Escalating military and economic threats have succeeded in getting Russian President Vladimir Putin to accept the legitimacy of presidential elections in Ukraine scheduled by the unelected regime in Kiev for May 25.

Amid a crackdown by the Kiev regime against pro-Russian activists and armed protesters in southeastern Ukraine, Putin made a statement Wednesday praising Ukraine’s presidential election as a step “in the right direction.”

He also urged activists in southeastern Ukraine to call off the independence referendums planned for this weekend “in order that conditions necessary for dialogue are created.”

Whether this call will be heeded is another question. Speaking after talks with Didier Burkhalter, Swiss president and current chairman of the Organization for Security and Cooperation in Europe (OSCE), Putin also said he had pulled back Russian forces from the Ukraine border after “we were told constantly about concerns.” They were now “in places of regular exercises, at training grounds,” he said.

Putin is desperate to prevent the conflict with the US and its allies escalating to the point of military conflict. Not the least of his concerns is preserving the loyalty of the Russian oligarchs who provide his regime with its social base, in the face of efforts by the US to drive a wedge between the oligarchs and the Kremlin. The US and Britain have both urged a boycott of the St Petersburg International Economic Forum, with the White House asking Wall Street executives not to “send an inappropriate message” by attending.

Neither will Moscow be indifferent to the possibility that opposition to the Kiev regime can get out of the control of the Russian nationalist elements that presently lead it, assuming positions that threaten Moscow’s own oligarchs in Ukraine who once made up the Party of Regions of deposed Prime Minister Viktor Yanukovych.

Svobodnaya Pressa, a pro-Western publication, recently interviewed Boris Shmelyov of the Moscow Institute of Economics, who noted, “The dissatisfaction with the oligarchs in the Donbass and Luhansk is great… Social anger is growing, and this will lead to a conflict between the population and the owners of factories and mines.”

Aleksandr Shatilov at Moscow’s Finance University was blunter still, predicting “a war not only against Kyiv but also against the Ukrainian oligarchs.”

Such an explosive confrontation could cut across efforts to play Ukrainian- and Russian-speakers off against each other and lay the basis for a unified struggle of the working class—one that would threaten the oligarchic regime in Russia itself. This is a decisive factor in Putin’s moves to seek an accommodation with Washington, Berlin, London and Paris, which have been escalating military threats against Russia.

On Wednesday, United States Air Force General Philip Breedlove said that NATO will consider deploying troops permanently in parts of Eastern Europe due to the increased tensions between Russia and Ukraine.

“We need to look at our responsiveness, our readiness and then our positioning of forces to be able to address this new paradigm that we have seen demonstrated in Crimea and now on the eastern border of Ukraine,” said Breedlove, who currently heads the alliance as NATO supreme allied commander Europe and commander of the US European Command.

Breedlove’s statement came after he admitted earlier this week that Russia is unlikely to send troops into eastern Ukraine. This gives the lie to his claim that NATO’s stationing of troops in Poland, Romania and the Baltic states, which he now suggests is to be a permanent arrangement, is “very easily discerned as being defensive in nature.”

NATO leaders are due to hold a summit in Wales in early September, which is expected to decide to bring a number of Eastern European states into the alliance.

Breedlove made a call for the European powers and the US to increase their military spending. “In our own country now, and I think in every other NATO nation, based on the paradigm that we see that Russia has presented in Crimea and on the border of Ukraine…we are all going to have to reevaluate some of the decisions that have been made,” he said.

Paralleling Breedlove’s statement, US Secretary of State John Kerry denounced moves by pro-Russian separatist groups in eastern Ukraine to organise a referendum on Sunday, May 11 as an attempt by Moscow to annex more Ukrainian territory.

“This is really the Crimea playbook all over again,” he declared. “We flatly reject this illegal effort to further divide Ukraine.”

Speaking in Washington Tuesday alongside Catherine Ashton, high representative of the European Union’s Union for Foreign Affairs & Security Policy, Kerry described the move towards a referendum on autonomy in the east as a means of cutting across the May 25 elections.

In a BBC interview earlier, British Foreign Secretary William Hague also lent his support to the May 25 elections. Ukrainians “cannot be bullied out of having their elections by disorder that is deliberately fomented and coordinated from another country, in this instance Russia,” Hague said.

Both President Barack Obama and German Chancellor Angela Merkel said last week that any effort by Russia to thwart the elections would lead to the imposition of harsher sanctions directed against entire sectors of the Russian economy such as defence, finance and energy.

Victoria Nuland, assistant secretary of state for European and Eurasian affairs at the US State Department, told the Senate Foreign Relations Committee Wednesday that Russian recognition of a separatist referendum could also be a trigger for sanctions.

Hague, speaking from Kiev, made identical threats. For a second round of international talks on Ukraine to be worthwhile, he said, Russia must accept the legitimacy of the May 25 elections.

“Russia has illegally annexed part of Ukraine’s territory and is actively creating unrest in other parts of the country,” he said. “I think they want to stop you from holding the elections. That is the objective, and that reflects a fear of the power of democracy.”

Russia had challenged the legitimacy of the Ukrainian elections and urged the participation of pro-Russian separatist forces in the east in any further discussions. Foreign Minister Sergei Lavrov said earlier this week that it would be “unusual” to hold an election in Ukraine while the army was being deployed. “Scheduling an election during a time when the army is being used against a part of the population is not conventional—it’s not Afghanistan,” Lavrov said.

But for the Western powers, it is considered politically imperative for the elections to be held to reinforce the claim that the government of oligarchs and fascists imposed by the February putsch has a democratic mandate to rule.

On Tuesday, German Foreign Minister Frank-Walter Steinmeier gave an interview with the newspapers El Pais, Le Monde, La Repubblica and Gazeta Wyborcza in which he warned that Ukraine was “just a few steps away from a military confrontation.”

He called for all sides in the conflict to hold a second diplomatic conference in Geneva in order to agree to hold presidential elections that would give Ukraine’s new leadership “democratic legitimacy.”

French President Francois Hollande also warned there would be “chaos and the risk of civil war” if the election did not take place.