UPDATE 2-Russia clamps down on foreign-funded rights groups
* Critics say law meant to stifle opposition
* U.S. has expressed "deep concern" over measure
* Follows NGO allegations of election fraud in Russia
* Putin has called foreign-funded NGOs "jackals"
By Nastassia Astrasheuskaya and Alissa de Carbonnel
MOSCOW, July 18 (Reuters) - Russia's parliament on Wednesday passed a law tightening controls on civil rights groups funded from abroad, a measure that foes of President Vladimir Putin say is part of a Kremlin campaign to stifle political opposition.
Ignoring criticism of the bill by the United States, the Kremlin-controlled upper house of parliament, the Federation Council, sped the bill through with just one vote against and one abstention in its last session before a summer break.
The rushed adoption signals the importance Putin attaches to the law, which will force non-governmental organisations (NGOs) engaging in "political activity" to register with the Justice Ministry as "foreign agents" and to file a report to officials every quarter.
The term "foreign agents", which NGOs will be forced to print on all their publications, carries the same associations of Cold War espionage and treachery that it does in the West.
The penalties for failing to comply with the law include six months' suspension without a court order and, for individuals, up to three years in jail.
Those who risk being stigmatised include the human rights group Amnesty International, the corruption watchdog Transparency International and the election monitoring group Golos (Voice), which was instrumental in compiling and publicising allegations of fraud in December's parliamentary election.
Opposition groups say Putin is trying to silence groups whose criticism of his human rights record has undercut his credibility and helped to fuel seven months of protests against his rule, the biggest since he came to power in 2000.
Putin has called NGOs dependent on foreign support "jackals" and accused Western governments of meddling in Russia's domestic affairs and trying to influence elections.
Golos says it plans to seek donations from Russians to end its reliance on grants from the United States and Europe.
"The law has three aims: First, to make the work of NGOs more difficult. Second, to intimidate ... and third, to blacken the image of NGOs and shame them for getting money from abroad," Grigory Melkonyants, the deputy director of Golos, told Reuters.
Putin, a former KGB spy, has been in power for 12 years as prime minister or president and could rule the world's largest country for another 12 years if he is re-elected in 2018.
The new law is the latest in a series of moves to crack down on protests since he returned to the Kremlin in May. His party has already pushed through a law making unauthorised demonstrations punishable with huge fines, while police have raided the homes of protest organisers.
The Federation Council also passed a law on Wednesday allowing for criminal prosecution of slander, which liberal media fear may be used to stifle free speech.
The U.S. State department last week expressed "deep concern" about the NGO law, and was promptly rebuked by Russia for "gross interference", an exchange that showed the impact the bill is having on already strained relations.
U.N. human rights chief Navi Pillay suggested on Wednesday that Russia was sliding back towards "a more restrictive era" of Soviet practices.
"In just two months, we have seen a worrying shift in the legislative environment governing the enjoyment of the freedoms of assembly, association, speech and information in the Russian Federation," she said in a statement issued in Geneva.
Several business groups registered as NGOs, including the Association of European Businesses, say they are concerned the law will hamper their activities in Russia.
Putin had dismissed calls by the head of his human rights advisory council for the bill to be delayed. Several prominent council members have since quit in protest over what they say is a wider rollback of civil liberties.
But ruling party lawmakers say the bill, which only requires Putin's signature to become law, is similar to Western legislation meant to increase NGOs' transparency.
To balance out the squeeze the bill will put on foreign-sponsored groups, Putin called for a tripling of annual state financing of Russian NGOs to 3 billion roubles ($92 million).
"A number of political structures are acting under the flag of rights organisations. They are openly engaged in political activities, while their financing comes fully from abroad," said Sergei Markov, a Kremlin adviser and former ruling party deputy.
"We have simply copied an American law with a few changes to make it softer."
The U.S. Foreign Agents Registration Act requires groups acting in a political capacity on U.S. soil as the agents of foreign governments to disclose their activities and finances.
However, the Kremlin only narrowly sidestepped potential embarrassment for the Russian Orthodox Church, which receives donations from abroad, with a last-minute amendment exempting religious and charitable groups, as well as ones created by the state or state-owned companies, from the legislation.
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