Economic liberalism and security preferences: A comparative case study of Russia and Ukraine in the 1990s

The privatization of major industrial assets represents a fundamental economic policy choice. The decision to allow foreign capital to participate in this process represents a fundamental foreign policy choice, one that I believe is framed largely by decision makers' preferences regarding economic security. In this article I seek to explain what seems a puzzling fact: Since the fall of the USSR, Russia has had a greater preference than Ukraine for foreign ownership of large enterprises, including "strategic" enterprises designated as important for national security. This is contrary to reasonable expectations based on military threat or perception of threat (i.e., Ukraine's desire to build relationships with other powers to balance the perceived threat from Russia; traditional hostility between Russia and the West) and economic interests (i.e., Russia's greater capacity for selfsufficiency). I advance an explanation for this based on psychological factors including the effect of formative events and schematic learning. I am especially interested in the role of imitation or observational learning in foreign policy.