By Susan Heavey and Mark Felsenthal
WASHINGTON (Reuters) - U.S. President Barack Obama on Wednesday canceled a Moscow summit with President Vladimir Putin planned for next month in retaliation for Russia's decision to grant asylum to fugitive U.S. spy agency contractor Edward Snowden.
The move marks a stark low point in U.S.-Russian relations and raised questions about the "reset" in ties that Obama embarked on in his first term to try to gain more diplomatic cooperation, only to find that deep differences remained.
"Following a careful review begun in July, we have reached the conclusion that there is not enough recent progress in our bilateral agenda with Russia to hold a U.S.-Russia summit in early September," White House spokesman Jay Carney said in a statement.
The Russian government expressed disappointment at the decision, which means Obama will skip Moscow talks with Putin but still attend a G20 summit in St. Petersburg September 5-6. Obama will stop in Sweden on September 4 instead of visiting Moscow.
"It is clear that the decision is due to the situation around the former U.S. special services employee Snowden, which we did not create," Putin's foreign policy aide, Yuri Ushakov, told reporters in Moscow.
He said Russia's invitation for Obama to visit Russia still stood.
Beyond Snowden, however, a long list of grievances separate the two governments, topped by Russia's support for Syrian President Bashar al-Assad in Syria's civil war.
"The real issue here is that the U.S.-Russian relationship has been adrift since 2011," said Andrew Weiss, a Russian expert at the Carnegie Endowment for International Peace. "Snowden is the obvious sore point and source of great public attention. But the relationship has been sagging and unmoored for some time now."
Obama and White House officials had debated whether to go ahead with the Moscow visit to give Obama the opportunity to outline his concerns to Putin face-to-face, but decided instead to express U.S. displeasure publicly by canceling the summit altogether. A June meeting between the two leaders on the fringes of a G8 summit in Northern Ireland was testy.
The office of House of Representatives Speaker John Boehner, the top U.S. Republican who is frequently at odds with Obama, criticized the president's handling of Russia.
"The president's self-proclaimed signature foreign policy accomplishment of the first term - a reset with Russia - has just collapsed," said Boehner spokesman Brendan Buck.
'COLD WAR MENTALITY'
Snowden, a former contractor for the National Security Agency, disclosed previously secret U.S. telephone and internet surveillance programs while in Hong Kong in June and then traveled to Russia, where he holed up in Moscow's airport before being granted asylum last week.
Snowden's father, Lon Snowden, told Reuters in an interview that he was confident Putin would not change his mind and send his son back to the United States to face espionage charges.
"President Vladimir Putin has stood firm. I respect strength and I respect courage," he said. "He has stood firm against the face of intense pressure from our government and I have to believe that he will continue to stand firm."
"These games of ‘Well, I'm not going to go to this meeting,' or ‘I'm not going to go to that meeting,' ... I do not believe that President Vladimir Putin will cave to that," he said.
Obama addressed U.S. differences with Russia in an interview with Jay Leno on Monday on NBC's "Tonight" show. He said the United States and Russia have cooperated on Afghanistan and counter-terrorism, particularly after the Boston Marathon bombings last spring.
"But there have been times where they slip back into Cold War thinking and a Cold War mentality," Obama said. He said he and Putin have had "some pretty blunt exchanges and animated exchanges."
Obama received vocal support from his fellow Democrats as well as Republicans for the decision.
While supporting Obama's move, Senator John McCain, a longtime critic of Putin who has raised questions about U.S. policy toward Russia, tweeted: "Remember: Tell Vladimir 'after my election I have more flexibility.'"
It was a mocking reference to an open-microphone comment Obama made to Putin ally and Russia's then-president, Dmitry Medvedev, in 2012 in South Korea promising more cooperation in relations if the U.S. leader won re-election.
Democratic Senator Charles Schumer, who had urged Obama to cancel the talks, said the president made the right decision.
"President Putin is acting like a school-yard bully and doesn't deserve the respect a bilateral summit would have accorded him," Schumer said.
Meetings between Defense Secretary Chuck Hagel and Secretary of State John Kerry and their Russian counterparts scheduled for Friday in Washington will go ahead as planned, the White House said.
"Our cooperation on these issues remains a priority for the United States," Carney said.
(Additional reporting by Tabassum Zakaria and Susan Cornwell; Writing by Steve Holland; Editing by Alistair Bell and Paul Simao)
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