Conciliatory words hide Putin's anger over Ukraine

Ordering his government to work with Ukrainian and foreign partners to find a financial package to shore up Ukraine's collapsing finances, Putin struck a measured note compared with the military muscle flexing of other officials, which had put thousands of Russian troops on high alert.

As the Kremlin issued its statement, armed men in Ukraine's southern Crimea region, thought to be ethnic Russians, were holed up in the local parliament. Within hours, Ukraine had accused Russian forces of taking over two airports on the Black Sea peninsula, despite Moscow's denials.

Since Moscow lost a struggle with the West for influence in Ukraine, Putin's policy has been to allow his lieutenants to stir up passions over a change in power in its "brotherly nation" while he stands above the fray.

But his mild words, Kremlin insiders say, conceal a more active plan, one that is informed by a strong sense of betrayal over the West's abandoning of an EU-brokered peace deal signed last week in Ukraine and acceptance of "illegitimate" rulers.

The question now for Russia is how much to spend to help its Slavic, Orthodox Christian neighbor and its crumbling economy.

"No matter what Russia does, Kiev will be firmly pro-Western. The only question left is are we prepared to pay more for this course or not?" said Alexei Pushkov, a Putin loyalist and a senior member of parliament.

CONSULTATIONS

The Kremlin said in its statement Putin had ordered his government "to conduct consultations with foreign partners, including the International Monetary Fund, on the provision of financial aid to Ukraine".

The three-paragraph statement issued at 11:45 p.m. seemed to offer little insight into the mind of a man who hoped Ukraine would play a central role in his project for a trade bloc stretching from the frontiers of China to the edge of the EU.

But it spoke volumes to his attitude towards Western support for the new leadership in Ukraine, and contained a veiled warning along the lines of - if you hold talks on rescuing Kiev from bankruptcy without us, Moscow will act.

Russia looks unlikely to press on with its $15-billion bailout for Ukraine, which has been seen as a reward for Yanukovich's decision to spurn a trade deal with the European Union in favor of closer ties to Moscow, and Ukraine is now looking for funds from the West.

A mission from the International Monetary Fund is due in Kiev next week, and Ukraine's new leadership has said it will meet any conditions.

"For him (Putin), Kiev no longer exists. There was an agreement with Western countries which those Western countries did not fulfill. I think that is utmost in his thoughts," said Gleb Pavlovsky, a former Kremlin spin doctor.

"He was tricked and he has to punish that."

Pavlovsky and other Kremlin insiders said events in Crimea, Ukraine's only region with an ethnic Russian majority, could be the result of the Kremlin's plan - to stand back, as Putin believes the West did when violent protesters took control of the situation in Kiev.

There was no immediate way to confirm whether the Kremlin had any connection with the fast-moving events in Crimea, which Ukraine's government described as an invasion by Russian forces.

Putin's spokesman, Dmitry Peskov, said: "I am not commenting. This is all rubbish."

Ukraine's top security official blamed the Kremlin directly, saying it was commanding the armed groups in Crimea.

"I don't think Putin is waiting for anything, he is acting according to his plan," said Pavlovsky. "I see action, the taking of Crimea. I think this is action."

MOVES IN RUSSIAN PARLIAMENT

Russia's lower house of parliament, the State Duma, has said it is ready to discuss a draft proposal to make it easier for a country or a region to become part of Russia if it has expressed a desire to do so in a referendum.

In a growing war of words, Ukraine took aim at reports that Yanukovich was in Russia, saying it would ask Moscow to extradite the leader if his whereabouts were confirmed.

On Thursday, Yanukovich made a statement to Russian news agencies declaring he was still president of Ukraine.

His whereabouts have not been independently confirmed although he was due to give a news conference in the southern Russian city of Rostov-on-Don later on Friday and has asked for protection from Russia.

Kremlin insiders said Yanukovich could not have arrived in Russia without Putin's blessing. His presence could force the Russian leader to make a stand of solidarity with a president-in-exile, despite Putin's animosity for man he sees as weak.

"I think Putin probably said to Yanukovich, why are you here? Go back to Ukraine where you are president," said Sergei Markov, a Russian political analyst.

"Putin wants to be constructive ... but the West told him to get lost and 'we will give you no role in Ukrainian affairs' ... He will continue to be silent as long as the West ignores Russian interests."

(additional reporting by Lidia Kelly, Steve Gutterman and Alexei Anishchuk; editing by Giles Elgood)