4. UKRAINE LEADER YUSHCHENKO DISMISSED GAZPROM THREATS TO TURN OFF GAS AS ‘BLACKMAIL’

AFX Europe (Focus),
Kiev, Ukraine, Tue, Dec 20, 2005

KIEV – Ukraine President Viktor Yushchenko dismissed threats by Russian monopoly Gazprom to end gas supplies to Ukraine unless new prices are agreed before year-end as “blackmail”. “No, they won’t shut it off,” Yushchenko told reporters after a news conference in Kiev.

“You know, one has to be absurd in regulating this problem in order to resort to such (methods)… It’s blackmail,” he said.

“I don’t think that authorities from both sides would lower themselves to such tones, to such methods. That is not my policy. I’m not used to solving problems through confrontation.”

Yushchenko spoke a day after talks in Moscow between Russian and Ukrainian premiers failed to resolve the months-long standoff over gas prices, which centers on Moscow’s intention to increase the price of gas for Ukraine to bring it in line with world market rates.

Currently Ukraine and Russia settle their gas bill by barter, with Moscow providing Kiev with gas as payment for the transit of Russian gas exports through Ukraine to Europe, with a base price of 50 usd (42 eur) per 1,000 cubic meters.

Moscow wants to switch to cash payments and more than quadruple the price of supplies to the Ukrainian market, to 220-230 usd per 1,000 cubic meters. Gazprom has threatened to cut gas supplies altogether if new terms are not agreed by Jan 1. Ukraine wants a price increase to be gradually phased in over several years.

Earlier Tuesday, Ukraine’s Prime Minister Yury Yekhanurov said that Kiev could appeal to the Stockholm International Arbitration Court in order to resolve the row. “We have a contract and all decisions, if there are problems, are decided in the Stockholm court,” Yekhanurov said during a news conference.

“So far we have not had any written requests to break the contract, quite the opposite, we have assurances that the contract will continue to be in effect,” Yekhanurov said. “I hope that such civilized relations will remain in the future.” Email

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