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Deputy Prime Minister Hryhoriy Nemyria said he expects no year-end complications in relations with Russia, and hoped the president vetoes a populist wage increase.

(Reuters) – A Ukrainian deputy prime minister expressed confidence on Oct. 27 that there would be no new end-of-year dispute with Russia over gas supplies, but conceded that meeting monthly bills was not easy.

Russia cut gas supplies to Western Europe across Ukraine in January 2006 and again in January this year during a row with its ex-Soviet neighbor over gas prices and payments.

A three-week standoff in the last dispute affected hundreds of thousands of Europeans and ended with a 10-year agreement being signed between Russia and Ukraine.

“I am confident that this year there are reasons to believe that there will be no third gas war,” Deputy Prime Minister Hryhoriy Nemyria said in an interview with Reuters.

Ukraine’s state energy firm Naftogaz pays the Russian Gazprom monthly according to a variable price for the quarter calculated by the two sides.

Asked specifically about the October bill, Nemyria said Prime Minister Yulia Tymoshenko, due to meet her Russian counterpart Vladimir Putin for bilateral talks on Nov. 19 and 20, was doing everything to stop a new dispute breaking out.


Extra spending?

But he said the situation was not easy. “I will be frank, it has not been easy because Ukraine and Russia, as in other countries, are doing this (seeking agreement with each other) in the conditions of a big economic crisis.”

He linked gas payments to the difficulty the government would have in spending an extra one billion dollars this year if President Victor Yushchenko, Tymoshenko's rival in a Jan. 17 election, refuses to veto a draft law raising the minimum wage.

“If adopted, (it) would result in additional spending of $1 billion in the next quarter which Ukraine cannot, just cannot afford,” he said.

Not only would the increases strain the budget further, but the International Monetary Fund may not disburse $3.8 billion of its $16.4 billion bailout plan if Ukraine fails to veto the bill, according to its statement issued on Sunday.

Nemyria said Yushchenko had two weeks to veto the law and the timing factor was «crucial» given the link with the IMF which has yet to decide on the fourth tranche. IMF funds have proved to be a lifeline for Ukraine, whose economy is expected to shrink by up to 15 percent this year after its heavy industries cut production, exports plummeted and the hryvnia currency plunged in value. Only Yushchenko can veto the parliamentary bill, yet to be signed by the assembly's speaker and sent to his office. And parliament could overturn any veto should it garner a two-thirds majority.