Ukrainian President Viktor Yushchenko warned on Tuesday that Russia could start another gas war as it did when it halted supplies in January to Ukraine and parts of Europe in a row over payments.

"What happened in January is not a problem just for Ukraine but for all of Europe. There is no guarantee that this sort of gas blackmail will not occur in the future," Yushchenko told Reuters in an interview.

Worries have been growing about a re-run of the gas crisis, which left large tracts of central and eastern Europe shivering in the winter, shut down factories and raised questions about Russia's reliability as a supplier.

The prime minister of gas transit country Slovakia said on June 22 that it was "highly probable" Russia would cut supplies again in early July because Ukraine would be unable to pay. Russian gas giant Gazprom said shortly afterwards that it was very concerned about Ukraine's ability to pay.

Yushchenko said Ukraine, as the country responsible for the transit of 80 percent of Russian gas to Europe, was in no way to blame for the two-week cut-off of supplies at the start of 2009.

"Perhaps European public opinion still does not understand what occurred in January. It was in no way a problem of transit, but rather a problem of supply," he said.

"I believe it was one of the elements of blackmail against not just Ukraine but the European consumer as a whole."

Gazprom halted gas supplies to Ukraine in the New Year in a dispute over payment arrears and pricing.

The row was resolved when the two sides signed a 10-year supply agreement which stipulated that Ukraine was to pay market prices, with a discount for the first year.


Yushchenko has denounced the deal, negotiated by Prime Minister Yulia Tymoshenko, his estranged ally turned arch-rival, saying it served the interests of the Kremlin.

He has said the accord obliges Ukraine to purchase large fixed volumes of Russian gas, while imposing no obligations on Russia concerning transit volumes through Ukraine.

The president accused Tymoshenko and her government in the interview of pursuing policies that he says will drive state energy company Naftogaz to ruin, including the issuing of central bank credits to pay Ukraine's monthly gas bill.

Tymoshenko denies the allegations and Naftogaz has made all payments on time, though Russian President Dmitry Medvedev and other officials have suggested the company is insolvent.

Tymoshenko has said the government intends to boost Naftogaz's capital and says it is seeking about $4 billion to buy sufficient volumes of gas for reserves.

In his comments to Reuters, Yushchenko said the January deal restoring supplies "contained few conditions related to the market or competition, and was politically motivated.

"I therefore believe that there was no new element in resolving the issue of reliability of supplies," he said.

He said the government had failed to create a viable framework for Naftogaz to survive, particularly by keeping artificially low the price for gas paid by households and municipal authorities.

"The question arises -- how do you cover the constant shortfall of funds? I believe that the government should do this with funds from the central budget," he said.

"If the government sets an administrative price that is lower than the market price, it must provide compensation. And the government has barred any cut-off of consumers who fail to pay for gas -- that is the second error."


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