EUROPE should "open its wallet" if it wants to avoid a gas crisis this winter, Russian prime minister Vladimir Putin said yesterday, after warning that supplies to the West could be hit if transit country Ukraine could not pay its energy bills.
"If there are problems, we are asking our European colleagues to get involved and lend Ukraine the necessary money. Give them a least a billion. Why be greedy? They (the EU] have the money, so why don't they fork it out?" Mr Putin said.
About 20 p
er cent of the gas the European Union receives flows via Ukraine, and some countries such as Slovakia and Bulgaria are almost totally dependent on it.
There are fears another energy dispute between Kiev and Moscow could lead to a repeat of the interruptions seen last year when many central and south-eastern EU countries experienced gas shortages for three weeks during one of the coldest winters in recent years.
Sweden, which holds the rotating EU presidency, reported yesterday that Mr Putin had issued a warning over gas supplies in a conversation with his Swedish counterpart.
Its government issued a statement saying: "Swedish prime minister Fredrik Reinfeldt, representing the Swedish presidency, spoke on the telephone with Russian prime minister Vladimir Putin about the fact that Ukraine risks not being able to meet its payment commitments to the (Russian] company Gazprom."
Quoting the Russian prime minister's press office, the Interfax news agency said that during the conversation, "Mr Putin drew the attention of the EU leadership to signals, including those received via official channels from Kiev, of possible problems with payments for Russian gas supplies". This meant "problems with Russian gas transit across Ukraine's territory aimed for European consumers could arise".
José Manuel Barroso, the head of the European Commission, said: "We hope that if such problems arise, we'll resolve them constructively. We're always ready to provide support, but I think that it's not fair for EU member states to be affected by problems between Ukraine and Russia."
The Ukrainian government has guaranteed that its state-run energy company, Naftogaz, will have enough money to pay the bills. But with the country relying on emergency funding from the International Monetary Fund as it struggles to cope with the severe effects of the global recession, it may not have enough money in the bank.
A political crisis in Ukraine has also complicated matters.
With president Viktor Yushchenko and prime minister Yulia Tymoshenko at each others' throats in a bitter struggle ahead of presidential elections in January, energy has become a political football.
Hryhory Nemyrya, the deputy prime minister, has already accused Mr Yushchenko of undermining Naftogaz's ability to pay by campaigning against spending cuts.
Mr Putin has also entered the fray by accusing the Ukrainian president, a long-time opponent to Moscow, of risking disruption by allegedly interfering in Ukraine's central bank.
Energy experts point to conflicts between powerful groups in both Ukraine and Russia as another source of friction that threatens supply. "The heart of the matter is a dispute between oligarchs that are trying to capture a very lucrative market," Jerome Guillet, an energy expert concentrating on Eastern Europe, told The Scotsman.
"It is very hard to know what is going on, and the fact that you have a highly unstable situation in Ukraine, with maybe three clans fighting it out, and in Russia you have at least two clans in the Kremlin, makes for a very unstable situation."
