ANALYSIS

December 1, 2001

Explaining State Capture and State Capture Modes: the Cases of Ukraine and Russia

By Oleksiy Omelyanchuk

Abstract

More than a decade into the simultaneous political and economic transition in Central Eastern Europe has produced different outcomes in different countries. Some nations advanced well on the road of transition (e.g. Hungary, Poland, Estonia, Slovenia) yet, some cases produced disturbing transition outcomes in both economic and political terms (Ukraine, Russia, Azerbaijan, Moldova, etc).

The fear that the leviathan state would be an obstacle to the process of democracy and market building is now ceding to a new worry. It is the concern that powerful self-interested economic actors gain control over the states to their own advantage and to the enormous losses to the entire societies. Media reports throughout the region have been telling of powerful "oligarchs" buying off politicians and bureaucrats
to shape the legal, policy and regulatory environments in their own interests. Preliminary inquiries of the scholars showed that these interests radically contradict the interests of societies and national economies. The empirical data reporting the aggregate costs of such an activity do not reveal the human suffering brought about.

Some important progress has been made in understanding the phenomenon under discussion called "state capture". Initial attempts carried out by the international institutions and individual authors laid the foundation for unbundling the phenomenon. Yet, some substantial gaps are still to be covered before the consistent state capture theory can emerge.

The given project is intended to contribute to advancing the theoretical and empirical knowledge about state capture and to combating the phenomenon in the transition countries. Specifically, the project is intended to answer two crucial questions. What are the causes of the state capture? What explains for the different state capture modes? The project is thus divided into two parts, each exploring the respective question. Structural and institutional analyses are invoked to explore the questions and link the two autonomous parts of the project into the full picture of state capture.

The first part of the project explores the hypothesis that state capture as such can be explained by two structural variables that deserve analytical primacy. These are the correlation of the concentration of economic and political power and the level of development of civil society.

The second part of the research suggests that channeling of state capture is determined by the explanatory variable of distribution of powers between the President, Assembly and Cabinet in the presidential systems.

The project explores state capture on the cases of Ukraine and Russia.

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Oleksiy Omelyanchuk is a Ph.D. Candidate in Political Science, Central European University, Hungary, Budapest. He was visiting the Stasiuk Program on Contemporary Ukraine in October - December 2001.

Presented in the seminar of the Stasiuk Program on Contemporary Ukraine, Canadian Institute of Ukrainian Studies, 30 November 2001.