RUSSIA INSISTED last night that it would not supply gas to Ukraine until it agreed to pay the full European market price for the fuel, something Kiev says would cause economic meltdown.
The condition did not appear to apply to gas exports to Europe via Ukraine, which Russia officially stopped yesterday after again accusing its neighbour of illegally siphoning the fuel from pipelines. Ukraine reiterated its own claim that Kremlin-controlled firm Gazprom had simply turned off the gas.
The halt in Russian gas forced several countries in eastern Europe and the Balkans to limit power supply to industry and urge factories to switch to other fuels.
Thousands of households were without gas heating in Bulgaria and Bosnia, two of 18 countries that have suffered a complete cessation or severe drop in Russia gas flow in recent days, after Gazprom reduced and then severed supplies to Ukraine due to a row over Kiev's alleged failure to pay all its 2008 fuel bills.
In a telephone conversation, Russian president Dmitry Medvedev told Ukrainian counterpart Viktor Yushchenko that gas provision to Ukraine could only restart once he agreed to pay "the market rate, corresponding to the European price level . . . (without) discounts or special rates."
Ukrainian officials have previously dismissed the suggestion that Kiev - which is in the grip of a severe economic crisis - could pay the European rate of $450 per 1,000 cubic metres, compared to the $179.50 that it paid last year.
Mr Medvedev also demanded a new "control mechanism" for the neighbours' gas trade, which would include monitors from the European Union. Russian and Ukrainian officials agreed yesterday to let EU representatives monitor the flow of gas between the two countries.
As the EU tried to coax Moscow and Kiev towards a resolution, fear and anger were rising in the bitterly cold Balkans, where energy was being rationed as the gas crisis began to bite.
The mayor of the Bulgarian capital, Sofia, demanded the government's resignation, as lights on the facades of the city's public buildings were turned off, heating was shut down on public transport, and gas-powered buses and taxis ground to a halt.
Across Bulgaria, at least 45,000 households had no central heating as power plants switched from gas to other fuels, and scores of schools and kindergartens closed their doors as sub-zero temperatures gripped the country.
"We can't believe this is happening in the 21st century in the capital of an EU country," said Keti Angelova, a management consultant in Sofia.
Heating was reduced or turned off to more than 70,000 households in the Bosnian capital, Sarajevo, where electric heaters were in short supply after a surge in demand from a worried population.
"It all reminds me of the war when we were freezing, except there is no shooting," Hilmo Celjo said as he queued in Sarajevo to buy wood and coal, recalling the 1992-95 Bosnian conflict.
"We were freezing the whole night. It was horrible, just like during the war," said Suada Salispahic, another resident of Sarajevo. "The stove is the same one we used during the war, we might be forced to feed it with old shoes just like we did back then."
In Serbia, where Orthodox believers were celebrating Christmas Day, officials said they had no gas reserves, and heating to tens of thousands of people was cut.
"In all the countries affected by this problem, people could start dying of cold as extremely low temperatures are forecasted to hit us as of Thursday," said Almir Becarevic, the head of Bosnia's gas firm. "This could result in a real humanitarian disaster."