Russia flaunted its grip on Crimea on Monday, with the prime minister, Dmitry Medvedev, flying in to the newly annexed territory for a cabinet meeting, cementing the sense of resignation in Kiev and the west that the seizure of the territory is irreversible.

At the same time, Russian forces appeared to be pulling back from the border with eastern Ukraine. Russia's president, Vladimir Putin, said in a phone conversation with the German chancellor, Angela Merkel, that he had ordered a "partial withdrawal" from the border, according to Berlin.

The developments came after a four-hour meeting on Sunday between the Russian foreign minister, Sergei Lavrov, and the US secretary of state, John Kerry, in which both sides put their visions for resolving the Ukraine crisis on the table. After the meeting in Pairs, Lavrov said Ukraine should introduce federalisation of power.

"Both sides had very concrete positions, and it was perhaps the first time over the past few months that things were called by their real names," said a source in the Russian delegation, who did not elaborate further on whether this left the sides closer or further away from an agreement.

Kerry said after the meeting that any decisions on federalisation ought to be made by Ukrainian authorities, and the Ukrainian foreign ministry released a vicious riposte to the Kremlin, telling it to keep its nose out of Ukrainian affairs: "Do not attempt to teach others. Better bring order to your own country. You have plenty of problems," read the statement. Ukraine's acting president, Oleksandr Turchynov, said on Monday that he saw no reason for the country to introduce a federal system.

On Monday, Kiev also sent a protest note to Moscow over the prime ministerial visit to Crimea, calling it a "crude violation" of international norms.

But Medvedev's rhetoric during the televised meeting, when he promised to create a special economic zone in Crimea, raise pensions and wages and improve infrastructure, was calibrated to send a firm message that Russia has no plans to give the territory back to Ukraine.

The hawkish deputy prime minister Dmitry Rogozin, who has been targeted by US sanctions, was one of those to accompany Medvedev on the trip. He posted a photograph of himself, with the sea in the background, on his Twitter account with the caption: "Crimea is ours. Basta."

"The government will take steps to make Crimean holidays more affordable and more attractive," wrote Medvedev on his Facebook page. "I am certain that many people will again discover the clean sea, unique nature and hospitality of Crimeans."

The peninsula's main source of revenue comes from tourism, and Russia has promised to make up for the absence of Ukrainian and other non-Russian tourists this summer by sending workers from state enterprises on package trips to Crimea.

With Crimea firmly in Moscow's grip, attention has turned to the Russian-speaking eastern regions of Ukraine, which have become the subject of a tough negotiating game from Moscow. In Russian-speaking cities such as Donetsk and Kharkov, there is less support for union with Russia than in Crimea, but repeated rallies have called for holding referendums either on joining Russia or on increased autonomy.

The government in Kiev has accused Moscow of deliberately stirring up tensions in the region, while the Russian foreign ministry has released a series of statements complaining that the rights of Russian speakers are under threat and making thinly veiled threats of military intervention.

Military analysts estimate that the Russians have amassed up to 40,000 troops close to Ukraine's eastern border in recent days, though a number of reports on Monday suggested that many of the troops had begun a withdrawal.

The Russian defence ministry said on Monday that a motorised defence infantry battalion stationed near the Ukrainian border for "training" for a month had begun the journey back to its base.

Tensions remain high in the runup to presidential elections in Ukraine scheduled for 25 May. Ukrainian intelligence claimed on Monday it had detained a Russian activist planning armed raids on government buildings in Kiev in an attempt to destabilise the situation in advance of elections.

Petro Poroshenko, a confectionary billionaire, is the favourite to win the vote, and was boosted over the weekend when former heavyweight boxer Vitali Klitschko withdrew from the race and gave his backing to Poroshenko. His only serious challenger is now the former prime minister Yulia Tymoshenko.

Moscow has refused to recognise the interim government that took over in Kiev after President Viktor Yanukovych fled, and has previously called the May vote illegitimate. But on Monday softened its tone, with deputy foreign minister, Grigory Karasin, saying the vote should be fair and transparent. A number of Russian analysts have suggested that Moscow could agree to recognise the new Ukrainian government if its demands about federalisation were met and its annexation of Crimea recognised.

Germany's finance minister, Wolfgang Schäuble, said on Monday that Russia's moves against Ukraine were reminiscent of Nazi aggression in Czechoslovakia before the second world war. "We know all about that from history," he told a group of students, Der Spiegel reported on its website. "Those are the methods that Hitler used to take over the Sudetenland."

Schäuble said there were considerable fears about Russia in the Baltic nations as well as in Poland and Hungary. "They're all crapping in their pants," he said.