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Russian president makes step toward Ukraine - Medvedev

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MOSCOW, December 29 (RIA Novosti) - The Russian president's offer to grant Ukraine a $3.6 billion loan to finance its Russian natural gas imports can be considered a step in the direction of Ukraine, the Russian first deputy prime minister and chairman of Gazprom's board of directors said Thursday.

"The proposed plan is a step toward Ukraine," Dmitry Medvedev said. "But this step fully accounts for the interests of Russian producers and the state."

Putin's proposal was meant to resolve the Russian-Ukrainian gas dispute. Ukraine, which heavily depends on Russian natural gas, has not yet agreed to a more than four-fold increase in gas prices, claiming the price hike is politically motivated. Russian gas monopoly Gazprom threatened to cut off deliveries beginning January 1 if a 2006 contract on gas deliveries to Ukraine and transit to Europe via Ukraine has not been signed.

Medvedev said it had not been an easy decision and that Russia would have to raise considerable funds, but added that it was an absolutely transparent and market-oriented decision.

"The motives behind the decision are clear. There is a willingness to support Ukraine, which has asked for a transitional period to move from state-controlled economic principles to adopting free market ones," Medvedev said.

He said too many companies had profited from re-exporting Russian gas in Ukraine and that their revenues had not reached the Ukrainian budget.

He also said the loan was a good way to end the price dispute between the two sides.

"This is an opportunity to finalize the issue: Ukraine will buy gas at market prices and enjoy beneficial loan terms," Medvedev said.

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