Angry Putin issues warning to US over damaged relations

Ties between Russia and the United States were placed under an unexpected new strain yesterday as Vladimir Putin reacted angrily to the arrest of a ring of 10 alleged under-cover agents, telling the US: "Your police have let themselves go."

The suspects are accused of posing for years as ordinary Americans while seeking to infiltrate "policy-making circles" in Washington and pass intelligence back to Russia.

Yesterday an 11th suspect was arrested at Larnaca airport in Cyprus. Described by American prosecutors as a money-man for other members of the ring, he had been using the name Christopher Metsos and professed to be of Canadian citizenship. He was preparing to board a plane for Budapest when he was picked up.

Yesterday, the Russian Prime Minister, Vladimir Putin, told the former US president Bill Clinton, who was in Moscow to speak at an investment conference: "Your police have let themselves go. They are putting people to prison. We hope that positive things achieved in recent years will be preserved. We also hope that people who value good relations understand that." The Russian Foreign Ministry branded the arrests "baseless and improper", but acknowledged last night that "some" of those arrested were of Russian nationality.

The round-up came immediately after a visit by President Dmitry Medvedev to the US, which had been hailed as further evidence of the successful "re-setting" of relations. He stopped in Silicon Valley and met President Obama.

The Obama administration yesterday sought to lessen the diplomatic fallout. "We were not going to forgo the opportunity to pursue our common interests because there are things we disagreed on," Phil Gordon, the top Russia policy official at the State Department, told reporters. "I think you should see this spying issue in that context."

The US Justice Department later said that the swoop had been triggered by the fact that one of the suspects was planning to leave the US and had to be taken into custody before he left. None of those in custody was charged directly with espionage, but rather with operating as intelligence gatherers on US soil without declaring themselves. In Cold War parlance they would be described as "illegals" with no direct connection to diplomats and thus no legal immunity.

References to fake British and Irish passports sounded alarm bells in London and Dublin. "We are aware that the indictments state that one of the accused has travelled on a UK passport," the Foreign Office said. "We will be investigating this fully with the US. We are establishing the facts."

The scale of the purported operation was a surprise to veterans of the Cold War. "The magnitude, and the fact that so many illegals were involved, was a shock to me," Oleg Kalugin, a former KGB general, who spied in the US in the 1960s and 1970s, told The New York Times. "It's a return to the old days, but even in the worst years of the Cold War, I think there were no more than 10 illegals in the US, probably fewer."

Despite Mr Putin's statement, there was no word of possible Russian retaliation yesterday. Some in Moscow speculated that conservative figures in the US were behind the round-up in an effort to up-end Mr Obama's courting of President Medvedev.

"Why these arrests happened just days after the Russian and American presidents met is understandable. Barack Obama has serious enemies among the Republicans, [who] have always been strongly represented in the American secret services," Mikhail Lyubimov, a former intelligence officer, told a Russian tabloid. But Sergei Markov, an MP from the ruling United Russia party, said the Americans had acted "properly" by waiting until Mr Medvedev had left before they swooped.

A son of a couple arrested in Yonkers, just north of New York City, said the charges against his mother, Vicky Palaez, a leading Spanish-language journalist in the city, and his step-father, Juan Lazaro, were "preposterous" and not believable. "We always had a very simple lifestyle," Waldo Mariscal, an architect, insisted.