By Steve Gutterman

MOSCOW, May 30 (Reuters) - Vladimir Putin resumed the Russian presidency declaring a moral right to promote Kremlin power on the world stage. A massacre in Syria could now press him towards abandoning his closest Middle Eastern ally, but any backdown would have to be carefully engineered to protect Russian interests and save face.

International envoy Kofi Annan said the massacre of 108 people, half of them children, in the town of Houla showed Syria at a 'tipping point'. He urged President Bashar al-Assad to halt the killing that the West blames squarely on his troops.

"I think there may be changes in Russia's position, because Russia has lost its ability to manage the situation," said Fyodor Lukyanov, editor of the journal Russia in Global Affairs and a foreign policy expert with Kremlin connections.

With Western and Arab League pressure on both Syria and Russia after the Houla killings, he said, a Russian shift "is more likely than before - but there is no decision yet."

Foreign Minister Sergei Lavrov, speaking after talks with British foreign minister William Hague, blamed both sides, government and rebels, for the Houla massacre; but he appeared to move a degree towards Western and Arab League positions in acknowledging Assad bears overall responsibility for security.

Putin flies to Berlin and Paris this week for talks he had hoped would be led by economic projects to modernise Russian industry. German Chancellor Angela Merkel and French President Francois Hollande may have other ideas.

"He did not want to talk about Syria, where Russian influence is overestimated," said German political scientist Alexander Rahr. "If the West decides Putin is defending Assad, that will spoil his chances to develop partnership with Germany and France, which are very important for him."

Russia has helped Assad play for time through more than a year of bloodshed in which the United Nations says government forces have killed more than 9,000 civilians. The government says thousands of police have been killed by 'terrorists'.

Putin spokesman Dmitry Peskov told Reuters nobody had "unambiguous information" about Houla. "One should not give in to emotion at such an important moment."

"Russia is a country with a consistent foreign policy and pressure is hardly appropriate."


HOMS

With China, Russia vetoed two Western-backed Security Council resolutions condemning the government, including one in February that backed an Arab League call for Assad to cede power.

The context of that veto might suggest a Russia inured to such atrocities or at least strongly wedded to the idea that Assad's forces were no more to blame than 'terrorist' rebels for the violence. The vote came shortly after hundreds of people were reported killed by government shelling of the city of Homs.

Houla, however, is arguably different.

The massacre took place with United Nations monitors present in the country. Details emerged quickly and in graphic form. The U.N. said whole families had been shot dead in their homes while houses suffered intense artillery bombardment.

Photographs of the bodies of children appeared on the front pages of newspapers across the Western world. In Russia, the coverage of the massacre was less prominent.

Wednesday's Komsomolskaya Pravda, a mass circulation newspaper that has been used to shape public opinion, carried a picture of a blue-helmeted UN observer and a line of bodies wrapped in sheets, the head and chest of one boy visible.

"The West has begun war in Syria with the Belgrade bombing scenario", the headline read, in reference to the 1999 NATO bombing of Belgrade intended to stop Serbian action against the breakaway province of Kosovo.

The story suggested the West was using the Houla massacre as a pretext for military intervention in Syria. Kommersant and Izvestia newspapers, however, allowed that Russia was now under stronger pressure to change its stance.

The diplomatic pressure to help press Assad to go, or to engineer his exit, could move Moscow from its policy of awaiting an ebbing of the violence.

"I think we're beyond this point now, we've passed this point with the massacre," said Vladimir Frolov, a Kremlin-connected foreign policy expert and president of LEFF Group, a Moscow-based government relations firm.

Moscow has stepped up criticism of Assad and courted his opponents, suggesting it is hedging its bets and hopes to preserve influence in Syria if he is forced out.

The Kremlin, however, does not want to lose its firmest foothold in the Middle East - a client for billions of dollars' worth of weapons and the host of Russia's only warm-water naval port outside the former Soviet Union.

Nor does it want to look weak, having paid the price for weakness in the immediate aftermath of the disintegration of the Soviet Union when it surrendered one foothold after another from eastern Europe to the Caribbean, Africa and Asia.

Putin, flanked by military commanders, set out his vision of a powerful Russia during World War Two Victory Day celebrations this month, two days after resuming the presidency.

"Russia consistently follows a policy of strengthening global security and we have a great moral right to stand up determinedly for our positions because our country suffered the blow of Nazism," he declared, flanked by his military commanders in front of the redbrick walls of the Kremlin.

He said the lessons of the war remain valid and that "respect for state sovereignty" is a crucial guarantee it will not be repeated - a warning against Western efforts to promote "regime change".


CONTROLLED DEMOLITION

Russian sensitivities run deep and suspicions of a Western-led diplomatic 'ambush' will be hard to overcome.

Putin made clear he was incensed when NATO, given the green light for air operations in Libya last year when Russia refrained from vetoing Security Council authorisation, helped rebels oust longtime leader Muammar Gaddafi.

Since enraging the West with its Syria veto in February, Russia has strongly backed U.N.-Arab League envoy Kofi Annan's peace plan, which is acceptable to Moscow because it includes no direct call for Assad to leave power.

Russia has long contended that it supports the peace plan, not Assad, and would accept a political transition as long as it is a product of an internal Syrian political process free of conditions dictated from outside.

Meanwhile, analysts say, Russia is watching Syria closely, trying to determine whether Assad can hold onto power and worrying there may be a point when helping him stay there is not worth the sacrifice of global prestige.

Earlier this month, U.S. President Barack Obama told G8 leaders including Russian Prime Minister Dmitry Medvedev that Assad must leave power and pointed to Yemen as a model of how political transition could work in Syria.

In Yemen, Frolov said, Saudi Arabia "pressured both the opposition and the government to agree on a formula for the political transition.

"I think that's what Moscow is trying to achieve in Syria, but I'm afraid Assad is denying Moscow this opportunity," he said.

Georgy Mirsky, of Moscow's Institute of World Economy and International Relations, said the evidence forced Russia to acknowledge government involvement in the Houla massacre, but that it is far from giving up on Assad.

"It would be a mistake to see ... a signal that Russia is beginning to distance itself from Assad, because Assad has not lost the war yet," he said.

But whether or not Russia is amenable, the limits of its sway over Syria could be the biggest hurdle to a deal for Assad's removal. Russia does not have the same influence in Syria that Saudi Arabia used to force Yemen's president to go. Yemen relies on Saudi Arabia for billions of dollars of aid.

"Russia cannot tell Assad to get out. Even if we did, it does not mean that he would - we're not in that type of relationship," Frolov said. "Russia can give him advice and nudge him to do this, but ultimately he makes his own decisions."

There are plenty of other obstacles to make Moscow wary of backing such an arrangement.

"There is a lot of talk about the Yemeni scenario. It won't work - it's a non-starter, because in Yemen there was a horrible split within the governing elite - nothing of this kind has been happening so far in Damascus."

Syria's governing elite "is well aware that as soon as Assad goes, it will mean the beginning of the end for the whole elite - the whole bloody building will come crashing down," he said.

Russia may take some persuading it could salvage more from the chaos of an Assad exit than the continued stalemate which keeps Russia's base open and its commerce, including arms trade, active. More Houlas could follow. Moscow could consider the potential loss to its international image ultimately too great.

Putin could be lured by the prospect of a controlled demolition, a peaceful exit by Assad, c arefully orchestrated, that can be presented as the work of the Syrian people alone, with perhaps the final solicitations of Moscow.

"Many in Russia understand that Assad has no political future," Lukyanov said. "If Russia can help him not be overthrown but leave smoothly, this can certainly be sold as a success." (Additional reporting by Gleb Bryanski; Editing by Ralph Boulton and Janet McBride)