Ukraine PM defends gas deal with Russia

13:48, 21 January 2009
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Poland and Romania, Ukraine`s...

Prime Minister Yulia Tymoshenko on Wednesday defended as a "true victory" the accord she negotiated with Russia to restore the flow of gas to Europe, hitting back at criticism from her ally turned rival, Ukraine`s president, according to Reuters.

Poland and Romania, Ukraine`s western neighbours, became the latest central European countries to report the resumption of gas supplies from Russia interrupted when the two ex-Soviet states argued over payment arrears and price.

The fresh hostilities between Tymoshenko and President Viktor Yushchenko made it virtually certain there would be no let-up in the political turmoil that has gripped Ukraine since the 2004 "Orange Revolution" brought pro-Western leaders to power.

Tymoshenko clinched the deal in long talks at the weekend in Moscow. It provided for Ukraine to pay market prices for gas less a 20 percent discount -- $360 in the first quarter -- likely to decline later in the year as markets fluctuate.

It also provided for the elimination of intermediaries in gas trading, as the prime minister had long demanded.

"Ukraine has won a special price," Tymoshenko told a cabinet meeting. "For Ukraine this is a true victory. I would like Ukraine to learn to celebrate victories rather than sling mud."

Yushchenko, at odds with the premier since she took office for a second time in late 2007, decried the deal on Tuesday as a "defeat". He said the price for Russian gas was too high with no increase in Ukraine`s transit fees to offset costs.

But Tymoshenko said the deal was the best that could have been achieved for Ukraine, where industrial production is in a slump as the world financial crisis hits the economy.

"I am surprised that people who are aware of things have the gall to say that Ukraine`s interests have been damaged," she told ministers.

In addition to fuelling tensions between Kiev and Moscow, the gas row accentuated the differences between the president and prime minister a year ahead of a new presidential election.

Tymoshenko rides high in opinion polls just behind opposition leader Viktor Yanukovich, friendlier towards Moscow and the main target of the 2004 mass protests against poll fraud. The president trails far behind in single figures.

The elimination of intermediaries would do away with longstanding corruption in the gas trade as Russian giant Gazprom would deal directly with state energy firm Naftogaz.

"There will be no more intermediaries. At last we have done away with their biggest source of windfalls," she said. "It is those who were involved in bribing schemes who are now saying they are unhappy."


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