The Role of State in Ukrainian Business: Violent Bespredel and Profitable Partner

Abstract

This article analyses the role played by the Ukrainian state in the everyday business under Yanukovych regime in 2007-2011. Relying on the empirical findings of a five-year case study conducted in Eastern Ukraine, this article confirms the image of the Ukrainian state as a “grabbing hand” or bespredel — an unrestricted and violent power. The contractual relations of the researched firms and the state actors were fraught with illegal practices such as kickbacks from suppliers and the need to systematically violate the law on state procurement; pervasive Soviet-style personal relations; the risk of experiencing violent administrative pressure including criminal prosecution; and deficiencies in the enforcement of contracts. Notwithstanding these risks, the researched businesses revealed no absolute moral prohibition against joining the “grabbing hand” of the state to exploit public resources and advance their own private gains.

Keywords: state, business, contractual relations, post-Soviet transition, Ukraine