MOSCOW (AP) — Stepping back from the brink of war, Vladimir Putin talked tough but cooled tensions in the Ukraine crisis Tuesday, saying Russia has no intention "to fight the Ukrainian people" but reserves the right to use force.
As the Russian president held court in his personal residence, U.S. Secretary of State John Kerry met with Kiev's fledgling government and urged Putin to stand down.
"It is not appropriate to invade a country, and at the end of a barrel of a gun dictate what you are trying to achieve," Kerry said. "That is not 21st-century, G-8, major nation behavior."
Although nerves remained on edge in the Crimean Peninsula, with Russian troops firing warning shots to ward off Ukrainian soldiers, global markets jumped higher on tentative signals that the Kremlin was not seeking to escalate the conflict. Kerry brought moral support and a $1 billion aid package to a Ukraine fighting to fend off bankruptcy.
Lounging in an arm-chair before Russian tricolor flags, Putin made his first public comments since the Ukrainian president fled a week and a half ago. It was a signature Putin performance, filled with earthy language, macho swagger and sarcastic jibes, accusing the West of promoting an "unconstitutional coup" in Ukraine. At one point he compared the U.S. role to an experiment with "lab rats."
But the overall message appeared to be one of de-escalation. "It seems to me (Ukraine) is gradually stabilizing," Putin said. "We have no enemies in Ukraine. Ukraine is a friendly state."
Still, he tempered those comments by warning that Russia was willing to use "all means at our disposal" to protect ethnic Russians in the country.
Significantly, Russia agreed to a NATO request to hold a special meeting to discuss Ukraine on Wednesday in Brussels, opening up a possible diplomatic channel in a conflict that still holds monumental hazards and uncertainties. At the same time, the U.S. and 14 other nations formed a military observer mission to monitor the tense Crimea region, and the team was headed there in 24 hours.
While the threat of military confrontation retreated somewhat, both sides ramped up economic feuding. Russia hit its nearly broke neighbor with a termination of discounts on natural gas, while the U.S. announced a $1 billion aid package in energy subsidies to Ukraine.
"We are going to do our best. We are going to try very hard," Kerry said upon arriving in Kiev. "We hope Russia will respect the election that you are going to have."
Kerry also made a pointed distinction between the Ukrainian government and Putin's.
"The contrast really could not be clearer: determined Ukrainians demonstrating strength through unity, and the Russian government out of excuses, hiding its hand behind falsehoods, intimidation and provocations. In the hearts of Ukrainians and the eyes of the world, there is nothing strong about what Russia is doing."
The penalties proposed against Russia, he added, are "not something we are seeking to do. It is something Russia is pushing us to do."
World markets, which slumped the previous day, clawed back a large chunk of their losses on signs that Russia was backpedaling. Gold, the Japanese yen and U.S. treasuries — all seen as safe havens — returned some of their gains. Russia's RTS index, which fell 12 percent on Monday, rose 6.2 percent Tuesday. In the U.S., the Dow Jones industrial average closed up 1.4 percent.
"Confidence in equity markets has been restored as the standoff between Ukraine and Russia is no longer on red alert," said David Madden, market analyst at IG.
Russia took over the strategic Crimean Peninsula on Saturday, placing its troops around its ferry, military bases and border posts. Two Ukrainian warships remained anchored in the Crimean port of Sevastopol, blocked from leaving by Russian ships.
"Those unknown people without insignia who have seized administrative buildings and airports ... what we are seeing is a kind of velvet invasion," said Russian military analyst Alexander Golts.
The territory's enduring volatility was put in stark relief Tuesday morning: Russian troops, who had taken control of the Belbek air base, fired warning shots into the air as some 300 Ukrainian soldiers, who previously manned the airfield, demanded their jobs back.
As the Ukrainians marched unarmed toward the base, about a dozen Russian soldiers told them not to approach, then fired several shots into the air and said they would shoot the Ukrainians if they continued toward them.
The Ukrainian troops vowed to hold whatever ground they had left on the Belbek base.
"We are worried, but we will not give up our base," said Capt. Nikolai Syomko, an air force radio electrician holding an AK-47.
Amid the tensions, the Russian military test-fired a Topol intercontinental ballistic missile. Fired from a launch pad in southern Russia, it hit a designated target on a range leased by Russia from Kazakhstan.
The new Ukrainian leadership in Kiev, which Putin does not recognize, has accused Moscow of a military invasion in Crimea, which the Russian leader denied.
Ukraine's prime minister expressed hope that a negotiated solution could be found. Arseniy Yatsenyuk told a news conference that both governments were gradually beginning to talk again.
"We hope that Russia will understand its responsibility in destabilizing the security situation in Europe, that Russia will realize that Ukraine is an independent state and that Russian troops will leave the territory of Ukraine," he said.
In his hour-long meeting with reporters, Putin said Russia had no intention of annexing Crimea, while insisting its residents have the right to determine the region's status in a referendum later this month. Tensions "have been settled," he declared.
He said massive military maneuvers Russia has conducted involving 150,000 troops near Ukraine's border were previously planned and unrelated to the current situation in Ukraine. Russia announced that Putin had ordered the troops back to their bases.
Putin hammered away at his message that the West was to blame for Ukraine's turmoil, saying its actions were driving Ukraine into anarchy. He warned that any sanctions the United States and European Union place on Russia will backfire.
American threats of punitive measures are "failure to enforce its will and its vision of the right and wrong side of history," Russia's Foreign Ministry said — a swipe at President Barack Obama's statement a day earlier that Russia was "on the wrong side of history."
In Washington, Obama shot back. Moves to punish Putin put the U.S. on "the side of history that, I think, more and more people around the world deeply believe in, the principle that a sovereign people, an independent people, are able to make their own decisions about their own lives."
"And, you know, Mr. Putin can throw a lot of words out there, but the facts on the ground indicate that right now he is not abiding by that principle," Obama said.