.
“We would certainly welcome a meaningful and transparent withdrawal of Russian military forces from the border. That's something that we have sought for quite some time," said a spokesperson, adding that there has been no evidence that such a withdrawal has taken place.
In another reversal, Putin said that presidential elections in Ukraine, scheduled for May 25, would be "a move in the right direction."
He made his comments after talks with the head of the Organization for Security and Cooperation in Europe, Swiss President Didier Burkhalter, who said the security and rights body would soon propose a “road map” to defuse the crisis in Ukraine.
Meanwhile, Ukraine's Prime Minister Arseniy Yatsenyuk dismissed Putin’s appeal for a postponement of the referendum, describing it with a term equivalent to “hot air.” He also questioned why the issue of Ukraine was being discussed without Kyiv’s participation.
A pro-Russian separatist leader said the separatists would consider Putin's call to postpone their referendum at a meeting of their self-proclaimed People's Assembly on Thursday. "We have the utmost respect for President Putin. If he considers that necessary, we will of course discuss it," Denis Pushilin said in Donetsk, a city of 1 million people that the rebels have proclaimed capital of an independent "People's Republic of Donetsk".
Since a pro-Russian president was ousted in an uprising in February, Putin has overturned decades of post-Cold War diplomacy by proclaiming the right to send troops to Ukraine and seizing and annexing Crimea.
A rebellion in the east has raised the prospect that Ukraine, a country of around 45 million people the size of France, could be carved up or even descend into civil war, pitting Russian-speaking easterners against pro-European Ukrainian speakers in the West.
Residents in areas held by the pro-Moscow rebels were stunned by Putin's remarks at a time when the region seemed to be hurtling towards inevitable independence and a week of bloodshed had brought animosity towards Kiev to a fever pitch.
"Maybe Putin doesn't understand the situation? There is no way this referendum isn't happening," said Natalia Smoller, a pensioner who has been bringing food to rebels manning a roadblock in Slaviansk, a town turned into a fortified redoubt where fighters withstood a government advance this week.
Nevertheless, experts predicted the separatists would heed Putin's call to stand down for now. "Among those confronting Ukrainian troops, a certain logic should prevail under which they understand that without the support of Russia and thereby the Russian army, they could be subjected to heavy military strikes," said Yevgeny Minchenko, a political analyst friendly to the Kremlin.
Russian share prices surged after Putin's remarks, seen as reducing the likelihood of damaging new sanctions. The MICEX index shot up 3.64 percent.
NATO again warns Russia
Despite President Putin’s surprise statements on the secession vote in east Ukraine and supposed Russian troop withdrawals, NATO's Secretary General Anders Fogh Rasmussen called on Moscow on Wednesday to stop supporting separatists in Ukraine and scale back troops from Ukraine's border to create a base for political solution to the Ukraine-Russia conflict.
Speaking after a meeting with Poland’s foreign and defense ministers, Rasmussen said NATO was not able to confirm a withdrawal of Russian troops.
“Russia should live up to its international commitments and stop supporting separatists and scale back troops from the border, so political solutions can be found,” he told reporters in Warsaw.
Rasmussen added that, if needed, NATO will not hesitate to take all necessary steps to increase the security of its allies in central and eastern Europe, which may include reinforced exercises, reviewed defense plans and a proper deployment of troops.
Ukrainian forces seized the rebel-held city hall in the eastern port of Mariupol overnight, driving out pro-Russian militants, then withdrew, making no apparent attempt to hold on to the building, witnesses said on Wednesday.
Ukraine's Channel 5 television said earlier Wednesday the Ukrainian National Guard had seized the administrative center in Mariupol, a mainly Russian-speaking city of nearly 500,000 people and key component in the self-declared breakaway People's Republic of Donetsk that had announced plans to hold a referendum on secession Sunday.
Pro-Russia separatists reported that five of their activists were killed in skirmishes Wednesday.
Also on Wednesday there were reports of clashes in the separatist stronghold of Slovyansk, as Ukrainian troops advanced on rebel positions.
On May 25, Ukrainians plan to hold presidential elections in hopes of stabilizing the volatile situation in their country. The vote is to formally replace president Viktor Yanukovych, who in February fled Kyiv for Russia amid mass protests against his government. Ukraine has since been led by an acting president, Oleksandr Turchynov.
Secretary of State John Kerry said Tuesday the U.S., in coordination with the European Union, will impose broader sanctions against Russia if it attempts to sabotage the election.
U.S. Treasury Undersecretary for Terrorism and Financial Intelligence David Cohen said on Wednesday Washington is working with others to ensure that sanctions will cost Moscow dearly if it does not change its tune on Ukraine.
Briefing journalists in Paris during a tour of European capitals, Cohen said: “We are moving in a strong and systematic way to maximize the cost on Russia ... while minimizing to the extent possible the spillover on other economies, including those here in Europe.”
Kyiv and the West believe Russia is in large part financing and choreographing the separatist violence in east Ukraine in an effort to destabilize the country because of its new government's pro-Western course.
Moscow denies that it has a hand in Ukraine's unrest. It has previously also put into question the legitmacy of the planned presidential elections saying that no fair poll can be held when Ukrainian troops are being used against "the country's own citizens."
Elaborating on President Putin's suprise endorsement of presidentail elections in Ukraine, the Kremlin has outlined conditions under which Moscow would condone the poll, just hours after the Russian leader also called on separatists in east Ukraine to put off a referendum on secession.
The Slon.ru website quoted Putin's spokesman Dmitry Peskov on Wednesday as saying that if supporters of "federalization" in eastern Ukraine heed Putin's call to postpone the referendum, and if Kyiv halts its military operation against pro-Russian activists and moves to begin a "dialogue," then the Ukrainian presidential election set for May 25 can legitimately be held.
Peskov added that the Kremlin is not negotiating with Kyiv authorities, and that Putin's proposal to postpone the plebiscite is "not a step towards Kyiv, but a step towards all Ukrainian people," the website reported.
Also on Wednesday, the Kremlin said many U.S. companies were coming under pressure not to attend an economic forum that is hosted by President Vladimir Putin and widely seen as Russia's counterweight to the annual World Economic Forum in Davos.
The May 22-24 St. Petersburg Economic Forum is usually attended by chief executives of large U.S. firms, as well as heads of other international companies, but the U.S. government has said it would not be appropriate for them to attend this year because of the crisis in Ukraine.
The Forum aims to showcase Russia as a place to invest but has not always succeeded in persuading executives worried by red tape, corruption and poor legal protection.
Separately, President Barack Obama gave the U.S. Congress official notice on Wednesday that he plans to pull Russia from a program that allows duty-free imports of certain goods, known as the Generalized System of Preferences, the White House said.
Russia is "sufficiently advanced economically" and no longer needs the special treatment, the White House said.
EU reaches sanctions deal
European Union governments reached a preliminary agreement on Wednesday to expand the legal criteria for targeting individuals and companies with sanctions meant to pressure Russia over Ukraine, opening the way for new listings as soon as Monday, diplomats said.
The decision, which should make it easier for the EU to target Russian companies, has to be formally approved during a meeting of EU foreign ministers on Monday.
“We have political approval, and it will have to be rubber-stamped,” one diplomat said, speaking on condition of anonymity.
Two other diplomats also said senior EU officials were due to discuss specific names of potential targets later on Wednesday.
The EU has already imposed asset freezes and visa bans on 48 Russians and Ukrainians over Moscow's annexation of Crimea.
Warsaw snubs Kremlin
Poland on Wednesday awarded a prize for championing democracy and human rights to Mustafa Dzhemilev, a leader of the Tatar community in Ukraine's Crimean peninsula who says he was barred from the region after Russia annexed it.
“He is a defender of Ukraine's integrity,” said Polish Foreign Minister Radoslaw Sikorski, as he announced Dzhemilev had been awarded the prize. “He is someone who, together with his people, has demonstrated that democracy is possible.”
Tatars are a Turkic-speaking Muslim community who make up about 12 percent of Crimea's two million-strong population. Many Crimean Tatars oppose a return to Moscow's control, especially as they were persecuted during Soviet rule.
The choice of laureate for the inaugural “Solidarity Prize” is likely to irk Russia.
Some information for this report provided by Reuters.