Pent-up political frustrations and fears about the global economic downturn are complicating what should be routine negotiations between Russia and Ukraine on gas prices and threatening to give Western Europe another headache over its energy supplies this winter.

Moscow and Kiev each accused the other today of being the first to walk out of New Year’s Eve talks on a gas supply contract for 2009 - and both hurried to take their cases to the EU, lest Brussels suspect either of political game-playing. Both assured EU states that their supplies would continue as normal, and indeed stockpiles in Ukraine and the West mean there is no immediate threat to hearths and homes in Western Europe.

The two sides are arguing over a $49 difference in the gas price. Russia wants to raise the price from $179.5 per 1,000 cubic metres to $250, while Ukraine says $201 should be enough. But a whole political and economic subtext thickens the plot.

No love has been lost between Moscow and Kiev since the 2004 Orange Revolution, but relations worsened last year when Ukraine threatened to refuse re-entry to its Crimean ports of Russian warships that had sailed to the Abkhazian coast during the war with Georgia. The Kremlin was outraged at what it saw as Ukraine’s disloyalty.

Vladimir Putin, the Russian Prime Minister, looked completely exasperated as he reported to his President Dmitri Medvedev, his protégé-turned-boss, that Ukraine had - once again - rejected Moscow’s "humanitarian" offer (the market price should be $418). Both knew the crisis would again make Russia look as if it was using its energy advantage to bully a smaller, former Soviet neighbour.

Having lost the initial propaganda war with Georgia last summer, Russia seemed determined to put its case to the West quicker this time and Mr. Putin telephoned European Commission president Jose Manuel Barroso to explain his stance in the gas row.

Pro-Kremlin political analyst Gleb Pavlovsky said in remarks published by Interfax that Ukraine was playing a "gas game" to spoil Russia’s relations with the EU. Ukraine had prepared in advance by filling its underground gas storage tanks, he alleged. "So if we are told that Russia, by cutting gas deliveries, is strangling Ukraine with hunger and cold, this will be a barefaced lie. Ukraine has deliberately created this crisis to blackmail Russia."

Ukrainian President Viktor Yushchenko has yet to comment on the row but Kiev said it had approached the EU for understanding, was ready to continue talks and hoped for a new gas deal by Orthodox Christmas on January 7.

Already impoverished Ukraine has been badly hit by the recession; indeed Mr. Putin claimed it was on the verge of national default. But Russia, while blaming the US for the economic downturn and refusing to pronounce the word "crisis" at home, is also facing rising unemployment and a sliding rouble. Ukraine needs the cheapest gas deal it can get while Russia, still over-dependent on energy exports, needs to keep prices as high as possible.

Both Russia and its neighbours fall back into a Soviet mentality from time to time. Russia is trying to move its economic relations onto a market footing but continues to subsidise countries, such as Belarus, that it perceives to be friendly and loyal.

The former Soviet republics insist on their independence but are not averse to taking handouts from Big Brother when it suits them.

For Vladimir Milov, a former Russian deputy energy minister, this was the root of the problem. The Russian gas company Gazprom’s image was harmed by repeated scandals ensuing from the fact that it sold gas to different countries at different prices, he told the Echo of Moscow radio. In future, it should conduct its energy dealings more professionally and without so much public fuss.

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