By Andrew Osborn
MOSCOW (Reuters) -Russia on Friday asked 10 U.S. diplomats to leave the country in retaliation for Washington's expulsion of the same number of Russian diplomats over alleged malign activity and suggested the U.S. ambassador return home for consultations.
The measures, part of a broader retaliatory package, were approved by President Vladimir Putin, as a response to an array of U.S. government sanctions imposed on Moscow a day earlier, including curbs to its sovereign debt market.
Though Moscow responded swiftly and with measures designed to hurt U.S. interests and shrink its diplomatic footprint, it left the door open for dialogue and did not kill off the idea, proposed by President Joe Biden, of a Putin-Biden summit.
"Now is the time for the United States to demonstrate good sense and to turn its back on a confrontational course," the Russian foreign ministry said in a statement.
"Otherwise an array of painful decisions for the American side will be implemented."
It said it had options to hurt the United States economically and to shrink its diplomatic corps in Russia to just 300 people, but was holding fire for now.
Russia-U.S. ties slumped to a new post-Cold War low last month after Biden said he thought Putin was a "killer" and Moscow recalled its ambassador to Washington for consultations. The envoy has still not returned almost a month later.
The Russian foreign ministry said John Sullivan, the U.S. ambassador to Russia, should return home for consultations too.
Washington said its own sanctions were payback for Russia interfering in last year's U.S. election, cyber hacking, bullying Ukraine and other alleged malign actions.
Russia denies all the U.S. allegations.
The Russian response on Friday was "escalatory and regrettable," a State Department representative said by email.
"It is not in our interest to get into an escalatory cycle, but we reserve the right to respond to any Russian retaliation against the United States."
RETALIATION
Moscow's response was mostly tit-for-tat.
It expelled 10 U.S. diplomats and banned eight high-ranking current and former U.S. officials from entering Russia for their contribution to what it called Washington's "anti-Russian course".
Those banned included FBI Director Christopher Wray, Director of National Intelligence Avril Haines, U.S. Attorney General Merrick Garland, and Secretary of Homeland Security Alejandro Mayorkas.
Others to face an entry ban were Director of the Federal Bureau of Prisons Michael Carvajal, Director of the Domestic Policy Council Susan Rice, John Bolton, the former U.S. National Security Advisor, and ex-CIA head Robert James Woolsey.
The Russian foreign ministry said it would also end the activity in Russia of U.S. funds and NGOs which it believes interfere in the country's internal affairs, while Sergei Lavrov, the foreign minister, spoke of potential "painful" measures aimed at U.S. business in Russia.
Other measures were designed to make it harder for the U.S. embassy to staff itself.
Biden, after imposing sanctions on Moscow, had called for a de-escalation in tensions and had said it was vital the White House and Kremlin kept communication lines open.
He has also proposed that he and Putin meet for a summit.
"(Putin) has repeatedly said we're ready to develop dialogue as much as our counterparts are ready to do so. In this sense it is probably positive that the views of the two heads of state coincide," Dmitry Peskov, Putin's spokesman, told reporters before the Russian counter sanctions were unveiled.
"Their views categorically do not coincide when it comes to creating mutually beneficial relations and taking each other's interests into account," Peskov added, however.
The foreign ministry said Biden's Putin summit proposal had been initially well received, but was now being studied in the context of unfolding events.
"We would like to avoid a further escalation with the United States. We are ready for calm and professional dialogue," the ministry said.
"However the reality is that we hear one thing from Washington and in practice we see something completely different. There should be no doubt - not a single sanctions 'wave' will remain unpunished."
The Kremlin says Putin has yet to decide whether he will take part in a U.S.-led climate summit next week.
It has also said it would be hard to quickly organise a Putin-Biden summit.