As Russia prepares to take over the G8 presidency on January 1, its president, Vladimir Putin, is indulging in some more muscle-flexing.
The state-controlled Russian gas monopoly, Gazprom, is threatening to cut off supplies to Ukraine on January 1 if Russia's neighbour does not agree to pay quadrupled prices for the energy that meets a third of its needs.
Ukrainian officials are back in Moscow today for talks in a bid to resolve a dispute that could bring relations between the two countries to a new low and have repercussions for the EU.
The crisis began when Gazprom decided to jack up gas prices for Ukraine to $230 (£133.50p) per 1,000 cubic metres in line with world prices. Ukraine currently buys Russian gas for its homes and factories at a heavily subsidised $50 per 1,000 cubic metres.
Moscow makes the not unreasonable point that the move is purely economic and that its neighbour no longer has a right to cheap energy supplies for steelmaking and other industries that compete with Russia's own.
But recent deals with other former Soviet countries such as Belarus have kept prices low, raising suspicions that the price increase is not just about economics.
Relations between the two neighbours have been rocky ever since Viktor Yushchenko took power after defeating a Moscow-backed rival in the "orange revolution" a year ago. Mr Yushchenko wants to bind Ukraine closer to the west by joining Nato and the EU, something that makes Moscow nervous.
"Many Russians fear that the Ukrainian-Russian border would turn into a new 'iron curtain' if Ukraine joined the EU and that bilateral trade would be disrupted," says Dmitri Trenin, in a recent essay for the Centre for European Reform.
The dispute is causing ripples of nervousness in the EU. Germany gets around 30% of its gas supplies through Ukraine, so little wonder that the German government has called on Russia and Ukraine to strike a deal "as soon as possible" in their dispute.
Today there were signs that Moscow may be trying to take the temperature down. According to the Ukrainian prime minister Yury Ekhanurov, Mr Putin has vowed to ensure that gas supplies to Ukraine continue.
"Mr. Putin declared that gas deliveries to Ukrainian consumers must be ensured," Ukraine's Era FM radio quoted Mr Ekhanurov as saying.
A way out of the dispute is discernible. Ukraine acknowledges Moscow's economic case for a rise in energy prices, but says a transition period is needed to adjust to new prices. The two countries should try to work out the details of such a transition.
As Mr Trenin argues: "Russia needs to abandon the last remnants of imperialist thinking, be it spheres-of-influence fantasies or the use of subsidised energy supplies for political leverage."
But such an approach will be difficult with parliamentary and presidential elections in Russia looming, in 2007 and 2008 respectively.
"If Putin is seen as 'too soft' in his foreign policy, populists will seek to exploit nationalist sentiment by accusing him of having 'lost' Ukraine," Mr Trenin says.
Closer to hand, Mr Putin will not want the dispute escalate into a full-blown crisis. That would not be the kind of start he wants for Russia's presidency of the G8.
Mr Putin is already under fire for his increasing intolerance of dissent at home. His economic adviser, Andrei Illarionov, one of the few remaining liberals in the inner circle, resigned this week saying that Russia was no longer free or democratic. To be seen as an international bully will hardly improve Mr Putin's image.
