Russia-Ukraine row threatens EU gas

RUSSIA HAS threatened to cut gas supplies to the European Union via Ukraine this winter if it encounters a repeat of last year’s energy problems with Kiev.

Last January’s dispute between the ex-Soviet neighbours deprived millions of central Europeans of heat and light during freezing conditions and forced hundreds of factories to cut or halt production. More than a dozen EU member states were affected by the crisis.

About one-fifth of the EU’s gas needs are fulfilled by Russian fuel pumped across Ukraine, but the bloc fears further disruption due to fractious relations between the two countries, the parlous state of Ukraine’s economy, and political manoeuvring ahead of its January presidential election.

“If they don’t pay for gas supplies for domestic consumption in Ukraine, they won’t receive it,” said Russian prime minister Vladimir Putin. “If they don’t receive it, then it’s likely they will siphon it from the export pipeline . . . As soon as siphoning begins, we will cut supplies.”

Mr Putin has blamed Ukraine for the price and supply disputes of recent winters, and urged the EU to “open its wallet” to help Kiev pay its gas bills and keep fuel pumping.

“If transit countries fulfil their obligations, there won’t be any problems from our side,” he said. “So don’t come to us on the question of reliability.”

Ukraine has paid its gas bills to Russia this year, but the next instalment of an emergency €11 billion loan from the International Monetary Fund (IMF) has now been delayed because Ukraine’s presidential candidates are squabbling over spending plans as they seek to boost their popularity ahead of the January ballot.

President Viktor Yushchenko is trying to push through a big increase in the minimum wage, which prime minister Yulia Tymoshenko and the IMF have criticised. Mr Yushchenko and Ms Tymoshenko led the 2004 Orange Revolution, which overturned the fraudulent election “victory” of pro-Moscow candidate Viktor Yanukovich and swept the pair to power.

Their feuding ever since has stymied their plans to modernise Ukraine and lead it towards the EU and Nato, however, and it has allowed Mr Yanukovich to become the country’s most popular politician.

Polls place him several percentage points ahead of Ms Tymoshenko in the race to become president, with Mr Yushchenko lagging far behind.

Analysts suggest all the candidates could seek to exploit a new gas war: Mr Yushchenko to discredit Russia and his more Kremlin-friendly rivals; the pro-Moscow Mr Yanukovich to demonstrate the need for close ties with Russia; and Ms Tymoshenko to show that she is a patriotic pragmatist, defending Ukraine’s interests while engaging with Moscow.

Russia is also wary of further damaging its reputation as an energy supplier, and wants to co-operate with several EU members on key gas and oil projects.

The EU, meanwhile, has been criticised for failing to push ahead with its own plans for new pipelines and storage facilities, which would reduce the bloc’s dependence on Russian energy.