Among the topics most actively discussed by the Ukrainian press over the past several weeks are the fuel crisis and hryvnia slump. Even the solar eclipse and prophesied end of the world faded into the background. In fact, only two textbook questions are being posed: Who is to blame? What is to be done? The powers that be answer the first with proletarian simplicity: negative objective factors and feckless bureaucrats. Great. Eliminate the negative factors and fire the bad bureaucrats.
What is to be done? The government responded by emergency gasoline and diesel fuel procurements from Russia, Azerbaijan, and Greece, along with tax concessions for oil exporters. This resulted in fuel market stabilization. Guilty parties were found and punished. The dollar dropped a bit. Simultaneously, there are certain noteworthy peculiarities and trends allowing one to assume that the fuel crisis was planned, aimed primarily at getting additional funds most likely to settle in one of the presidential candidate's campaign coffers, as well as enter the bank accounts of domestic oil tycoons who rub shoulders with those in high office. Actually, there are several reasons for this assumption.
First, the fact remains that the entire big oil wholesale business is in the hands of several financial industrial groups controlled by the political leadership. As for all those other firms peacefully grazing in the oil field, they are just sheep meant to supply wool and meat to the royal storehouse. The more so that every liter of gasoline delivered to Ukraine already contains a certain amount of this wool and meat. In other words, raising fuel costs only helped all those fat cats receive additional mind- boggling revenues for nothing. True, third-rate bureaucrats were fired, but this was a bone thrown to the angry and hungry wolves in the street.
Another source of «hard- earned» returns to the budget was the 25-30% dollar jump. Part of the proceeds of boosted gasoline sales was converted into greenbacks. The National Bank responded characteristically and was wholeheartedly supported by the President. Some analysts maintain that in the heat of the crisis NBU did not sell any of its reserves. On the contrary, it bought dollars to replenish them and rid itself of hryvnias. The financial storm's artificial nature was indirectly corroborated by Serhiy Tyhypko who, when asked during a news conference, assured one and all that the dollar rate would be back within the limits of the currency trade band or near enough. As a result of that taxpayer's pocket-emptying operation the rich got richer and the poor poorer. Currency returns that «suddenly» came the National Bank's way (most likely by «binding» commercial banks' hryvnia resources) will, once again, replenish someone's presidential campaign fund. As for the national currency, also in abundance, some of this money will be definitely spent to pay off wage and pension arrears at budget-sustained enterprises. This, in turn, will play into Leonid Kuchma's hand in the elections. In a word, the current President is again on the winning side.
These inferences will be further substantiated after we consider the latest Ukrainian fuel market saga. In June 1998, the excise duty rate for high-octane gasoline rose 2.5 times, and the low-octane one 5 times. Under these artificially created circumstances, joint ventures controlled by people close to the top of the political Olympus became the principal suppliers. The reader should also be reminded that these ventures had gasoline import tax privileges (i.e., paying nothing). Put together, this makes it clear precisely why the excise rates went up. The Cabinet decided to cushion the effect of this obviously contracted decision by resolving to suspend oil-trading joint venture tax concessions. Almost as soon as the resolution was made public these joint ventures turned to the Constitutional Court. What will be its ruling? The reader has two guesses. However, the cancellation of these privileges was caused by the situation discussed earlier. Hence, whatever the angle at which one looks at the situation, the government's interest in it is obvious. Apart from everything else, recent events attested to the national currency's dystrophy. It is so shaky a good gust of wind can topple it. Its rate has gone down three times since its inception, making it hard to believe in its longevity. Nor do the deep furrows of fatigue lining the top bureaucrats' faces do not inspire confidence either. It is hard to say what they fear most, oil crisis or their bluff being called.






