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. Last Updated: 07/27/2016

Putin Warns Ukraine Leader Over Gas Crisis

NOVO-OGARYOVO — Prime Minister Vladimir Putin on Friday warned that Ukrainian President Viktor Yushchenko risked provoking a new gas crisis that could disrupt supplies to Europe.

"It looks like, we will again have problems with energy payments," Putin said after a telephone call with Ukrainian Prime Minister Yulia Tymoshenko, Yushchenko's main political foe and a frontrunner in a Jan. 17 presidential election.

Putin, speaking at his Novo-Ogaryovo residence outside Moscow, said Yushchenko was "blocking the transfer of funds" to pay for Russian gas.

He added that the European Union had also failed to help ease the problem.

"The European Union has not given the promised money," Putin said at a meeting with leaders of his party.

Putin's warning raises the spectre of a new gas dispute, though diplomats have said Russia may be wary of entering a row with Kiev on the eve of the vote, which Moscow hopes will bring a more pro-Russian president to power.

Ukraine's deep economic crisis has raised fears about its ability to pay for Russian gas.

The European Commission on Friday said it had proposed to European Union governments that they lend Ukraine 500 million euros ($741 million).

But the International Monetary Fund's managing director said that a wage bill signed by Yushchenko on Friday, which the fund had asked him to veto, cast doubt on the next tranche of a $3.8 billion IMF-bailout program for Ukraine.

Russia cut gas supplies to western Europe across Ukraine in January 2006 and again in January this year during a dispute with its ex-Soviet neighbor over gas prices and payments. Supplies to EU customers were disrupted in the dead of winter.

Gazprom, the world's biggest natural gas company, supplies a quarter of the European Union's gas, and most of this is piped across Ukraine.

Russia would like Ukraine's next president to be more pliant after stormy ties under Yushchenko, who came to power on the back of the 2004 "Orange Revolution" protests.

Putin, whose comments were shown on Russian state television, said Tymoshenko had complained that Yushchenko's actions were complicating payment for gas supplies.

"Yushchenko is blocking normal cooperation between the central bank, which controls ... foreign exchange reserves, and the government of Ukraine, thus blocking the transfer of funds," Putin said.

Putin is due to meet Tymoshenko in Ukraine next month for talks that some analysts say could be used by Moscow to give a boost to her presidential campaign.

Yushchenko, who has unnerved Russia with talk of joining NATO, has low ratings and is expected to fall in the first round. Tymoshenko and former prime minister Viktor Yanukovich are frontrunners in the vote.

Most Ukrainians hope the vote will end five years of political in-fighting that has paralyzed decision-making and frustrated reform in one of Europe's worst performing economies.

Ukraine's Deputy Prime Minister Hryhory Nemyrya told Reuters this week he was confident there would be no new end-of-year gas war with Russia, but conceded that meeting monthly bills was not easy.