Medvedev scraps Ukraine visit after gas merger fails

Russian President Dmitry Medvedev has scrapped plans to visit Ukraine for a Navy Day parade after Kiev balked at Moscow's proposal to merge the countries' state gas firms, Kommersant said on Monday. Citing sources in the Ukrainian foreign ministry and the Kremlin administration, the newspaper said the signing of an agreement to merge Russia's Gazprom with Ukraine's Naftogaz was the main condition of Medvedev's Sunday visit to the Crimean port of Sevastopol, where the Russian Black Sea Fleet is based. "Since we deemed this disadvantageous, we were told: then there won't be any visit," the Ukrainian foreign ministry source told Kommersant. "Despite the current state of Russian-Ukrainian ties, we are interested in any contact between the presidents." The Kremlin source added: "When it became known that this would not happen, Dmitry Medvedev made a decision not to go to Ukraine." A Russian defense ministry source told AFP on Friday that Medvedev had cancelled plans to go to Sevastopol to preside over a Navy Day parade amid an unexpected surge in tensions, saying the status of the parade was unexpectedly downgraded. Medvedev on Sunday visited the port of Baltiisk in the Russian exclave region of Kaliningrad instead. His spokeswoman Natalia Timakova has denied to AFP that the Kremlin chief had any plans to go to Sevastopol. Yanukovych has worked hard to improve relations between Moscow and Kiev since defeating the leaders of the pro-Western Orange Revolution in presidential elections last year. But observers say Ukraine has over the past months grown disillusioned with the prospects of closer ties with Moscow and its attempts to strong-arm Kiev into joining a Russian-led customs union. Ukraine has also repeatedly insisted that any joint business with Gazprom should be implemented on equal terms and ruled out an outright merger. Moscow fears Ukraine may be ramping up its ties with NATO despite its non-aligned status. Russia in June protested the arrival of a US Navy cruiser equipped with a ballistic missile defence system in the Black Sea to take part in naval exercises with Ukraine.