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Peace talks between Russia and Ukraine have made their most meaningful progress so far, Turkey's foreign minister said on Tuesday after Moscow announced it would scale back its military operations near Kyiv.
Mevlut Cavusoglu said negotiators in Istanbul had reached a "consensus and common understanding" on some of the issues between the warring countries,.
It came as Ukraine offered concessions to Russia, including staying out of Nato and keeping foreign military bases off its territory, in exchange for guarantees from allies to protect it from foreign aggression.
Mr Cavusoglu said Tuesday's negotiations would be followed by talks between the Russian and Ukrainian foreign ministers, and possibly the two presidents Vladimir Putin and Volodymyr Zelenskyy, to discuss the "more difficult" outstanding issues. Ukraine said these could include discussions on the future of the Crimean peninsula, which was annexed by Russia in 2014.
Stocks jumped and oil prices fell on the signs of optimism emerging from the talks, in which Ukraine is seeking a ceasefire and the withdrawal of Russian troops. But there is wariness among its allies about Moscow's intentions after what they describe as broken promises by Mr Putin in the past.
"Whatever agreement there is, it is made at gunpoint," Estonia's Prime Minister Kaja Kallas told CNN.
The meeting at Istanbul's Dolmabahce Palace was the first face-to-face encounter between the two sides for almost three weeks, during which Russia's invasion was seen as having stalled.
Ukraine said it was carrying out successful counter-attacks in some areas but being pounded by Russian attacks on fuel storage sites, while Moscow said it had succeeded in diminishing the Ukrainian armed forces and would now focus on areas claimed by separatists in the eastern Donbas region.
Deputy Defence Minister Alexander Fomin said the promise to scale back fighting around Kyiv was meant to create mutual trust and the necessary conditions for more talks to take place.
Russian billionaire Roman Abramovich attended the meeting in what the Kremlin said was an appearance to "enable certain contacts" between the two sides, after overnight reports that he had suffered symptoms of poisoning at an earlier round of talks. The Kremlin has denied reports of Mr Abramovich's poisoning.
The two sides were urged by Turkish President Recep Tayyip Erdogan, who was hosting the talks, to pave the way for a Putin-Zelenskyy meeting that could "stop this tragedy" after almost five weeks of war.
“In a fair peace, there are no losing parties and the extension of conflict is to nobody's benefit," said Mr Erdogan. “The whole world is waiting on good news to come out of your negotiations,” Mr Erdogan said.
The two negotiating teams sat facing each other at a long table in the presidential office, a Turkish presidential video feed showed. However, it appeared there was no formal handshake or greeting at the start of the meeting.
Ukraine said it was seeking a customised version of Nato's Article 5 mutual defence guarantee, in which its allies would agree to protect it from aggression but it would not join the alliance.
A potential Ukrainian accession to Nato is regarded as unacceptable by Russia and was cited as a threat by Mr Putin when he announced the invasion last month.
Mykhailo Podolyak, an adviser to Mr Zelenskyy, named the US, UK, Germany, Turkey and France as countries that could provide this "enhanced analogue" of Article 5 and commit to being "actively involved" in protecting Ukraine.
Ukraine also wants Germany, Canada, Italy, Poland and Israel among the guarantors, Mr Zelenskyy's office said, and assurances that any deal would not prevent it from joining the EU.
Such an agreement would be adopted through a referendum, an ideal already floated by Mr Zelenskyy to legitimise Ukraine's proposed neutrality, and through the parliaments of the guarantor states.
The Ukrainian side said the status of Russian-annexed Crimea was also on the table, in a deal that would span a period of 15 years, if a ceasefire agreement was reached.
Ukraine's Foreign Minister Dmytro Kuleba separately said his country would not compromise on “people, land or sovereignty” during the talks.
Russia's chief negotiator, Vladimir Medinsky, said the Russian side would look at the proposals and would report on them to President Vladimir Putin after what he called constructive talks.
Alexander Dubowy, an analyst, said the news from the talks called for "cautious optimism" but that extent of Russia's pull-back around Kyiv remained to be seen. CNN quoted US officials describing the move as a major strategic shift by Moscow rather than a temporary ploy to regroup.
The Russian General Staff will reveal in more detail about the decisions after the delegation returns to Moscow, Mr Fomin said. Turkey said that the second day of talks to be held on Wednesday was no longer expected to take place.
"The most meaningful progress since the beginning of negotiations was made today," Mr Cavusoglu said. "The more difficult issues will be taken up at a higher level.
"In the coming period, it is foreseen that both countries' foreign ministers will come together and for the final version of the common understanding. Following that, it is on the agenda for the presidents of the two countries to come together."