The announcement on Thursday came as Gela Bezhuashvili, Georgia’s foreign minister, was visiting Moscow in the hope of easing tension.

 

Bezhuashvili said he was not surprised by the announcement as Russia had been saying that it would put Georgia on the same payment terms as other European nations.

 

Russia has assured Georgia that it would not cut off gas or electricity supplies to his country, he said.

 

"They present it as a commercial deal, but there is a big portion of politics … the price we pay for our choice in setting pro-Western policies," Bezhuashvili said.

 

Bezhuashvili said his country had worked to diversify its energy sources away from Russia, which has been virtually the only supplier.

 

"Negative role"

 

It is counting on negotiations with Azerbaijan, Turkey and Iran, which can cover Georgia's 1.5 to 1.8 billion cubic metre annual demands, he said.

 

Bezhuashvili said Russia played a "negative role in manipulating the conflicts," and complained that Moscow was turning a blind eye to illegal activities in the two separatist regions.

 

"Russian banks are operating without licenses, contravening international regulations to stop money-laundering, and counterfeit dollars are being printed in South Ossetia," he said.

 

"The most dangerous activity is [Russia's] uncontrolled illegal arms deals with the breakaway regions, that makes it very difficult to control the situation," Bezhuashvili said.

 

Gazprom has consistently argued that price increases for former Soviet neighbours are a long-overdue recalibration towards market pricing.

 

Price blow

 

However, they have been widely seen in the West as part of the Kremlin's attempts to put pressure on ex-Soviet neighbours.

 

Gazprom temporarily switched off the gas it supplies to Ukraine at the start of the year after Kiev refused to accept an abrupt price rise that was seen as a calculated blow to its Western-leaning government.

 

Since the appointment of Viktor Yanukovych, the Ukrainian prime minister, Ukraine has been able to negotiate a lesser price rise for 2007.

 

Cuts would also deal a blow to Georgia's landlocked neighbour, Armenia, which receives its gas from Russia via Georgia.

 

Armenian businesses already have been forced to organise costly new export routes to Russia due to the transport blockade.