英国皇家国际事务研究所-乌克兰的裙带资本主义制度（英）-2021.7-42页_333kb

Summary of Ukraine's System of Crony Capitalism

Core Content

Ukraine's system of crony capitalism, referred to as systema and often called oligarkhiya, is a deeply entrenched governance model that has persisted despite political and economic upheavals since the late 1990s. It is characterized by the close alignment of interests between major financial-industrial groups (FIGs) and the political class, which prioritizes rent-seeking over public wealth creation. This system has weakened democratic institutions, reduced economic competition, and increased corruption and inequality.

Main Points

• Systema's Resilience: Despite reforms and political changes, including the Revolution of Dignity in 2014, systema remains a dominant force in Ukraine. It has shown adaptability and resistance to change, even in the face of war and international pressure.

• Structure of Systema: The system operates through a network of four key pillars:

  • Deep Government Penetration: Senior officials who favor big business and benefit from these connections.
  • Influence Over Legislation: Through the support of MPs who have direct or indirect business interests.
  • Judicial and Law Enforcement Control: By appointing loyal individuals and using bribes to protect their interests.
  • Media Control: Ownership of key media outlets that shape public opinion in favor of systema.

• Economic Impact:

  • Politically connected businesses control a significant portion of Ukraine's assets and debt financing, despite being less productive and slower to grow.
  • The system has led to the concentration of economic power, with around 3,700 state-owned enterprises (SOEs) still in operation.
  • The energy sector, in particular, has been heavily influenced by systema, resulting in poor rankings in the World Bank's Ease of Doing Business report.

• Regional Influence: Systema is not limited to Kyiv. It is replicated at the regional level, supporting local elites and their allies in regional governments. This has led to localized forms of rent-seeking and resistance to national reforms.

• Agriculture as an Anomaly: The agricultural sector stands out as less influenced by systema due to the absence of major FIGs and the strong public resonance of land reform, which has limited the ambitions of some powerful players.

• Zelenskyy's Challenge: President Volodymyr Zelenskyy's 2019 election was seen as a potential turning point, but his administration has struggled to break systema. His reliance on the support of FIGs and the resistance to reforms by entrenched interest groups have limited his ability to implement meaningful change.

• Reforms and Resistance: While some reforms have reduced opportunities for rent-seeking, the influence of systema remains strong. The IMF's insistence on anti-corruption and judicial reforms threatens to disrupt the status quo, but the system has shown resilience in countering these changes.

Key Information

• Economic Inequality and Corruption: Ukraine consistently scores poorly in the World Justice Project's Rule of Law Index, ranking 110th in the 'absence of corruption' category and 90th in 'criminal justice' in 2020.

• Political Influence: Major FIGs maintain influence through political connections, with some business leaders serving in parliament or holding key government positions. For example, Viktor Poroshenko, a former president, has been a direct representative of the business elite.

• Media as a Tool: Media ownership is crucial for maintaining systema. The main outlets are controlled by FIGs to shape public opinion and support their political allies.

• Judicial and Law Enforcement Corruption: The judiciary and law enforcement agencies are often co-opted to protect the interests of the business elite, making reform difficult.

• Regional Dynamics: Local elites and their networks in regional governments and councils play a significant role in maintaining systema at the local level, creating a fragmented yet cohesive system of influence.

Conclusion

Ukraine's systema is a complex and resilient form of crony capitalism that continues to undermine democratic governance and economic development. The system's survival is due to the symbiotic relationship between business and politics, the concentration of economic power, and the lack of strong, independent institutions. While there are signs of reform, the entrenched nature of systema and the political resistance to change suggest that dismantling it will be a long and difficult process. The challenge for Ukraine lies in developing a new governance model that prioritizes public interest over private gain and fosters transparency and accountability.