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Ukraine hopes for energy project with Russia, EU

Ukraine hopes for energy project with Russia, EU

President Viktor Yanukovych on Friday said a proposed project to modernize the aging gas pipeline network in his country should go ahead, but vowed not to cede control of the pipelines to Russia.
Yanukovych said the modernization is a less costly and more effective alternative to the South Stream gas pipeline project that would transport Russian natural gas under the Black Sea to Bulgaria and other European countries bypassing Ukraine.
The construction of South Stream _ funded chiefly by Russia's Gazprom and Italy's Eni _ is planned to start this year and to be completed by 2015.
Work on the project intensified after price disputes between Russia and Ukraine caused shutdowns in Russian gas supplies to Europe via Ukraine. Yanukovych insisted that Kiev is a reliable partner and should not be excluded from energy relations.
"Why did you decide to do without us and ignore us?" Yanukovych said at a meeting with a group of foreign reporters. "We believe it's not what partners do, it's wrong."
He stressed that any possible joint energy venture involving Russian and European investors will not see Ukraine ceding control over its pipelines. Russia has signaled interest in helping modernize Ukraine's pipelines, but pushed for control of the sprawling network.
"When we talk about creating some joint enterprise, if it is on Ukrainian territory, without a doubt the controlling stake should be on our side," Yanukovych said.
Yanukovych also defended recent regional elections in Ukraine, which drew criticism from Washington, saying the vote had technical flaws that will be addressed in future elections but was democratic and fair. He also said that democracy and freedom of speech were not under threat here, even though Ukraine has slipped on the press freedom list compiled by the Paris-based watchdog Reporters Without Borders.
"Have you ever heard me say 'don't criticize the president'? You won't hear that," Yanukovych said.
Asked about a controversial tax bill that has drawn anger from entrepreneurs across the country and sparked the biggest protests since his election in February, Yanukovych said he needs to analyze it before deciding whether to sign it into law.
The government insists that the tax reform is needed to fund pensions and other spending after a severe economic crisis, but businessmen say the new tax code will cripple small and medium-size enterprises by eliminating much-needed tax breaks.
Speaking ahead of a Ukraine-EU summit in Brussels next week, Yanukovych said his country will continue reforms to deepen economic integration with the European Union and hopes the EU and Ukraine can eliminate visas for each other's citizens by 2012.