In a burgeoning controversy surrounding complaints from the Obama administration about a cyberattack against America's political system, the White House on Thursday unleashed a string of sanctions and coupled them with an order that 35 Russians be expelled.
Putin on Friday, however, said that Moscow would not be ejecting American diplomats in response to what he described as "provocation aimed at further undermining Russian-American relations."
"The Russian diplomats returning home will spend the New Year holidays with their relatives and dear ones," Putin said in a statement published on the Kremlin website. "We will not create problems for U.S. diplomats. We will not expel anybody."
The diplomatic confrontation between Washington and Moscow, which had been festering even before the Nov. 8 presidential election elevated Donald Trump to the presidency, puts pressure on the billionaire businessman not to let Russia off the hook after he takes office on Jan. 20.
Russia's government had threatened retaliation, and it continues to deny U.S. accusations that it hacked and stole emails to try to help Trump win.
Trump said the U.S. should move on, but in a sign he was no longer totally brushing off the allegations, he plans to meet with U.S. intelligence leaders next week to learn more.
Putin's statement came hours after Foreign Minister Sergey Lavrov suggested a tit-for-tat expulsion in televised remarks. Another suggestion is to bar American diplomats from using their summer retreat on the outskirts of Moscow and a warehouse south of Moscow.
But in his statement published on Friday Putin said that Russia will not bar the diplomats' "families and their children from using their favorite places of recreation during the holidays."
"Moreover, I am inviting all children of U.S. diplomats accredited in Russia to the New Year and Christmas parties at the Kremlin," he said.
Russians celebrate both Christmas and New Year's Eve but New Year's eve has been the main holiday in Russia since Soviet times.
President Barack Obama on Thursday ordered sanctions against the GRU and FSB, the Russian intelligence agencies the U.S. said were involved in the hacking attacks. In an elaborately coordinated response by at least five federal agencies, the Obama administration also sought to expose Russia's cyber tactics with a detailed technical report and hinted it might still launch a covert counterattack.
"All Americans should be alarmed by Russia's actions," said Obama, who was vacationing in Hawaii.
Yet the sanctions could easily be pulled back by Trump, who has insisted that Obama and Democrats are merely attempting to delegitimize his election.
Prime Minister Dmitry Medvedev charged earlier on Friday that Washington has become immersed in "anti-Russian death throes."
Medvedev, who focused on improving U.S.-Russia ties when he was president from 2008-2012, called the latest diplomatic breach "sad" in a Twitter post.
U.S. relations with Russia have suffered during Obama's years in office as he and Putin tussled over Ukraine, Edward Snowden and Russia's support for Syrian President Bashar Assad. Maria Zakharova, a Russian foreign ministry spokeswoman, took to Facebook to call the Obama administration "a group of foreign policy losers, angry and ignorant."
As part of the punishment leveled against Moscow, the U.S. kicked out 35 Russian diplomats, in response to Russia's harassment of U.S. diplomats. They also shut down Russian recreational compounds in New York and Maryland that U.S. officials said were being used for intelligence.
It was the strongest action the Obama administration has taken to date to retaliate for a cyberattack, and more comprehensive than last year's sanctions on North Korea after it hacked Sony Pictures Entertainment. The new penalties add to existing U.S. sanctions over Russia's annexation of Crimea and support for separatists in eastern Ukraine.
Senior Obama administration officials said that even with the penalties, the U.S. had reason to believe Russia would keep hacking other nations' elections and might well try to hack American elections again in 2018 or 2020. The officials briefed reporters on a conference call on condition of anonymity.
Though the FBI and Department of Homeland Security issued a joint report on "Russian malicious cyber activity" it still has not released a broader report Obama has promised detailing Russia's efforts to interfere with U.S. elections.
The report has been eagerly anticipated by those hoping to make it politically untenable for Trump to continue questioning whether Russia was really involved.
The move puts Trump in the position of having to decide whether to roll back the measures once in office, and U.S. officials acknowledged that Trump could use his executive authorities to do so. Still, they suggested that building the case against Russia now would make it harder for Trump to justify easing up. Putin mentioned on Friday that Russia will be taking steps in the bilateral relations depending on what President-elect Donald Trump will do once he's sworn in.