By Matt Spetalnick and Susan Cornwell
WASHINGTON (Reuters) - After causing weeks of embarrassment for the U.S. intelligence community, the Edward Snowden saga has now cast a shadow over international efforts to end the Syrian civil war and deal with Iran, and could also undermine White House hopes for a nuclear arms reduction deal.
Russia's decision on Thursday to grant asylum to Snowden threatens to send already-strained relations between the United States and Russia to the lowest point in years and further complicate efforts to work out geopolitical challenges.
With Russia's sheltering of the former U.S. spy agency contractor seen as a slap in the face to President Barack Obama, the White House is weighing whether he should now back out of a Moscow summit in early September, in a direct snub to Russian President Vladimir Putin.
The fact that Washington is even issuing such a threat underscores the potentially damaging repercussions for any prospects of reconciling the two former Cold War rivals on thorny global issues that go well beyond the fate of a single 30-year-old hacker trying to evade U.S. prosecution, analysts say.
The two men are highly unlikely to sort out all their many differences even if the summit goes ahead as planned. They have bad personal chemistry and previous meetings have been awkward and unproductive.
While the Kremlin played down any bilateral friction, Obama administration officials and top lawmakers suggested it would not be business as usual now that Russia has given Snowden a year's asylum and allowed him to leave Moscow's airport after more than five weeks in limbo.
"The political climate in Washington on Russia is poisonous," said Andrew Weiss, a former Russia adviser to President Bill Clinton. "There was already plenty of anger toward Russia brewing in the political establishment. Snowden is an accelerant."
The long list of U.S. differences with Russia is topped by Moscow's support for President Bashar al-Assad in Syria's civil war even as Obama has led international calls for him to step aside.
Worsened ties between the United States and Russia could now make it even more difficult for them to cooperate in arranging Syrian peace talks aimed at a political solution.
With Iran about to install newly elected President Hassan Rouhani, who has signaled greater willingness to negotiate over its disputed nuclear program, there are also concerns in Washington that Russia may break ranks with Western countries seeking to curb Tehran's nuclear ambitions through tough sanctions.
DEEPLY AT ODDS
On human rights, the United States and Russia remain deeply at odds. The White House has been mostly measured in its criticism of the Kremlin's crackdown on opponents, but it may now feel freer to be more outspoken in the aftermath of the Snowden decision.
For his part, Putin has used Washington's pursuit of Snowden, who faces U.S. espionage charges for revealing National Security Agency surveillance secrets, to accuse the Obama administration of hypocrisy for chiding him on human rights.
Tensions over Snowden are also likely to make it harder for Obama to push forward on negotiations for a new nuclear arms reduction deal with Russia, a proposal he issued in a speech in Berlin in June and which he hopes to make part of his legacy. Russia so far has shown little appetite for the idea.
Though counterterrorism has emerged as a rare bright spot in relations, especially in the aftermath of April's Boston Marathon bombings, this too could suffer. White House spokesman Jay Carney said pointedly that the Russian decision on Snowden "undermines a long history of law enforcement cooperation."
Even before Snowden, the consensus in Washington and Moscow was that the "reset" in ties with Russia that the newly elected Obama touted in 2009 had run its course.
But Obama's critics say the return to the presidency of Putin and his anti-U.S. rhetoric has shown that the U.S. leader was naive to put his faith in Moscow. They point to the Snowden decision as a rebuke that calls for a tough response and say it is one more foreign policy failure at a time when Obama struggles to assert influence in crises sweeping Syria and Egypt.
"Unless we want to remain in the position of someone who is insulted and demeaned, sooner or later those in Washington who want Russia to pay the price for this chain of insults will prevail," said Ariel Cohen, a senior research fellow for Russian and Eurasian studies at the conservative Heritage Foundation.
The Obama administration must now decide how far it wants to go in demonstrating its anger. But its options may be limited, especially at a time when Washington needs continued use of Russian territory for its withdrawal from Afghanistan and still hopes for Russian diplomatic cooperation against Iran.
Obama's first major decision is whether to go ahead with a one-on-one summit with Putin in Moscow next month.
Scrapping the meeting might not antagonize Russia too badly. But it would be a different story if Obama decides not to attend the Putin-hosted summit of G20 leaders in St. Petersburg shortly afterwards - something considered unlikely.
Some U.S. lawmakers have called for a U.S. boycott of the Winter Olympics that Russia will host in Sochi next February, but that is also seen as a step too far for the White House.
Despite increased strains, no one is predicting a rupture in relations between Washington and Moscow. Many believe the two sides will go through a period of drift but ultimately find a way to "compartmentalize" their disagreements and move on.
"Neither side wants an antagonistic relationship. That would just make the world a more dangerous place," said James Goldgeier, dean of the School of International Service at American University in Washington.
(Editing by Alistair Bell and Eric Walsh)