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Where there is no law, but every man does what is right in his own eyes, there is the least of real liberty
Henry M. Robert

Volodymyr Matviyenko: “I have long been silent but now I will talk”

13 November, 2012 - 00:00

Recently our government has systematically done everything possible in order to ruin our country’s economic foundations of life.

This is witnessed to not only by our lowered international economic reputation but also by the steps it has taken directly. Not long ago several decisions cut the ground from under the numerous stratum of shuttle traders who did much to help the country financially. In their place a few connected firms are promised. They decided to remove from servicing the state budget the bank that experts consider the most appropriate, Prominvestbank (Industrial Investment Bank). Who is getting the additional revenue from taxpayers? Those structure, of course, which are most closely connected with the government.

Prominvestbank Chairman of the Board Volodymyr Matviyenko, who was first governor of Ukraine’s National Bank and who, of course, keeps his own council about what has happened and will take place in our country began his conversation with our correspondent with the words, “I have long kept silent but now I will talk.”

The Day: Some connect the government's attitude toward your bank with its not wanting to buy domestic government bonds.

A.: In fact this was motivated by the ill-considered nature of the obligations, but we did what we were supposed to in this market. The problem actually consisted in those hundred million owed the miners. What can they get when the Ministry of Finance has not paid us what it owed for last year? Our Ministry of Finance is nonviable; it cannot pay up. Nor does it. But it has already taught us, and we have become smarter. We can pay the state what we owe it, but at the same time we also want to receive our due.

Would such a situation be possible in a civilized country? They would never do such a thing there. I am very well acquainted with Premier Valery Pustovoitenko and Deputy Premier Anatoly Holubchenko; it does not surprise me that this was done in my absence. I arrived and the reaper was in full swing. Why can't one normally talk the issue out? We cannot immediately deliver money on high simply because somebody in the Ministry of Finance wants us to. We are not firemen and not scapegoats, nor are we the only bank in Ukraine.

If I do what the state demands, then I will have to halt tank production, Kryvostal, the Illich plant, atomic power stations, oil refining, and other factories.

I could have bought state treasury bills with bank money and sit like others do counting my returns. Let them say that we no longer need production, make the transition to fictive operations and the bubble we have with government bond trading.

The Day: How much longer will the financial pyramid in Ukraine last? In Russia it already seems to be bursting.

A.: I once worked in the Donbas, and once one of the bosses told me "in order to succeed at something you have to fail first." And in order that people not laugh, you have to suffer. It's the same with us.

The Day: And what do you think about international loans? Won't they finally lead us to the loss of our political independence?

A.: I stand above all for our counting on our own economy, our own resources, and our own banks. If the government thought this way, we would not now have the situation we do with the banking system. Today those who are to blame for the collapse of the economy are interfering in it. They squeeze us from all sides and are oriented not toward development but consumption. The same goes for international financial institutions. Not to use them would be silly, but only as a supplement, not as a political course on which everything in the world is wagered. When abroad they dictate to us what our foreign exchange rate ought to be, something our banking system should determine, then we are losing something we cannot afford to. In particular, because of this much was done in financial policy that has led us into a dead end. Barter, for example, is an evil which can be compared only with the other ills Ukraine has seen in this century: the totalitarian system, man-made famine, World Wars, or Chornobyl. Barter is the fruit of our financial and monetary policy, which is not directed at development nor based on any notion of our developing. It was bequeathed us by those horrible theoreticians who love such memorable terms as "extraordinary situations." And neither Parliament, the Cabinet, nor the National Bank has thus far worked our a monetary policy directed toward our state and nation, toward our production. And when there is no well thought-out and agreed-upon policy you have voluntarism.

The Day: Does Ukraine's bank system have any prospects for development?

A.: Is this a system? It is a bunch of mini-banks! A conglomerate, a salad, because there are many who want to have their own pocket banks or piggy banks. To throw out everything in reach. Subjectivism and voluntarism are not things of the past; they are with us again.

Ukraine needs at most ten strong banks. Nobody needs the others. We lack the resources to completely halt money turnover. Banks should control big capital, be strong, and have a strong system of local branch offices. And in general we lack such a system. If a person breathed like a bank, he would die. Is it an economy when they cut the banks off from oxygen? In general we lack the climate for a bank system, neither economically nor in terms of defending banks from criminal abuses. Today everything possible is being done to bring the bankers and industry under control. They are already demanding that we give information about every client. Leaving aside the juridical aspect of this, I ask you, who is supposed to do this and with what am I supposed to pay for this work?

We have created an immense administrative machine that squeezes on all sides those who want to and can work. And nothing is changing. Everyone also needs to understand that as long as we do not put money into production, nothing will happen.

The Day: Ukraine's government is blamed for the fact that when it issued domestic government bonds it cut the financial system off from industry and now enterprises cannot get loans. What's the way out?

A.: There isn't any. If a bank could invest 300-400 million in these things production would recover more and quicker.

The Day: And can the state's domestic liabilities be reduced at the expense of foreign ones?

A.: I don't believe in these loans. While they provided a substantial sum, they involve a burden of $200 million semiannually. This is laughable. Do you know how much international financial institutions gave Ukraine in 1992? Much less than Prominvestbank alone. Also, they basically extended loans for goods, and we loaned live money. They went for shipbuilding, machine building, metallurgy, transport, and communications. The only way out is to work at home. That's the solution! And political games are not for us. How in God's world can we bankers overcome the problem when the government is always against us. In October last year we began negotiations with Western banks on a bond issue: $50 million at first and $100 million later. We want to pay 10%, 11% at most. And our government issued securities in Europe at 16%. Now they don't talk with me anymore, and they want the same returns. But such conditions do not suit us because we have to give everything under 20% to our industry. And such operations yield no profit, because we spend more money traveling abroad.

The way out is also not be groping in the dark. We have to leave behind subjectivism and voluntarism and work out a monetary policy aimed at reviving production and ending barter. Otherwise these negatives will bury our entire economy.

Photo:

Volodymyr Matviyenko

 

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