The self-proclaimed Donetsk and Luhansk People’s Republics operate in line with mafia rules. The extraction, export and sale of coal – the region’s key resource – have helped the two para-states survive. It has also become a fuel for local power struggles, all under the blind eye of the European Union.

The self-proclaimed Donetsk and Luhansk People’s Republics (DNR, LNR) are often compared to Transnistria, another unrecognised quasi-state supported by Moscow and used as a tool to destabilise Moldova. Such a comparison, however, is a mistake. Transnistria – to put things simply – is organised around the Transnistrian business conglomerate Sheriff, which controls the majority of companies, some government agencies and local political parties. In contrast, the DNR and LNR, covering one-third of Ukraine’s Donets Black Coal Basin, operate according to mafia rules. This is an important point to keep in mind while analysing the functioning of the economy of the para-states.

Almost a year ago the National Anticorruption Bureau of Ukraine (NABU) opened an investigation into the Rotterdam Plus formula – a method used to calculate the prices of coal. It seems quite likely that the escalation of the Rotterdam Plus topic in the media was made in the interests of politicians and big industrial electricity consumers.