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Biden and Putin exchange warnings amid Ukraine tensions.

US president Joe Biden and his Russian counterpart Vladimir Putin on Thursday exchanged warnings over Ukraine but conveyed some optimism that upcoming diplomatic talks in January could help ease spiralling tensions.

In a 50-minute call, their second conversation this month, Mr Biden said he needed to see Russia de-escalate its military build-up near Ukraine, while Mr Putin said sanctions threatened by Washington and allies could lead to a rupture in ties. The call was requested by Mr Putin.

“President Biden reiterated that substantive progress in these dialogues can occur only in an environment of de-escalation rather than escalation,” said White House press secretary Jen Psaki.

Kremlin aide Yuri Ushakov said the call created a “good backdrop” for future talks.

The leaders’ exchange set the stage for lower-level engagement between the countries, including a January 9th and 10th US-Russia security meeting, followed by a Russia-Nato session on January 12th, and a broader conference including Moscow, Washington and other European countries slated for the following day. On Wednesday, Josep Borrell, the EU’s chief foreign policy official, said the bloc must be included in the negotiations.

Despite the talk of diplomacy, the tone of the call was described by officials on both sides as “serious”. And neither side detailed significant progress towards a resolution.

For his part, Mr Biden reiterated his threat of unprecedented sanctions if Russia chose to invade Ukraine.

“Biden laid out two paths,” including diplomacy, said a senior administration official.

“The other is a path that is more focused on deterrence, including serious costs and consequences should Russia choose to proceed with a further invasion of Ukraine.”

Aides have said the possibilities include measures that would effectively disconnect Russia from the global economic and financial system, while further arming the North Atlantic Treaty Organisation, the European military alliance.

Mr Ushakov said Mr Putin “immediately responded” that any sanctions now or later “could lead to a complete breakdown in ties between our countries”.

He added: “Our president also mentioned that it would be a mistake that our descendants would see as a huge error.”

The call comes amid intense diplomatic efforts to defuse tensions over Ukraine, following reports that Russia has deployed 100,000 troops on its side of the border with the country and controversy around Russia’s role in Europe’s rocketing gas prices.

Mr Putin said on Wednesday that gas prices would stabilise once the German regulator allowed supplies to flow to western Europe via the Nord Stream 2 pipeline, which runs under the Baltic and bypasses Ukraine. Kiev currently receives transit fees for Russian gas passing through its territory. Germany’s approval of Nord Stream 2 is not expected until mid-2022.

Critics of the pipeline say it will increase Europe’s reliance on Russian energy supplies, and the US has earmarked it as a possible target for sanctions in the event of a Russian invasion of Ukraine.

Moscow considers Ukraine, where Russian is widely spoken and which was part of the former Soviet Union, to be within its sphere of influence. When asked last week about the possibility of an invasion of its neighbour, Mr Putin said that the tensions had been caused by Nato overstepping acceptable boundaries with its eastward expansion towards Russia’s borders, and called for an immediate guarantee that such an expansion would stop.

Although Russia’s leader has previously denied any plan to invade, he last week refused to rule out a military solution.

Nord Stream 2’s second pipeline was filled with gas and ready for operation, Mr Putin said on Wednesday. “Now, of course, everything depends on our partners in Europe and Germany, ” he said. “As soon as they decide on the start of the work, Europe will immediately get large additional volumes of Russian gas. This will certainly affect the price . . . on the spot [market]. And all the consumers buying Russian gas will immediately feel that.”

Gazprom, Russia’s state-backed monopoly gas exporter, has been repeatedly accused of exacerbating Europe’s surge in gas prices by withholding volumes beyond its contractual obligations and failing to fill its European gas storage facilities. Mr Putin last week defended the company, saying it had supplied more gas to Europe this year than in 2020 and that it had received no requests for additional volumes at current prices.

Gazprom has a deal to transit 40 billion cubic metres of gas via Ukraine until 2024, and has surpassed that volume this year. – Copyright The Financial Times Limited 2021/Reuters

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