Majority arrangements show their first hitch
Verkhovna Rada failed to remove NBU head Volodymyr Stelmakh on November 26. The move to dismiss him received only 214 ayes. As reported previously, the top financier’s post was to be succeeded, as part of the coalition government arrangements and as previously agreed between the majority leaders, president, and premier, by Serhiy Tyhypko, representing the Industrialists and Entrepreneurs and Labor Ukraine fraction. As it was, the majority failed to do as expected, and the president’s representation proposing the new head of the National Bank was never put on the agenda.
The opposition came out against Volodymyr Stelmakh’s replacement, showing an enviable unanimity (no ayes at all). Mostly due to the absence of formal reasons for his dismissal. When debating the issue, SPU and Our Ukraine lawmakers called into question the fact that the current NBU governor had indeed tendered his resignation, as previously announced by Speaker Volodymyr Lytvyn. In the end, Mr. Stelmakh had to take the floor and explain his stand. He stated that he had not intended to resign, but that he and the president had met and reached an agreement: “I realized that the point at issue was not who held the post but achieving political unity. As a citizen, I did not want to be a catalyst of discord.” When queried by deputies, he said they should vote “as prompted by your conscience,” adding that would not be unemployed whatever the outcome. The implication was clear enough and parliament refused to accept Volodymyr Stelmakh’s self-sacrifice — not only the opposition but also part of the majority made it clear by their nays. This, actually, is the crux of the matter. A full-fledged majority, as reasonably pointed out by minority lawmakers, would not need any help in having their decisions passed by parliament. The vote’s turnout gave the evil tongues reason to challenge the majority’s integrity.
Very likely, the majority — precisely those of it with hurt feelings — will be straightened out shortly, precisely after the president returns from Italy. In the end, Volodymyr Stelmakh will resign his post, lest he become a “catalyst of discord” and in order to help unite the majority (maybe not, for he could well end up as chairman of the NBU council and Serhiy Tyhypko as NBU Governor).
So what is likely to happen next in the financial domain?
The Labor Ukraine leader, as promised earlier, will quit the party and “if need be,” will sell his banks and never again “take up that line of business.” Quite likely, being a man of his word, he will not attempt a “cadre revolution” at the National Bank, making do with just several appointments.
According to Oles Syrtsov, an analyst with the Ukrainian Legislation Development Center, there are positive and negative aspects about Serhiy Tyhypko. Among the negative ones he lists the possibility of a conflict of interest, considering that a man running a commercial bank will be at the head of an institution empowered to supervise all banks in this country. On the other hand, if and when Mr. Tyhypko succeeds in implementing his positive properties, smoothing over the negative edges, NBU will have one future. Otherwise, it will have a totally different future.
Volodymyr Sydenko, head of economic programs at the Oleksandr Razumkov Economic and Political Science Center, believes that the cabinet will try to shift some of its responsibility to the NBU, particularly in terms of budget implementation and debt payments in 2003. This could well damage the hryvnia’s stability and even precondition its devaluation. Here much will depend on the National Bank’s balanced policy. Serhiy Tyhypko is an experienced banker, so if and when made head of NBU, he would not be likely to unquestioningly take orders from the cabinet.
Andriy Yermolayiv, political analysts with the Sophia Social Study Center, says Tyhypko’s chances, as the Dnipropetrovsk group’s representative, have waned of late, if considered as a presidential candidate — even as one expecting to be numbered among the candidates. With the giants dueling, his figure has shrunk, and the NBU card has obviously already been played, most likely as the last straw, rather than any launch pad. At present, playing out the scenario with Serhiy Tyhypko as head of NBU is most likely a way to save the Labor Ukraine leader’s face.
At the same time, Mr. Yermolayiv notes that the Tyhypko-oriented politicians in the banking sector have long positioned themselves as exponents of an easy monetary policy. Quite an advantageous stand under the circumstances, one the cabinet will be interested in while searching for ways to save the budget and solve the debt problem. In this sense, starting the money-printing machines and working out new credit systems has long been considered as a cure-all. Serhiy Tyhypko’s appointment as head of the NBU will have negative as well as positive aspects, considering a statement made by Anatoly Kinakh, among the acknowledged experts on what the future NBU leadership will shortly have to cope with (his Party of Industrialists and Entrepreneurs shares a fraction with Tyhypko’s Labor Ukraine). Mr. Kinakh believes that they will have to get closer to the real economy. This statement could be interpreted as a parting word addressing not only Serhiy Tyhypko, but also the current cabinet which is even more bound by the current economy in its relations with the National Bank. In a word, the exporters coming to power have no cause for worry and they ask fellow Ukrainians not to worry — at least not for the time being — for the financial market might be liberalized, even if by a degree of hryvnia devaluation.
