The Russian government has demanded that USAID, the aid and development arm of the US government, close its entire mission in the country. The move, which comes after increasingly hawkish rhetoric over the alleged nefarious aims of the US in Russia from President Vladimir Putin and other top officials in recent months, is likely to result in 13 US diplomats being forced to leave Russia.
"The Russian government has decided that they want the activities of USAID to cease in Russia," said a senior US administration official yesterday. "We have responded to that decision today, but that doesn't mean that we have changed our policy of supporting the kinds of activities that USAID has been supporting, both in the sphere of health and the environment, and support for civil society."
USAID had planned to spend a total of around $50m (£31m) in Russia this year, of which almost 60 percent was earmarked for projects involving democracy, civil society and human rights. It funded Golos, the only real election monitoring body in the country, as well as organisations such as Memorial, which researches Soviet-era crimes and current human rights abuses.
A senior US administration official said that the news was broken by Russian officials to Secretary of State Hillary Clinton at a summit in Vladivostok last week. Yesterday, Ms Clinton wrote to her Russian counterpart to say that the US would comply with the demand, though it is unclear if the Americans will comply by what is believed to be a demand from the Russians to cease all activities of USAID by 1 October.
A US government official confirmed the US Embassy in Moscow hosts 13 American diplomats working for USAID, as well as employing 60 Russian staff. It was also unclear whether the US will plan reciprocal moves. However, the US official made it clear that Washington will attempt to continue funding the organisations it currently does within Russia, saying that the Obama administration "will be looking for ways to advance our old foreign policy objectives using new means".
In an election season in which Republican candidate Mitt Romney has already referred to Russia as an "enemy", President Barack Obama will be under pressure to formulate a firm response. There has been criticism of the decision to close USAID without a fight.
"For USAID to up and leave Russia simply because Vladimir Putin asked us to do so is a betrayal of our decades-long support not only for grassroots human rights defenders, civil society, and development of the rule of law in Russia but also for assistance in areas like improving public health and the environment," said David Kramer, president of the organisation Freedom House. He said the decision showed that the US was "caving in to a repressive government".
When Mr Obama first came to office, he championed the "Reset" policy with Russia, designed to usher in a new era of cordial relations. But in the past year, there has been a sharp deterioration, with US Ambassador Michael McFaul subject to harassment from Kremlin-linked journalists and youth groups, and Mr Putin claiming on television that anti-government protesters who came to the street to rally against his rule were paid by the US State Department.
Mr Putin's spokesman Dmitry Peskov told Russian news agencies last night that he had no knowledge of the decision to close USAID.