Ukrainian President Viktor Yushchenko urged compromise Monday in a bitter dispute with Russia over natural gas prices as Russian state-controlled giant Gazprom threatened to cut off supplies to the pro-Western former Soviet republic on January 1.
Gazprom, which controls about a third of the world's gas reserves, has announced an end to Soviet-era subsidies and more than a quadrupling of prices from January 1. If Ukraine refuses to pay the new tariff, said by Gazprom to be 220-230 dollars per 1,000 cubic meters (35,000 cubic feet), supplies could be cut off.
With the clock running down, Yushchenko said that Ukraine was ready to pay market prices, but that the change should be gradual and not used as a form of political pressure.
"The issue is simply that the prices should be based on economics, not political speculation. And the liberalisation of prices should be in stages to avoid shock therapy in the economy," he said in an interview with the Russian edition of the US magazine Newsweek published Monday.
Yushchenko also underlined that he wanted to see Russia paying market-level fees for using Ukraine as a transit route for gas deliveries to western Europe. "We are for... liberalisation of prices for gas and for transit," he said.
What Gazprom officials say is a purely commercial dispute comes against the backdrop of tense political relations between Moscow and Kiev, where Yushchenko has taken a strongly pro-Western stance since leading last year's "orange revolution" and defeating a pro-Kremlictions.
Ukraine's strategic position as a transit country for Russian exports has raised the stakes further. The European Union gets about half of its gas from Russia.
As Yushchenko pointed out, 80 percent of Ukraine's gas needs were met by Russia, while 80 percent of Russia's exports to Europe pass across Ukraine.
Late Sunday, Yushchenko's chief of staff Oleg Rybachuk expressed the country's willingness to end the current system of barter and subsidies, but also urged Gazprom to agree to a gradual change.
"The compromise lies in that Ukraine acknowledged and does acknowledge the need to change to international prices, but the key issue is the timetable," Rybachuk was quoted as saying by ITAR-TASS.
Rybachuk also tried to calm fears at home, pledging that "nothing will change after January 1" and that "private consumers, communities and people will feel no difference."