In politically correct Davos this activity does not go down well

In politically correct Davos this activity does not go down well. Neither, come to that, did Zyuganov's remark at a press conference: "Trust the prettiest girl to ask the most difficult question."They are like two bears who have been hibernating for 40 years and are now, sleepy-eyed and muttering, lumbering towards each other for a punch- up. He polls around 14 per cent, against 11 per cent for the reformist democrat Grigory Yavlinsky (also at Davos), 7 per cent for the fascist Zhirinovsky and 5 per cent for Yeltsin. The word is "Communist" and its embodiment is a thick-set, 51-year- old Phil Collins lookalike called Gennady Zyuganov. Zyuganov is the leader of the Russian Communist Party and currently the man most likely to succeed Boris Yeltsin as president in the June elections. But this year a word has risen from the dead to haunt them all, to remind them that things can still go wrong, that history may not, in fact, be over. The suits and politicians fall like grey snow on this tiny ski resort to sing each other's praises and tell themselves that the world is one, unified at last by the aspiration to join the capitalist club.

Davos, Switzerland - The point of the annual meeting of the World Economic Forum is the celebration of the globalised, liberalised, democratised culture. But that single sacrifice will not solve the issues of corporate governance and public accountability to which privatisation has given rise. While British Gas's executives may now earn a respite, the questions raised will remain for the electorate at the general election. The future of Cedric Brown should not obscure the debate on the kind of energy sector that is emerging under market forces.

This - not executive pay - is what will matter for the future competitiveness of UK plc.The writer is Fellow in Economics at New College, Oxford.. Competition has only just begun, and it has done so in benign conditions of over-supply and cheap fossil fuels. It is yet to be tested in conditions of excess demand.The break-up also has a political side-effect. The public concern over executive pay found a convenient scapegoat in Cedric Brown. He has borne the brunt of public anger and a scalp has finally been taken. In the longer term, however, when the surpluses of North Sea gas are gone and when fuel markets tighten, the results may be much less attractive than the immediate price cuts might suggest. It is a process that is far from complete.Whether this is good for customers is yet to be shown.

In the short term, prices can go in only one direction - downwards. Takeovers, mergers and break-ups will result in a much more complicated sector. More companies will compete, and the old certainties provided by the familiar one-stop shops will have gone Competition has made this inevitable. However, short of a rise in gas prices or a change of regulatory heart, the shareholders may still have to pay the price for having had the benefits and obligations of the monopoly.When the dust has settled, the British Gas break-up will be seen in the wider context of the restructuring of the energy market. The electricity industry has seen a wave of takeovers and steps towards restructuring ahead of competition in 1998 Gas is simply following suit. Separation will help to define the problem and focus attention on its solution.

The new company's managers will still have to resolve the tricky problem of who pays. Now, as recommended by the MMC, the pipes will be separated out as a necessary first step to meeting the competitive challenge.The break-up is not, however, a "solution" to these legacy contracts. It had contracted for supplies well into the future on the understanding that it had a captive market on to which to pass the costs. In following the logic of the monopoly model, it had put itself into an uncompetitive position.