* Putin to see Western leaders for first time in months
* US and EU have imposed sanctions over Ukraine
* Putin defiant on Ukraine but sanctions start to bite
By Timothy Heritage
MOSCOW, June 4 Whether he is made to feel like
an unwelcome guest or the Prodigal Son returning, Vladimir Putin
is relishing the chance to show his defiance over Ukraine at his
first meetings with Western leaders in months.
With his ratings soaring at home, the West showing no taste
for a fight over Crimea and Europe reluctant to hit Moscow with
new sanctions, the Russian president feels he has the upper hand
as he sets out for World War Two anniversary events in France.
He also has a point to prove to Barack Obama over comments
the U.S. president made last week, suggesting sanctions were
deterring the Russian leader from pursuing his policies in
Ukraine and that Putin was acting from a position of weakness.
Asked at a conference in St. Petersburg late last month
about Obama's frequent criticisms of him over the Ukraine
crisis, Putin replied brusquely: "Who made him the judge?"
The response was typical of a man who, far from cowering
under sanctions and clamouring to be welcomed back into the
international fold, seems to be revelling in the ideological and
geopolitical battle over Ukraine and his campaign to have Moscow
treated as an equal by its old Cold War adversaries.
He did not even flinch over a boycott of a G8 summit he had
been due to host this week in the Black Sea city of Sochi,
intended by the Western members as a protest over Russia's
annexation of the Black Sea peninsula of Crimea.
As the seven others in the Group of Eight industrial powers
prepared to meet without him in Brussels, he appeared to be
making a point by publicly scheduling his own high-level talks
on Wednesday - with officials from the energy industry which
gives Russia much of its sway in world affairs.
Putin has good reason to seek an end to the Ukraine crisis;
he has achieved key goals - both territorial and in countering
NATO - and may see little prospect now of annexing further
Russian-speaking areas of eastern and southern Ukraine.
U.S. and European Union visa bans and asset freezes on
leading officials and business figures are starting to hurt some
in the Russian elite, the economy is sliding into recession and
further sanctions could make millions of Russians - still
leading life much as usual - start to feel some impact.
But Putin is unlikely to show this at commemorations of the
1944 D-Day landings in Normandy which opened a western front
against Nazi Germany as Soviet troops advanced from the east.
Although he will hold his first face-to-face talks with
European leaders since the Ukraine crisis worsened in February,
when the country's Moscow-leaning president was overthrown, he
has no talks scheduled with Obama or with Ukraine's newly
elected replacement president, Petro Poroshenko.
But those who are due to hold talks with Putin - France's
Francois Hollande, Germany's Angela Merkel and Britain's David
Cameron - can expect plenty of bravado.
Putin, 61, has deflected every attempt to pin the blame on
Russia for the worst standoff with the West since the Cold War -
and is likely to read from much the same script in France.
In extracts of an interview with French broadcasters TF1 and
Europe 1, the former KGB spy denied Moscow was controlling
pro-Russian separatists fighting in east and southeast Ukraine.
Asked if he had tried to annex or destabilise Ukraine, he
said: "No, we have never done this and are not doing it."
Many of his actions in the past few weeks have appeared
intended to show sanctions will not isolate Russia.
These included a $400-billion, 30-year gas supply deal
signed with China while Putin was visiting Shanghai last month
and a treaty he signed last week with two other former Soviet
republics, Kazakhstan and Belarus, creating a Eurasian Economic
Union to challenge Western economic dominance.
With Obama's own domestic ratings down, European leaders
such as Cameron and Hollande facing political problems, and EU
leaders wary of imposing more sanctions because they rely on
Russia for energy supplies, Putin will feel confident in France.
The world is unlikely to see "the bored kid in the back of
the classroom" that Obama once described Putin as.
Instead, the Kremlin leader will cast himself in two of his
most comfortable roles - as the defender of national interests
and as the leader of a country which made a major contribution
and huge sacrifices in the defeat of Hitler.
Any sign of concessions over Ukraine would be likely to hit
his ratings, especially after a surge in patriotism over Crimea.
READY FOR DEAL?
Behind the scenes, though, Putin may be ready to let the
meetings in France sow the seeds of rapprochement with the West.
By reclaiming Crimea, given to Ukraine by Soviet leader
Nikita Khrushchev in 1954, and exploiting events in Ukraine to
undermine the pro-Western leadership and deter Kiev from seeking
NATO membership, Putin may have achieved all he can for now.
The West has clearly drawn a line against Russia annexing
regions of east Ukraine where separatists are fighting the
authorities and Putin has shown no overt support for their cause
in recent weeks, even pulling some troops back from the border.
Putin also signalled backing, albeit lukewarm, for the May
25 presidential election won by businessman Poroshenko.
The chances of a compromise being reached in a long-running
dispute with Kiev over the price Ukraine pays for Russian gas
and bills worth billions of dollars are also increasing.
All that would be threatened if violence in eastern Ukraine
got out of control and if Putin came under heavy public pressure
at home to send in the army, an option he appears to oppose.
Putin has other reasons to halt the violence in Ukraine, if
he still can. Even while mocking Obama at the St. Petersburg
conference, he acknowledged sanctions were having an impact.
While many of the country's political and business elite
have rallied behind his attempts to stand up to the West and
ensure Russia is treated as an equal partner, many see danger
ahead if the crisis drags on and new sanctions are imposed.
"The best-case scenario would include a peace treaty on
favourable terms," said Sergei Karaganov, head of the advisory
Council for Foreign and Defence Policy, suggesting this meant
Russia keeping Crimea and dominating east and southeast Ukraine
without it formally being part of the Russian Federation.
"One thing is for sure; it would be a tragedy if Russia does
not use the crisis in relations with the West ... to pursue
serious reforms that will speed up its development and create a
promising outlook for the nation and its people."
(Editing by Elizabeth Piper and Alastair Macdonald)