Medvedev Threatens Ukraine Sanctions

RIA-NovostiDvorkovich listening to Medvedev at a meeting Friday at the president's Gorky residence, just outside of Moscow.
President Dmitry Medvedev used a wide-ranging interview to threaten sanctions against Ukraine, say Russia will allow a more flexible exchange rate and express hope for partnership with the incoming U.S. presidential administration.

But he also said Russia reserved the right to use force again to defend its interests and would not tolerate attempts by Western powers to contain it, in an apparent reference to the country's war with Georgia in August.

"[Ukraine has] to pay to the last ruble if they don't want their economy to eventually face sanctions and demands from the Russian Federation," Medvedev said in the interview, which was shown Wednesday on national television stations. "We do not have it as a goal to cut off" supplies, he said. "Our goal is to get the money."

Medvedev also said that the government would support the ruble "within certain limits, but at the same this rate should be more flexible than it has been recently, in order not to create internal economic problems."

The Central Bank devalued the ruble on Friday for the third time in a week, sending the currency to its lowest level against the dollar since January 2006, although he said there was no reason to fear a repeat of the 1998 default.

"The volume of domestic debt is such that there could be no default," Medvedev said. "We are not planning any denomination either; it is an absolutely senseless thing."

Russia may slip into its first recession since the 1998 financial crisis in the first half of 2009, Kremlin economic adviser Arkady Dvorkovich said in an interview earlier this month.

Medvedev also expressed optimism for better ties with U.S. President-elect Barack Obama, saying, "I hope that we can establish much more effective and reliable ties than have existed up to now."

(Bloomberg, Reuters)