What will you do for us?: Medvedev ties Ukraine aid to gas negotiations.
Russia says Ukraine credit tied to gas
Russian President Dmitry Medvedev said today it would be difficult for Moscow to grant Ukraine financial credits to cover its deficit until the two states resolved their gas dispute.
Russia has said the Ukrainian government, seeking to extend credits to help cover its budget deficit, has asked it to secure a $5 billion loan.
However, the two countries are also locked in a battle over gas supplies.
"Our Ukrainian colleagues ask us to give money. How can we give money if we cannot agree on such a crucial issue," Medvedev told a news conference with German Chancellor Angela Merkel.
Russia must be part of the talks on a deal between Ukraine and the European Union on upgrading its gas pipeline network, Medvedev said in a Reuters report.
Russia, angry at being excluded from the talks, has criticised the modernisation agreement, which was signed by the EU and Ukraine earlier this month.
Ukraine is the main transit route for Russian gas exports to Europe and the spat has revived fears of a repeat of a dispute over prices with Russia in January which disrupted supplies to many countries in the middle of winter.
Ukraine has said the overhaul of the gas transit system, likely to boost capacity, was not aimed at Russia.
Merkel said the parties must prevent the dispute from escalating.
"There is no need to make a conflict out of something that is not a conflict," she said.
Medvedev said Russia was ready to continue consultations on the issue but that if Russia was not included, it would affect relations.
"If our Ukrainian partners decided to hold consultations without Russia's participation, we can take our own steps of which you know," said Medvedev, in an apparent threat to halt deliveries.
"You cannot distribute a product you don't own or build a delivery system without the participation of the country which produces the product," he said.