Viktor PYNZENYK: "There will be no political changes until holding companies realize that their time is over"

CABINET WILL BE RETIRED ANYWAY

Q: Do you think that Parliament will eventually show a majority voting to bring down the government?

A: I think that the Cabinet's retirement is inevitable, but the problem is who will replace who. The current situation cannot be corrected going by the book, because it is caused by the people's distrust of current policy. And I think that are we simply not prepared to make mature political decisions.

Q: Then why change the government?

A: Because it must be replaced by a team of professionals.

Q: Is there a team that would agree to work on current terms and with the President we have?

A: Hard to say, but the situation may become such that political ambitions will have to be cast aside.

Q: You mean the President's ambitions?

A: Not only his, although he will have to take a corresponding stand, of course.

Q: Will the President have to agree to curbing his powers?

A: Maybe the opposite. According to one scenario a decisive Premier is given enough authority, by another, the President has the final say in every matter.

Q: Mr. Pynzenyk, you are an experienced politician, you have worked for the President for quite some time. Do you know of a single professional who will agree to work for the current President and his administration, given the present function allocation?

A: You ought to restate your question: work not for somebody, but on certain terms. If such terms were formulated and agreed upon, vacancies would be filled. There have been several premiers we know of who tried to agree on certain terms, but there was always the Presidential Administration.

Q: Does this mean that politically this variant is unrealistic? If so, a team of professionals will never be found under these circumstances. There is a list of contenders for the Premier's post even now. Your name does not seem to be included, perhaps because you have been on such lists twice and they lack the nerve to invite you again. But if they did, would you agree to take this post?

A: I think that the terms I've mentioned should be regarding as a point of departure. Accepting the post just like that would be unreasonable and hopeless. Here the important thing is not one's personal stand but the idea itself. It must be upheld, not destroyed. If we steer a middle course we will just last a little longer.

Q: In other words, you could agree on certain terms, couldn't you?

A: I have never refused a job on acceptable terms and if these terms were observed.

Q: And your experience on the previous two occasions would not stop you?

A: I do not regret those experiences. I think that people appreciated the degree of stability I succeeded in providing, although I did not achieve much of what I had planned, like structural reforms.

Q: What about a coalition government? Is it possible? If so, what could be the basis of such coalition?

A: There is such a possibility, but now it is regarded as a compromise and we have no time for compromises, although we may not realize this, not yet. What I mean is that the time has come to have a group of people with complete and unquestionable authority vested in them. A government made up of representatives of most factions would be incompetent; moreover we also have to make reforms in government as such.

Q: Do you think there is a political will to make such reforms?

A: I hate to say it, but I don't. I believe, however, that life will force us to do what has to be done. Otherwise there are no reasons to expect the situation to improve in Ukraine. I also think that we will have to take decisive steps even before the presidential elections.

Q: Would you agree that certain other options must be considered under the circumstances. In the absence of political will and the impossibility of a coalition, with Cabinet reshuffling implying a revision of the political system, how can the problems we are faced with be solved? What could Parliament do to help?

A: Not much if at all. I have never viewed Parliament as the main obstacle in the way of reforms. Many things can be done using the executive vertical and President. And Parliament can be made to accomplish much using both traditional Ukrainian and classical democratic methods. Presidential edicts were adopted previously, weren't they? Why not follow in the same vein now? Also, the executive can veto such edicts.

Q: You have mentioned a group of people that should be vested with full authority. Who exactly do you have in mind?

A: I did not mean anyone in particular. That's not important, because we can always find people who know what must be done and how.

Q: What criteria should be used in selecting these people? Volodymyr Filenko, one of the NDP leaders, says Ukraine is ruled not by political forces, but by holding companies.

A: I didn't mean holding companies. This is a complex question. Holding companies must realize that their time is over. Until they do - and until several heavy caliber magnates suddenly find themselves bankrupt - there will be no political understanding of the need to surrender all power to them.

Q: Suppose certain political forces agree among themselves to let Premier Pustovoitenko stay, but insist on firing NBU Governor Yushchenko. Do you think this likely to happen?

A: I cannot rule out the possibility The more so that this scenario is being discussed. There are enough forces in Parliament to choose precisely this middle course. A certain number of portfolios will be sold. However, we seem to underestimate what is going on in the economy. It was possible to play such games in the last two years and stay afloat, but not now. Negative processes will develop very dynamically unless we take decisive steps. No good will come of compromises.

Q: What do you think of Mr. Yushchenko's possible resignation?

A: One cannot consider it a positive thing. The man is a topnotch professional and his retirement would be taken as a very bad sign by financial market decision-makers. Is the National Bank to blame for the current situation? Certainly not. We have always overestimated its role in stabilizing the economy on the one hand, and in destabilizing it on the other. We have no monetary reasons for devaluation.
The way things are, even if Mr. Yushchenko retains his post now he will be ousted later, for every political decision being made points in that direction

NO MONETARY REASONS FOR DEVALUATION

Q: The President openly accuses the National Bank of wasting its reserves on supporting the hryvnia, which he thinks is a short-sighted price-setting policy. Any comments?

A: The NBU's key task is regulating the exchange rate, selling or buying dollars. Now the President's accusation are obviously words put in his mouth by someone else. The National Bank simply has had to do what it has been doing since late 1997. Another thing is whether this policy is adequate to the current situation, but even here NBU should not be blamed. The whole responsibility rests on the government.

Q: What do you think the situation will be like a year from now?

A: It is very hard to predict, because in all our forecasts we overlook the dynamic economic factor. In other words, we proceed from the assumption that the hryvnia remains stable. What happens to our national currency will drastically effect the situation.

Q: You say that the decisions being made only cause our problems to be pushed down, but 70% of these decisions consist of measures aimed are regulating foreign exchange policy. In addition, Mr. Yushchenko is convinced that letting loose the exchange rate will damage the economy far worse than the current temporal administrative control. What do you think?

A: There is some Hr 6 billion in Ukraine's cash turnover and there is a feverish demand for dollars which is sustained by the administrative exchange rate. I understood the situation for so long as this rate was kept in the manual regulation mode. This doesn't work and keeping this rate like that any further is simply impossible. On the other hand, if they let the rate loose it won't go higher than three hryvnias to the dollar. Containing the exchange rate only strengthens people's distrust. I think that today's rate is excessively devalued.

Q: How would you propose to do without emission now that the rate is on the rise, as are the costs of energy resources, and there is no money to pay them?

A: Many are frightened by the current situation. Of course, there is nothing to feel happy about, but I regard it as a denouement. Too bad 1993 was an experiment, but I am certain that without that horrible experiment there would have been no stability. And let us remember that to err is human. People tend to make mistakes and will make them over and over. But life itself will make us do the only right thing. Suppose the Communists come to power on the crest of extremely popular slogans. Will the economy change? It needs domestic investment and no one will provide it under slogans of nationalization. Regrettably, this will be another experiment, but each experiment is a lesson that cannot be ignored. Even the Communists would not resort to emission.

In a word, the crisis is here and we have to face it. Now we must not stand in the way of what is happening. If there is a disproportion, we must find a way to regulate it.

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Viktor Pynzenyk is known for his "inveterate optimism." He often uses words like "there is a way out of any situation" or "life itself will make us do the right thing." However, his arguments left The Day's journalists under the impression that correct decisions in Ukraine are possible only after economic cataclysms. This is not optimism but prosaic life.