Russia threatens to cut off Ukraine's gas supply

Russia drastically raised the price for vital winter fuel supplies to neighbouring Ukraine yesterday, hours after threatening to cut off the country's gas if a deal was not reached by January 1.

Gazprom, the Kremlin-controlled gas company worth up to £55bn, said the new starting "market price" was $220-$230 (£124-£129) per thousand cubic metres.

Alexander Medvedev, deputy chief of Russia's largest company, said talks about the price had dragged on for so long that it had risen nearly 50%. "Ukraine has wasted time and it is now out of the question to discuss $160," he told the Russian NTV television station.

Ukraine's western-oriented president, Viktor Yushchenko, tried to play down the conflict, suggesting a solution could be found within weeks. "The main thing is not to allow the Ukrainian or the Russian side to politicise this issue, [resorting to] political speculation," he told Interfax.