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Russia's Putin Warns Ukraine Leader On Gas Payment

Vladimir Putin
NOVO-OGARYOVO (Reuters) -- Russian Prime Minister Vladimir Putin said on October 30 that Ukrainian President Viktor Yushchenko risked provoking a new gas crisis that could disrupt supplies to Europe.

"It looks like we will again have problems with energy payments," Putin said after a telephone call with Ukrainian Prime Minister Yuliya Tymoshenko, Yushchenko's main political foe and a frontrunner in a January 17 presidential election.

Putin's warning raises the spectre of a new gas dispute, though diplomats have said Russia may be wary of entering a row with Kyiv on the eve of the vote, which Moscow hopes will bring a more pro-Russian president to power.

Ukraine's deep economic crisis has raised fears about its ability to pay for Russian gas.

The European Commission on October 30 said it had proposed to European Union governments that they lend Ukraine 500 million euros ($741 million).

But the International Monetary Fund's managing director said that a wage bill signed by Yushchenko on October , which the fund had asked him to veto, cast doubt on the next tranche of a $3.8 billion IMF bailout programme for Ukraine.

Russia cut gas supplies to western Europe across Ukraine in January 2006 and again in January this year during a row with its ex-Soviet neighbour over gas prices and payments. Supplies to EU customers were disrupted in the dead of winter.

Russia's Gazprom, the world's biggest natural gas company, supplies a quarter of the European Union's gas, and most of this is piped across Ukraine.

Russia would like Ukraine's next president to be more pliant after stormy ties under Yushchenko, who came to power on the back of the 2004 "Orange Revolution" protests.

Ukraine Election

Putin, whose comments were shown on Russian state television, said Tymoshenko had complained that Yushchenko's actions were complicating payment for gas supplies.

"Yushchenko is blocking normal cooperation between the central bank, which controls...foreign exchange reserves, and the government of Ukraine, thus blocking the transfer of funds," Putin said at the Novo-Ogaryovo residence outside Moscow.

Putin is due to meet Tymoshenko in Ukraine next month for talks that some analysts say could be used by Moscow to give a boost to her presidential campaign.

Yushchenko, who has unnerved Russia with talk of joining NATO, has low ratings and is expected to fall in the first round. Tymoshenko and former Prime Minister Viktor Yanukovych are frontrunners in the vote.

Most Ukrainians hope the vote will end five years of political in-fighting that has paralysed decision-making and frustrated reform in one of Europe's worst performing economies.

Putin, who has repeatedly called on the European Union to help ease Ukraine's gas problems, said on October 29 he was unhappy with a lack of action by the EU.

"The European Union has not given the promised money," Putin said at a meeting with leaders of his United Russia party.

Ukraine's Deputy Prime Minister Hryhory Nemyrya told Reuters this week he was confident there would be no new end-of-year gas war with Russia, but conceded that meeting monthly bills was not easy.