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Western leaders reacted with scepticism on Tuesday to Russia's announcement that some troops amassed near Ukraine were returning to their bases after finishing military drills.
It was not clear how many troops were pulling back out of an estimated 130,000 stationed near Ukraine's border, and senior western figures called for more proof from Russia that it was easing its military posture. The foreign minister in Kiev issued a warning: “Don't believe what you hear, believe what you see.”
But markets rallied on hopes of a peaceful solution as Ukraine said a flurry of diplomacy in recent weeks had helped to prevent a Russian escalation.
Nato leaders said there were signs of a diplomatic opening after the troop reductions followed signals from Russia that it wanted to keep the delicate talks alive.
However, Russia has previously left heavy equipment behind while withdrawing soldiers and the movement of forces alone “doesn't represent real de-escalation”, said Nato Secretary-General Jens Stoltenberg.
The US envoy to the alliance said Russia had a history of false claims that it was lowering tension. “You may remember in late December, there were some similar claims that came out of Moscow that they were de-escalating and in fact, facts on the ground did not support that claim,” said Julianne Smith.
Prime Minister Boris Johnson said the UK's intelligence was "not encouraging" with Russia said to be building field hospitals in Belarus, in what he said was potential preparation for an attack on Ukraine.
Mr Scholz sat down with President Vladimir Putin at the long Kremlin table that has been a feature of recent discussions, after France's Emmanuel Macron was similarly kept at a distance after reportedly refusing a Russian coronavirus test.
The German leader welcomed Russia's call for more discussions after saying he could see "no sensible reason" for Russia to amass troops near Ukraine. He said he hoped more troops would withdraw from the border to follow those sent back to their barracks on Tuesday.
"We are ready, together with our partners in the EU and Nato and with Russia, to discuss concrete steps to improve our common security," he said.
Mr Putin repeated Russia's frustration that Nato would not consider putting curbs on its eastward expansion but said he would engage with discussions on other issues such as missile control.
The US and UK have warned in recent days that Mr Putin could order an invasion of Ukraine at any moment, and satellite images published by US company Maxar Technologies suggested new Russian movements of troops, attack helicopters and fighter jets.
But Russia's Defence Ministry announced early on Tuesday that some units were returning to their garrisons after completing drills that have added to the West's disquiet.
“The units of the southern and western military districts, having completed their tasks, have already begun loading on to rail and road transport,” spokesman Igor Konashenkov said.
Video footage published by a Russian news agency showed some tanks and other armoured vehicles being loaded on to railway flatcars.
It was the second glimmer of hope in two days from the Russian side after it signalled on Monday that it was open to further talks, although experts urged caution in interpreting the significance of the withdrawal.
UK Foreign Secretary Liz Truss, who was on air when news of the partial Russian withdrawal filtered through, said Britain would “need to see a full-scale removal of troops” to believe Moscow's insistence that no invasion is planned.
Henry Boyd, an analyst at the IISS think tank, said Russia had mobilised at a scale it could not have managed until very recently and that concrete signs of a withdrawal would need to be seen.
“I think it's within this context that one should maintain an air of cautious scepticism about Russia's announcement this morning,” he said. “As recently as five years ago, I think the scale of mobilisation would have been impossible for Russia's armed forces to achieve.”
Other Russian drills were still going on, Mr Konashenkov said, with the navy staging war games and marines planning a live-fire exercise with allied Belarusian troops on Saturday.
But Ukraine claimed a diplomatic victory after what was the first announcement in weeks of a Russian pull-back.
“We and our allies have managed to prevent Russia from any further escalation. It is already the middle of February, and you see that diplomacy is continuing to work,” Foreign Minister Dmytro Kuleba said.
Ukrainian President Volodymyr Zelenskiy declared Wednesday, the day speculated about as the potential start date for a Russian invasion, as a day of unity featuring defiant flag-waving and singing of national hymns.
The Kremlin, in turn, mocked the supposed timetable by saying Mr Putin had enquired about what time the Americans thought an invasion would start.
John Chipman, the head of the IISS, said Russia had enough assets to carry out some operations in Ukraine even if it was not poised to invade the entire country.
“Should Russia decide to attack, there's probably enough combat mass now present to conduct a more limited ground operation, perhaps to seize Ukraine's eastern regions or to conduct stand-off strikes,” he said at the launch of the institute's annual Military Balance report.
Mr Johnson and Mr Biden said in a call on Tuesday that there was a “crucial window for diplomacy” in which Russia could be persuaded to step back from Ukraine.
Hopes were raised after Russian Foreign Minister Sergey Lavrov told Mr Putin that talks with the West should continue despite differences over the future of Nato.
Meanwhile in Britain, Ms Truss sought to keep up the pressure on Russia by saying sanctions in the event of war would target Kremlin-linked oligarchs who have long used London as a base.
She said Russia should expect a “ratchet of sanctions”, including asset freezes and visa bans for Kremlin associates, offering detail on the package of measures repeatedly threatened by western powers.
“There will be nowhere to hide for those oligarchs close to Putin, for companies that back the Russian state, and it will see a degradation of the Russian economy,” she told BBC Radio 4's Today programme.
The EU's foreign policy chief, Josep Borrell, told the same programme that the Nord Stream 2 gas pipeline would “not become operational” if war were to break out in Ukraine.
While the US and Britain have joined Ukraine in opposing the pipeline, Germany has resisted calls for a firm commitment that gas will not flow through the pipeline.
Mr Borrell said the EU was ready to keep discussing security concerns with Russia after previous rounds of talks ended with no clear breakthrough.
Suhail Al Mazrouei, UAE Minister of Energy and Infrastructure, told US network CNBC that he hoped negotiations between Russia and its European neighbours would prevail.
“What we hear is that there is no intention for an invasion and that, I think, is comforting,” he said. “Hopefully we will see a de-escalation.”