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Ukraine warms to Putin gas deal
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YOUR E-MAIL ALERTSMOSCOW, Russia (CNN) -- Ukraine could accept a Russian compromise deal in a dispute over natural gas supply prices, but more talks are needed, a spokesman for the Ukrainian prime minister is reported to have said. Earlier Saturday, Russian President Vladimir Putin ordered his government and the Kremlin-controlled Gazprom natural gas company to supply Ukraine with gas on 2005 terms in the first quarter of 2006 if Kiev agreed to pay the higher market price for gas from the second quarter. Ukraine has until now received one-third of its natural gas from Russia at the heavily subsidized rate of $50 (€42) per 1,000 cubic meters, in addition to its domestic supply and imports from Turkmenistan. But Russia's Kremlin-controlled gas company Gazprom had threatened to cut supplies to Ukraine on Sunday if Kiev does not agree to pay more than four times the current rate, which is closer to what most Western European countries pay. Kiev indicated it was prepared to move on the price. "As for the statement by Russia's leadership, we accept the proposal on a transition to market prices for gas," Valentin Mondrievsky, spokesman for Ukraine's prime minister, told Interfax Ukraine news agency, according to Reuters. "But there must be talks on figures and both sides must agree their positions. We have to fix a day for sitting down and continuing talks." Putin issued his orders, reported on Russian TV, at a Russian Security Council conference. Gazprom chief executive Alexei Miller was invited to that meeting. "I can see quite a hard line on the part of both the government and Gazprom," Putin said, in quoted remarks reported on Interfax. "At the same time, I draw your attention to the fact that Ukraine is not an abstract lot of senior officials and not a lot of oil and gas barons who will take care of their interests in any event, but above all it is a fraternal Ukrainian people and we must think about all aspects of relations between Russia and Ukraine." "For this reason, I instruct the government and Gazprom to ensure supply of gas to Ukraine for the first quarter of 2006 on the terms and on the basis of the prices of 2005 on condition that our Ukrainian partners sign before the end of today a contract that would contain Gazprom's proposals to go over to market prices in the second quarter," the president said. "If no clear reply comes, we will consider that our proposal has been rejected," he said. President Viktor Yushchenko did not elaborate on whether he would accept Putin's offer. In remarks broadcast by the TV5 station later Saturday, he said: "All problems can be solved through a market approach, and, therefore through a price Ukraine can afford." The Ukrainian president's office added that in a telephone conversation with Putin earlier in the day, Yushchenko emphasized that "it's extremely important that the sides refrain from political or economic pressures. I believe we will reach a compromise," according to the statement. Meanwhile, Europe warily watched the standoff amid warnings that its supplies could also be affected. Earlier Saturday a former Kremlin adviser criticized Moscow's gas price hike, saying the demand indicated resurgent Russian imperialism. Andrei Illarionov, Putin's former economic adviser, said the Kremlin had asked him to help portray the price rise as a free-market measure, but instead he resigned this week. "Energy weapons are being used against neighbors," Illarionov said on Ekho Moskvy radio, according to The Associated Press. "The move toward a policy of imperialism ... has a clear and high price that will eventually be paid by the citizens of a nation that embarks on the imperialist path." One reason for Russia's push to increase prices is Ukraine's 2004-05 "Orange Revolution," which forced its pro-Russian government out of power, replacing it with Yushchenko's pro-Western presidency, which seeks NATO and European Union membership. Dmitry Trenin, an analyst at the Carnegie Moscow Center, said Ukraine "cannot have (its) cake and eat it." "If the Ukrainian government has decided that the future of Ukraine lies with the West, then they have to know that the basis for their relations with Russia will be different," he said. Seeking to divert attention away from the row, Yushchenko on Friday announced his country would continue to import natural gas from Turkmenistan and would have enough heating fuel for the cold winter months. "We will receive 40 billion cubic meters (from Turkmenistan) which is more than a half of our gas balance for the next year," Yushchenko said, according to his Web site. The same pipeline that brings Russia's natural gas to Ukraine extends to the EU, providing it with nearly half the natural gas it needs. Russia and Ukraine promise their disagreement will not affect that supply. EU Energy Commissioner Andris Piebalgs said he was concerned about the Russian threat, but believed an agreement will be reached "and that Russia and Ukraine will honor their commitments to supply European gas markets as they have at all times in the past." Putin has defended the quadruple increase in natural gas prices, and offered a loan to help Russia's neighbor weather the financial hit. But national pride runs high in Ukraine. Before Putin made his latest compromise offer, Yushchenko said his country would only pay 50 percent more than it does now, and rejected Putin's offer of a loan. "Ukraine will pay with its own money at a price set in a comprehensible, objective fashion," he said. Illarionov said that in August 2004, Gazprom signed a deal with Ukraine's gas company guaranteeing five years of gas supplies at the subsidized rate -- part of the Kremlin's efforts to support presidential candidate Viktor Yanukovych, who lost a tense race against Yushchenko. "When the political situation changed, they remembered about subsidies," said Illarionov, who long had been a dissenting voice in the Kremlin, which is dominated by Putin's fellow veterans of the Soviet spy agency KGB. Illarionov compared Russia's price hike for Ukraine to Nazi and Soviet ultimatums issued to Eastern European nations before their annexation on the eve of World War II, and urged the Kremlin to step away "from the brink of a precipice that we are approaching so blindly and quickly." Copyright 2005 CNN. All rights reserved.This material may not be published, broadcast, rewritten, or redistributed. Associated Press contributed to this report. 
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