Russia pulls some troops back to base, but NATO remains cautious

Russia announced the start of a pullback of some forces after drills that raised U.S. and European alarm about a possible military assault on Ukraine.

Markets rallied on news of the withdrawal as investors took the move as a sign of possible de-escalation by Russia amid a major diplomatic push following weeks of warnings from the U.S. and Europe about the risks of a conflict. The Kremlin has consistently denied it plans an attack and President Vladimir Putin endorsed continued talks with the West.

The U.S. and NATO have warned that Russia has massed some 130,000 troops near the border with Ukraine in preparation for a possible invasion and demanded a withdrawal to ease tensions. Russia has rejected the accusations while saying movements of forces on its own territory are an internal matter. Russia is continuing its largest drills in years in neighboring Belarus that are due to finish on Feb. 20 and is conducting naval exercises in the Black Sea that are scheduled to wrap up on Sunday.

Putin has called for the U.S. and its allies to give sweeping security guarantees, including a ban on further expansion of the North Atlantic Treaty Organization that would include a refusal of future membership for Ukraine. They have rejected his demands but offered talks on other security issues including on missile restrictions and measures to build confidence. Russian Foreign Minister Sergei Lavrov described those proposals as “constructive” and recommended to continue talks at a meeting with Putin on Monday, while also extending efforts to attain the broader guarantees.

Russia is confident that diplomatic efforts aimed at resolving the stand-off will succeed, Lavrov said Tuesday. “Overall we can work out a fairly good package solution,” he told reporters in Moscow.

The announcement of a Russian pullback offers “reason for cautious optimism,” NATO Secretary General Jens Stoltenberg told reporters in Brussels on Tuesday. “So far, we haven’t seen any sign of de-escalation on the ground” and Russia’s military presence remains capable of an attack, he said.

Units of Russia’s Western and Southern military districts are already loading equipment onto road and rail transport after completing their drills and will begin returning to their permanent bases Tuesday, Defense Ministry spokesman Igor Konashenkov said in a video posted on its website. Other military units are continuing drills at training grounds in Russia and “as soon as the combat training activities are completed, the troops, as always, will” return to their bases, he said.

The ruble rose on news of the pullback, strengthening 1.8% against the dollar to 75.2232 as at 3:22 p.m. in Moscow. Oil retreated from the highest since 2014 as traders weighed a possible cooling in the crisis. Brent futures fell as much as 2.1% to trade below $95 a barrel while futures in New York also slumped.

The withdrawal was announced hours before Putin began a meeting in Moscow with German Chancellor Olaf Scholz, the latest Western leader to hold talks with him on the crisis. Putin had separate phone calls on Saturday with U.S. President Joe Biden and French President Emmanuel Macron, who also traveled to Moscow last week for nearly six hours of talks with the Kremlin leader.

After warning that a Russian invasion could take place as soon as this week, the U.S. has evacuated its embassy from Kyiv and urged American citizens to leave Ukraine. The Kremlin has dismissed U.S. claims as “hysteria,” while accusing the government in Kyiv of preparing to try to retake by force regions in eastern Ukraine held by Russian-backed separatists. Ukraine denies this.

Russia’s lower house of parliament voted Tuesday to appeal to Putin to recognize the separatist entities, potentially further complicating efforts to resolve the conflict. Russia has issued more than 700,000 passports to residents in the self-declared Donetsk and Luhansk Peoples Republics, even as it publicly backs talks on implementing peace accords intended to reintegrate the regions into Ukraine.

Some of the troops on exercise on Belarus have moved closer to the border than expected, according to Western intelligence officials. They added their intelligence showed there were currently 100 Russian battalion tactical groups massed near Ukraine’s borders and 14 more in transit. The officials did not detail the evidence behind their assessments.