Historical study

Marko Bojcun


Preface to the first English language edition

This historical study was originally published in Ukrainian in the journal Spil’ne (The Commons, no. 7, 2014). Written a year before the the Maidan and the overthrow of President Yanukovych, it examines over twenty years the parallel and mutually reinforcing constructions of an independent state and an oligarchic capitalist economy.

I try here to understand their failure in combination to deliver the promise voiced in 1991 by national democrats and communists alike – that an independent Ukraine would bring a better life for all its people. The present fragility of the Ukrainian state, its lack of an adequate social consensus and its vulnerability to external challenges I attribute in the first instance to that historic failure.

At the same time I argue in this study that Ukrainian leaders have managed to establish for their own narrow class a functioning regime for the accumulation of capital. The state itself is the central instrument of their accumulation regime. And so, my argument goes, they are becoming entrenched as a new ruling class. The recent events, however, throw into doubt my second claim – whether Ukrainian oligarchic capitalism and its state can survive in their present form, or at all.

I offer the work below as a background analysis to the current crisis  

Becoming independent in a capitalist world

The emergence of the independent Ukrainian state after the fall of the Soviet Union marked also the beginning of a historically new phase of capitalist development for that country. These two historical moments are intertwined in the consciousness of many people inasmuch as the advocates of both these new paths – national independence and the market economy– promised a better life for people than they had in the collapsing Soviet Union. Indeed, the leaders of the new Ukraine believed that their country was the best placed of all the Soviet republics “to join the West” – that is, to become integrated with the core capitalist states into the top echelon of the global economy.

Yet, as we know the following twenty years brought much hardship to the people. Moreover, the national economy became integrated into global markets and production chains on a considerably lower echelon than many had hoped for. And successive Ukrainian state and business leaders have proved incapable of altering fundamentally that international position of the Ukrainian economy or alleviating the poverty of the majority of the people.

Of course, the evolving international situation played an enormous part in channelling the efforts of the new state’s leaders and limiting their options. The collapsing Soviet Union passed the initiative over to the United States, who together with the G7 and OECD states dealt with the implosion of the Second World in their own way. These states worked together to absorb all of Central Europe, a reunified Germany and the Baltic littoral into the Euro-Atlantic core, while holding the Soviet Union at arms length, containing its threats to international security and stability, and firmly denying its successor states after 1991 a path of integration into the Euro-Atlantic core.

In the eyes of American and West European leaders Ukraine was never a serious contender for membership in the core. If for the Americans she was for a while a candidate for NATO, only the British among the West European members of the core ever thought she should be admitted to NATO and the European Union. At best, Ukraine was a counterweight to Russia on the side of the core, meant to prevent Russia from returning to great power status.

However, the strategic vision of the core took time to be agreed among its member states and to be recognized for what it truly meant for Ukraine, Russia and the other countries of the core’s own “far abroad”. And for that time Ukraine’s leaders held out hope, albeit ever diminishing, they would be taken into the world’s premier league of states. It was not until the end of the 1990s that Ukrainian state leaders set out a strategy of development of the Ukrainian economy that relied on generating domestic resources for growth and diversification, rather than seeking salvation from western capital and technique.

The conditions for entry and survival in the global capitalist system were not very auspicious for new post-communist states like Ukraine, so poorly equipped as they were to regulate their own domestic economies or to facilitate their path into the arena of international competition. However, Ukraine’s economy was initially shielded from penetration by the biggest players on the world market by the sheer chaos of the breakup of the Soviet bloc. For so long as well heeled Western businessmen feared to tread in the ganglands of the East, well placed Ukrainians went about the primitive accumulation of their own capital practically unchallenged. But this early period of easy pickings did not last long. Russian and then Western businessmen entered the picture, making sure that by the end of the second decade Ukraine’s capitalist class would be integrated in a wider transnational fraternity.

In this study I seek to explain two apparently contradictory outcomes of the past twenty years: how the development strategies of Ukraine’s leaders have failed to build an all rounded and prosperous society; yet despite this failure, how the Ukrainian state has incubated a class of national capitalists and established for them a successful regime of accumulation of capital.

Kuchma’s strategy of development

In its first seven years as an independent state Ukraine experienced a continuing economic decline. The decline had begun in the 1980s, but it accelerated rapidly as the Soviet and East European networks of production and trade disintegrated. A severe contraction of output in most sectors of the economy, the degradation of their fixed assets and the diminution of the labour force, both in the absolute numbers employed and their level of productivity, were the outstanding features of the 1990s. The value of Ukraine’s GDP measured in constant domestic prices fell between 1990 and 1997 by around two thirds.[i]

Hardest hit were the sectors with the highest levels of technique, which had also been the most closely integrated sectors within the Soviet division of labour: armaments, aeronautical and aerospace industries, heavy engineering and consumer durables. Mining and processing of fuels, minerals and chemicals, whose gross output declined in absolute terms at a relatively slower rate, increased their share of industrial production overall. These sectors enjoyed strong international demand in the 1990s and figured prominently in the structure of Ukraine’s exports. They survived better because they were not affected so much by the collapsing domestic demand and they could find markets beyond the disintegrated Soviet bloc.

Not only did the Ukrainian economy contract, but it also splintered into several autonomously reproducing layers: a subsistence economy in the production of food, on which all the rural population and up to half the urban population depended in the mid 1990s[ii]; a nationalized sector of arms, aerospace, aviation, as well as the major utilities, which the new state was not eager to privatize; and a private sector emerging from cross border trade in fossil fuels and electricity, primary goods and semi processed materials, and from the first rounds of privatization of state owned small and medium sized enterprises. Much of this emerging private sector belonged to the shadow economy, beyond the reach of statistical measurement, state regulation or taxation.

It was only during Leonid Kuchma’s first term as president (1994-1999) that the state leadership acquired minimal institutional capacity to put the brakes on the economic decline. In 1996 it introduced the national currency (hryvnia), the last to do so among the post-Soviet states. It implemented a monetary stabilization, tightening money supply and bringing down the raging inflation rate. And it started to build up state finances and regulatory institutions mainly on the basis of implementing the first rounds of privatization.

However, the new Ukrainian state could not undertake a pro-active strategy of economic and social development until after the decline hit rock bottom in 1999. The devaluation of the hryvnia in the wake of the 1998 financial crisis provided the kick start for a recovery of the food processing sector, allowing it to compete effectively with food imports that had managed by the end of the 1990s to capture more than 60% of the domestic retail market.[iii] The devaluation and favourable world market prices spurred a recovery of Ukraine’s exports of steel, chemicals and food products. From these altered price conditions on domestic and external markets, and with the help of recently built state institutional capacity came strong renewed growth from 2000 onwards.

By the end of the 1990s, Kuchma’s leadership team was convinced that Ukraine should not try to follow the prescriptions of the International Monetary Fund and the World Bank. No-one but themselves would help pull Ukraine out of “the widening bloc of poverty” that such prescriptions had fostered in past decades on Latin America and Africa, and into which most post-Soviet countries had now fallen.[iv] Rather, Kuchma’s strategy of development aimed to create “a social market economy” integrated into the world market on terms that capitalized on its strengths and resulted in its insertion on a relatively high technological echelon.

Kuchma’s strategy was in the first instance an export led strategy to accumulate surpluses from foreign trade in steel, chemicals, and food products, as well as refined petroleum products and machinery. The accumulated surpluses would be used to upgrade existing high technology sectors of production and to create new ones, leading in the long run to an import substitution strategy of growth, one more reliant on domestic demand and less vulnerable to external fluctuations and shocks.[v]

An integral part of the strategy was to establish a strong national capitalist class and to restrict foreign ownership of strategic industries, the banking system and the fuel and energy complex.[vi] The principal mechanism for establishing this class was privatization of the large nationalized economic assets. After the privatization of small and medium sized enterprises was completed, the State Property Fund began organizing the distribution of the first set of big industrial enterprises. It chose to sell these assets in 2003 and 2004 at low prices to just a few powerful “clans”. These clans were building vertically integrated corporations of production, trade and finance. Thgey had accumulated their initial capital in the 1990s through various legal and extralegal means, which they now used to get an inside track to the privatisation of big productive enterprises. Of the eighteen big enterprises privatized in 2003 and 2004, 13 of them went to just four corporations, of which one of them – System Capital Management controlled by Renat Akhmetov, a close ally of then Prime Minister Yanukovych – got seven.[vii] Thus, the new historical phase of capitalist development in Ukraine was being shaped by a state strategy that would preserve the concentration of industry on a very narrow social base.

Further privatizations would of course follow. Let us not forget that in 2004 the technologically most sophisticated sectors of the economy – aeronautics, aerospace, armaments, transport, telecommunications, as well as the public utilities providing energy, water and environmental protection – were not yet even considered for privatizations. They remained state owned, either giving added revenues to the state coffers (armaments in particular) or requiring substantial state support to maintain them in the face of highly competitive and restricted foreign markets (aeronautics and aerospace)[viii].

Kuchma’s “multi-vector” foreign policy served his economic development strategy. Maintenance of strong ties with Russia was essential: cheap Russian oil and gas fuelled the Ukrainian economy and its public utilities; Russia was the biggest importer of Ukrainian machinery and processed food products; and Ukrainian firms were locked into joint production with Russian ones in a number of sectors, the most important of which was the production of armaments.

Nevertheless, the Ukrainian leadership under Kuchma aimed to utilize its competitive advantages vis a vis Russia, as well as other ex-Soviet states, in order to acquire the resources it needed for eventual westward integration into the single market and the governing institutions of the European Union. The whole point of building a social market economy and entering on a high echelon into the global division of labour was to make Ukraine an attractive candidate for membership in the European Union.[ix]

European integration remained the priority of Ukraine’s foreign policy throughout Kuchma’s term in office, even when after 2000 he was diplomatically isolated in the West and faced mounting pressure from a resurgent Russia to yield to deeper penetration of the Ukrainian economy by Russian firms.[x] Kuchma made concessions to Putin, but steadfastly refused to consider going any further into the Russia-led Single Economic Space than participation in a free trade area (which was not established anyhow). Therefore, Kuchma’s determination to keep foreign capital out of the strategic heights of the national economy applied as much to the Russians as it did to the West Europeans.

However, it was difficult to keep Russian investments out of the middle tiers of the Ukrainian economy once the Russian economy started to recover and the Russian state state took a more determined stance in staking out a westward, downstream trail for its primary resource producers. Ukraine’s processing and refining industries and its transport infrastructure were these Russian producers’ obvious targets. The pace of Russian cross border investment into Ukrainian assets quickened in 2000 and 2001, especially in the fuel and energy sector and metals refining. By using Ukraine’s state debt for Russian natural gas supplies as leverage Putin succceeded in getting Kuchma to initial a debt for equity deal in November 2000 to cede control to Gazprom of Ukrainian gas transit pipelines to Central and Western Europe. Kuchma managed somehow to wriggle out of this initialized deal.

Meanwhile, other Russian companies did succeed in taking large shares or controlling interest in a number of powerful Ukrainian enterprises: the Russian holding SUAL, buying the Zaporizhzhia Aluminium Plant; Lukoil buying the Odessa oil refinery, creating a joint venture with the Kalush refinery and purchasing a network of petrol stations; the Tuymen Oil Company buying the Lysychansk oil refinery; the metals conglomerate Russian Aluminium taking the Mykolayiv Aluminium Industrial Complex; MetalsRussia investing in the Donetsk Metallurgical Plant; the companies Alliance Group, Alfa Nafta and Tat Nafta taking part in the privatisation of the Kherson, Nadvirna and Kremenchuk refineries respectively.[xi] Undoubtedly, the inability of Western investors to buy such assets at the time explains much of the sang froid of European and American diplomacy towards Kuchma after 2000.

The economic statistics suggested that Kuchma’s growth strategy was working (see Table 1). Gross domestic product grew solidly year on year, the rate of inflation was reduced to single digits and the current account balance rose into positive figures. The income of the population rose markedly in real terms for four years. Investment into fixed capital grew year on year, although from a very low base. Foreign direct investment remained distinctly modest on a per capita basis, though one has good reason to suspect that investments from the Russian side were much higher than official statistics indicated.

Table 1: Ukraine 2000-2012: Selected indicators of economic growth

  2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Growth in real GDP (in percent) 5.9 9.2 5.2 9.6 12.1 2.7 7.3 7.9 2.1 -15.1 4.1 5.2 0.2
Inflation (percentage change in annual average consumer price level) 28.2 12.0 0.8 5.2 9.0 13.5 9.1 12.8 22.3 12.3 9.1 4.6 -0.2
Real income of the population (percentage change over previous year) 4.1 10.0 18.0 9.1 19.6 23.9 11.8 14.8 7.6 -10 17.1 8 13
Real income of the population as percentage of 1991 34.3 37.7 44.5 48.6 58.1 72 80.5 92.4 99.4 89.5 104.7 113.1  
Balance of foreign trade $USD m         6919 1292 -2885 -7264 -13295 -1313 -3025 -6657 -6473
Government current account balance

(in percent of GDP)

4.7 3.7 7.5 5.8 10.5 2.9 -1.5 -4.1 -7.2 -1.5 -2.2 -5.5 -8.0 year end figure
Foreign direct investment(net inflows in $m) 594 769 698 1411 1711 7533 5737 9218 6181 4463 4753 4556 2600

Sources: EBRD, World Bank, Ukrainian State Committee of Statistics 2012

Economic and social precursors of the 2004 Orange revolution

However, there were also shortcomings both in the strategy and the political regime that was built by Kuchma to manage it. First, the export led strategy relied in 2000-02 on expanding production of export commodities through increasing labour and raw materials inputs. But these inputs were maximally applied and quickly exhausted, while fixed capital itself was already exhausted by the long decline of the 1990s. And while the real incomes of the workforce were growing, the owners of industry and their state sponsors were failing to address domestic demand. In 2003-4 exports soared again, but the earnings from exports were not sufficiently reinvested in fixed capital, nor were they targeted to diversifying production in order to meet the still expanding domestic demand.

One may well ask what happened to the earnings of the big exporting firms? A larger part of these earnings were expatriated to offshore havens to protect them both from devaluation and the taxation authorities. Tiny Cyprus, where numerous Ukrainian and Russian firms opened up bank accounts, was one of the key locations. Furthermore, in 2004 the President’s Administration intensified the collection of taxes and compulsory purchases of state bonds by VAT indebted firms. Yet these tax obligations were avoided through corrupt agreements between firms and regional taxation authorities. Moreover, a large portion of the taxes that were collected in 2004 were diverted into the presidential election campaign to support Viktor Yanukovych, the president’s chosen successor.

Such collusion between state officials and businesses contributed to the consolidation of regionally based political formations around the most powerful firms, whose leaders balanced off against the centre and competed against one another for influence within its central institutions.[xii] In turn, their success at minimizing their own taxes threw the burden onto the smaller businessmen, who invariably served the domestic market. In 2004 this burden potentially fell onto 2.5 million legally registered small business and self employed people out of a total working population of 20 million.[xiii] They naturally passed on the greater tax burdens to their own clients. But they were deeply resentful both of the Kuchma regime and the big business clans it protected.

Regionally concentrated centres of production serving export markets and enriching regionally aligned elites aggravated social and economic disparities across the country as a whole. One of the most evident disparities was a growing regional differentiation in the wage packet. By October 2004 the average monthly wage in the eastern oblasts of Donets’k, Dnipropetrovs’k and Zaporizhzhia was over 700 hryvnia, while in the western oblasts of Ternopil’, Rivno and Khmel’nyts’kyi it was barely over 400 hryvnia. Western Ukraine, moreover, was haemorrhaging from a mass emigration due a lack of jobs. And while wage arrears were highest in the eastern oblasts at the beginning of that year, they were paid off more quickly there than in the western oblasts, leaving the strong impression among the population of unequal treatment and unequal distribution of the rewards from the economic recovery.[xiv] These regional disparities in income explain why more rural workers and urban workers from the central and western oblasts tended to support the Orange camp, and the industrial heartland of Eastern and Southern Ukraine backed the Blue camp during the upheaval at the end of 2004.[xv]

The Ukrainian state leadership was always mindful of the need to maintain a consensus between the classes as it tried to navigate the society through the transition to capitalism. During the 1990s and into the new century Ukrainian leaders regularly expressed their fear of “an uncontrollable social explosion”, not knowing what were the socially acceptable limits or the consequences of their actions. And this fear was quite understandable because a new sovereign state power was breathing life into a new class of very wealthy people by handing over to them the accumulated social wealth of past generations while the absolute majority of the living generation, the legal heirs of that wealth, was being impoverished. The mechanism of this historic redivision of wealth was privatization.

The majority of the population were bitterly disappointed with the coupon privatization of the early 1990s and the worker and management buyouts that followed. Their allocated shares in both methods of privatization failed to bring them even a glimpse on the promised prosperity. Everyone saw the first big enterprises denationalized in 2003 -04 go to insiders of the regime. And then a wave of illegal and hidden privatizations of production facilities, research institutes, communal housing, trade outlets and natural resources mounted on the eve of the 2004 presidential election and carried on right up to the deciding round of voting. It rightly provoked popular outrage and condemnation as corrupt and “antinational”.[xvi]

Of course, the industrial working class in Ukraine did enjoy rapidly growing real incomes after 1999. But these incomes were recovering from a terribly depressed state when close to 95% of household incomes were being spent on food and essential services, when life expectancy plummeted, infant mortality rose and women stopped bearing children. And these incomes recovered in a highly uneven manner, aggravating regional tensions within the working class.

Tensions also increased between the professionals, the small and medium sized businesses and the state supported billionaires. Not only had Kuchma failed in his strategy to establish a workable cycle of domestic economic and social reproduction mediated by the world market. He also failed to contain the social tensions arising from this strategic failure, which then took on a complicated political life in the struggle between the Orange and Blue camps.

Thus, concludes the economist Ya. Zhalilo,

… the radical political upheavals that shook Ukraine at the end of 2004 and into 2005 were a direct result of the chronic ineffectiveness of the state’s strategy to build a mechanism for the harmonious division of wealth created by the society for the purpose of its development.[xvii]


From the Orange revolution to the international financial crisis

The 2004 Orange revolution marked a watershed in the Ukrainian state’s domestic and external policies. While this is not the place to analyse the course of the revolutionary events, it is nevertheless important to identify the mass expectations arising from them that influenced the state to try to change course. These expectations included above all:

  • to end the widespread corruption in privatization, taxation and state regulation in general; to end state protection and favouritism to the biggest corporations and to assure equal treatment of self employed people in small and medium sized businesses;
  • to end the various kinds of coercion used by the state authorities against their parliamentary and extra-parliamentary opponents. Such coercion included spying, press censorship, murders of journalists, denial of basic rights of assembly and expression;
  • and to improve the standard of living of those parts of the population who had benefitted the least from the economic upturn since 1999 – pensioners, small town and rural workers, inhabitants of economically depressed regions. These people were an important contingent of the multiclass alliance that made up the Orange camp.

Meanwhile, the Orange leaders could not afford to alienate any more the mass base of the defeated Blue pro-Yanukovych, camp, which in electoral terms was almost as large as its own. The industrial workers concentrated in eastern and southern oblasts did not want to see the material gains they had made in previous years eroded. Both Yushchenko and Tymoshenko felt compelled to restore a sense of national unity across the country.

However, they were not ready to restore unity within the establishment itself. Before continuing with any new privatizations the Orange leaders decided to take back the biggest assets privatized under Kuchma and to reprivatize them by an open and transparent tender. In this way they were killing three birds with one stone. First, they were responding to the outrage of the public over the way that privatizations were conducted in the past. Second, they were set on weakening their rivals from the Blue camp by confiscating their wealth. Viktor Pinchuk, Kuchma’s son in law and Renat Akhmetov, the richest man in the country, were the first to be targeted. They lost the steel plant complex Kryvorizhstal’. Pinchuk also lost the Nykopil’ Southern Pipe Plant and Oranta Insurance Company.

Some 1700 other privatizations were hastily challenged and reclaimed by the state before the whole process was brought to a halt by protests of its selective nature. Threats were issued both at home and abroad that the loss of business confidence in private property rights would cause big business to withdraw from Ukraine altogether.

The third bird at which reprivatisation was aimed represented the biggest change of all to state economic strategy that had been initiated by Kuchma: to open up the economy to foreign investment. The new government demonstratively organized a show piece reprivatisation of Kryzorizhstal’, which was won by competitive tender by the Indian steel tycoon Lakshmi Mittal in October 2005 and which brought into the state treasury more than six times the price at which Pinchuk and Akhmetov had gotten it in the first place.

But then privatization of large industries and utilities like Ukrtelecom and the Odesaa Port Authority faltered and got bogged down in renewed public opposition. The Verkhovna Rada refused to approve further privatizations.[xviii] Therefore foreign capital could not take this direct route to the productive assets of the Ukrainian economy, but rather had to approach them by other routes, such as investing in foreign and domestic trade.

Like Kuchma, Yushchenko was dedicated to integrating Ukraine into the Atlantic core of advanced capitalist states, their economic, institutional and security structures. In contrast to Kuchma, Yushchenko’s pro-EU, pro-NATO foreign policy was aimed against Russia. Yushchenko wanted to weaken the strengthening grip of Russia on Ukraine’s economy, its information space and security environment. This much is clear in the foreign policy pursued after 2004, notwithstanding Tymoshenko’s attempts while Prime Minister to blunt Yushchenko’s edge and seek an accommodation with Russia.

Yet with respect to the state’s strategy of economic development, which concerns us most here, Yushchenko’s enthusiastic engagement with the EU and NATO at the political level was accompanied by a major opening up to transnational capital flows from the Euroatlantic states into Ukraine. These two engagements were seen as mutually reinforcing by those who wanted Ukraine rapidly to become a member of the EU and NATO. It was as if the new leadership under Yushchenko had concluded that Kuchma’s strategy of European integration would take too long, and that it might be achieved more quickly if the doors were thrown open to let European finance sink roots into the national economy. Surely the EU’s political institutions and its NATO security umbrella would have to follow finance in so as to protect it?

It was the accepted wisdom in the Ukrainian liberal-democratic, pro western camp that foreign direct investment invariably brings with it new technologies, stimulates upgrading and diversification of domestic production and links it to transnational production and distribution chains. This was quite the opposite view to Kuchma’s: that the economic policy advice of Western multilateral institutions would lead Ukraine into “the widening bloc of poverty”. The Orange camp wanted to believe that Western capital would help create those still missing or chronically weak economic sectors that were needed to serve growing domestic demand.

For domestic demand did indeed continue to grow, both as a result of growing real income (see Table 1) and government social policy. Honouring its commitment to improve the lot of the poorer sections of society, the government took in a still greater proportion of the GDP from businesses and boosted household incomes. Wages and salaries in the public sector went up rapidly. Pensions and social welfare benefits went up in 2005 by the equivalent of 4% of GDP to 25% of GDP, while overall GDP growth in that year rose only by 2.7%. So it was not just the explosion of cheap foreign credit that led to the expansion of effective demand. And without an equivalent expansion in the domestic production of goods and services in demand, only foreign producers and suppliers could satisfy it.

Foreign direct investment leapt forward after the Orange revolution from $1.7bn in 2004 to the peak of $9.2bn in 2007. Much of this inflow came through the banking system. The proportion of capital held in Ukraine’s banks that was owned by foreign shareholders grew from 13 to over 50% between 2004 and 2009. The EU and Russia were the most important sources. Between them six EU member states held 61% of the foreign owned banking capital. Financial institutions based in Russia held another 21%.

The Russian share was distinguished by the predominance of state banks among their holders – VTB, Vneshekonombank, Sberbank, BM Bank and Prominvestbank, and by four other banks closely tied to the Kremlin. The European presence was headed up by Raiffeisen of Austria, Unicredit and Intesa San Paolo of Italy, and BNP Paribas, based in France. By April 2009 seven out of the largest ten banks in terms of their assets were foreign owned. Ukrainian state owned banks, meanwhile, held less than one eighth of the country’s bank assets.[xix]

Foreign direct investment in the years 2005-09 did not go into technologically upgrading and diversifying the economy, except in a very limited way. Rather it went mainly into acquiring and expanding networks of retail bank branches which released the cheap credit to the population (cheap at the time of boom), expanding wholesale and retail trade in high tech goods, consumer durables and luxuries, much of them imported, financing mining and processing plants geared for export, and buying up real estate. In 2007, the peak year for FDI, 29% went into expanding financial services themselves. Another 9% went into construction, which at the time was closely tied to a booming real estate market in the cities.

Twenty five percent of FDI went into industry, but it was targeted at the plants exporting most of their production (steel and chemicals) into soaring world commodities markets. Engineering got just 1.7% of all FDI in 2007. So, machinery became an ever growing component of the country’s imports until the value of imported machinery outstripped the value of its domestic production.[xx]

Table 1 shows Ukraine experienced eight years of strong GDP growth from the beginning of 2000 to the end of 2007. That period saw two phases of strong growth which were divided by a moderate downturn right after the Orange revolution. Both of these phases saw growth driven by strong international demand for Ukrainian steel and chemicals. However, the structure of industrial GDP remained fairly static over this eight year period, with some clearly negative trends of food production and light industry reducing their proportion of GDP output. And the engineering sector, whose output enjoyed demand in Russia and other ex-Soviet markets, hardly grew at all. That can only mean that neither the private owners of industry that were making big profits from exports nor the state which reclaimed part of these profits through taxation were redirecting these accumulated resources to the sectors of the economy most in need of development.

These eight years of export-led growth did not fundamentally improve the structure of Ukrainian industry, or its overall technological level or the level of its insertion into the world capitalist economy. The question arises: did this failure arise for different reasons in the phases of GDP growth presided over by Kuchma and Yushchenko? Kuchma’s strategy failed because his political regime could not manage the social and regional tensions arising from the unregulated expansion of capital in the exporting sectors. – i.e. there was an internal brake on the strategy.

On the other hand, after the Orange revolution opened up the political process to broader groups of the middle and upper classes and promised to overcome these tensions. Yushchenko altered Kuchma’s approach in another way as well: he invited foreign capital from the Euroatlantic core both to balance it off against Russian capital and to help satisfy the still growing domestic demand for commodities and services that the domestic economy could not provide. Yushchenko and his allies believed foreign capital would help upgrade the Ukrainian economy technologically and diversify domestic production of goods in demand.

However, foreign capital did not put its money there, but rather into domestic and foreign trade, financial services and the high earning exporting sectors. Foreign owned capital expatriated its earnings, as indeed did domestically owned capital. Thus, Yushchenko’s strategy came up against an additional, external brake on development. And when the international financial crisis mounted in 2007-08, freezing capital flows and driving down prices and demand on world commodities markets, the Ukrainian economy and the state were left without reserves or alternative demand to fall back on.

The 2008 financial crisis

The financial crisis struck the Ukrainian economy in the summer of 2008 when its principal exports – steel, chemicals and wheat – collapsed after heavy price falls on international commodities markets. This led to a sharp contraction in production: gross domestic product, which had steadily grown over the previous eight years, fell in 2009 by 15 percent, one of the sharpest falls in Eastern Europe.

Unemployment rose, wage arrears mounted and real wages declined. Household debt increased as people who had borrowed for automobiles, houses, holidays, education for their children, etc. either lost their jobs or saw the value of their hryvnia earnings sink against their euro and dollar denominated loans.

The banks that channeled foreign investment faced an immediate squeeze on two sides: from their Western based headquarters that were now facing their own crises of liquidity back home, and from their Ukrainian corporate and retail clients who had overextended themselves during the boom and could not repay their loans. By the end of 2008, private sector debts amounted to US$104 billion, practically equal to the annual GDP by official calculations so that a crisis of the banking sector followed. A massive flight of capital out of the country occurred in autumn 2008; it was provoked by the Russo-Georgian war as well as the financial crisis. Net foreign direct investment in 2009 fell to US$4.5 billion, half that of 2008. After its steady revaluation up to 2008, the hryvnia fell in value in relation to the euro by 47 percent in the following year.

The government under Premier Yuliya Tymoshenko opted to deal with the crisis by taking out a US$16.4 billion loan from the IMF with which to re-capitalize the banks in trouble, nationalize those most intoxicated, cover the external trade deficit and mounting state social security obligations. Her successor after the 2010 presidential elections—Premier Mykola Azarov—took another IMF loan and borrowed more from European and Russian banks. In this way, the government turned the debts of the private sector born out of the crisis into a public debt of the Ukrainian workers and taxpayers. None of these loans was used to stimulate the recovery of domestic production, but rather to rescue financial institutions, repay foreign creditors, repay state debt for Russian gas and reduce the state budget deficit.

Accumulation regime of the Ukrainian oligarchs

The Ukrainian regime of private accumulation of capital is a reliable mechanism for the private appropriation of wealth from an economy still in the process of privatization (or denationalisation – rozderzhavlennia). This regime has permitted both the privatization of much state owned (legally publicly owned) capital, created by past generations as well as the continuous extraction of surplus from the ongoing labour process.

Such a regime could be built only with the co-operation of key groups with a shared vision of an unequal society that has – for them – no historic alternative: the public officials who have implemented and legalized transfers of public wealth and who have codified the general rules of engagement between capital and labour on Ukrainian territory; the businessmen who have organized production, realized its sales and divided the supluses; the trade union officials who have maintained labour peace; the state security organs that have suppressed the politicization of labour; and the professional intelligentsia who have persuaded and reconciled society to the benefits and necessary costs of this regime. This regime has also become integrated with other, foreign, centres of accumulation along chains of labour, commodity and capital flows that make the Ukrainian capitalists a part of a transnational capitalist class. Thus while the class we call oligarchs in Ukraine is truly a national capitalist class with its own state and territory to defend it is at the same time intricately linked to a bigger family. The Ukrainian capitalist state remains fragile and insecure partly because the battle between Russian and Western capitalists for its allegiance is not yet over.

The establishment of the Ukrainian accumulation regime in the past two decades can be usefully compared to the late 1920s and 1930s when the Communist Party leaders and theoreticians (Yevgeniy Preobrazhynsky, Lev Trotsky, Nikolai Bukharin, Josef Stalin and others) also strove to establish a regime of state accumulation of capital from an economy in the process of nationalization. Then the Party’s aim was to transfer capital from peasant agriculture into state hands in order to finance industrialization, to modernize the society and build the ruling state elite.

One may well ask why the emergent Ukrainian capitalists and their state have not seen it in their own interests to invest in building the national economy, in its diversification and technological upgrading, in the improvement of workers’ living standards? The obvious answer is that the capitalism breeds – nay, requires – individuals who must accumulate first for themselves in order to survive in the competitive struggle. In a collapsing economy in the 1990s there simply wasn’t enough surplus available to do more than that.

However, the peculiar historical conditions of Ukraine’s recent birth as an independent state have also retarded in other ways the attachment of the Ukrainian capitalists to their national territory and society. First, there was no radical democratic renovation of public office when the new state appeared. It appeared furtively from its dying host. Its erstwhile occupants in the Verkhovna Rada made a deal between themselves to keep their seats of power. Not until 1994 were multiparty elections held to the Verkhovna Rada. The corporate clan interests of the old/new occupants of state office took precedence over any new social contract that the population should have expected to secure from s a radical and democratic renovation of the state.

By way of a contrasting example of a successful democratic renovation, one can point to several Western European countries after 1945 whose working classes secured a new social contract with their ruling classes and so established the welfare state which redistributed the social wealth in a fundamentally more egalitarian manner for decades afterwards.

Secondly, the first Ukrainian businessmen needed a national economic territory to produce goods or to transit goods, not to sell them: they sold mainly on foreign markets. They exploited the wage and price differences between their domestic and foreign markets to make their profits. They had no need to invest in the development of their own labour force, as long as it was kept alive. They expatriated their profits.

Thirdly, the nascent Ukrainian bourgeoisie saw the light of day in the 1990s, at a historic moment when finance, production and trade were already dominated by multinational corporations working in ever tighter global chains, making it extremely difficult for any new, independent national centres of capital accumulation to establish themselves.

So, for the past twenty years the Ukrainian capitalists have been insecure, asking themselves: will we survive, can we survive alone, with whom must we ally in order to survive? They concentrate on securing co-operative relations with foreign centres of capital that control their upstream suppliers of energy and raw materials and their downstream markets. The Ukrainian national idea as a historical project, as a basis for a multiclass social contract holds little or no appeal to them. So there is neither a capitalist nor a patriotic motivation of any great significance that will unite them in building the national economy and society.

The 2010 presidential elections

Coming right in the wake of the sharp domestic economic downturn provoked by the financial crisis, the presidential election campaign from October 2009 to February 2010 might have been expected to register some important shifts in both elite strategy and public attitudes. However, it did not. Rather, the main candidates all kept their own counsel about the way out of the crisis until the election was over. It was the subject of small think tank discussions and private briefings, not election debates, because all of the candidates were preparing to take measures that would be deeply unpopular with the electorate.

The election of Viktor Yanukovych was assured by the solid backing of the most powerful oligarchs. They looked to Yanukovych to develop a strategy to help their businesses cope with the crisis. Although the government and big business leaders expected to climb out of the financial-economic-trade crisis on the back of a recovery of international demand for Ukraine’s principal exports, they obviously believed a change in external conditions would be an insufficient condition for domestic recovery. The international economic climate had cooled considerably in the wake of the crash of 2008 and would remain so for the foreseeable future. Significant domestic changes were therefore needed to compensate, to recover the rate of profit for business and the rate of tax collection for a government saddled with an unprecedented sovereign debt. Thus the state leadership and its big business sponsors undertook new initiatives in their respective spheres to adjust the regime of private accumulation of capital they had built over the previous years. These initiatives were met with widespread popular resistance on a scale not seen for several years.

New initiatives from above, protest from below

As soon as he took office as president in 2010 Yanukovych moved to strengthen presidential authority over the legislature, the judiciary, the public procuracy and the Kyiv city government. He appointed his own government under Mykola Azarov, denying the legislature its constitutional prerogative. The rules were changed to make it easier for the Party of Regions to build voting majorities in the Verkhovna Rada.

And in August 2012 the law by which the Rada was elected entirely on the basis of proportional representation of parties was replaced. Now half the seats would be chosen on the basis of proportional representation of those parties that gained more than 5 percent of all votes, and the other half by single mandate constituency elections. The new law gave the President’s Party of Regions a way to heavily finance its own candidates disguised as independents to run in the single mandate constituencies. It also provided the means to subvert the democratic oversight of local electoral committees and to deliver fraudulent vote counts to the Central Election Commissions.

In addition to settling scores and removing potent rivals, the imprisonment of Yulia Tymoshenko and Yuriy Lutsenko and their barring from public office for 7 yearswas aimed at intimidating the entire parliamentary and extraparliamentary opposition. State security organs targeted opposition candidates, independent analysts, university rectors and investigative journalists. A determined attempt was made – in the end unsuccessful – to muzzle the media by making slander a criminal offense on a variety of vague grounds. This broader offensive had the hallmarks of the drive to “sovereign democracy” made by Putin years before in neighbouring Russia.

Public protests, practically absent during the presidential election campaign, mounted in the spring of 2010. A growing number of actions were aimed against the employers’ attempts to cut their costs and increase the rate of labour exploitation, which included withholding wages, violations of collective agreements and the closures of factories. Some protest actions involved thousands of workers: the Mayday march in Dnipropetrovsk, the strike at the Frunze factory in Sumy, the Luhansk locomotive factory protests against wage arrears, and the August 2010 Italian slowdown strike at the giant Poltava iron ore mine.

­­Reacting to this rise in social protest, the authorities resorted increasingly to legal prohibitions or physical blocking of street protests by police, beating and arrest of protesters, searching of premises of participants, and laying criminal charges against them.

In early September 2010, the government announced plans to introduce legislation allowing higher educational institutions to charge students additional fees for various educational services. These plans met with student protests across the country between October and January 2011 against commercialization of education and the blatant encouragement of corrupt practices that were already widespread throughout the educational system. The protests forced the Verkhovna Rada to withhold from adopting the legislation.[xxi]

Replacing the Soviet Labour Code

A new Labor Code came before the Verkhovna Rada for its second reading in November 2010. Drafted originally in 2008 under the Tymoshenko government it was designed to replace the 1971 Code of Labor Laws. Although many provisions of the old Soviet Labor Code were increasingly ignored and not enforced, especially in the private sector, the Code nevertheless provided workers with a legal basis to defend their collective agreements and labor rights. It acted as a deterrent against the most arbitrary practices on the part of employers, such as dismissal without notice.

Under the old Labor Code, the main handicap faced by employees had been not the letter of the law, but the failure to enforce it. Enforcement depended on the readiness of the trade unions to defend their members through direct action against employers or in the courts. However, the official Federation of Trade Unions proved to be an ineffective defender of its members’ interests. And Vasyl Khara, head of the trade union federation and an elected member of the Verkhovna Rada from the Party of Regions was one of the main authors of the new Labor Code that came before the Rada for its second reading in November 2010.[xxii]

The new Code offered less protection to employees than the old Code from dismissal, arbitrary increases in working hours and reductions in pay. It provides no guarantee that trade unions can function in the workplace, nor does it acknowledge their right to represent their members in disputes with the management, as did the old Code. Thus, the new labor legislation sets out to legalize employer practices that had already been introduced to increase the rates of labour exploitation, to maintain insecurity of employment and the international competitiveness of Ukrainian firms. This, in fact, was a code for the new market realities, and it became even more urgent after the crash of 2008 for the employers to see it adopted in law.

The independent trade unions mounted a demonstration against the new Labor Code outside the Verkhovna Rada on November 15, 2010. But the size of this demonstration was far too small to prevent its adoption on third reading. However, two days later, third reading was postponed.

Taxation and tax avoidance

The reason for the postponement was a wave of big demonstrations on November 16 that swept through the main cities, with more than 10,000 people assembling in the capital outside the legislature. These demonstrations were directed against the new Tax Code about to be adopted by the Rada.[xxiii] The government was concerned enough not to have two popular grievances coincide through active protests on the streets that it withdrew from adopting the new Labor Code.

A new Tax Code had been promised ever since President Yanukovych named Mykola Azarov Premier. Azarov was well known for his zeal as a tax collector from the time he served as head of the Tax Inspectorate in Premier Yanukovich’s government in 2007. However, the challenge of collecting sufficient taxes in 2010 was much greater than in 2007 because of the sheer size of the public debt that needed paying off. Yet the government was still unwilling to compel the biggest corporations to pay their taxes in Ukraine. They were still able to shelter their profits in Cyprus under a state-level agreement concluded in the 1980s by the Soviet government but still in force in Ukraine. This legal loophole thereby deprives the government’s treasury of at least US$20 billion, or 10 percent of annual GDP.[xxiv]

As a result the Azarov government was obliged to introduce higher taxes for the small and medium sized businesses that invariably work for the domestic market and pay their taxes in Ukraine. Such plans understandably provoked their furious response. The November 22, 2010 demonstrations that involved some 50,000 participants across the country. They demanded that the government annul the agreement with Cyprus and compel big business to pay its fair share of taxes.

At the same time, the debates in the press and the speeches at mass meetings revealed important divisions among the protesters: on the one hand, small and medium sized businesses and professional people expressed hostility toward the government for protecting big business interests; on the other hand, rank and file workers expressed their opposition to tax avoidance practiced by small and medium sized businesses that deprived the state pension fund and other parts of the social security system of necessary contributions.[xxv] Despite these protests the new tax code was adopted in December 2010.

In November 2012 President Yanukovych signed a Double Tax Treaty with the government of Cyprus to replace the Soviet era treaty. Thus he preserved the lucrative channel for the biggest Ukrainian corporations to expatriate their profits either permanently or to be able to return them to Ukraine as foreign investments and loans that are subject to much lower levels of capital gains tax.

Flight of capital from Ukraine to tax havens takes place through various other means practiced by Ukrainian and foreign firms alike, including transfer pricing, leasing, and internet transactions.Ukrainian law is very ineffective and incomplete in taxing foreign owned companies operating in Ukraine, regulating only certain elements of transfer pricing..[xxvi] After all, it is all part of the regime of accumulation of capital that serves a resident transnational class.

Land: the last frontier

Finally, President Yanukovych began preparing the privatisation of the country’s agricultural land. If successful, he would advance significantly the penetration of market relations into the economy and the entrenchment of the ruling class. Of all the “objects” marked for privatisation by the his government, agricultural land was by far the most important. The country’s arable land and remaining forests have been subjected to a long and still incomplete historical process of alienation from the rural commoners. Today’s stage in the process is a rather delicate one: for the state to devise a process that will take out of the hands of 5-6 million former collective farm workers some 30 million hectares of arable land and make this land available for consolidation into massive latifundia, owned by a narrow class of landholders who can then employ all the remaining rural population they need as wage earners.[xxvii] These will be integrated production enterprises, monopolising the domestic wholesale and retail markets and exporting globally.

A good share of the land will no doubt be made available to foreign investors for long term lease or even outright ownership. Within a few years there will be no place left for the mixed farm and the small farmer, except perhaps as locations for ethnographic and ecological tourism in an otherwise industrialized, commodified and corporatized countryside. Unless there is serious political opposition mounted to this monumental privatisation, it will go ahead as soon as the cadastre of land is ready.

Results and prospects

The export led and import substitution strategies which were espoused in varying combinations for twenty years failed spectacularly to deliver an all rounded and prosperous economy. On the contrary, Ukraine’s economy has experienced mounting annual trade deficits every year since 2009, exceeding $6.5bn in 2012. Combined with a declining net foreign direct investment, the trade deficit has contributed to a government current account deficit of $8bn, the largest in the past seven years of deficits. This state of government finances simply means the government has no resources of its own to promote any kind of development. What it borrows from domestic and foreign investors in government bonds goes to pay off state debt, to subsidize the oligarchs’ appetite for Russian energy supplies and to maintain creaking social security programmes.

On the other hand the regime of accumulation of capital established for the chosen few has been rather successful. The state continues to promote the construction of its native capitalist class – through privatization, state aid to its industries that includes various corrupt schemes, the maintenance of low wages, dangerous working conditions and toothless “official” labour unions, and convenient channels for the biggest corporations to expatriate their wealth while placing the burden of taxation onto the small businesses and professions. The chosen few have become fabulously wealthy, truly “Europeanized”, while a large proportion of the population has remained below the poverty line.

The average real income of the population is today barely above that of the crisis year of 1991, while the disparities of individual and family incomes are very great, indeed unprecedented since Czarist times. These are the essential ingredients of the regime of accumulation of the oligarchs’ wealth, which binds them tightly to their “own” nation state. This regime has removed from the domestic cycles of economic and social reproduction so much of the surplus product from year to year as to deny Ukrainian society any chance of all rounded development and widespread prosperity. If anything, the manufacturing sector is weaker and the primary- semi processed goods sectors are stronger than they were in 1991. The domestic markets for consumer goods and machinery, sectors in which the national economy was traditionally very strong, have been largely captured by foreign producers.

Regional economic inequalities remain large, a cause of social inequalities among workers, a potent source of ethnic tensions and right wing extremism.

However, this process of capitalist construction is neither complete, nor is it any longer national in scope. Poor sections of the population continue to rely in varying degrees on the subsistence (or sustenance) economy, on the simple, non-monetary exchange of labour and resources. This is especially so for the provision of food from the private plots. The most recent surveys show that a full half of all households in Ukraine, including 36% of urban households, rely on these plots for some of their food.[xxviii] And given the harsh experience of the transition to the market in the past 20 years, Ukrainians are not ready to put so much of their faith in the market to deliver them their livelihoods—or all of their livelihood – that they will give up devoting part of their own labour and resources to the subsistence economy.

If a Ukrainian ruling class has indeed managed to establish itself on its own national territory, it has not been able to keep foreign capital out. Indeed, its regime of accumulation has depended on participation in certain transnational investment, production and distribution chains that necessarily require accommodation to foreign capital.

The international crisis in 2008 forced the rival centres of foreign capital to alter their positions within the Ukrainian economy. The Euroatlantic centre which had bought up the domestic networks of several Ukrainian banks in the expectation of super profits from financial services during the boom were forced to sell in the wake of the collapse. Ukrainian oligarchs, who had sold their banks at lucrative multiples of their book value now bought these banks back at a good discount. The Russian banks, on the other hand, were better protected from the crisis by ample credits from their own government, so they could strengthen their position in the Ukrainian banking system. On balance, however, the biggest winners were the Ukrainian private banks, which increased their share of assets in the banking system from 40 to 51% between 2008 and 2012. The Ukrainian state banks Oshchadbank and Ukrexsimbank also increased their share from 11 to 15% over the same period.[xxix]

Whether this is a momentary recovery or a more long term strengthening of Ukrainian banking capital is hard to say. On the one hand, the West European banks face severe and unresolved problems within the eurozone that will keep them tied down for several years to come. Russian banks on the other hand have continued to acquire assets in Ukraine since 2008, placing them and their state sponsor in an even stronger position to bring into private and/or foreign state ownership the gas pipelines running across Ukraine. President Putin’s strategy is to use Ukraine’s state debts for Russian gas to “merge” Gazprom and Naftogaz Ukrayina, and to keep Western based transnational rivals out of Ukraine’s energy production facilities and distribution networks.

The resulting structure of ownership of the Ukrainian economy now consists of three layers – at the top the financial layer is divided between European, Russian and Ukrainian-owned banks. It has not gone so far as, say Poland or Latvia, but foreign ownership of the banking system is far advanced. The middle layer is occupied by Ukrainian owners of mining and industrial processing industries, with Russian investors making big inroads into the technologically higher end of the processing chains. Their advantage is to control or have strong ties with the upstream suppliers of Russian energy and raw materials that feed the processing industries and the public utilities in Ukraine. And the bottom layer – agriculture and food production – seems secure in Ukrainian private and state control.

The agricultural processing plants were privatized quite early on, by the late 1990s. While it was in opposition the Party of Regions with the help of the Communists kept the privatization of land off the political agenda. It is now firmly back on the agenda, but the pace and outcome of land privatization is far from clear. The land represents far more than an economic resource in the historic consciousness of the people of Ukraine. The President’s plans may well face much deeper public opposition than earlier privatizations of nationalized property.


[i] 1.Ukrainian Economic Trends, June 1997, pp. 8-14; V Riaboshlyk, “Realnii podatkovyi tiahar prykhovano statystykoiu VVP”, Ekonomist, Vol. 1, No. 1, January-March 1997; pp. 28-32.

[ii] International Labor Office, The Ukrainian Challenge: reforming labor market and social policy,(Budapest: Central European University Press, 1995)p. 15; Oleg Dubrovskii with Simon Pirani, Fighting back in Ukraine: a worker who took on the bureaucrats and bosses (London: Index Books, 1997) pp. 5‑6.

[iii] Chas commented on 25 October 1996: “We have lost not only the foreign market; we’ve almost lost our own…One of Kiev’s supermarkets is now selling potato varennyky, and they’re made in Brooklyn, New York!”

[iv]A.S. Hal’chynsky et al., Stratehiya ekonomichnoho i sotsial’noho rozvytku Ukrayiny 2004-2015 roky shliakhom yevropeys’koyi intehratsiyi Ukrayiny; Kyiv 2004; pp. 15-16.This is a collective work by Ukrainian academics and experts working under the direction of then Prime Minister Viktor Yanukovych.

[v] Ibid.

[vi]Ukrayinska Pravda 26 December 2003, citing Mykhailo Chechetov, head of the State Property Fund.

[vii]Aleksandr Paskhaver And Lidiia Verkhovodova “Privatization Before and After the Orange Revolution”, Problems of Economic Transition, vol. 50, no. 3, July 2007, pp. 5–40.

[viii] Central European, July‑August 1992; Chas, 18 October 1996, p, 7; Ukrainian Economic Trends, January 1997, Table 1.4.

[ix] Halchyns’kyi et al., op. cit.’ p. 18. The strategy of European integration was a long term one. It foresaw mastering an “innovative” model of further economic development, reducing the per capita income gap between the EU and Ukraine, incorporating Ukrainian industrial production into European production chains, building a strong middle class, democratizing political institutions, adapting the legal code to EU law, joining the World Trade Organization and NATO by 2008.

[x] Marko Bojcun, Russia, Ukraine and European Integration, European University Institute Working Paper HEC No. 2001/4, EUI, San Domenico Italy, 2001.

[xi] Kyiv Post 30 May 2000, Ukrayina moloda 21 February 2001, Baltimore Sun 29 April 2001, Moscow Interfax 12 February 2001, Centre for Peace, Conversion and Foreign Policy of Ukraine, Occasional Report No. 7, 2001.

[xii] Ya. A. Zhalilo, Teoriya i praktyka formuvannia ekektyvnoyi ekonomichnoyi stratehiyi derzhavy, (Kyiv, National Institute of Strategic Studies, 2009); pp. 129-31.

[xiii] Aleksandr Paskhaver And Lidiia Verkhovodova “Privatization Before and After the Orange Revolution”, Problems of Economic Transition, vol. 50, no. 3, July 2007.

[xiv] Zhalilo, op. cit. pp. 129-31.

[xv] “…the Orange revolutionary coup was broadly a product of real economic grievances and ‘decremental relative deprivation’ suffered by the majority of the Ukrainian electorate during the transition.” Vlad Mykhnenko, “Class voting and the Orange Revolution: A Cultural Political Economy Perspective on Ukraine’s Electoral Geography”; Journal of Communist Studies and Transition Politics, Vol.25, Nos.2–3, June–September 2009.

[xvi] Paskhaver and Verkhovoda, op. cit., p. 30.

[xvii]Zhalilo, op. cit., p 133.

[xviii] Paskhaver and Verkhovoda, op. cit., p. 31

[xix] Vlad Mykhnenko and Adam Swain “Ukraine’s diverging space economy: The orange Revolution, post-soviet development models and regional trajectories”, European Urban and Regional Studies 2010; 17; 141; p. 158.

[xx] Zhalilo, op. cit, pp. 143-50.

[xxi]. See http://www.marx.org.ua/2008-04-23-09-06-29/1-articles/850q—q,

accessed on February 12th, 2011.

[xxii]See http://www.zahist.wordpress.com/2010/11/12/ukrslovo-tk/, accessed on

November 17th, 2010.

[xxiii]See http://www.pravda.com.ua/news/2010/11/29/5625895/, accessed on November 30th, 2010.

[xxiv]See http://www.pravda.com.ua/news/2010/11/29/5625895/, accessed on November 30th, 2010.

See http://www.pravda.com.ua/news/2010/11/29/5625895/, accessed on November 30th, 2010.

[xxv]18 BYUT Inform, 174, November 30th, 2010.)

[xxvi]Тищук Т. А, Іванов О.В., Шляхи протидії прихованому відпливу капіталу з України.Національний інститут стратегічних досліджень, 2012. http://www.niss.gov.ua/, accessed 14 November 2011

[xxvii]   http://realt.aviso.ua/uk/news?id=c38d63e4-68a6-4f63-ba5a-69d8e088647c, accessed 20 December 2012

[xxviii] See http://www.ukrstat.gov .ua/operativ/operativ2010/gdn/sdh/sdh2010.htm, accessed on February 21st, 2011.

[xxix]Tyzhden’. 18 February 2013






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