Moscow to restore Ukraine gas supply

BERLIN -- The government of President Vladimir Putin last night backed away from a politically driven attempt to starve Ukraine of natural gas after the European Union, led by Germany, unequivocally warned that Russia could face serious economic consequences if it meddles with the West's energy supply.

The stunning turnaround meant a big chill was avoided in winter-locked Europe, and it suggested that a big lesson might have been learned in Moscow -- that Russia may control supply, but Europe controls the investments and foreign aid that Putin desperately needs to bring his country forward.

Putin was left looking like the neighborhood bully -- more than willing to cut off Ukraine's supply of natural gas, with potentially devastating consequences for the fledgling democracy, but quickly drawing back when Western Europe and the United States protested.

Russia's state-owned gas monopoly, Gazprom, promised to restore the normal flow of gas to Europe by no later than tonight after tightening the valves on a massive pipeline system that feeds not only Ukraine but nearly every country in Europe. In a face-saving effort, the natural gas colossus said the reduced flow through the pipelines that caused immediate shortfalls in about a dozen European countries was the result of Ukraine ''stealing" gas intended for European markets.

Across Europe, Russia was castigated yesterday for using the sort of menacing tactics that many had thought ended with the Cold War and the collapse of the Soviet Union. ''The novelty of 2006 is Russia's appearance on the map of world threats," said Italian newspaper La Stampa. ''Only its tool has changed: Instead of nuclear warheads and the international communist movement, today there is the gas tap."

Tiny Moldova -- like Ukraine, a former Soviet state that has attempted to realign itself politically with the West -- said Russia has almost entirely cut off its flow of natural gas.

Germany joined the United States in warning that Moscow's unilateral action -- interpreted by many analysts as an effort by the Putin government to punish Ukraine for its recent political tilt away from the Kremlin toward the European Union and NATO -- could damage Russia's economic relations with the West. The country depends heavily on investment and economic aid from Europe.

Russia provides a quarter of Europe's natural gas, with most of that fuel, roughly 80 percent, carried through a pipeline system crossing Ukrainian territory. If the flow is not restored, industrial consumers in European countries could feel the impact within days. Despite Russia's assurances yesterday, governments across the continent were scrambling to find alternative supplies even as they assured consumers that rationing of gas for heating homes and powering factories is not imminent.

On Sunday, Russia stunned the continent by dramatically reducing pipeline flow in a wrangle over prices with Ukraine, saying the action would affect only gas meant for its neighbor and not reduce the larger volumes destined for Western Europe.

But gas systems across Europe yesterday reported sharp drops in the flow of gas, raising fear that the continent might be headed for a mid-winter energy crisis and a nasty row with its giant eastern neighbor.

Reductions in the volume of natural gas from Russia were reported in Poland, Austria, Hungary, Slovakia, and Italy, with several countries already scrambling for alternative sources of fuel.

Michael Glos, Germany's minister for economy, called upon Moscow to behave ''responsibly," suggesting that European countries might look to other sources of natural gas if Russia seems an unreliable supplier.

Germany is Russia's largest single customer in Europe, but officials in Berlin said the country has sufficient reserves to endure as much as two months of interrupted gas flow.

Other countries aren't so lucky. Hungary yesterday instructed large firms to switch to oil after the supply of gas from Russia dropped 40 percent.

As European leaders prepared for an emergency meeting tomorrow to discuss the situation, tensions between Moscow and Kiev intensified as Gazprom accused Ukraine of siphoning off some $25 million worth of natural gas destined for Western Europe on the first day of the supply interruption.

Speaking on Russian television, Aleksandr Medvedev, Gazprom export chief, charged Ukraine with ''indisputable thievery of our gas from the export pipes. . . . If thievery continues at this rate, the volume and cost of stolen gas will be considerable."'

Ukraine denied the charge. ''There has been no unauthorized diversion of natural gas," Fuel and Energy Minister Ivan Plachkov told reporters in Kiev, the Ukrainian capital.

The reduction of natural gas flow to Ukraine, a former republic in the old Soviet Union, came after months of rancorous price talks between the two countries. Ukraine, whose economy depends heavily on cheap fuel from Russia, had refused to pay the $230 per 1,000 cubic meters of gas demanded by Gazprom, a sharp increase from the $50 previously paid.

European Union customers pay roughly $240 per 1,000 square meters, according to gas industry analysts.

But Moscow's decision to tighten the flow valves seemed prompted at least partly by politics, not simply a price dispute.

The Putin government has made no secret of its anger with reformist ''Orange Revolution" leader Viktor Yushchenko, who is pushing Ukraine away from Russia's orbit toward a stronger alliance with the European Union and NATO.

The US State Department criticized Russia's apparent effort to use natural gas as a political cudgel.

Material from wire services was used in this report.