TODAY: Putin drops South Stream, looks to Turkey; NATO accuses Russia and vice-versa; Russia to up its military exercises next year; Kiev reaches truce with separatists; Moldova turns to Europe; ruble suffers worst day since 1998; Rosneft privatisation approved.

President Vladimir Putin has announced that Russia will scrap construction of the long-awaited $22 billion South Stream gas pipeline to Europe, and redirect it to Turkey, which will in turn receive a number of energy price discounts.  Putin blamed the ‘counterproductive attitude’ of the European Commission for the failure of the project, and portrayed the news as Europe’s loss; the New York Times sees it as a diplomatic defeat for Russia; the British Times says this means ‘gas war’.  RFE/RL explains why Putin and his Turkish counterpart, Recep Tayyip Erdogan, make a good pair.  The Energy Minister has said that he is not aware of any pre-payments from Ukraine for its winter gas supplies as yet (the deadline was yesterday).  Russia and NATO have each traded accusations that the other is causing instability – Russia in Ukraine and NATO in northern Europe and the Baltics – in conjunction with the news that Russia will hold more military exercises next year than it did this year.  Kiev says it has reached a truce with pro-Russian separatists in eastern Ukraine.  Moldova’s election results show a clear turn towards Europe, away from Russia.