Georgia rejected a compromise deal with the Russian gas monopoly Gazprom on Wednesday, leaving it with the prospect of either paying twice the price for Russian fuel or having supplies cut off.
Moscow is locked in a bitter row with its ex-Soviet neighbour and has already severed transport links. A threat to gas supplies - which Georgia depends on - would dramatically ratchet up the stand-off.
State-owned Gazprom says it wants Georgia in 2007 to pay $230 per 1,000 cubic metres of gas instead of the $110 it pays now. It says if no new contract is signed, supplies will be cut.
Gazprom offered to soften the increase if Tbilisi handed over control of its domestic gas distribution network to Russia. Georgian Prime Minister Zurab Nogaideli rejected that offer. "I want to repeat once again - we are not going to bow to blackmail," he told a cabinet meeting. Energy Minister Nika Gilauri, asked by reporters if Georgia might cede energy infrastructure to Gazprom, replied: "Never."
Russia supplies almost all of Georgia's gas needs. The Georgian government is seeking alternative suppliers but they are not ready to replace Russian gas in full. Tbilisi says Moscow is using gas as a political tool to punish it for its pro-Western policies. Gazprom says the increase is purely commercial.
If the price stays at $230, Georgia - where the average monthly income is just over $100 a month - would pay the same for its gas as rich countries such as Germany and Italy.
US Vice-President Dick Cheney accused Russia this year of energy blackmail after Gazprom cut off supplies to Ukraine, also in a row over higher prices. Deliveries to Western Europe were briefly disrupted because the pipelines cut across Ukraine, jolting Western confidence in Russia's reliability as a supplier. Ukraine is due to pay $130 next year, under a deal not yet finalised.
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