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Yushchenko Weathers the Storm

27 October, 00:00

The question of who cast the first stone at the NBU Governor is as interesting as it is intimate. It all officially started about two weeks ago, when several events coincided in time: the UT-1 newscast mentioned a timely financial audit of the NBU’s sport center construction, copies of a SBU report on financial abuses in the NBU, addressed to Speaker Oleksandr Tkachenko, started to circulate in the depths of the legislature, and, simultaneously, Leonid Kuchma indicated his discontent with NBU credit and monetary policies.

The imminent threat of government resignation created a rather grim backdrop for the situation. In conformity with the laws of the genre, it was all happening at the time when Viktor Yushchenko was attending the IMF and the World Bank meeting in the United States. All of that together immediately gave rise to rumor about the premature resignation of the NBU Governor.

However, the first attack did not yield success. Before the government reported to Parliament, Leonid Kuchma, at a Cabinet of Ministers meeting, credited the NBU for its professional actions during the crisis.

Whatever the case, the NBU Governor delivered his report to half-empty Parliament and was treated with indifference by both the People’s Deputies and the public at large. Apparently, only the lack of a sufficient number of deputies in the hall prevented them from closing the issue. Perhaps, that was the case, if it were not for some peculiarities of the current political season.

Of late, the Ukrainian credit and monetary system has become somewhat tight. And not only the financial system, of course - the country in general is experiencing a lack of resources. Some remember how easy it is to make a fortune under hyperinflation. The desire to manage overwhelming economic hardships by way of printing money has never left our country’s helmsmen, so Yushchenko with his monetarism is clearly a minority here.

The present work of the Ukrainian Currency Exchange breeds even more discontent. Both the hryvnia exchange rate and the volumes of currency sales have been regulated manually for almost two months by now. When dollar demand drops from $75 million to $5 million over the course of one week, by no means does it signal a currency market stabilization in our situation. It rather indicates a maximum reduction in the number of currency buyers on the market. This kind of policy has an adverse impact not only on petty importers but also on rather influential figures. It is entirely possible that between Friday and Tuesday two weeks ago some of the structures formerly loyal to Yushchenko simply could not buy dollars.

Quite clearly, the NBU is fighting the economic crisis. Yet, this very fight can fully upset the existing banking system and, on a broader scale, the entire structure of economic interests. For example, the ramifications of the restructuring of the Ukraina Bank, especially given that one of the bidders for the state share in the bank is Ukrros, whose head won the parliamentary elections on the Peasant Party list. Something began to smell fishy. In the midst of the crisis, a number of structures have gained such opportunities to penetrate into others’ spheres of influence that they would not even dream about in a stable situation.

Viktor Yushchenko, just like Premier Pustovoitenko, has turned out to be one of the key figures who will decide in what way and in whose favor the existing disputes between the groups of influence will be resolved. The figures that have turned up along the way seem quite accidental and situational. (Let’s add that the NBU’s mandatory mutual debt write-offs on inter-bank credits and deposits have adversely affected, among others, such banks as Finansy ta Kredyt, Praveks, Ukrinbank, Brokbiznesbank, and Ukrhazprombank. The parliamentary representatives of some of these banks have already been included in the commission on NBU inspection.)

In this situation, Yushchenko’s allies cannot always be called strategic partners either. It is quite logical when he is supported by the bankers and importers who are working successfully on the foreign currency market. We can also understand Rukh members, who respect the NBU Governor like the country’s national emblem and anthem. However, there is no consistent underlying ideology in the support that the Left unexpectedly lent Yushchenko. Thanks to their departure on Tuesday, Parliament limited itself to only setting up an investigative commission. The focus of the discussion smoothly shifted from the NBU Governor to the budget problems, the basics of the government’s policy, and Pustovoitenko’s excuses. The fate of the government, too, remained unclear. As long as the annual program of the government activity is not adopted (the Premier appealed to Parliament to do so as soon as possible), the threat of resignation will still exist. And what else can we expect at a time when old unions and coalitions have started to fall apart, and new ones have not had enough time to form? It is good that we have a great number of interesting things lying ahead: the budget, the program for the government, the law on the National Bank, and others. It is difficult to overestimate the significance of these documents - not for the country’s economy, but for the groups of influence. After all, parliamentary lobbyists do not have any other means available to influence the decisions taken by leading figures.

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