Ukraine, A Country Of Misery: A Failed State And A Country Of Stationary Oligarchism

Матч всех звезд баскетбольной Суперлиги 2012. Киев.
Ukrainian All-star

Image by Александр Осипов

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KYIV – What is the political and economic state of Ukraine you may ask yourself?

Definitely, it’s not the capitalism that you know in the USA. What is it then?

Ukraine is a country of a failed state and a country of stationary oligarchism.

Now let’s review how it happened.

The USSR collapsed in 1991. Several years before the collapse of the USSR, the government allowed cooperatives, barters, and small businesses. People who had the money and desire began to open stores. Some people succeeded, some failed.

Some government officials who looted money from the government opened their small businesses. Some former KGB and police officers were involved. Some bankers from government-owned banks began to use banking schemes to launder money. Criminal groups began to operate in Ukraine and Russia immediately after the break-up of the Soviet Union. The Russian mafia recruited government officials, police, bankers, former military, and former KGB. Some KGB began to work for the mafia, some former KGB tried to use the mafia to work for them or they cooperated with the mafia and criminal groups. The same happened in Ukraine and Russia. 

Fast forward several years after the crisis of 1991. 1995-1996 – there was a huge economic crisis in Ukraine. People survived on basic food. Hyperinflation. The average salary was 30 USD per month. People who worked in the government did not know what to do, neither had they been taught what to do with a failing country. They did what they can do. They listened to the mafia, some ill-educated advisors, they tried to listen to the advisors from the USA. All people in 1st, 2d, and further governments of Ukraine had to listen to corrupted individuals who surrounded them. Imagine a mix of ignorance, greed, poverty, nationalism, poor education, absence of knowledge about monetary policy, and absence of knowledge of how companies should operate – these are the traditional characteristics of the government officials in Ukraine, in all governments and under all presidents of Ukraine. 

In 1991-1996, the former KGB, now called SBU in Ukraine began to search for means of making money. Instead of guarding the body of the state of Ukraine and working to guard the security of the state, smart, thrifty officers of KGB-SBU organized confidant groups of SBU-army generals and began to sell. What did they sell? Weapons, property of the army, land, government assets. They tried to get in and sell anything that could be sold by the government. Sometimes they would buy themselves, sometimes for their friends. Sometimes they would get a % commission from the privatization, sometimes not. Shyster lawyers of all kinds helped government officials to privatize – or better use the proper word – loot government property. Small, medium, and large companies, lands, assets, equipment, and weapons were sold abroad or locally using various elaborative schemes: barter, vouchers, bonds, obligatory notes, export-import guarantee notes, simple fake agreements, fake orders, and fake notices. Former KGB, now SBU or former GRU, now HUR officers facilitated the deals, secured the deals, secured the transactions, and took their margin. 

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At some point of time – 1996-1998 former SBU officers began to make friends and do business with some outright criminals in Donetsk, Luhansk, Kyiv, Vynnytsia, Dnipro, Lviv, and other cities. Local criminal marriages of SBU, police, and criminal groups appeared. In fact, the local police office would guard the assets of criminals, but not guard the safety of streets, etc. The guarding from the police and the SBU was required in order for other SBU and police officers and other criminal groups to not loot what was looted previously via elaborate (but often, stupid) schemes. Anti-raider groups appeared. Former KGB, now SBU and now HUR officers joined the business groups as security officers, responsible for the security and guarding of companies. Some high-ranked SBU and HUR officers helped to bribe senior government officials allowing fake privatization of the largest enterprises in the country. They obtained positions of Head of Security or Head of Operations in some companies being subordinate to the fake owners of companies, criminals, who later became oligarchs. The same happened in Russia, but instead of SBU, there was FSB.

What’s the difference between the state of Ukraine and the state of Russia?

In Russia, from 1991-1998, the FSB quickly took control of criminal mafia groups and some businesses that were establishing companies under the control of the FSB and using criminal groups’ subordinates. In simple terms: FSB used and hired criminal groups. FSB became a criminal organization – using mafia and local criminal groups for their own business. FSB took over major businesses. The FSB placed his president – you know who he is. FSB penetrated into banks, state-owned banks, and state-owned companies establishing their own money-making channels on government companies. 

In Ukraine, from 1991-1998, the SBU-police-HUR and the officials of ministries of the government became employees of the (now) criminal-owned companies and became subordinate to criminals. From approximately, 1996, the positions in the government are being sold for an amount of money estimated by “behind the curtain” collectors of money who established control of the treasury of cities, regional and central governments. 

Summarizing and simplifying the last 2 paragraphs: Russia – is a state controlled by a group of criminal FSB that is a government that uses and guides local criminal groups. Ukraine – a state that is controlled by criminal groups that assign, sells, and employs government officials. Both states: Russia and Ukraine are states of the stationary bandit system. The difference is: the system of control in Russia works, the FSB became bandits, and controls other bandits. In Ukraine the government system failed, and the oligarchs continue to control the government and continue to loot the government and government-owned companies and banks. In addition to local oligarchs in Ukraine, international oligarch-owned investment groups and security agents have penetrated various organs of the government of Ukraine, and, also, loot the government, acting not better than the local oligarch-placed employees of the government. 

What are the next steps for the government of Ukraine?


If elections do not work, the country is destined to be under the control of oligarchy and corrupted government officials — forever.

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