German Foreign Minister Frank-Walter Steinmeier on Wednesday warned of a new flare-up in the Russian-Ukrainian gas conflict, and possible reductions in energy supplies to Europe, according to dpa. Berlin's top diplomat, visiting the Ukrainian capital Kiev with Polish Foreign Minister Radoslaw Sikorski, called for renewed efforts to head off an impending impasse. Disputes between Ukraine and Russia over gas prices led to a total cut-off of Russian gas exports to Ukraine in January. The blockade - lasting three weeks - dramatically reduced supplies to Europe, which receives roughly one-quarter of its natural gas needs via Ukrainian pipelines. "We are together here in Ukraine, in order to at least make the attempt, to prevent another gas supply crisis. Whether that will be successful or not, we both can't yet say," Steinmeier said to reporters in Kiev, alongside Sikorski. "There are pressing interests to prevent another another gas supply conflict," Steinmeier added. Ukraine's cash-strapped government has struggled this year to pay for Russian gas imports on time, provoking repeated Kremlin threats of another shut-down. Ukraine's currently feuding political Prime Minister, Yulia Tymoshenko and President Viktor Yushchenko, should work "at the very least towards cooperation," in order to meet terms for further international financial aid needed to head off another (gas) conflict," Steinmeier said. Germany and Poland in April began an EU programme to assist Ukraine with its financial difficulties, to prevent a second Russian cut-off of gas supplies to Ukraine. Polish, German, and Ukrainian officials were discussing a possible four billion dollar loan to Ukraine to be made available by the end of June, officials from Tymoshenko's office said. Ukraine could run out of money to pay for Russian gas by as early as the beginning of July, Sehodnia newspaper reported. A gas rate price increase for Ukrainian gas consumers, among other reforms, are among the conditions set by international loan organisations to Ukraine for further credit. Steinmeier and Sidorski on Wednesday also met with Yushchenko as well as former Prime Minister Viktor Yanukovich, the leader of Ukraine's opposition Regions Ukraine political party. "I am sure that Ukraine will provice Europe stable deliveries of fuel and energy resources; the gas and oil will keep going to Europe," Yanukovich said. Gas reserves in Ukraine are, according to local media reports, some 30-40 per cent full, enough to meet Ukrainian demand for 30 - 45 days. Were Russia to cut off gas supplies to Ukraine the downstream effect on Europe would be almost instantaneous, as Ukraine's reserves would barely cover Ukrainian gas needs, according to industry observers. Steinmeier and Sidorski promised to work hard on obtaining for Ukraine further financial assistance, but during meetings with reporters in Kiev both said Ukraine must meet "political conditions." Ukraine's creaky finances currently are heavily dependent on an ongoing International Monetary Fund (IMF) loan programme worth some 16.5 billion dollars, of which two of six tranches have been paid out. For Ukraine to receive further tranches of the loan, the country must use the money in sectors designated by the IMF, particularly in paying the gas bill to Russia on time, and propping up Ukraine's wobbly banking sector. Ukraine's economy has suffered badly from the international financial crisis, with overall GDP set to fall between 10 and 20 per cent during 2009. Ukraine is set for a presidential election in early 2010, creating a political m~+s;!ere`|he government is unwilling to hike state-controlled natural gas prices in the country, for fear of angering voters.
