President Vladimir Putin has condemned the US for imposing sanctions and expelling Russian diplomats amid allegations of Russian meddling in the American presidential election, but said no US diplomats will be ousted in reprisal.
In a growing controversy surrounding complaints from President Barack Obama's administration about a cyberattack against America's political system, the White House unleashed a string of sanctions and coupled them with an order that 35 Russians be expelled.
Mr Putin said on Friday that Moscow would not eject American diplomats in response to what he described as "provocation aimed at further undermining Russian-American relations" less than a month before Donald Trump takes over the White House.
The decision came as a surprise, as tit-for-tat expulsions are common diplomatic practice and Russian foreign minister Sergey Lavrov had suggested hours before Mr Putin's announcement that Moscow would oust 31 American diplomats.
"The Russian diplomats returning home will spend the new year holidays with their relatives and dear ones," Mr Putin said in a statement on the Kremlin website. "We will not create problems for US diplomats. We will not expel anybody."
He added: "Moreover, I am inviting all children of US diplomats accredited in Russia to the new year and Christmas parties at the Kremlin."
Dmitry Trenin, director of the Carnegie Moscow Centre, said on Twitter: "Putin's asymmetric response to Obama's new sanctions is an investment in the incoming Trump presidency. A different kind of tit-for-tat: even as Obama seeks to constrain Trump in his Russia policy, Putin counters that step with a show of magnanimity."
The diplomatic confrontation between Washington and Moscow, which had been festering even before Mr Trump won the November 8 presidential election, puts pressure on the billionaire businessman not to let Russia off the hook after he takes office on January 20.
Russia's government had threatened retaliation, and it continues to deny US accusations that it hacked and stole emails to try to help Mr Trump win.
The president-elect praised Mr Putin for holding off on retaliation, tweeting: "Great move on delay."
He added: "I always knew he was very smart!"
Mr Trump has been slow to criticise Mr Putin and has questioned US intelligence linking Russia to the hacking.
He is planning to meet US intelligence officials next week, but has said it is time for the country to move on.
Mr Obama on Thursday ordered sanctions against the GRU and FSB, the Russian intelligence agencies the US said were involved in the hacking attacks. In an elaborately co-ordinated response by at least five federal agencies, the Obama administration also sought to expose Russia's cyber tactics with a detailed technical report and hinted it might still launch a covert counter attack.
"All Americans should be alarmed by Russia's actions," said Mr Obama.
Yet the sanctions could easily be pulled back by Mr Trump, who has insisted that Mr Obama and Democrats are merely attempting to de-legitimise his election.
Russian prime minister Dmitry Medvedev said earlier on Friday that Washington has become immersed in "anti-Russian death throes".
Mr Medvedev, who focused on improving US-Russia ties when he was president from 2008 to 2012, called the latest diplomatic breach "sad" in a Twitter post.