Rada Deputy Sergey Kaplin
The Fall of the Hryvnya is Our Financial Ilovaysk
By Sergey Kaplin
Translated from Russian by J.Hawk
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
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
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
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
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!
J.Hawk’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, 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.