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Russia tensions rise as France urges end to sanctions

Will Russian sanctions be lifted?

French President Francois Hollande has called on the West to end sanctions against Russia but as the streets of Moscow sees an increase in angry protests, there is no sign that tensions are calming down any time soon.

Hollande said in an interview Monday that sanctions placed on Russia by Europe, the U.S. and Canada for its role in intervening in Ukraine, could be lifted if there is progress in talks between European leaders and Russia this month.

"I think the sanctions must stop now. They must be lifted if there is progress. If there is no progress the sanctions will remain," he told France Inter radio station.

Hollande added that he believed Putin would not look to ratchet up tensions further, saying the Russian President "doesn't want to annex eastern Ukraine - he told me that."

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There have been recent signs that the West is ready to extend an olive branch to Russia, should Putin change tack from his increasingly nationalistic, anti-Western stance.

The U.S. Secretary of State John Kerry insisted in December, that sanctions could be lifted at any time depending on the "choices" that Putin makes. Meanwhile, Germany's Vice-Chancellor, Sigmar Gabriel, has also warned against further sanctions on Russia, telling the Bild Am Sonntag newspaper this weekend that Europe wanted to resolve the Ukraine crisis and not to "push Russia onto its knees."

Attention is now focused on international talks set to be held on January 9 by foreign ministers from Ukraine, Russia, France and Germany. It is hoped that the meeting, in the Kazakh capital Astana, could make steps towards a peace agreement when the leaders of the same countries meet on January 15.

Moscow's next move

Despite the attempts to offer a peaceful solution to Russia, Putin shows no signs of changing course.

One senior political analyst at Nomura, Alastair Newton, told CNBC Europe's "Squawk Box" that tensions between the West and Russia were unlikely to calm down anytime soon.

"I think where Putin is at the moment -- anchoring his regime on a very nationalistic, anti-western stance – and inevitably as tensions within Russia increase, he is going to look to resort to more foreign policy distractions -- which means more tensions with the West," Newton said although he did not specify was those "distractions" could be.

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Newton was emphatic that sanctions would not be lifted anytime soon.

"We've already seen a very hawkish U.S. Congress more than prepared to slap additional sanctions on Russia. On the other hand, EU sanctions expire automatically after 12 months unless they are renewed by consensus so he does have an incentive there to back off -- but I don't think he's going to."

Existential Crisis?

Although Putin shows no signs of changing course on an international diplomatic level, growing civil unrest has begun to dog the Kremlin closer to home.

Sanctions, combined with the precipitous fall in the oil price, have damaged Russia's economy, sending its currency plunging along with its political standing on the global stage.

Russian government officials expect the country to enter a recession in 2015 and the economic situation is not helped by rampant inflation – at annual rate of 11.4 percent – and an interest rate hike to 17 percent introduced in December.

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More than 100 demonstrators were arrested after protests in Moscow in defense of Russian opposition activists, Alexei Navalny and his brother Oleg, who were convicted for fraud in December in what is seen by their supporters as a politically motivated case.

Navalny was given a suspended sentence and attended protests that followed the conviction, defying the conditions of his house arrest. In a move bound to enflame tensions, he cut off his monitoring tag on Monday, stating on his blog that he now rejected his "illegal detention."

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Although the Kremlin was afraid of the risk posed by Navalny, Newton didn't think that he posed a great threat to the government.

"I think it's interesting that the Muscovite authorities have moved fairly quickly against Navalny, it does appear to me and that given the increasing economic stresses in Russia, the Kremlin is concerned about the possibility of this spilling over into renewed civil unrest with Navalny clearly a potential leader."

"Having said all that, and I think that Russia has all the underlying conditions for civil unrest, I would be really surprised if we saw anything remotely existential to the regime," Newton added.

- By CNBC's Holly Ellyatt, follow her on Twitter @HollyEllyatt. Follow us on Twitter: @CNBCWorld