Many see foreign direct investment as a key prerequisite for an economic breakthrough in Ukraine. Yet, as this Financial Times article reports, political and security problems in Ukraine prevent FDI from climbing back to its pre-war levels. With the onset of the conflict with Russia, FDI flows to Ukraine experienced an unprecedented decline, falling from $8.5bn in 2012 and $4.5bn in 2013 to just $410m in 2014. Despite a certain rebound, driven by the recapitalisation of foreign-owned banks, FDI has so far failed to return to previous levels.

It is important to note, though, that foreign investment in Ukraine has often served as a veil for local (and sometimes Russian) big business, which uses special purpose entities in Cyprus and other tax havens to secure special legal treatment, conceal the ownership of assets and minimise taxes.

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