Riga  - Russian gas supplier Gazprom on Tuesday cited a lack of democratic structures, political instability and reneging on contracts as reasons for putting the squeeze on former Soviet republics Belarus and Ukraine.

"Gazprom's decisions had no ill-will," the company's deputy chairman, Valery Golubev, told a group of regional business leaders at the Baltic region forum in the Latvian capital, Riga.

Averting a threat of cutting supplies to the rest of Europe, Gazprom and Ukraine's government agreed in March to eliminate intermediate companies, some of which have been accused of funnelling proceeds to organized crime syndicates.

Gazprom's decision to cut off supplies to Ukraine in 2005 because of disagreements between Kiev and Moscow spiralled into a fear that Russia may use its economic foothold in the region to advance its political goals.

The fear was especially felt in Estonia, Latvia and Lithuania, which would have to rely on Russia for energy after the only existing nuclear power plant shuts down at the end of 2009.

However Gazprom has not cut off supplies to the Baltic states in 18 years since their independence from the Soviet Union, Golubev said.

Belarus paid its bills with Gazprom last August after the Russian gas monopolist threatened to reduce deliveries because Minsk fell behind on payments for the last six months of gas.

A late 2005 disagreement between Moscow and Kiev on gas sold to Ukraine halted the flow, spiking prices as far away as France. Gazprom temporarily cut off supplies to Ukraine again last month, during the latest round of price negotiations.

Gazprom, the world's third largest corporation accounting for roughly 3 per cent of Russia's gross domestic product (GDP), sells some 150 billion cubic metres of natural gas to European consumers each year.

The business, in today's market of rocketing energy prices, is worth as much as 45 billion dollars every twelve months to the Kremlin. (dpa)