The semantic fog of our politics

For example, few know that the term monetarism, often heard and understood as something derogatory, almost an expletive, actually means an economic theory where monetary stability is considered the main prerequisite for overall economic stability. Only recently, almost everyone supporting market reforms (primarily the President) and not siding with the Left was branded a "monetarist." This is history now. With the parliamentary elections close at hand one is not likely to find a single party in Ukraine supporting monetarism. But does this mean that the political forces criticizing monetarism or those that changed the attitude only recently actually understood it as a stable money theory?

The fact remains the various people criticizing monetarism more often than not have different notions in mind. Last week the Ukrainian variant of monetarism was sharply attacked by the world's number one monetarist, the IMF. Its mission visiting Ukraine March 4-14 failed to complete revising the standby program required to provide the next loan installment. Among the principal shortcomings, IMF experts blamed the government for an unjustified increase in budget expenses and deviations from a number of financial indicators previously agreed to with the Fund. Presidential Adviser Valery Lytvytsky shared with The Day his views on the Cabinet's problems, saying they would have been solved by now if the President's edict imposing strict budget expense restrictions had been implemented as envisioned.

Oleksandr Moroz and his Socialist Party offer a different version of antimonetarist criticism. Mr. Moroz believes that the current economic policy being conducted as advised by Western experts and international financial institutions is geared to make Ukraine a colony of the developed countries. "Rather than develop its own economic policy, Ukraine blindly follows Western recipes," the Speaker summed up his view. With regard to land relationships, he declared that the process of parceling the land into shares will result in the "scattering" of arable land, leading to a situation in which progressive industrial technologies will no longer be possible in agriculture, adding that "the guidelines of the policy being implemented in Ukraine boil down to turning it into a raw material appendix of other countries." It is difficult, however, to assess the Socialist Party's actual stand using Mr. Moroz soliloquy, unless one considers that instead of one faulty economic strategy the Speaker suggests another, far more disastrous.

In the past year, both the communists and socialists tended to regard the "Belarus model" as the most acceptable economic system for Ukraine. Remarkably, most of the measures still remaining in the Left's party programs have been implemented in Belarus. Belarus takes no loans from the West and listens to no Western recommendations. President Lukashenko does not recognize monetarism and stated point blank that he had consciously stimulated inflation in order to secure the harvesting and sowing campaigns. As a result, GDP had grown by 11% and real monetary incomes by 11%. Belarus has no problems with back wages. They were successfully paid off using the money printing presses. The Belarus President will never agree to private ownership of land and will not permit market food costs, even if this requires rationing, which, in fact, it does.

However, despite the outwardly stable dictatorship in Belarus, a sharp devaluation of its national currency dating from two weeks back will in all probability dot the i's and cross the t's. Two years ago Comrade Lukashenko banked on commission support from the domestic manufacturer. True, this served to stimulate production somewhat but failed to rid the country of its economic disproportions. Enterprises continued to manufacture goods no one wanted to buy, imports exceeded exports, and the industries got increasingly energy- and budget-consuming. Rigidly controlled by the President, the monetary market remained stable until very recently, until Comrade Lukashenko had to go on a trip abroad. His jet had hardly taken off when Belarus zaichik's exchange rate dropped 50%, justifying its name, which translates as rabbit. In a word, the supposed Belarus economic miracle is just further evidence that economics knows no miracles.

At first sight the situation in Ukraine has nothing in common with that in Belarus. Still, the so-called miracles of "Ukrainian stability" should have sobered those in power two years ago. The laws of economics say that after two years of stability on the monetary market a country should enter a phase of industrial growth.

Naturally, in the absence of this growth, even after four years, Ukrainian illusions were bound to shatter, just as in Belarus. It also stands to reason that the Social-Democratic opposition, foreseeing precisely such an outcome, should declare its being prepared to "revise the monetarist policy," if and when they win the elections. This is what we all heard last week from Viktor Medvedev, second in command at the SDPU(U). Leonid Kravchuk, topping the united SD list, specified that the economic course on which Ukraine embarked in 1994 turned out to have two flaws: "worshipping the monetary system and discarding the government's regulatory role." "After the role played by the centralized economy, abandoning government regulation was a very dangerous move," he added.

If truth be told, losing control over the situation worries not only the united Social Democrats, but also the President. A Cabinet meeting was held last Tuesday to consider a draft called Stability and Economic Growth Strategies. Presidential Aide Anatoly Halchynsky told journalists later that the tasks set by the President in 1994 - liberalization, price stability, overcoming hyperinflation, and thereby stabilizing production - "have basically exhausted themselves." He went on to explain that the document placed "new emphasis" on a number of aspects and was aimed at enhancing the government's regulatory role. Strategies voiced by ministry people and economists present at the meeting were viewed differently and the subject had to be studied further, Mr. Halchynsky concluded.