Interaction between states and capital in post-communist Europe has developed quite differently during the dual transitions taking place in the 1990s. High state capture is one outcome, plaguing candidate countries like Latvia, Slovakia, Bulgaria and Romania, while the opposite goes for Estonia, Slovenia, Poland, Hungary, the Czech Republic and Lithuania. Captured states are a threat to democratic legitimacy, economic development, and to stability in the whole region. What can explain the difference in levels of state capture? The aim of the project is to answer this question. Previous research has failed to adequately recognise the immense importance of state-capital relations for state-building in the post-communist countries. The major idea is to investigate the formation of the political elite, by focusing the networks out of which core political parties were created and the alliances embedded in those parties. Alliance formation determined the way interaction between political institutions and market actors developed; that is the first idea to be tested. The different strategies chosen to form alliances were rooted in differing cognitive perceptions about the state; that is the second idea. A focused case study of the Baltic states will form the empirical core of the project.