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Ukraine gas payment issues political not financial: Putin

Russian Prime Minister, Vladimir Putin, says Ukraine is likely, once again, to have problems paying for its gas supply, but that these stem from domestic Ukrainian politics rather than lack of finances.

In the wake of a series of disputes between Russian, Gazprom, Naftogaz and Ukraine, which have seen gas supplies to Ukraine, and supplies across Ukraine for Europe, halted, the Russian Prime Minister stated that the payment issues faced by Ukraine were not the result of a lack of financial capacity to pay, but rather Ukraine’s fractious domestic politics.

“According to the International Monetary Fund, Ukraine does have the money. Furthermore, the IMF thinks paying for Russian gas out of Ukraine's foreign reserves is possible – and the right thing to do. A large part of IMF funding is provided by Russia. But, as the Ukrainian Prime Minister Yulia Timoshenko told me, the country's president is blocking money transfers within the country.”

Russian political figures backed the Prime Minister, with Vyatcheslav Volodin, secretary of the general council’s presidium, rejecting any proposal to increase domestic gas charges in order to compensate for the possibility that Ukraine may not pay for its gas consumption.

“We by no means can shift the problems created by Ukraine to our citizens and won’t raise taxes for our Russian companies.”

Meanwhile, the European Union has also weighed in on the disagreement, with European Commission President, Jose Manuel Barroso saying it was not fair that the EU should bear the brunt of the two countries' dispute.

In January this year, a row between Moscow and Kyev over Ukraine's illegal syphoning of gas resulted severe disruption of supplies to Europe.

This resulted in many parts of Eastern and Central Europe receiving no supplies for nearly two weeks during a particularly cold spell of weather.

A spokesman for Ukraine's President Yushenko has issued a prompt response, saying the office was not hampering payments for gas.