* Russian leader delivers speech in annexed Crimea region
* He says Moscow does not want war or confrontation
* A strong Russia does not have to use military power: Putin
* NATO chief welcomes Putin olive branch - if it's sincere (Updates with NATO chief in paragraphs 9-11)
By Alexei Anishchuk
YALTA, Crimea, Aug 14 (Reuters) - President Vladimir Putin said on Thursday Russia would stand up for itself but not at the cost of confrontation with the outside world, a conciliatory note after months of tough rhetoric over the crisis in Ukraine.
Putin was speaking to Russian ministers and members of parliament in Crimea, the Ukrainian region annexed by Russian this year - a stage that led many people to anticipate a major announcement about Ukraine.
But the tone of Putin's comments was low-key and he avoided the kind of barbs that he has previously directed at Western countries during the crisis, which has dragged East-West relations to their lowest ebb since the Cold War.
"We must calmly, with dignity and effectively, build up our country, not fence it off from the outside world," Putin said. "We need to consolidate and mobilise but not for war or any kind of confrontation ... for hard work in the name of Russia."
He also said Russia would do everything in its power to end the conflict in Ukraine as soon as possible and stop the bloodshed there.
Explaining his thoughts on Thursday about Russia's foreign policy doctrine, he said it should be peace-loving.
"All our partners in the world should understand that Russia, like any other large, powerful sovereign state, has various ways and means of ensuring its national interests, and these include armed forces," he said.
"But this is not a panacea and we do not intend, like some people, to dash around the world with a razor blade and wave that blade around. But everyone should understand that we also have such things in our arsenal."
NATO Secretary-General Anders Fogh Rasmussen, asked about Putin's remarks, said if they were a sincere attempt to defuse the standoff, they would be welcome.
But he said at a news conference in Norway that the Russian leader had sounded dovish in the past yet had not followed up his words with concrete actions.
"On the contrary, we have seen a continued military build up along the Ukrainian border, we have seen a flow of weapons and fighters across the border from Russia into eastern Ukraine, we have seen an active Russian support of armed separatists in Ukraine," Rasmussen said.
Moscow has denied those allegations. It says it is interested only in protecting the largely Russian-speaking population in eastern Ukraine, which it portrays as a target of nationalistic Ukrainian military forces.
The standoff over Ukraine is now becoming much more costly for both sides, with the EU and United States imposing economic sanctions, and Russia retaliating by banning imports of many food products.
Putin used his visit to Crimea to offer reassurances that Moscow would foot the bill for propping up the economy.
A tourist region, Crimea has seen a sharp fall in bookings from holiday-makers. Local tourism officials estimate 3 million tourists will visit this year, against 6 million annual visitors before Russia's annexation.
Crimea, a peninsula in the Black Sea, has also struggled with disruptions to water and electricity supplies, which reach Crimea along a narrow strip of land that connects it to Ukraine.
Moscow said in July it would invest more than $20 billion between now and 2020. The government plans to spend about a third of this amount on building a bridge across the 4-km strait that separates Crimea from Russia.
In his speech on Thursday, Putin said Crimea was an inseparable part of Russia and that there was no turning back on Moscow's takeover of the peninsula.
He said people should not complain about the amount of cash being spent on Crimea since it was Russian territory and the money was being spent for the benefit of all Russian people. (Additional reporting by Joachim Dagenborg in Arendal, Norway; Writing by Christian Lowe; editing by Ralph Boulton)