By Steve Holland and Arshad Mohammed
WASHINGTON (Reuters) - President Barack Obama raised U.S. concerns directly with Russian President Vladimir Putin on Friday over Moscow's handling of former U.S. spy agency contractor Edward Snowden, but there was no sign of a breakthrough on Washington's demand that Russia expel him.
Obama and Putin spoke by phone in a discussion that White House spokesman Jay Carney said earlier would largely be about Snowden, who is wanted in the United States for disclosing secret surveillance programs. Carney had accused Russia of providing Snowden a "propaganda platform" to air his complaints about the United States.
A White House statement about the Obama-Putin call offered no indication that Putin was prepared to send Snowden back to the United States.
"The two leaders noted the importance of U.S.-Russian bilateral relations and discussed a range of security and bilateral issues, including the status of Mr. Edward Snowden and cooperation on counter-terrorism in the lead-up to the Sochi Winter Olympics," the statement said. The Sochi Olympics are in 2014.
The high-level contact came during intense diplomatic wrangling over Snowden, who has been holed up in a transit area at a Moscow airport since arriving from Hong Kong on June 23. He is seeking asylum in either Russia or in one of three countries in Latin American that have offered to take him: Venezuela, Nicaragua and Bolivia.
Snowden, 30, is wanted on espionage charges, accused of taking records about secret U.S. surveillance of internet and phone traffic and releasing them to the news media. The disclosures have raised Americans' concerns about domestic spying and strained relations with some U.S. allies.
Putin has so far refused all U.S. entreaties to return Snowden to the United States.
'DOING THE RIGHT THING'
The case presents Putin with an international headache as he prepares to host Obama and other world leaders at a G20 summit in St. Petersburg.
"I can't imagine Mr. Putin wants this thing hanging around as it is necessary to get ready for the summit in September," said James Collins, a former U.S. ambassador to Russia who is director of the Russia and Eurasian Program at the Carnegie Endowment for International Peace.
State Department spokeswoman Jen Psaki said it would raise concerns in the U.S.-Russian relationship if Moscow were to accept an asylum request from Snowden.
"However we are not at that point yet. They still have the opportunity to do the right thing and return Mr. Snowden to the United States and that's what our hope is," she told reporters.
The White House and the State Department complained that the Russian government had permitted Snowden to meet with human rights groups at the Moscow airport. Snowden told activists on Friday he was seeking temporary asylum in Russia and had no regrets about spilling U.S. spy secrets.
"Providing a propaganda platform for Mr. Snowden runs counter to the Russian government's previous declarations of Russia's neutrality," Carney said.
He said it was "also incompatible with Russian assurances that they do not want Mr. Snowden to further damage U.S. interests."
In Moscow, Putin's spokesman repeated earlier conditions that Snowden should stop harming the interests of the United States if he wants asylum.
The drama has tested U.S.-Russian relations, although no lasting damage has been apparent so far.
"My sense is that both Washington and Moscow have lots of experience in compartmentalizing these kinds of issues when you've got spies or … defectors," said Steven Pifer, a Russia expert who is director of the Brookings Institution's Arms Control Initiative. "They can fence that off from the rest of the relationship."
(Additional reporting by Deborah Charles; Editing by Peter Cooney)