Russian Prime Minister Vladimir Putin met with his Ukrainian counterpart Yulia Tymoshenko in Moscow on Saturday to discuss controversial economic and military issues that have raised tensions between their two countries.  Mr. Putin warned that resolution of these issues could impose various costs on Ukraine, not only in terms of higher energy prices, but also the possible loss of lucrative contracts with Russia's security and space industries.  But as Emma Stickgold reports for the VOA from Moscow, Kyiv is seeking to minimize those costs.

Prime Minister Vladimir Putin said Saturday that Russian leaders would like to slowly increase gas prices for Ukraine closer to the higher rate encountered by its European neighbors.  But some Central Asian suppliers are encouraging Moscow to do so starting in January of 2009.

 Mr. Putin says Turkmenistan and Uzbekistan, who deliver natural gas to Ukraine via pipelines through Russia, are to blame for the possible increase.  The CEO of Gazprom, Alexei Miller, has said Ukraine will likely face more than double its current rates, going from the $179 per cubic meter to more than $400.  

Ms. Tymoshenko told Ukrainian's One-plus-One television station that the two leaders agreed Russia would raise Ukraine's price to European levels over three-to-four years.  There is no immediate confirmation of that from the Russian government.

Natural gas has been a contentious issue between the two countries, with Russia having reduced or cut off Ukraine's gas supply on a number of occasions in recent years.

The Russian head of government praised Ukraine for being debt free when it comes to current gas bills for the first time in many years.

Mr. Putin says Ukraine has debts from previous years, and both sides are still searching for a solution to this issue. However, there are no debts for the current bills, which he says is a good result of the work of the current Ukrainian government and a good condition for moving forward in resolving gas-related issues.

Turning his attention to Ukraine's possible membership in the North Atlantic Treaty Organization, Mr. Putin said Russia would terminate its military and other contracts with Ukrainian weapons and space facilities that depend on Moscow, if Ukraine joins the Western defense alliance.

Moscow opposes bids by Ukraine and Georgia to join NATO, and Mr. Putin says membership in the organization would be counter-productive for international security.

Independent Russian military analyst Pavel Felgenhauer told VOA that efforts to recreate Ukrainian productions lines may prove to be quite difficult.

"How successful will be these plans to create production lines - different equipment and components that are being made in Ukraine today on Russian territory - that is another question," he said.  "Maybe partially they will be successful, maybe partially not.  It is not an easy endeavor at all to simply cut off Ukraine - but the threats are there for sure."

Another contentious issue is the disposition of Russia's Black Sea fleet, which is stationed in Sevastopol on Ukraine's Crimean peninsula.  Russia's representative to NATO, Dmitri Rogozin, recently said Russia would never leave Sevastopol, despite a lease agreement with Ukraine that stipulates a withdrawal in 2017.  

Recently, Moscow has been seeking to extend the lease, but Ms. Tymoshenko indicates that is not likely to happen.
The Ukrainian prime minister says both sides have an agreement until 2017 and her country will observe it as it does all of its other international agreements - very accurately, and without any deviations.

Pavel Felgenhauer notes that much can happen between now and 2017.

"Right now, there are no real plans at all of actually moving the fleet from Crimea and its infrastructure and of course this entire issue right now is now of course immediate," he said.  "The fleet can stay until 2017, which is quite some time away - there can be elections in Ukraine that may bring a more pro-Moscow government to power - many things other can happen."

Carnegie Moscow Center political analyst Sam Greene told VOA this weekend's Putin-Tymoshenko discussions indicate much work is needed to repair strained relations between Russia and Ukraine.
"I think it was clear through this weekend that these issues remain troublesome for both sides and that neither is quite ready to make the compromises that would be needed to really make progress in terms of moving past these issues or working through them in some way," he said.
But Greene notes there has been a change in the nature of the dialogue, noting that a cordial tone recognizes that neither country really wants or needs the relationship to be problematic.