Russia angry as U.S. seeks to limit spy fallout

MOSCOW/WASHINGTON,  (Reuters) – Moscow yesterday  angrily rejected allegations by Washington that it had cracked  an undercover Russian spy ring but U.S. officials said the Cold  War-style cloak and dagger saga would not undermine a thaw in  relations.

Prime Minister Vladimir Putin said U.S. police who arrested  10 suspected spies in four cities in the eastern the United  States on Sunday had gone “out of control”.

“I hope that all the positive gains that have been achieved  in our relationship will not be damaged by the recent event,”  Putin told visiting ex-U.S. President Bill Clinton in Moscow.

An 11th suspect was arrested in Cyprus yesterday and freed  on bail, police on the Mediterranean island said. The Russian  Foreign Ministry said those arrested in the United States were  Russians and the charges against them were baseless.

In Washington, administration officials said the case would  not set back President Barack Obama’s drive to “reset” ties  with Russia, one of the signature diplomatic initiatives of his  administration.

“I think we have made a new start to working together on  things like in the United Nations dealing with North Korea and  Iran,” White House spokesman Robert Gibbs said. “I do not think  that this will affect those relations.”

The suspects, some of whom lived quiet lives in American  suburbia for years, were accused of gathering information  ranging from data on high-penetration nuclear warhead research  programs to background on CIA job applicants.