IA “FACT” already wrote that BlackRock is entering Ukraine is no accident — it is a signal that the world’s financial elites consider Ukrainian reconstruction to be predictable and promising for investment. His participation through the UDF fund shows that Ukraine is no longer a “grey zone”, but a strategic point of capital entry, where even risks have become manageable thanks to Aladdin-type algorithms.
When BlackRock enters the Cabinet: a private adviser on public policy
Let’s imagine a company that manages $10 trillion in assets. It invests in corporations, dictates trends, and forms the value of assets. Now imagine that the same company advises governments on how to restructure their debts, build pension reform or to develop the energy sector. That’s exactly what BlackRock does.
In the midst of covid, the Federal Reserve System of the United States approached BlackRock with a request manage corporate bond redemption programs. Company received asset management contracts, which she herself partially owned, and this immediately caused a wave of criticism.
“BlackRock got access to a $750 billion program to buy the market. But some of those assets are its own funds,” wrote The Wall Street Journal.
Although the company said that between its analysts and traders works the so-called Chinese Wall, that is, the barrier of non-disclosure, ethical questions remain: does she not have an insider’s advantage in the system she herself helps to build?
In 2020, the European Commission signed a contract with BlackRock for the development of “green” standards for the EU banking sector — that is, the integration of ESG criteria into financial decisions. The reaction did not take long: 80 members of the European Parliament accused the Commission that BlackRock has a direct commercial interest in the area where it proposes rules. “We invited the fox to guard the henhouse,” said Ernest Urtasun, a member of the SK from the European Parliament.
The company defended itself: it was standard practice, and the team of analysts working on ESG design did not have access to investment decisions. But the scandal became a precedent — the issue of transparency of the analytical influence of big capital on regulation came to the level of European institutions for the first time.
In 2023, the government of Ukraine signed an agreement with BlackRock on the creation of the Ukrainian Reconstruction Fund (UDF) — a mechanism for attracting international capital to post-war reconstruction. The memorandum provides for analytical support, assistance with the formation of portfolios, strategic expertise, structuring of the mechanisms of Forbes Ukraine funds. “BlackRock will be an adviser on the creation of the fund. But later it can also become its operator.”
On the one hand, this is a signal to investors: “the largest market player believes in the project.” On the other hand, it gives a private fund unique access to state infrastructure even before the first investor appears.
In the 2020s, BlackRock was a key player in Argentina’s debt restructuring negotiations. He performed at the same time, the main creditor, an active player in the bond market, and an informal lobbyist for reforms.
This has sparked debate: when a fund influences decisions that directly affect the value of its own assets, it is a systemic advantage that is difficult to control by external mechanisms.
BlackRock claims to have integrity policies, internal barriers, ethics committees and audits. But the scale of its involvement — from climate policy analysis to the management of national funds — raises a fundamental question: Can a private company be allowed to both make the rules and play by them?
The answer has not yet been given. But if the world’s financial system has a new center of influence, it must be accompanied by a new level of accountability. Because otherwise we risk getting a shadow coordinator of the world government — without a mandate and without opposition.
BlackRock as an architect of post-war capital: how global players are shaping a new model of investing in Ukraine
BlackRock does not invest directly. He is a strategist, an architect, an adviser who creates structure and rules of the game: transparency, management, project selection standards, monitoring. And funds from other investors — pension funds, banks, insurance companies, G7 states — should come to this framework.
BlackRock outlines its conditions for raising capital. In particular, capital blending: part — donor money, part — state guarantees, part — private investments. This design reduces risks for each participant.
Company focuses on clear sectors: energy, logistics, agriculture, IT. That is, industries that already need investment and can have an effect even during a war.
Regarding corporate ethics, the fund will not take a majority in projects. He acts as a minority co-investor to signal: “it’s verified.” An important condition is transparency: if there is no public reporting, independent audit, filters for corruption, then there will be no next dollar.
According to experts, the UDF project can become “the first example of a new model of post-war partnership between the state and global capital”
JPMorgan, McKinsey, as well as representatives of IFC and EIB are already joining the cooperation. The focus is on 15 to 25 “pilot” projects that will give the green light for hundreds of others.
The BlackRock effect — the “mechanical crowd” effect
BlackRock is the world’s largest provider of ETFs (exchange-traded funds) through its iShares line, covering more than $3 trillion in assets. This means that when investors buy ETFs on the S&P500, Nasdaq, oil companies or green energy, they almost always invest in BlackRock.
An ETF is a portfolio that tracks an index. You buy an ETF share — the fund automatically buys all shares within the index in the same proportions. And it is precisely this “automatism” that generates power: when an investor enters an ETF, he does not choose companies manually, but still changes the demand for each of them; the more money that goes into the ETF, the higher are growing asset prices, not necessarily because of the actual achievements of the companies.
“ETF creates demand even where it is not deserved.” Price ceases to be a reflection of value. It becomes a reflection of the flow of passive money.
Examples of the “BlackRock effect” can be the following cases. After being included in a number of ESG indices under which BlackRock stands in 2021, shares of ExxonMobil rose — even though the fundamentals did not change at the time.
A sharp ETF dump on the S&P500 in 2010 triggered an automatic sell-off of components, with several stocks briefly falling to 1 cent. This was the first bell about the “mechanical crowd” effect.
Following the Fed’s program during covid, BlackRock bought corporate bonds through its ETFs. The market instantly “overvalued” these papers just in anticipation of their redemption.
Passive investments provide accessibility, low commissions, and peace of mind. But the price of this is a decrease in sensitivity to reality. “When tens of billions are simply poured into the market index loses a taste for choice,” says John Coates, a Harvard financial law expert.
Vanguard analysts acknowledged that an excessive concentration of ETF capital can have the effect of “overvaluing the entire index,” even if there are unprofitable or weak companies inside.
European regulators warned in their 2023 reports: in moments of crisis, ETFs behave “like catastrophic copies of the market” and not its stabilizers.
How transparent is BlackRock
BlackRock positions itself as an exemplary transparent market player: annual reports, publication of conflict of interest policies, SEC and BaFin audits. But its size and the complexity of its business raise questions: Is this transparency enough when dealing with a giant with $11+ trillion in assets?
BlackRock paid $12 million fine after a portfolio manager conducted business outside the company without disclosing interests in 2015-2016. This caused the first changes in control policies.
In 2023, the SEC fined Randy Robertson, a BlackRock portfolio manager, $250,000 for failing to disclose that Aviron Group (the fund’s own asset) helped his daughter with an acting career. Investors were unaware of this conflict of interest.
In the same year, the SEC fined the BlackRock Multi-Sector Income Trust $2.5 million for misrepresenting investments. Aviron by mistake determined as “Diversified Financial Services” and overestimated profitability. The error was corrected only in 2019.
In 2020, the European Parliament and the Ombudsman appealed due to a conflict of interest: BlackRock, which has large investments in oil and banks, is developing ESG standards for the European Commission. The ombudsman issued an order — the contract was deemed dubious. It is also known about fine $2.5 million for misrepresentation of assets in BIT reporting.
When responding to criticism, BlackRock usually reacts quickly: paying fines, making changes, updating policies. He calls the accusations of the conflict episodic, not systemic. Stock practices audits, internal control (“Chinese walls”), separation of the roles of consultant and investor.
The key question remains: are these signatures, demarcations and “barriers” enough when it comes to an institution with financial weight that shapes policies, markets and standards?
BlackRock is part of the Big Three, which also includes Vanguard and State Street. They are together have a significant stake in over 40% of US public corporations — from Microsoft to CVS and Citigroup. This concentration of ownership raises concerns: Is it acceptable for three companies to be responsible for parts of competing markets while still being able to vote at meetings of hundreds of companies?
Common ownership effect: the ability to coordinate among competitors, for example, not to support the expansion of production capacity, even without direct antitrust collusion.
BlackRock is active practices proxy voting — votes for ESG measures: climate, diversification or workers’ rights. This is noticeable: some companies practically built a strategy for such voices, because otherwise they risked losing investment interest.
It often looks like an upward equation: to get into cash-yielding ESG funds, companies must adhere to the standards developed by BlackRock. Critics believe that this can force businesses to “catch the trend” instead of innovating on their own.
But the representatives of the activist-critic answer: “they only implement the will of fund clients who are ready to comply with ESG, so this is a symptom of democracy in business, not dictatorship.”
Recently, US regulators and states (such as Texas in the lawsuit against the cranial “climate coordination” of fund giants) suspect that shared ownership may be anti-competitive. In particular, the Ministry of Justice and the Federal Trade Commission stated, that possible coordination of prices or limitation of products through such funds may fall under the prohibition of antimonopoly legislation.
In the case, which is being heard in a court in Texas, 11 states declare, that BlackRock, Vanguard and State Street caused electricity prices to rise by supporting coal restrictions under ESG cover.
DOJ and FTC filed the official Statement of Interest, reinforcing the claim of “curtailment of production” and distrust of the fact that the funds are simply “following the client’s order”.
This marks a new era: regulation can apply not only to corporations, but also to funds whose strength lies in the centralization of capital, rather than rigid dominance of a single market.
Tetyana Viktorova
