This article originally appeared at Fort Russ
The entire country is now a financial cauldron, we are surrounded by the infantility and self-importance of the National Bank, government, and power ministries. Those who took bribes in dollars are the winners, while those who paid their last hryvnyas in taxes are the losers. There are two reasons for this: Putin and Gontareva.
Every cauldron, starting with Ilovaysk, was the result of a strategic miscalculation. The reasons are simple: ministers are not ministers, military commanders are not military commanders, but mere scum, children who think that the Motherland is a board game in which one can always throw the dice one more time.
They were not born and destined to be the elite, this cheap not-quite-government which assembled 10km from the Maidan and watched the revolution from coffee houses, from the offices of Arbuzov and Klyuyev, even Azarov. They are not willing to give even their attention, let alone their lives, for the lives of ordinary people.
Mr. President, show them the door! Adopt strict and consistent personnel policies! Clan people are always worse than the obsessed and the professionals, don’t allow the government to be paralyzed! They already lost your Rada campaign for you, they are losing the war for you, they have buried the hryvnya, what’s next? You are next! What’s next is your devaluation and your defeat and the collapse of the State!
What is to be done about the hryvnya?
First, the truth concerning what happened. There are two reasons, Gontareva and Putin. The second caused a crisis in the balance of payments: there is no coal, and we have to pay for it with hard currency, but there is no more hard currency because its main source was the Donbass and associated industries in the South. All assets have been expended to support the army, and we are not developing the internal market. Then there’s Yatsenyuk and the failure of his reforms: we are living only thanks to imports.
Then, Gontareva…She gave out financing to anyone and everyone, saved billionaires and multi-millionnaires, but her second crime was that she allowed them to use that money to play games on currency markets: they borrowed hryvnya at 20% and waited until it ballooned to 200.
The third crime was that she allowed hard currency to desert to the West through fictitious import contracts. The fourth crime was that she dropped the hryvnya in the search for a more balanced exchange rate under the conditions of wartime—which is nonsense.
The fifth crime is that she gave birth to a monster through her lack of activity, which is the black market which sees a turnover of two billion a day. Neither Yatsenyuk nor the Rada said a word about it. While Ukraine’s “population” grew richer with every day!
What is to be done?
First, the Rada must investigate hyperspeculation and non-professionalism. Prison, prison, prison! The head of the NBU must be immediately fired, and the President and the Prime Minister must take the reins of control into their own hands. Both of them are competent financiers with the necessary political authority and a mandate to conduct surgery on the hryvnya.
Secondly, establish an absolute military discipline over refinancing, those banks which need them “for balancing” ought to surrender their vault keys to the state, those who want to remain banks ought to start working like banks and not as currency trading kiosks on a giant scale.
Thirdly, create an inter-agency commission to control the currency market: Finance Ministry, Customs, Tax Policy, Ministry of Economy, NBU, SBU, Prosecutor’s General Office, MVD. Every import contract must be reviewed.
Fourthly, limit, destroy, burn out with white-hot iron currency speculation by banks using refinancing. Everything that was stolen must be returned even if you have to use administrative resources and political influence.
Fifth, immediately convene the Rada to strengthen the criminalization of speculation and black market activity, up to the “firing squad” or the ban to do anything financial for 50 years.
Next to last, strictly regulate imports, allowing only that which is absolutely necessary to ordinary people. It’s a temporary stabilizing measure.
Last, form a strategy for redressing the balance of payments, mainly by increasing exports which would require a couple of years. Pay particular attention to the Military Industrial Complex, which will both help the army and will provide an influx of hard currency which will anchor the course of the hryvnya.
For God’s sake, try at least one of those measures!
Do it immediately!
Translator’s comment: None of these measures are even remotely plausible. Ironically, the Yanukovych government was potentially better prepared to deal with a crisis like that due to his successful centralization of executive authority which, ironically enough, the Maidan protested against. There are too many vested interests to be overcome, except maybe through the introduction of a totalitarian regime–which, come to think of it, just might be right around the corner.
The one thing that the writer, a Rada Deputy from the UDAR Party [of Vitali Klitschko], does not mention is…improving relations with Russia. He is wrong to blame Putin for Ukraine’s woes–they are entirely self-inflicted, and they were inflicted by Ukraine’s original cauldron that was the Maidan.
It was obvious from the outset that any policy of using Russophobia as a rallying cry for the new regime would quickly become a very costly one economically, not only because it would antagonize Russia, but because it also threatened to alienate big swaths of the country, like the Donbass, which Kaplin acknowledges was Ukraine’s main source of hard currency.
But the junta cannot reverse course now. Too many things were said, too many people killed, and none of those things can be undone.