By Da Dzi
Translated from Russian by J.Hawk
Yatsenyuk is planning to rob Ukrainians using the “Cyprus
The Ministry of Finance legislative project “On Ukraine’s
Financial System During the Special Period” contains a number of provisions
concerning individual and corporate bank deposits.
Specifically, there the following provision: “in the event
of a martial law and a moratorium on disbursement of bank deposits such
deposits may be used in order to satisfy the needs of the state during the
special period by including such a proportion as will be determined by the
Cabinet of Ministers into the state budget.”
The legislative project also specifies that the deposits
which are used in this manner are added to the national debt, and the owners of
the deposits are issued state bonds. The government will fulfill their
obligations to the bond holders after the special period is finished, using the
national budget. What makes such a law appear necessary is the possible
introduction of the martial law in Ukraine in the event of an escalation of
fighting, but also serious problems with fulfilling budget obligations due to
sharp drop in receipts.
This bill has already been coordinated with the National
Bank, the Ministry of Economic Development, the National Financial Services
Committee, the MOD, and the MVD.
The measures being discussed by the Ministry of Finance and
the National Bank in order to stabilize the financial system for the duration
of the special period include both the inclusion of deposits from existing
accounts into the national budget, as well as the so-called “haircut” using the
Cyprus scenario, when deposits above a certain threshold will be converted into
shares in the afflicted banks for a certain period of time (this is the
so-called bank recapitalization at the expense of the bank customers).
Martial law in the entire country or several regions may
lead to a temporary confiscation of deposits of all manner of physical and
legal subjects (except for defense industry enterprises). Any deposits larger
than 200 thousand hryvnya could be drawn into the process of saving Ukraine’s
“As these deposits are being in effect sequestered, any hard
currency deposits will be automatically converted into hryvnya using the
official exchange rate, and will be returned to the owners in the national
currency. Nobody knows what the exchange rate could be at the time that the
deposits are returned.”
Ukrainians, I am not trying to frighten you. But they are
planning to nakedly rob you. All of you. If you still have any deposits left,
withdraw them as soon as you can. Otherwise you may be too late.
J.Hawk’s Comment: Since no international funding is forthcoming, it only makes sense for the Ukrainian government to squeeze every little bit of assets still to be found in their country. Aside from fostering discontent, it also means that any future Ukrainian government (one that appears after the “special period” is over) will be facing impossible financial demands, both to international institutions and to their own citizens. This is making Greece look like a paragon of financial health. But it looks like the Kiev junta has in effect decided to resort to hostage-taking (except in this case the hostage is the entire population of the country) in order to get its way: either you give us what we want, or you will have a failed state in a civil war right in the middle of Europe. It’s doubtful they are doing it at the behest of Washington, Berlin, or Brussels. It’s more the case of puppets trying to control the puppet-masters.
It’s also interesting that the original article on which this blog entry is based was published in the Ukrainian media. If Ukrainians needed any excuses to stage a bank run, they have one now.
Finally, one should ask oneself the question who exactly in Ukraine still has sizable hard currency (i.e., euros or dollars) deposits. The list includes the country’s oligarchs and any enterprises which engage in large-scale import and export operations. Ultimately it’s their wealth that the proposed law would target and, frankly, annihilate, because Ukrainian government bonds do not seem like the safest vehicle for preserving wealth these days. No wonder Kolomoysky and Baloga are suddenly in favor of a referendum to determine the fate of Eastern Ukraine…