Turmoil between Moscow and Zug

Coming back to Europe - in this case Brussels - from China one immedately finds that the gas dispute issues are still very high on the agenda.

I expect them to figure rather prominently in different discussions in Brussels during the day.

But the most obvious turmoil is in Ukraine, where a coaliktion of more Russia-leaning forces and ex-Prime Minister Timoshenko are doing their best to unseat the government before the March elections.

The vot in the Rada yesterday opens a Pandoras Box of copmplicated constitutional issues. From the beginning of this year the constitutional regime of the country has changed.

In all probability the coalition of the dissatisfied will continue to try to unseat the government - and in all probability they will fail. But turmoil there will be - before as well as after the elections.

There are undoubtedly some aspects of the deal that look rather questionable.

One is that Ukraine seems to have accepted that it can no longer buy gas from Central Asia and transit it through Russia. While Ukraine must accept to transit Russian export gas to Western Europe, it has now accepted that Russia does not accept to transit Central Asian export gas to Ukraine.

This of course leaves Ukraine in a strategic sense in a more vulnerable position.

The other dubious element is that everything now gas to go through a company called RosUkrEnergo. This was evidently a key demand from the Russian side.

This small company is now heading for stratospheric profits, but exactly who stands to gain from these profits is unclear in the extreme.

It's a joint company between Gazprom and some individuals, and in order to assure that it is as non-transparent as possible it is registred in the Swiss municipality of Zug, known for its "letter-box companies". A law firm takes care of everything - Zug lives by beuing a cover for other things.

It might be noted that the joint Gazprom-German company that will build the discussed North European Gas Pipeline under the Baltic, and where former German Chancellor Schröder will be Chairman, is also registred in Zug.

Certainly in both cases to avoid taxes. But even more to avoid the transparency that would disclose which are the persons and interests to which the gas transit billions will now flow.

A certain amount of turmoil over that issue isn't surprising.

It might even be healthy.
Ukrainian News