Kremlin defends Putin decorating Bulgarian 'spy'

But tensions spiked in September when Bulgarian prosecutors charged a pro-Russian activist, Nikolay Malinov, with espionage and banned his alleged Russian handler from entering Bulgaria.

Malinov however travelled to Moscow to attend the televised award ceremony at the Kremlin on Monday as Russia marked Unity Day, a public holiday.

Putin's spokesman Dmitry Peskov said Tuesday the award was a recognition of Malinov's "contribution to the development of friendship and cooperation between our two countries."

He denied that the gesture would harm ties.

"This would be illogical and have very negative consequences," Peskov said, adding he hoped Malinov would be allowed to continue his work.

Malinov, a former lawmaker, heads Rusofili, the largest pro-Russia non-governmental organisation in Bulgaria.

He is accused of collaborating with Kremlin think-tank the Russian Institute for Strategic Studies (RISS) and another Russia-based organisation.

He faces up to 15 years in jail, if convicted.

Former RISS chief Leonid Reshetnikov has been banned from entering Bulgaria for 10 years.

According to Bulgarian authorities, Malinov regularly travelled to Russia to meet Reshetnikov "to discuss information, some of which was classified".

The RISS is now headed by Mikhail Fradkov, the former chief of Russia's Foreign Intelligence Service.

Malinov thanked Putin at the Kremlin ceremony and said he was being prosecuted in Bulgaria for his proposal to create an "international Russophile movement", among other ideas.

He said pro-Russian activists backed Russian values including the concept of a "multi-polar world" and "a strong state."

"These ideas are changing the world, and changing the world for the better," he said in remarks released by the Kremlin.

A Bulgarian judge ruled that Malinov could go to Russia although he does not have the right to travel while facing espionage charges, prompting Bulgaria's chief prosecutor Sotir Tsatsarov to call for an investigation into the move.

In another espionage row, Bulgaria last month expelled a Russian diplomat for ignoring a request to leave after a probe confirmed he had been spying.