Ukraine's Prime Minister Mykola Azarov ratcheted down the rhetoric on Sunday in a brewing conflict over natural gas supplies from Russia to Ukraine, saying Kiev will honor its contract with Moscow until an agreement is reached to change it.
"We have a disagreement and believe these deals are not beneficial for us; our citizens, country and economy suffer from them. Nonetheless, we will continue to fulfill the agreements until we come to terms [with the Russians]," Azarov said in comments published on a government website.
"In regards to a gas war: I firmly and absolutely categorically want to say to everyone that nobody foresees any wars, including 'gas' ones, with our strategic partner Russia," Azarov said.
Ukraine has been unsuccessfully trying over the past 18 months to negotiate lower gas prices and last week suggested the deadlock may force Kiev to abrogate through court the controversial 10-year gas agreement signed in January 2009.
Azarov said Friday Ukraine may move to liquidate Naftogaz Ukrayiny, the national energy company, and cancel the controversial agreement, forcing Gazprom to renegotiate a new deal.
On Saturday, the presidents of Ukraine and Russia met at a summit of leaders from the Commonwealth of Independent States in Dushanbe, Tajikistan and talked briefly about the escalating tensions over the controversial gas deal, according to a statement posted by the Kremlin on Saturday.
Ukraine's President Viktor Yanukovych had been seeking to use the summit as an occasion for a separate meeting with his Russian counterpart Dmitry Medvedev to discuss the recent aggravation over natural gas talks.
Instead, Medvedev dismissed Ukraine's gas sector proposals as lacking specifics, according to the Kremlin statement.
Medvedev warned that annulling the contract would have serious consequences for Ukraine's economy and that Ukraine was bound by the contract's terms and price even if Naftogaz Ukrayiny is reorganized.
INTERNATIONAL ARBITRATION?
Speaking with Ukrainian reporters after the summit, Yanukovych said that appealing to international courts to cancel the agreement is a measure of last resort which will only be used if the parties fail to achieve compromise.
"We are facing a situation in which Ukraine is losing a lot of money," Yanukovych said in comments released by his press service. "We cannot sit and wait without implementing active measures to somehow solve the problem."
Yanukovych argued that an agreement signed between the two governments and ratified by both countries' parliaments in 2004 calls for annually setting volumes of gas imports and gas prices between Ukraine and Russia, and that the 2009 agreement violates the earlier deal.
"If Russia does not agree with this, we, of course, will have to appeal to an international court," Yanukovych said. "But I hope that we have enough wisdom to find a joint decision without court."
UKRAINIAN HUMILIATION
Yanukovych also warned Russia against putting pressure on Ukraine, and said as the president he will do whatever it takes to prevent this.
"Our position is based on principle and any pressure applied concerning these issues is humiliating," Yanukovych said. "We will not let them talk to us like that."
"First, they drive us into the corner and then dictate conditions," Yanukovych said. "This humiliates not me personally, but the country, and I cannot let this happen."
Russian Foreign Minister Sergei Lavrov said Monday at a Moscow press conference broadcast on the Rossiya-24 channel that Russia isn't trying to force Ukraine into a corner with a gas conflict or force Kiev to join the Customs Union between Russia, Belarus and Kazakhstan.
"Those directly involved with the gas issues and gas cooperation... will go about it professionally and without politicization," Lavrov said, adding that the negotiations should be based on contracts and international agreements.
Ukraine's Foreign Minister Kostyantyn Hryshchenko, speaking at the same event, said that Kiev expects to resolve the gas issue with Russia on bilateral terms without going to court.
Russia has steadfastly refused to lower gas prices over the past 18 months of talks, leading Ukraine last week to announce plans to cut Russian gas imports by 66% over the next five years, including a 33% cut to 27 billion cubic meters in 2012.
But Russian gas giant Gazprom responded that Ukraine is contractually obligated under the deal's take-or-pay terms to purchase at least 33 Bcm/year.
Ukraine set a deadline of October 15 for reaching the gas deal with Russia and warned that the country may move to cancel the existing gas agreement.
Yanukovych on Friday ordered the government to get ready by October 1 to liquidate Naftogaz Ukrayiny and to create several independent entities, which the Ukrainian authorities have said would lead to a review of all existing contracts.
Around 80% of Russia's gas exports to Europe pass through Ukraine's pipeline system.
