Russian President Vladimir Putin said Thursday the country will only deliver gas to Ukraine if it pays in advance in cash starting from June.
Putin first warned in April that Russia would do so, in a letter to European leaders whose nations are customers of Russian state-controlled Gazprom natural gas giant. He said Moscow would have to demand advance payment if Ukraine failed to start settling its mounting gas debt.
In the second letter released by the Kremlin Thursday, Putin said that a meeting involving Russian, Ukrainian and the European Union officials has failed to settle the issue. Putin said that Ukraine's gas debt to Russia has kept rising and has reached $3.5 billion.
"Given the circumstances, the Russian company has issued an advance invoice for gas deliveries to Ukraine, which is completely in accordance with the contract, and after June 1 gas deliveries will be limited to the amount prepaid by the Ukrainian company," Putin said in the letter.
The move is part of Russia's efforts to retain control over its struggling neighbor, which has been teetering on the verge of financial collapse and facing a mutiny in the east, where pro-Russian separatists seized administrative buildings, fought government troops and declared two regions independent following Sunday's referendum.
Putin sought to cast the move as a purely economic decision, saying that Russia is "still open to continue consultations and work together with European countries in order to normalize the situation."
"We also hope that the European Commission will more actively engage in the dialogue in order to work out specific and fair solutions that will help stabilize the Ukrainian economy," he added.
Ukraine has said it could start paying off the debt if Moscow restores the gas discounts canceled following the ouster of pro-Russian president in February after months of protests.
Meanwhile, Ukraine's acting President Oleksandr Turchynov said Thursday the country's army destroyed a pair of military bases of pro-Russian insurgents in overnight operations.
The offensive occurred a day after the start of European-brokered talks that have yet to draw in the warring sides.
Turchynov told lawmakers that government forces attacked an insurgent base in the city of Slovyansk and another one in nearby Kramatorsk, about 95 miles west of the Russian border.
Ukraine's defense ministry said there were no casualties while the army took three insurgents captive, including one who was armed with a rocket-propelled grenade launcher.
AP journalists in Slovyansk heard bursts of automatic gunfire overnight, but details of Turchynov's statement couldn't be independently confirmed. The situation was quiet during the day Thursday, and there has been no comment from the insurgents to the claims made by Turchynov.
Turchynov didn't describe the insurgents' bases or give any further details. Both government troops and insurgents have checkpoints around Slovyansk and Kramatorsk.
Some previous Ukrainian claims of successful operations have proved to be exaggerated.
Insurgents, who have seized government buildings across eastern Ukraine and fought the Ukrainian military, declared two eastern regions independent following Sunday's referendum, which was dismissed as a sham by the Ukrainian government and the West.
The Organization for Security and Cooperation in Europe, a trans-Atlantic security group, put forward a "road map" calling for national dialogue as a first step toward resolving the escalating tensions. The first round of talks in Kiev produced no visible result as the government has confirmed its refusal to sit down with representatives of the insurgents.
In the east of Ukraine, insurgents said they hadn't been invited to the Kiev round table and said that talks should be held in Donetsk. One of the leaders of the insurgency, Denis Pushilin, said it should focus on a prisoners exchange and the pullout of the government forces, whom he called "occupation troops."
Some present at the meeting pushed for separatist representatives to be included, The Wall Street Journal reported.
"Without their participation, the round tables will just be declarative," said Nestor Shufrych, a senior lawmaker from the Party of Regions that used to back ousted President Viktor Yanukovych.
Ex-President Leonid Kuchma said he hadn't expected the meeting to produce an immediate result. "We can't solve the problems in a day," he said, according to the Journal. "We want to make a hot situation just warm."
The next session of the talks is expected on Saturday, but the government hasn't made any specific commitments.
In Moscow, Russian Foreign Ministry spokesman Alexander Lukashevich cited a "stubborn reluctance of the authorities in Kiev to launch a real process of national reconciliation."
Commenting on Moscow's attitude to the Donetsk insurgents' appeal to join Russia following the referendum, Lukashevich made it clear that the Kremlin has no immediate intention to do so, saying that the priority is to encourage talks between the government and its foes.
"Russia has actively pushed for launching a broad national dialogue between Ukrainians about ways of forming the future of Ukrainian state," Lukashevich said.
At the meeting in Kiev, Ukraine's interim president, Turchynov, said the government was ready to hand more powers to the regions and to hold talks with everyone except for "those who, with weapons in their hand, try to wage war with their own country," The Wall Street Journal reported.
The Associated Press contributed to this report.