(Reuters) – Russia cut off gas to Ukraine on Monday in a dispute over unpaid bills that could disrupt supplies to the rest of Europe and set back hopes for peace in the former Soviet republic.

After weekend violence that included the loss of 49 troops in the downing of a Ukrainian plane, Russia said Kiev missed a deadline for a $1.95 billion debt payment and it would now only get gas paid for in advance. It insisted that Ukraine must also ensure that it lets Russian gas flow through its international pipelines to Moscow’s clients in the European Union.

Kiev and Moscow blamed each other for the failure to agree overnight on the price of future gas deliveries and refused to abandon well established positions: Russia offering a discount and Ukraine rejecting that as a tool for political manipulation.

The talks are bound up with the worst crisis between Russia and Ukraine since the Soviet Union collapsed and rising tensions over Saturday’s shooting down of the aircraft by pro-Russian separatists in the east, an attack on the Russian embassy in Kiev and Western charges that Russia is arming the rebels.

“Thanks to the unconstructive position of the Ukrainian government, today a prepayment system was introduced,” Alexei Miller, the chief executive of Russian state exporter Gazprom, told Prime Minister Dmitry Medvedev during a somber meeting at a government residence at Gorki, outside Moscow.

He said Ukraine had “adopted a position that can only be called blackmail”, adding: “They wanted an ultra-low price.”.. see more

source: reuters