Ukraine’s system of crony capitalism

The challenge of dismantling ‘systema’
Research paper Updated 2 November 2021 Published 1 July 2021 ISBN: 978 1 78413 475 4
Image shows Volodymyr Zelenskyy greeting crowds in Kyiv on his way to be sworn in as president of Ukraine

Watch a short explainer video with publication author John Lough about his research.

Ukraine’s system of crony capitalism – described in this paper as systema – reflects the absence of a strong state, and an enduring relationship between big business and the country’s political class that puts their own interests before those of society.

Despite some setbacks since 2014, crony capitalism’s stakeholders have shown their ability to continue to manipulate Ukraine’s public institutions in the face of the deepest set of reforms undertaken since independence, as well as in conditions of war.

Dismantling the networks of systema will require a combination of deep structural reforms, preventive and repressive measures to curb corruption, and civic activism to hold politicians, officials and business owners accountable.

This research paper sets out how systema operates across key sectors of Ukraine’s economy, and identifies the main mechanisms that enable its stakeholders to preserve their privileges and divert public resources. It also considers the factors that may change the behaviour of those who benefit from crony capitalism.

A Ukrainian translation of this paper is also available as a PDF via this link.