Senior diplomats from the US and Russia sparred politely in Iceland on Wednesday in their first face-to-face encounter, which came as ties between the nations have deteriorated sharply in recent months.

US Secretary of State Antony Blinken and Russia’s long-time Foreign Minister Sergey Lavrov spoke frankly but calmly of their differences as they held talks on the sidelines of an Arctic Council meeting in the Icelandic capital of Reykjavik.

“We seek a predictable, stable relationship with Russia,” Mr Blinken told Mr Lavrov, echoing comments made by President Joe Biden, who has proposed a summit with Russian leader Vladimir Putin next month.

“We think that’s good for our people, good for Russian people and indeed good for the world.

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Antony Blinken, left, meets Sergey Lavrov at the start of their meeting (Saul Loeb/Pool/AP)

“It’s also no secret that we have our differences and when it comes to those differences, as President Biden has also shared with President Putin, if Russia acts aggressively against us, our partners, and our allies, we’ll respond — and President Biden has demonstrated that in both word and deed, not for purposes of escalation, not to seek out conflict, but to defend our interests.”

The meeting took place just as the Biden administration notified Congress of new sanctions on Russia over a controversial European pipeline. The administration hit eight Russian companies and vessels with penalties for their involvement in the Nord Stream 2 pipeline, while sparing two German entities from similar penalties.

“We have serious differences in the assessment of the international situation, we have serious differences in the approaches to the tasks which have to be solved for its normalisation,” Lavrov said. “Our position is very simple: We are ready to discuss all the issues without exception, but under perception that the discussion will be honest, with the facts on the table, and of course on the basis of mutual respect.”

Even before Wednesday’s talks the two diplomats had laid down near diametrically opposed positions for the meeting, previewing what was likely to be a difficult and contentious exchange over myriad issues including Ukraine, the Arctic, Russia’s treatment of opposition figure Alexey Navalny and accusations of cyber malfeasance, including claims that Russia-based hackers were responsible for a ransomware attack on a key US pipeline.

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Russian Foreign Minister Sergey Lavrov (Saul Loeb/Pool/AP)

The meeting also followed a spate of tit-for-tat diplomatic expulsions as US-Russian relations threaten a return to Cold War lows.

After the meeting, which ran for a longer-than-expected hour and 45 minutes, the State Department said Blinken had called for Russia to release two Americans it holds, Paul Whelan and Trevor Reed. He also raised “deep concerns” about Russia’s military build-up on the Ukraine border and its actions against the Voice of America and Radio Free Europe/Radio Liberty, the department said.

Perhaps anticipating Mr Blinken’s position and the expected sanctions announcement, Mr Lavrov had offered a prebuttal on Monday.

“Apparently, a (US) decision was made to promote stable, predictable relations with Russia,” he told a news conference. “However, if this includes constant and predictable sanctions, that’s not what we need.”

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The US is looking to move on from former president Donald Trump’s mixed legacy on Russia, which including a personal friendship with its president Vladimir Putin (Sergei Ilyin/Sputnik/Kremlin Pool/AP)

Mr Blinken said his meeting with Lavrov would be an important opportunity to test the proposition that the U.S. and Russia can work collaboratively on certain issues, like climate change, the Mideast, Iran and North Korea, despite bitter disagreements on others. The meeting comes as much of the world is focused on the Israel-Palestinian war.

Mr Blinken noted that despite the vitriol, the US and Russia had agreed early in the Biden administration to a five-year extension of a key arms control pact that President Donald Trump had declined to renew before he left office.

Mr Trump left a decidedly mixed legacy on Russia that included a friendly personal relationship with Mr Putin, while his administration still imposed sanctions and other punitive measures.

Another, more immediate area of disagreement in Reykjavik is the Arctic, where Russia has been expanding its military presence and pursuing policies to expand its influence, to the alarm of the Americans.