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* Putin says Snowden in transit area at airport, free to go

* Russia and China dismiss U.S. criticism

* U.S. says Russia has clear legal basis to expel Snowden

* White House says China relations have been damaged

(Adds U.S. comments on Russia’s stance)

By Alexei Anishchuk and Thomas Grove

MOSCOW/NAANTALI, Finland, June 25 (Reuters) – President

Vladimir Putin confirmed on Tuesday a former U.S. spy agency

contractor sought by the United States was in the transit area

of a Moscow airport but ruled out handing him over to

Washington, dismissing U.S. criticisms as “ravings and rubbish”.

In his first public comments since Edward Snowden flew in on

Sunday, Putin appeared to make light of the diplomatic uproar

over the fugitive, whose flight from U.S. authorities is

becoming a growing embarrassment for President Barack Obama.

Asked by a journalist about the affair, he smiled fleetingly.

“I myself would prefer not to deal with these issues. It’s

like shearing a piglet: there’s a lot of squealing, but there’s

little wool,” he told a news conference in Finland.

Snowden, who worked as a systems administrator at a U.S.

National Security Agency facility in Hawaii, is facing espionage

charges from the United States after leaking details about

secret U.S. surveillance programs to the news media.

Putin’s refusal to hand back Snowden risked deepening a rift

with the United States that has also sucked in China and

threatens relations between countries that may be essential in

settling global conflicts including the Syrian war.

Washington has gone to great lengths to try to ensure

Snowden has nowhere to go to seek refuge. But Putin said Russia

had no extradition treaty with the United States and suggested

Moscow would expel Snowden only if he were a criminal.

“He has not crossed the state’s border, and therefore does

not need a visa. And any accusations against Russia (of aiding

him) are ravings and rubbish,” Putin said in the garden of a

presidential residence, with Finnish President Sauli Niinisto

beside him.

Shortly after Putin’s comments, the White House once again

urged Russia to immediately expel Snowden and said Moscow had a

“clear legal basis” to do so based on the basis of his revoked

passport and the outstanding charges against him.

“Accordingly, we are asking the Russian government to take

action to expel Mr. Snowden without delay and to build upon the

strong law enforcement cooperation we have had, particularly

since the Boston Marathon bombing,” said White House National

Security Council spokeswoman Caitlin Hayden.

Hayden said the United States agreed with Putin’s comment in

Finland that it did not want the incident to negatively impact

U.S.-Russia relations, but members of the U.S. Congress

denounced Putin’s stance and said it would have an inevitable

impact.

“It should cause a profound reevaluation on our relationship

with Russia and with Vladimir Putin, something that a lot of us

have been saying for a long time,” Senator John McCain, the 2008

Republican presidential contender, told reporters.

Hours earlier, U.S. Secretary of State John Kerry had

cautiously questioned the Russian approach.

“It is accurate there is not an extradition treaty between

Russia and the United States, but there are standards of

behavior between sovereign nations,” Kerry said, in Jeddah.

Snowden has applied for asylum in Ecuador but Quito has said

it is still considering the application and the United States is

trying to persuade the governments of countries where he might

head to hand him over. His plans remain unclear.

FREE TO LEAVE

Putin said the 30-year-old Snowden was in the transit area

of Moscow’s Sheremetyevo airport and, not having gone through

passport control, was free to leave.

“The sooner he chooses his final destination, the better it

would be for us and for himself,” Putin said.

There has been speculation in the Russian media that Snowden

may be talking to the FSB, the Russian security service, and

could be involved in a prisoner swap. Putin said Russian

security agencies “never worked with … Snowden and are not

working with him today”.

The U.S. State Department said diplomats and Justice

Department officials were talking to Russia, suggesting they

sought a deal to secure his return to face espionage charges.

“We’ve asked the Russian government to consider all

potential options to expel him to return to the United States,

and we’re going to continue those discussions in law enforcement

and diplomatic channels,” State Department spokesman Patrick

Ventrell told reporters.

Snowden left Hong Kong for Moscow on Sunday, and the

WikiLeaks anti-secrecy group said he was headed for Ecuador.

Journalists camped out at the airport have not spotted him

inside, or leaving, the transit area. He has not registered at a

hotel in the transit zone, hotel sources say.

A receptionist at the Capsule Hotel “Air Express”, a complex

of 47 basic rooms furnished predominantly with grey carpets and

grey walls, said Snowden had turned up on Sunday, looked at the

price list and then left.

U.S. officials admonished Beijing and Moscow on Monday for

allowing Snowden to escape their clutches but the United States’

partners on the U.N. Security Council, already at odds with

Washington over the conflict in Syria, hit back indignantly.

“The United States’ criticism of China’s central government

is baseless. China absolutely cannot accept it,” Foreign

Ministry spokeswoman Hua Chunying said in Beijing, also

dismissing U.S. criticism of Hong Kong, a Chinese territory, for

letting Snowden leave.

WIKILEAKS

Putin also went on to praise WikiLeaks founder Julian

Assange, who is also a fugitive from U.S. justice, and

questioned whether he or Snowden should be treated as criminals.

“Ask yourself: should such people be handed over to be

imprisoned or not?” said Putin, who last week was smarting at

being isolated over Syria at a summit of the G8 industrial

powers and sees Washington as an overzealous global policeman.

Advisers to Assange declined to comment on the situation.

Fallout from a protracted wrangle over Snowden could be

far-reaching, as Russia, the United States and China hold veto

powers at the U.N. Security Council and their broad agreement

could be vital to any settlement in Syria.

International mediator Lakhdar Brahimi said on Tuesday he

was pessimistic an international conference on Syria could take

place in July as hoped and urged Russia and the United States to

help contain a conflict which has killed almost 100,000 people.

The Sheremetyevo airport transit area is Russian sovereign

territory, but Russia says that in staying there Snowden has not

formally entered the country. Going through passport control

might implicate Putin in helping a fugitive.

Snowden is traveling on a refugee document of passage

provided by Ecuador, WikiLeaks said.

U.S. officials said intelligence agencies were concerned they

did not know how much sensitive material Snowden had and that he

may have taken more documents than initially estimated which

could get into the hands of foreign intelligence.

(Additional reporting Gabriela Baczynska and Lidia Kelly in

Moscow, Alexandra Valencia in Quito, Mark Felsenthal, Paul

Eckert, Rachelle Younglai, Laura MacInnis and Mark Hosenball in

Washington and Katya Golubkova in Havana; Writing by Elizabeth

Piper and Timothy Heritage; Editing by Ralph Boulton, Karey Van

Hall and Tim Dobbyn)