Accusing the West of encouraging an "unconstitutional coup" in Ukraine, Vladimir Putin said Tuesday that Moscow reserves the right to use all means to protect Russians there. The Russian leader's first comments since Ukraine's fugitive president fled to Russia last month came just as U.S. Secretary of State John Kerry was flying to Kiev to meet with Ukraine's new government.
Putin also declared that Western actions were driving Ukraine onto anarchy and warned that any sanctions the West places on Russia for its actions in Ukraine there will backfire.
Tensions remained high Tuesday in Crimea, with troops loyal to Moscow firing warning shots to ward off protesting Ukrainian soldiers. Russia took over the peninsula on Saturday, placing its troops around the peninsula's ferry, military bases and border posts.
Yet world markets seemed to recover from their fright over the situation in Ukraine, clawing back a large chunk of Monday's stock losses, while oil, gold, wheat and the Japanese yen have given back some of their gains.
"Confidence in equity markets has been restored as the standoff between Ukraine and Russia is no longer on red alert," David Madden, market analyst at IG, said Tuesday.
Speaking from his residence outside Moscow, Putin said he still considers fugitive President Viktor Yanukovych to be Ukraine's leader and hopes that Russia won't need to use force in predominantly Russian-speaking eastern Ukraine.
"We aren't going to fight the Ukrainian people," Putin said, adding that the massive maneuvers he ordered last week had been planned earlier and were unrelated to the situation in Ukraine.
Putin also insisted that the Russian military deployment in Ukraine's strategic region of Crimea has remained within the limits set by a bilateral agreement on a Russian military base there. He said Russia has no intentions of annexing Crimea, but insisted that its residents have the right to determine the region's status in a referendum set for this month.
Earlier Tuesday, the Kremlin said Putin had ordered tens of thousands of Russian troops participating in military exercises near Ukraine's border to return to their bases. The massive military exercise in western Russia involving 150,000 troops, hundreds of tanks and dozens of aircraft was supposed to wrap up anyway, so it was not clear if Putin's move was an attempt to heed the West's call to de-escalate the crisis.
Putin accused the West of using Yanukovych's decision in November to ditch a pact with the 28-nation European Union in favor of closer ties with Russia to encourage the months of protests that drove him from power and putting Ukraine on the verge of breakup.
"We have told them a thousand times: Why are you splitting the country?" he said.
Yet he acknowledged that Yanukovych has no political future and Russia gave him shelter only to save his life. Ukraine's new government wants to put the fugitive leader on trial for the deaths of over 80 people during protests last month in Kiev.
Ukraine's dire finances have been a key issue in the protests that drove Yanukovych from power.
On Tuesday, Russia's state-controlled natural gas giant Gazprom said it will cancel a price discount on gas it sells to Ukraine. Russia had offered the discount in December following Yanukovych's decision to ditch a pact with the European Union in favor of closer ties with Russia. Gazprom also said Ukraine owes it $1.5 billion.
The new Ukrainian leadership in Kiev has accused Moscow of a military invasion in Crimea. The Kremlin, which does not recognize the new Ukrainian leadership, insists it made the move in order to protect Russian installations in Ukraine and its citizens living there.
On Tuesday, pro-Russian troops who had taken control of the Belbek air base in Crimea fired warning shots into the air as around 300 Ukrainian soldiers, who previously manned the airfield, demanded their jobs back.
About a dozen soldiers at the base warned the Ukrainians, who were marching unarmed, not to approach. They fired several warning shots into the air and said they would shoot the Ukrainians if they continued to march toward them.
Ukrainians said the troops that have overtaken Belbek and other Ukrainian military bases across Crimea, but Putin denied it, saying they were self-defense forces answering the pro-Russian regional government.
The shots reflected tensions running high in the Black Sea peninsula since Russian troops — estimated by Ukrainian authorities to be 16,000 strong —tightened their grip over the weekend on the Crimean peninsula, where Moscow's Black Sea Fleet is based.
Ukraine has accused Russia of violating a bilateral agreement on conditions of a Russian lease of a naval base in Crimea that restricts troop movements, but Russia has argued it was acting within the terms of the deal.
At the United Nations in New York, Russia's ambassador to the U.N., Vitaly Churkin, said Monday that Russia was entitled to deploy up to 25,000 troops in Crimea under the agreement. Churkin didn't specify how many Russian troops are now stationed in Crimea, but said "they are acting in a way they consider necessary to protect their facilities and prevent extremist actions."
Russia is demanding the implementation of a Western-sponsored peace deal that Yanukovych signed with the opposition that set presidential elections for December. Russian envoy at those talks did not sign the deal. Yanukovych fled the capital hours after the deal was signed and ended up in Russia, and the Ukrainian parliament set the presidential vote for May 25.
In Crimea, a supposed Russian ultimatum for two Ukrainian warships to surrender or be seized passed without action from either side, as the two ships remained anchored in the Crimean port of Sevastopol.
In Brussels, meanwhile, the ambassadors of NATO's 28 member nations were to hold a second emergency meeting on Ukraine on Tuesday after Poland, which borders both Russia and Ukraine, invoked an article calling for consultations when a nation sees its "territorial integrity, political independence or security threatened."
President Barack Obama has said Russia is "on the wrong side of history" in Ukraine and its actions violate international law. Obama said the U.S. was considering economic and diplomatic options that will isolate Russia, and called on Congress to work on an aid package for Ukraine.
In return, Russia's agricultural oversight agency on Tuesday reversed its earlier decision to lift the ban on imports of U.S. pork. It said the existing U.S. system of checks don't guarantee its safety.
The European Union's foreign ministers on Monday threatened Moscow with halting talks on visa liberalization and negotiations on further economic cooperation unless Russian troops on the Crimean peninsula pull back over the next three days.
The bloc's 28 heads of state and government will hold an emergency meeting Thursday that will decide whether to impose sanctions against Russia if there is no de-escalation on the ground.
Putin's economic advisor, Sergei Glazyev, says Russia can develop financial ties with other nations to offset any potential Western sanctions.