More from Putin's press conference:
Putin placed blame on the European Union for the developments that have unfolded in Ukraine since pro-European protests pushed President Viktor Yanukovych from power in February 2014, after he scrapped plans for a landmark agreement to tighten EU-Ukraine ties.
He criticized the sanctions imposed on Russia by the United States and EU in response to Russia's seizure of Crimea and support for the separatists.
"We did not initiate the worsening of our ties with the EU. It was the EU that imposed sanctions against us, and we had to react with our own restriction," he said, referring to a Russian ban on most foods from the EU.
"I have always said that only joint [West-Russia] efforts can tackle terrorism," he added. "But how such efforts can be united if we have sanctions?"
Putin also suggested that he sees the United States as interfering with Russia's relations with the EU, saying Moscow wants the EU to be "a reliable and strong partner...without a third country's involvement."
More on Ukraine from Putin:
Putin said that an existing four-country format for talks aimed at ending the conflict in eastern Ukraine -- involving France, Germany, Russia, and Ukraine -- "does not operate super-efficiently" but that "there is no alternative."
"Should we lose this mechanism, this tool, the situation will deteriorate and will do so rather rapidly," he said.
Here is today's map of the security situation in eastern Ukraine, according to the National Security and Defense Council:
More from Putin's annual press conference:
Putin voiced confidence that Russia's relations with Ukraine would improve "sooner or later."
Russia seized the Crimean Peninsula from Ukraine in March 2014 after sending in troops and staging a referendum considered illegitimate by most countries, and backs separatists whose war against Kyiv's forces has killed more than 9,750 people since April 2014.
Putin said a bridge under construction between Russia and Crimea would help develop commercial and humanitarian links between the two countries once relations improve -- a remark likely to irritate Ukraine, which demands that Russia return the peninsula to its control.
From Russian President Vladimir Putin's marathon year-end press conference, happening now:
Next question is from a Ukrainian reporter, asking Putin to release Ukrainian citizens being held in Russia prisoners. Says Ukrainians consider Russians to be occupiers.
Putin says Kyiv should worry more about making sure that people in eastern Ukraine don't consider Ukrainian forces to be occupiers.
Putin says there are a large number of people in Ukrainian prisons that Ukraine considers legally convicted and will not agree to release, as -- he says -- the Minsk process requires. Putin says many Ukrainians held in Russia were members of Ukrainian military or intelligence services. He says they have confessed in detail although "no one has tortured them."
Putin says that no Ukrainians are held in Russia for being journalists or filmmakers. It's a reference to Oleh Sentsov. Putin then says he can't release anyone just because they are a filmmaker. Says he has nothing against a general bilateral amnesty.
Putin says the Minsk process hasn't worked very well, but it is the only process we have and should be continued. Putin says he fully supports visa-free travel between Ukraine and the EU and in general says visas are a holdover from the Cold War. He says the number of Ukrainians moving to work in the EU will increase dramatically, many of them will work illegally. Goes into detail about how Ukrainians might be exploited in the EU.