Sports Minister Vitaly Mutko gave no details of the negotiations amid reports that the globetrotting 66-year-old Italian was asking for the whopping annual sum of seven million euros ($8.5 million).
"From here, we move on to the next candidate," Mutko was quoted as saying by the RIA Novosti news agency.
"I think that over the course of a week -- certainly by next Tuesday -- all the consultations with the managers on our list... will be held."
Capello's name was one of 13 to feature in an extraordinary list of possible managerial targets that Russia was forced to release to dispel rumours that it had already secretly hired a coach.
The wish list includes such giants as ex-Barcelona boss Pep Guardiola and one-time Liverpool chief Rafael Benitez as well as former Tottenham manager Harry Redknapp.
The Englishman for one wasted no time brushing off the Russian approaches but telling The Sun that "I haven't been contacted but I'm sure it's a fantastic job for someone."
But Capello's name has clearly interested suffering fans the most. The ex-England manager was rumoured to be the Russian Football Union's first choice and reportedly eager to accept the lucrative and high-profile assignment.
One football union official told the Lifesports.ru website that Capello had given "an agreement in principle to head the Russian team" as long as his pay request was met.
An unnamed Italian official told the Sport Express daily's website that both sides came away satisfied with the talks.
The Russian sports minister added to the speculation by putting Capello on a par with Guus Hiddink -- a legend in Russia who showed flashes of coaching brilliance while guiding the unfancied side to the Euro 2008 semi-finals.
The Italian "would be a good option for Russia. He knows how to win," Mutko earlier told reporters.
"You only have to look at his record," Mutko said of a man who won five title trophies in Italy's Serie A -- seven save for two that were stripped from Juventus -- and who twice led Real Madrid to the top of La Liga.
The post became vacant when Dick Advocaat left for the Dutch league after the much-vaunted team's meek first round exit from Euro 2012.
Russia's shock failure to qualify out of what many though was the event's weakest group left the team low on morale and limited in choices as it assumes the challenge of making it to the 2014 World Cup.
But the bigger prize will come in 2018 when Russia becomes the first Eastern European country to host the world's most watched event.
Russian football is now torn between picking a coach with a long-term horizon or someone like Capello who can help make a more immediate impact while bringing the team big name recognition as well.
Some of the country's most respected sport commentators are actually rooting against Capello because they would prefer the more long-term approach.
"He is one of the world's top five managers. But his candidacy is not a good fit," television analyst presenter Vasily Utkin told the Sports.ru website.
"He cannot do what is needed most -- reload the team and do more teaching," said Utkin. "He will set the goal of making the 2014 World Cup finals and then forget about the whole thing."
The new coach is expected to be announced by the time the 2012-2013 season kicks off at the end of next week.
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