“Black Holes” in the Political Economy of Ukraine: The Neoliberalization of Europe’s “Wild East”

Abstract

This paper analyses the complex interactions between ruling and emergent capitalist forces in Ukraine and the structures of transnational capital. It argues that the implementation of neoliberal market reforms along the lines laid out by the IMF, EBRD, EU, and WTO has facilitated the formation of “black holes” in the country’s economy. Through creating legal spaces for tax evasion, capital flight, money laundering, administrative and tax pressures, the country’s productive base continues to be subjected to a process of accumulation by dispossession, deepening socio-economic disparities and furthering transnationalization of the state. Covered by the discursive and legal façade of pluralist democracy, the large-scale embezzlement of economic assets undermines the stabilisation of a new social order whilst disrupting relations with foreign states and transnational business. The paper looks at (1) privatisation including the transfer of state-owned enterprises to financial industrial groups mostly controlled by oligarchs; (2) FDI regulations, the chronology of their reform, and their uneven implications for accumulation by both domestic and foreign capitals; (3) the creation and functioning of special economic zones and capital operation in those zones; and (4) tender and state-purchasing legislation reform and procedure abuse.