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Old 06-28-2010, 03:03 PM
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Default 10 alleged Russian secret agents arrested in US

AP


WASHINGTON Ten people have been arrested for allegedly serving as secret agents of the Russian government with the goal of penetrating U.S. government policymaking circles .

The Justice Department announced the arrests Monday.

According to court papers in the case, the U.S. government intercepted a message from Russian intelligence headquarters in Moscow to two of the defendants. The message states that their main mission is "to search and develop ties in policymaking circles in US" and send intelligence reports.

The court papers cited numerous examples of communications intercepted by U.S. investigators that spelled out what the 10 allegedly were trying to do.

One message back to Moscow from the defendants focused on turnover at the top level of the CIA and the 2008 U.S. presidential election.

The information was described as having been received in private conversation with, among others, a former legislative counsel for Congress. The court papers deleted the name of the counsel.

Another intercepted message said one of the defendants living in New Jersey, known as Cynthia Murphy, "had several work-related personal meetings with" a man the court papers describe as a prominent New York-based financier who was active in politics.

In response, intelligence headquarters in Moscow described the man as a very interesting target and urged the defendants to "try to build up little by little relations. ... Maybe he can provide" Murphy "with remarks re US foreign policy, 'roumors' about White house internal 'kitchen,' invite her to venues (to major political party HQ in NYC, for instance. ... In short, consider carefully all options in regard" to the financier."

The court papers described the defendants communicating with purported Russian agents using a method not previously described in espionage cases here: by establishing a short-range wireless network between laptop computers of the agents and sending encrypted messages between the computers while they were near each other.

The papers also said that on Saturday an undercover FBI agent in New York and another in Washington, both posing as Russian agents, met with two of the defendants, Anna Chapman at a New York restaurant and Mikhail Semenko on a Washington street corner blocks from the White House.
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Old 06-29-2010, 01:11 PM
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Default Russia rips spy ring bust as arrests rise to 11

AP


NEW YORK A shadowy money man for a Russian spy ring whose members were assigned a decade or more ago to infiltrate American society was captured overseas, authorities said Tuesday, becoming the last of 11 arrests made over three days in one of the largest such busts in recent years.

Russian officials angrily denounced the arrests as "Cold War-era spy stories," but officials there and at the White House insisted they would do little or nothing to tear recently mending relations between the two nations.

The FBI moved on the bust because one of the suspects was scheduled to leave the country, the Justice Department said. It did not identify which suspect.

The 11th suspect, using the name Christopher Metsos and purporting to be a Canadian citizen, was arrested at the Larnaca airport in Cyprus while trying to fly to Budapest, Hungary, police in the Mediterranean island nation said. He was later released on bail.

Metsos, 54, was among those named in complaints unsealed Monday in federal court in Manhattan. Authorities in Cyprus said he will remain there for one month until extradition proceedings begin.

Most of the suspects were accused of using fake names and claims of U.S. citizenship while really being Russian. It was unclear how and where they were recruited, but court papers say the operation goes back as far as the 1990s.

Intelligence on President Barack Obama's foreign policy, particularly toward Russia, appears to have been their top priority, according to prosecutors, who charged each of the 10 arrested in the U.S. with conspiracy to act as an agent of a foreign government without notifying the U.S. attorney general.

The 38-year-old son of one of the arrested couples, Vicky Pelaez and Juan Lazaro, said Tuesday outside their home in Yonkers that he didn't believe the allegations.

"This looks like an Alfred Hitchcock movie with all this stuff from the 1960s. This is preposterous," Waldomar Mariscal said. Of the charges, he said, "They're all inflated little pieces in the mosaic of unbelievable things."

Russia's foreign ministry acknowledged Tuesday that those arrested included Russian citizens but insisted they did nothing to hurt U.S. interests.

The ministry earlier angrily denounced the arrests as an unjustified throwback to the Cold War, and senior lawmakers said some in the U.S. government may be trying to undercut President Barack Obama's warming relations with Moscow.

"These actions are unfounded and pursue unseemly goals," the ministry said in a statement. "We don't understand the reasons which prompted the U.S. Department of Justice to make a public statement in the spirit of Cold War-era spy stories."

The timing of the arrests was notable, given the efforts by Obama and Russian President Dmitry Medvedev to reset U.S.-Russia relations. The two leaders met last week at the White House after Medvedev visited high-tech firms in California's Silicon Valley, and both attended the G-8 and G-20 meetings over the weekend in Canada.

A member of the Russian Parliament had suggested that elements of the U.S. government opposed to the recent thaw in relations were responsible for the timing of the arrests. But Justice spokesman Dean Boyd noted several critical law enforcement and operational reasons for the timing of the arrests, including one suspect's plans to leave the country.

Prime Minister Vladimir Putin mentioned the arrests during a meeting at his home with former President Bill Clinton, who was in Moscow to speak at a conference.

"I understand that back home police are putting people in prison," Putin said. "That's their job. I'm counting on the fact that the positive trend seen in the relationship will not be harmed by these events."

White House spokesman Robert Gibbs sounded a similar note, saying relations wouldn't take a hit. Obama, who wouldn't comment earlier when questioned by reporters, was "fully and appropriately" informed, Gibbs said.

Assistant U.S. Attorney Michael Farbiarz on Monday called the allegations against the 10 suspects arrested in the U.S. "the tip of the iceberg" of a conspiracy of Russia's intelligence service, the SVR, to collect inside U.S. information.

Their charge carries a maximum penalty of five years in prison upon conviction. Two criminal complaints outlining the charges were filed in U.S. District Court in New York.

The FBI said it had intercepted a message from SVR's headquarters, Moscow Center, to two of the 10 defendants describing their main mission as "to search and develop ties in policymaking circles in US." Intercepted messages showed they were asked to learn about a wide range of topics, including nuclear weapons, U.S. arms control positions, Iran, White House rumors, CIA leadership turnover, the last presidential election, Congress and the political parties, prosecutors said.

The court papers allege some of the ring's members lived as husband and wife; used invisible ink, coded radio transmissions and encrypted data; and employed Hollywood methods like swapping bags in passing at a train station.

The court papers also described a new high-tech spy-to-spy communications system used by the defendants: short-range wireless communications between laptop computers a modern supplement for the old-style dead drop in a remote area, high-speed burst radio transmission or the hollowed-out nickels used by captured Soviet Col. Rudolf Abel in the 1950s to conceal and deliver microfilm.

Behind the scenes, they were known as "illegals" short for illegal Russian agents and were believed to have fake back stories known as "legends."

In spring 2009, court documents say, conspirators Richard and Cynthia Murphy, who lived in New Jersey, were asked for information about Obama's impending trip to Russia that summer, the U.S. negotiating position on the START arms reduction treaty, Afghanistan and the approach Washington would take in dealing with Iran's suspect nuclear program. They also were asked to send background on U.S. officials traveling with Obama or involved in foreign policy, the documents say.

"Try to outline their views and most important Obama's goals (sic) which he expects to achieve during summit in July and how does his team plan to do it (arguments, provisions, means of persuasion to 'lure' (Russia) into cooperation in US interests," Moscow asked, according to the documents.

Moscow wanted reports that "should reflect approaches and ideas of" four unnamed sub-Cabinet U.S. foreign policy officials, they say.

One intercepted message said Cynthia Murphy "had several work-related personal meetings with" a man the court papers describe as a prominent New York-based financier active in politics.

In response, Moscow Center described the man as a very interesting target and urged the defendants to "try to build up little by little relations. ... Maybe he can provide" Murphy "with remarks re US foreign policy, 'roumors' about White house internal 'kitchen,' invite her to venues (to major political party HQ in NYC, for instance. ... In short, consider carefully all options in regard" to the financier.

The Murphys lived as husband and wife in suburban New Jersey, first Hoboken, then Montclair, with Richard Murphy carrying a fake birth certificate saying he was born in Philadelphia, authorities said.

The complaint says Metsos traveled to the United States to pay Richard Murphy and others using clandestine and sometimes bizarre methods.

Metsos was surreptitiously handed the money by a Russian official as the two swapped nearly identical orange bags while passing each other on a staircase at a commuter train station in New York, Metsos said.

After giving some of the money to one of the defendants, Metsos drove north and stopped his car near upstate Wurtsboro, N.Y. Using data from a global-positioning system that had been secretly installed in his car, agents went to the site and found a partially buried brown beer bottle. They dug down about five inches and discovered a package wrapped in duct tape, which they photographed and then reburied.

Two years later, video surveillance caught two unnamed secret agents digging up the package.

On Saturday, an undercover FBI agent in New York and another in Washington, both posing as Russian agents, met with two of the defendants, Anna Chapman at a New York restaurant and Mikhail Semenko on a Washington street corner blocks from the White House, prosecutors said. The FBI undercover agents gave each an espionage-related delivery to make. Court papers indicated Semenko made the delivery as instructed but apparently Chapman didn't.

Aside from the Murphys, three other defendants also appeared in federal court in Manhattan Pelaez and Lazaro, who were arrested at their Yonkers, N.Y., residence, and Chapman, arrested in Manhattan on Sunday.

Pelaez was a reporter and editor for a prominent Spanish-language newspaper videotaped by the FBI contacting a Russian official in 2000 in Latin America, prosecutors said.

The Murphys, Lazaro, Pelaez and Chapman were held without bail but didn't enter a plea. Another hearing was set for Thursday.

Pelaez is a Peruvian-born reporter and editor and worked for several years for El Diario/La Prensa, one of the country's best-known Spanish-language newspapers. She is best known for her opinion columns, which often criticize the U.S. government.

"They were very friendly," said Carmen Marrero, 80, who lived next to Pelaez and Lazaro in Yonkers for years. When a tree from the couple's yard fell on Marrero's property, they took care of it promptly. They once invited him to their young son's piano concert. And they threw parties on the Fourth of July.

"I never saw anything suspicious," he said.

Two other defendants, Michael Zottoli and Patricia Mills, were arrested at their Arlington, Va., residence. Also arrested at an Arlington residence was Semenko.

Zottoli, Mills and Semenko appeared before U.S. Magistrate Theresa Buchanan on Monday in Alexandria, Va. The hearing was closed because the case had not yet been unsealed in New York. The three did not have attorneys at the hearing, U.S. attorney spokesman Peter Carr said.

Two defendants, Donald Howard Heathfield and Tracey Lee Ann Foley, were arrested at their Cambridge, Mass., residence Sunday and appeared briefly in Boston federal court Monday. A detention hearing was set for Thursday. Lawyers could not be found or did not return calls.














This undated image taken from a Facebook page shows a woman journalists have identified as Anna Chapman.

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Old 06-29-2010, 01:16 PM
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Default Russia: Suspected spies include Russian citizens

AP


MOSCOW Some of the suspected spies arrested in the United States are Russian citizens, Russia's Foreign Ministry acknowledged Tuesday, but it insisted they did nothing to hurt U.S. interests.

The ministry statement said Russia is counting on the U.S. "to show proper understanding, taking into account the positive character of the current stage of development of Russian-American relations."

Prime Minister Vladimir Putin delivered the same message during a meeting at his country residence with former President Bill Clinton, who was in Moscow to speak at an investment conference.

"I understand that back home police are putting people in prison," Putin said, drawing a laugh from Clinton. "That's their job. I'm counting on the fact that the positive trend seen in the relationship will not be harmed by these events."

The Foreign Ministry would not say specifically how many of the 11 alleged deep-cover agents are Russian.

NTV television identified two of the defendants as Russian and showed their photographs from a social networking website. NTV said Mikhail Semenko had moved to the U.S. in 2008 and Anna Chapman, said to have an English husband, moved to the U.S. in February of this year. Both are in their late 20s.

The FBI announced the arrests of 10 suspects Monday, and an 11th person allegedly involved in the Russian spy ring was arrested Tuesday in Cyprus. Court papers said the operation goes back as far as the 1990s and many of the suspects were tracked for years.

Semenko and Chapman, however, were listed in a separate complaint and said to use their real names. Most of the other suspects were accused of using fake names and purporting to be U.S. or Canadian citizens while really being Russian.

They are accused of attempting to infiltrate U.S. policymaking circles while posing as ordinary citizens, some of them as married couples.

Oleg Gordievsky, a former deputy head of the KGB in London who defected in 1985, said Russia probably has about 50 deep-cover couples spying inside the United States.

Russian President Dmitry Medvedev would know the number of illegal operatives in each target country but not their names, the 71-year-old ex-double agent told The Associated Press in a phone interview Tuesday.

Countries often have a number of intelligence officials whose identities are declared to their host nation, usually working in embassies, trade delegations and other official posts.

Gordievsky, who spent nine years working in the KGB directorate in charge of illegal spy teams, said he estimates there are 400 declared Russian intelligence officers in the U.S., as well as up to 50 couples charged with covertly cultivating military and diplomat officials as sources of information.

He said the complexity involved in training and running undercover teams means Russia is unlikely to have significantly more operatives now than during his career.

"I understand the resources they have, and how many people they can train and send to other countries," Gordievsky said. "It is possible there may be more now, but not many more, and no more than 60 (couples)."

The ex-KGB officer said deep-cover spies often fail to deliver better intelligence than their colleagues who work in the open.

"They are supposed to be the vanguard of Russian intelligence," Gordievsky said. "But what they are really doing is nothing, they just sit at home in Britain, France and the U.S."

The Foreign Ministry's first reaction to the U.S. arrests was less amicable, and some senior Russian lawmakers said some in the U.S. government may be trying to undercut President Barack Obama's warming relations with Moscow.

"These actions are unfounded and pursue unseemly goals," the ministry said in a statement issued earlier Tuesday. "We don't understand the reasons which prompted the U.S. Department of Justice to make a public statement in the spirit of Cold War-era spy stories."

Foreign Minister Sergey Lavrov noted that U.S. authorities announced the arrest just days after Medvedev had visited the United States and met Obama at the White House.

"They haven't explained to us what this is about," Lavrov said at a news conference during a trip to Jerusalem. "I hope they will. The only thing I can say today is that the moment for doing that has been chosen with special elegance."

Russia's Foreign Intelligence Service refused to comment on the arrests of its alleged agents.

Nikolai Kovalyov, the former chief of the main KGB successor agency, the Federal Security Service, said some of the U.S. charges against the alleged spies resembled a "bad spy novel."

Kovalyov, now a lawmaker, said the arrests were an attempt by some "hawkish circles" in the United States to demonstrate the need for a tougher line toward Moscow. Kovalyov added that Russian-U.S. ties will continue to improve despite the spy scandal.

"Our two great powers must stand together," he said.

Some lawmakers suggested a tit-for-tat Russian response, but Kovalyov said Russia would reciprocate only "if the Americans don't stop at that and risk evicting our diplomats," the ITAR-Tass news agency reported.

Other senior Russian lawmakers also alleged that some in the U.S. government resented warmer ties with Russia.

"This was initiated, was done by certain people of certain political forces, who aren't in favor of improving relations between Russia and the United States, and I feel deeply sorry about that," Konstantin Kosachev, the head of the foreign affairs committee in the lower house, the State Duma, told Associated Press Television News.

"Not all of them support Obama's policy," Mikhail Grishankov, a deputy head of the Duma's security affairs committee, told AP. "There are forces interested in tensions."

Viktor Kremenyuk, a deputy head of the U.S. and Canada Institute, a Moscow-based think tank, said the spy case could threaten a planned ratification of a new nuclear arms reduction deal signed by Obama and Medvedev in April.

"That may change the atmosphere, that may change the attitudes among Americans toward Russia, (and) that may cause very significant political consequences," Kremenyuk said.

In Britain, the case stirred memories of the country's own illegal Soviet spy Melita Norwood, a civil servant who spent about 40 years passing atomic research and other secrets to Moscow. Authorities ruled against prosecuting the elderly grandmother when she was exposed in 1992. Norwood died in 2005 at the age of 93.













This undated image taken from a Facebook page shows a woman journalists have identified as Anna Chapman.

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Old 06-29-2010, 08:27 PM
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Default Spy suspects had interests in science, finance

AP


MONTCLAIR, N.J. One hobnobbed with academics and entrepreneurs who shared his interest in cutting-edge science. Another spoke five languages, went to embassy parties and was fascinated by global politics. A third held herself out to be a venture capitalist and hit the networking circuit, looking for investment opportunities.

The 11 people arrested and accused of being members of a Russian spy ring operating under deep cover in America's suburbs appear to have been part of a slow and patient plan by Moscow to cultivate contacts in the U.S. who could yield vital competitive information not necessarily on weapons or U.S. strategic planning, but on finance, business and technology, intelligence experts say.

"This is a long-term investment by an intelligence service to lead those individuals there, give them general assignments and see what they can pick up," said John Slattery, a deputy assistant director of counterintelligence at the FBI who retired in 2008 and is now an executive with BAE Systems Intelligence and Security.

"Although they aren't trained intelligence professionals, they are available and on call for assignments such as: Can you go attend this meeting? Can you go attend this trade show? Can you contact this person? Could you maybe enroll in this university? And then elevate the access as they go."

Ten members of the alleged ring were arrested across the Northeast and charged Monday with failing to register as foreign agents, a crime that is less serious than espionage and carries up to five years in prison. Some also face money laundering charges. An 11th suspect was arrested in Cyprus, accused of passing money to the spies over several years.

Prosecutors said several of the defendants were Russians living in the U.S. under assumed names and posing as Canadian or American citizens. It was unclear how and where they were recruited, but court papers said the operation went back as far as the 1990s. Exactly what sort of information the alleged agents provided to their Russian handlers and how valuable it may have been was not disclosed.

The FBI finally moved in to break up the ring because one of the suspects apparently a woman who called herself Anna Chapman, who was bound for Moscow, according to court papers was going to leave the country, the Justice Department said.

The arrests flabbergasted many of the defendants' neighbors. In a case that seemed to have come straight out of a Cold War spy novel or a Hitchcock thriller, many of the defendants lived what seemed to be utterly ordinary suburban lives saying goodbye to their kids at the bus stop, taking pride in their well-kept lawns and flower beds, making small talk with the neighbors, even holding Fourth of July parties.

In Montclair, N.J., neighbors of a woman who called herself Cynthia Murphy said that they detected an accent, and when they asked where she was from, she said Belgium. Chapman, a young redhead, posted a number of pictures of herself on social networking sites, including a photo of her at the Statue of Liberty and a seductive, pouty shot of her in a lacy baby-blue outfit.

The court papers allege that some of the ring's members were husband and wife and that the spies used invisible ink, coded radio transmissions and encrypted data, and employed Hollywood methods such as swapping bags in passing at a train station.

"We're from a generation where everyone was afraid of the Red Menace, of 007 and hiding under desks during drills all of that stuff. There was real fear, so it's shocking to see something like this," said Alan Sokolow, a neighbor of Cynthia Murphy and her husband, Richard. "I can see it happening in the mid-1950's, but now, in 2010, it comes across as more comical, with the low-tech stuff they said they were using."

The arrests raised fears that Moscow has planted other couples in the U.S. Federal prosecutor Michael Farbiarz said the allegations are "the tip of the iceberg" of a conspiracy by Russia's intelligence service, the SVR, to collect information inside this country.

The alleged deep-cover agents are known as "illegals" in the intelligence world because they take civilian jobs instead of operating inside Russian embassies and military missions.

Federal agents said in court papers that almost all members of the group had been under surveillance for some time.

One suspect, Vicky Pelaez, a reporter and editor for the Spanish-language newspaper El Diario/La Prensa, had been videotaped taking bags of money from a Russian official as early as 2000, the FBI said. Others had their phones tapped, their homes searched and their computer hard drives copied by FBI agents years ago.

All the suspects were allowed to go about their lives, though under close watch.

Donald Heathfield, who worked for a management consulting firm and lived in Cambridge, Mass. home to Harvard and MIT had ties to several organizations involved in forecasting emerging technologies. "He hung around the world of futurists," said retired George Washington University professor William Halal.

The two were business partners in TechCast, a think tank that tries to predict the shape of tomorrow's technologies, and had also been members of a board at the Lifeboat Foundation, a nonprofit organization that encourages scientific advancements. Prosecutors said that in 2004, Heathfield met with an employee of the U.S. government "with regard to nuclear weapons research."

Another of those arrested, Mikkail Semenko, worked at Travel All Russia, a small travel agency in Arlington, Va., that is in the same building as a U.S. military recruitment center. Colleagues in the office described him as clumsy and quirky, but smart. They said he spoke five languages.

The agency's marketing manager, Slava Shirokov, said he had known Semenko since they were students together at Amur State University in Russia. Shirokov said Semenko had majored in Chinese studies and spent several years in China after graduating. After moving to the U.S., he got two master's degrees from Seton Hall University in 2008, one in diplomacy and international relations and one in Asian studies.

"He was always interested in languages, global politics and other cultures," Shirokov said. "He liked to go to banquets to meet people. He did a lot of that in New York, he did a lot of this here. We always thought he is networking in order to land the jobs of his dreams. ... He said, `My dream job would be something in international relations, an NGO or something like that.'"

A number of the suspects had interests in finance.

One couple, who went by the names Michael Zottoli and Patricia Mills, had taken an advanced finance course at the University of Washington when they were living in Seattle, according to their former instructor, Ufuk Ince. Cynthia Murphy earned a master's degree in business administration from Columbia University this year.

Chapman lived close to the New York Stock Exchange and described herself in numerous Web postings as being on the hunt for investment opportunities in the U.S. and Russia.

Russian officials initially denounced the arrests as "Cold War-era spy stories" and accused elements of the U.S. government of trying to undermine the improving relationship between Moscow and Washington. But the White House and Prime Minister Vladimir Putin expressed confidence that the arrests would not damage ties between the two nations.

Bruce Riedel, a former CIA officer and a senior fellow at the Brookings Institution Saban Center, said it was a "classic KGB-style" operation, in which Russian intelligence officials plant moles and "hope that they will produce something years and maybe even decades later."

"They're trying to get someone into a position of influence, where someone becomes the friend of, let's say, the president of a think tank who may become a Cabinet member in the next administration," Riedel said. "And then you have someone who not only can ask that Cabinet member questions, but might be able to influence what they're doing."

Waldomar Mariscal, the 38-year-old son of Pelaez, scoffed at the allegations Tuesday outside Pelaez's home in Yonkers, N.Y.

"This looks like an Alfred Hitchcock movie with all this stuff from the 1960s," he said. "This is preposterous."
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Old 06-29-2010, 08:29 PM
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Default State Department plays down fallout from spy case

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WASHINGTON The scandal over an alleged Russian spy ring erupted at an awkward time for a White House that has staked its foreign policy record on improved cooperation with Moscow, but it appeared unlikely to do lasting damage to U.S.-Russian relations.

The administration sought to dampen tensions, while the Russian government offered the conciliatory hope Tuesday that U.S. authorities would "show proper understanding, taking into account the positive character of the current stage of development of Russian-American relations."

The White House response was notably restrained following the dramatic announcement that 11 people assigned a decade or more to illegally infiltrate American society had been arrested. They are accused of using fake names and claims of U.S. citizenship to burrow into U.S. society and ferret out intelligence as Russian "illegals" spies operating without diplomatic cover.

White House spokesman Robert Gibbs labored to show that the arrests were a law enforcement matter one not driven by the president, even though President Barack Obama was informed and played down any political consequences.

Obama was asked about the matter by reporters twice Tuesday. He declined to comment both times.

Gibbs said Obama was aware before he met with Russian President Dmitry Medvedev at the White House on Thursday that the case was under investigation, but the two leaders did not discuss it. Another White House spokesman, Tommy Vietor, said Obama did not know the exact timing of the arrests.

The FBI's arrests of 10 Russian spy suspects had to be carried out Sunday partly because one of the defendants was scheduled to leave the United States, according to the Justice Department. But agency spokesman Dean Boyd declined to identify which of the 10 defendants arrested Sunday was planning to exit the United States.

Officials in both countries left the impression that spy rings remain a common way of doing business.

Prime Minister Vladimir Putin offered a message of restraint during a meeting at his country residence with former President Bill Clinton, who was in Moscow to speak at an investment conference.

"I understand that back home police are putting people in prison," Putin said, drawing a laugh from Clinton. "That's their job. I'm counting on the fact that the positive trend seen in the relationship will not be harmed by these events."

The administration has made a high priority of improving relations with Russia. Critics say Obama has bent too far backward to accommodate the Russians, with little to show in return.

Stephen Flanagan, senior fellow at the Center for Strategic and International Studies, said some Obama critics will point to the spy scandal as evidence of a dual-track Russian approach of offering an outstretched hand while "still trying to pick your pocket" with the other.

At stake in the short term is a newly concluded nuclear arms control deal, dubbed New START, which requires a favorable vote in the U.S. Senate and approval by the Russian legislature.

More broadly, Obama wants to build the foundation for a strategic partnership with Moscow to increase security and economic and other cooperation with the former Cold War foe.

It was that longer-term goal that the State Department emphasized in reacting to the spy case.

"We were not going to forgo the opportunity to pursue our common interests because there are things we disagreed on," Phil Gordon, the department's top Russia policy official, told reporters.

"I think you should see this spying issue in that context. We feel we have made significant progress in the 18 months that we have been pursuing this different relationship with Russia," Gordon added. "We think we have something to show for it."

By coincidence, Secretary of State Hillary Rodham Clinton is scheduled to visit the former Soviet republics of Ukraine, Georgia, Azerbaijan and Armenia in coming days, as well as Poland. Each of those countries is keenly interested in the direction of U.S.-Russian relations.

Spying has often produced pockmarks on the face of U.S.-Russian relations, even in the two decades since the collapse of the Soviet Union. The full dimensions of the latest case are yet to be made public, but the charges against the 11 suspects do not include espionage, and it was unclear what if any U.S. government secrets they managed to collect or transmit to Moscow.

The suspects allegedly assumed fake names and sought to obtain insights to U.S. government policymaking in ways that could benefit Russia.

Stephen Sestanovich, a Russia expert at the Council on Foreign Relations, said the matter is likely to blow over quickly, in part because the suspects are not high-value agents and appear to have accomplished little.

"The stakes for both sides are pretty small here," Sestanovich said.

Bruce Riedel, a former CIA officer and a senior fellow at the Brookings Institution think tank, said the spy ring was "classic KGB style" in which the Russian intelligence service would plant moles and "hope that they will produce something years and maybe even decades later."

"They're trying to get someone into a position of influence, where someone becomes the friend of, let's say, the president of a think tank who may become a Cabinet member in next administration," Riedel said. "And then you have someone who not only can ask that Cabinet member questions, but might be able to influence what they're doing."

Leon Aron, the top Russia expert at the American Enterprise Institute, saw little chance of further diplomatic fallout in Washington or Moscow.

"I think they'll shrug it off," he said.

Andrew Kuchins, the top Russia expert at the Center for Strategic and International Studies, took a similar view.

"My guess is that like most spy scandals this is going to blow over," Kuchins said.

Some analysts said they expected Moscow to consider some form of retaliation.

"There is never a good time for these things, but I am not surprised that Russian espionage continues," said David Kramer, a former assistant secretary of state in the Bush administration and now a Russia analyst at the German Marshall Fund of the United States. "The Russians are going to respond and retaliate and that will determine what happens from here."

Nina Khrushcheva, great-granddaugher of former Soviet leader Nikita Khrushchev and an observer of Russian political currents, said there is great suspicion about the timing of the arrests, coming shortly after Obama's friendly meeting with Medvedev.

"The timing seemed too convenient for the conservative forces on both sides," she said in a telephone interview from Moscow. "So there are all these conspiracies here running around: The Americans pushed it, the KGB pushed it, the reset will go to hell."

She was referring to the Obama administration's efforts to "reset" relations with Russia after a period of tensions, particularly following Russia's armed invasion of Georgia in August 2008.
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