Ukraine may again face gas payment problem: Putin

NOVO-OGARYOVO: Ukraine could again have problems paying for Russian gas, Prime Minister Vladimir Putin said Friday, raising the spectre of new supply interruptions to Europe this winter.

He said Ukraine had sufficient funds due to its assistance package from the International Monetary Fund (IMF) and blamed pro-Western Ukrainian President Viktor Yushchenko for preventing the transfer of funds.

Russian gas supplies were cut off to a dozen European countries for two weeks in January as part of a bitter dispute over payments and prices between Russia and Ukraine.

"It seems we are again having problems with the payment of our energy supplies (from Ukraine) which is extremely sad," Putin said, following a telephone conversation with his Ukrainian counterpart Yulia Tymoshenko, Yushchenko's arch foe.

"According to the Ukrainian prime minister, Yushchenko is blocking normal cooperation between the central bank ... and the Ukrainian government and blocking the transfer of appropriate funds," Putin said.

"The question is: what are we to do?" he asked the party bosses.

Earlier Friday Putin and Tymoshenko, who have never made a secret of their strong relations, discussed the two countries' gas cooperation, with Putin stressing the need for Ukraine to honour its contractual obligations.

In keeping with the customary squabbling within the Ukrainian administration, the government and presidency offered vastly different interpretations of Putin's comments.

"Unfortunately it's true. It's because of the president and Putin has told the truth," a source close to Tymoshenko's government told AFP.

But Yushchenko's representative on energy security Bogdan Sokolovski said: "We have not mandated Putin to count Ukraine's money." He expressed hope that Ukraine would pay its half a billion dollar gas bill for October.

Haggling over gas supplies and prices has in the past years become a familiar problem ahead of winter.

The latest row comes just months before Ukraine is set to elect a new president in polls in which both Tymoshenko and Yushchenko will run against the more pro-Russian Viktor Yanukovich.

The first round is scheduled for January 17.

In August, the Kremlin cut off ties with Yushchenko, accusing him of pursuing "anti-Russian" policies.

Putin's sudden statement comes after repeated pledges from both the Russian gas giant Gazprom and Ukraine's Naftogaz that gas supplies would not be interrupted.

Earlier this week Naftogaz issued a statement saying it will pay for October gas supplies on time. Gazprom declined comment on Friday.

Analysts said the threat of a cut in gas supplies was not warranted given Ukraine's regular payments in the previous months, suggesting the upcoming polls in Ukraine may have a role in the latest dispute.

"The possibility of a political game cannot be completely ruled out," said Vladimir Osakovsky, head of strategy and research at UniCredit.

He added however that Russia had learned from its past mistakes and would unlikely directly interfere in the January 17 election.

During the last presidential vote in 2004, the then president Putin congratulated Yanukovich on his victory in the vote the opposition said was rigged, in a move seen as a major Kremlin faux pas and meddling in Ukraine's domestic affairs.

Svetlana Grizan, a gas analyst with VTB Capital, added that European customers had so far no reason to worry. "They definitely have enough to pay for October," she said, referring to Naftogaz.

Putin also accused the European Union of failing to prop up the ex-Soviet nation at a difficult time.

"The European Union has not given money to Ukraine," Putin said. "Not a single cent, not a single hryvnia."