Nov 4, 2009, 13:48 GMT
Brussels - The International Monetary Fund should speed up a 3.8-billion-dollar loan to Ukraine so that the former-Soviet state can buy natural gas and prevent a new crisis in Europe, Ukraine's deputy prime minister said Wednesday.
'We need a short-term, ad hoc solution' to chronic financial problems which mean that Ukraine could default on a gas debt as early as Friday, Hrihoriy Nemyria told journalists in Brussels.
A quarter of the gas burned in the EU comes from Russia, and 80 per cent of it passes through Ukraine. Because there is a limit to the capacity of the Soviet-era pipelines, Ukraine usually buys Russian gas each summer, stores it until the winter and then sells it on to European clients.
But chronic financial problems within the country and political feuds at home and with Russia have cast that system into disarray.
In January, Russia's gas monopoly, Gazprom, shut off supplies to its Ukrainian equivalent, Naftogaz, in a row over unpaid bills. The row left a swathe of countries in central and southern Europe without gas in the depth of winter.
This week, Russian and Ukrainian officials have warned that similar problems could arise as early as the end of this week. Russian Prime Minister Vladimir Putin said that he thought the European Union should offer a bridging loan.
Nemyria, in turn, said that the IMF should speed up the payment of the fourth slice of a massive loan package it agreed to keep Ukraine's economy afloat in the midst of the financial crisis.
'The situation in Ukraine is extraordinary,' he said.
The situation is complicated by political issues. Western observers say that Russia is keen to portray Ukraine as an unreliable partner so that it can isolate its pro-Western regime and revive European backing for new pipelines linking Russia directly to the EU.
Simultaneously, Ukraine's ruling clans are gearing up for a presidential election on January 17, with energy issues and relations with Russia set to be hot topics.
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