"The Economy of Losses" – The Pinnacle of the Corruption System's Evolution

The essence of this trend lies in creating the illusion of managing the economy in the interests of society, whereas in reality, schemes are implemented to enrich specific oligarchs.

The nationalization of losses and the privatization of profits are the primary tasks of officials at all levels and ranks who work tirelessly in Ukraine. Their goal is to shift the entire financial burden of financial-industrial groups (FIGs) or oligarchs onto the state, thereby allowing their companies to maximize profits. Such a practice, functioning as a mechanism for distributing economic resources, has been made possible by a system that can no longer simply be called corrupt—it is, in fact, state governance itself.

Nationalization of Losses

Nationalization of losses manifests not only in the form of state subsidies, tax breaks, debt buyouts, or direct financial support for enterprises that are far from unprofitable. A particular line should be drawn under the productive work of public officials in transferring contracts for endless and essentially useless modernization and repairs of infrastructure and public utility facilities to the companies of their direct employers. And, as you might guess, this has nothing to do with benefiting the people.

Privatization of Profits

Privatization of profits includes the sale of profitable state assets, the issuance of licenses for resource extraction, or the signing of contracts with private companies on terms that are clearly disadvantageous for the state. These deals always involve corruption, as decision-makers gain personal benefits in exchange for fulfilling obligations to those who promoted them to their positions or granting privileges to private sector representatives.

The nationalization of losses and the privatization of profits create a closed loop of dependency between state structures and business elites. This phenomenon is often referred to as "oligarchic symbiosis." Politicians and officials who control budget funds receive financial support to maintain their power, while businesspeople secure guarantees for preserving their privileged positions.

The Nature of "The Economy of Losses"

"The economy of losses" is a system in which state bodies play a key role in redistributing risks and revenues. This redistribution is never fair. Primarily, this is because the beneficiaries of inefficient budget spending are large corporations and banks. For their essentially anti-state activities, they receive financial support from the state, subsidies, and tax benefits. At the same time, the primary source of wealth for FIGs is taxpayers’ money, which essentially amounts to the nationalization of losses.

The Ukrainian Context: Oligarchs’ “Care” at Society’s Expense

In Ukraine, "the economy of losses" has reached a unique level of cynicism. The state actively creates conditions for the maximum enrichment of oligarchs, openly sacrificing the population's interests. One of the most striking examples is the energy sector.

Instead of developing nuclear power plants (NPPs) and selling cheap electricity to the population, the state has done everything possible over the years to allow oligarchs to profit from expensive electricity produced by inefficient thermal power plants (TPPs). The state has effectively destroyed nuclear energy, enabling oligarchs to implement schemes like "Rotterdam+" with impunity.

This approach has not only led to increased tariffs but also forces people to pay inflated prices for basic services.

Central heating is another black hole into which billions of taxpayers’ money flow. It is a remnant of the Soviet planned economy—an inherently economically unviable system where excessive consumer expenses and state subsidies merge into an uncontrolled stream, enriching major market players. Instead of dismantling or decentralizing this system, billions are poured into useless modernization and endless repairs.

Despite the sector’s inefficiency for consumers, budgetary resources benefit a narrow circle of individuals, while service quality remains abysmally low. The only thing that grows is the price of these services.

War: The Pinnacle of “The Economy of Losses”

War is undoubtedly the most convenient and ultimate expenditure item within "the economy of losses" because its costs are extremely difficult to verify. The overall chaos allows for any spending to be written off. Using the rhetoric of "everything for victory," officials of all ranks and categories conceal the true scale of financial abuses, redirecting and reallocating resources, desperately needed at the front, in favor of a narrow group of individuals.

Offshore Ukraine

The most egregious problem in Ukraine is oligarchs avoiding taxation. Virtually all oligarchic profits are siphoned off to offshore accounts, depriving Ukraine of significant tax revenues. While globally, corporations evade around 37% of taxes, in Ukraine, this figure can reach up to 70%. This phenomenon is outright looting. However, instead of tightening controls on offshore activities and forcing big businesses to pay taxes domestically, the so-called "people’s representatives" shift the financial burden onto those who already sustain the economy—entrepreneurs and non-offshore businesses. For them, taxes are continuously raised, creating unbearable working conditions and exacerbating social inequality.

Is There a Way Out?

No. Ukraine's political system is structured so that real representatives of the people and opponents of oligarchic dominance cannot enter Parliament. Meanwhile, parties that essentially serve as oligarchs’ proxies continue dividing the budget pie among themselves year after year.

Beyond the inability of the people to nominate their candidates for office, another problem is funding politicians and parties that could represent their interests. There is no understanding among the public that if you want someone to represent your interests, you must, in essence, pay for their work.

Some may argue that many parties have raised funds through public donations in recent elections. But this is a lie. Donations cover up to 5% of a politician's expenses. The rest comes from businesses, or more specifically, FIGs.

As for the law enforcement and judicial systems, there’s no point in even starting the “old song about the main issue.” There has been no reform there, nor is there any in sight.

"The economy of losses" is not just a temporary phenomenon; it is the result of the corruption system’s evolution—a deep structural problem of the modern global economy, most vividly manifested in Ukraine. Addressing it requires a comprehensive approach rooted in the desire to make the country's economy truly sustainable and equitable for all.

But who, in fact, would be interested in that?