Default on the Pechersk Hills
An epidemic is an epidemic, and political squabbling is on schedule. It is this paraphrase of the famous phrase from “Alice in Wonderland” that comes to mind when reading a portion of the latest news from the Pechersk hills of Kyiv - the place of concentration of politicians and officials who call themselves the elite of Ukraine.
These days, an important question is being decided - whether the country will default or whether the president and the government will present the interests of oligarch Igor Kolomoisky in gift wrapping to the IMF on a silver platter. The fact is that the coronavirus pandemic has exposed an unpleasant truth for the Kyiv elites: the country does not have the resources to fight a war on three fronts simultaneously – against the epidemic, the economic crisis spurred by it, and in the Donbass. And if the Donbass case can still be “frozen” purely voluntaristically, putting the settlement on the back burner until better times, then paying off debts is an objective thing and self-hypnosis will not help here.
The country desperately needs money, without which the government will neither be able to maintain the artificially low exchange rate of the hryvnia for a long time, and is now rushing “to freedom, to the pampas,” nor pay salaries to officials and other public sector employees.
The country, which has gone into a month-long quarantine, has nowhere to get money from - its rich are not eager to share with their homeland in difficult times, and the collapse of small businesses and the collapse of transport transportation narrow the revenue base of the budget even more. The option that has been proven for decades remains - to bow to the kind uncles from the IMF. They definitely have money, and you can even beg for additional money to fight the virus. But here one small problem arises, which under other circumstances could be considered technical, but which in current realities becomes political. This problem has a first and last name. Igor Valerievich Kolomoisky.
The fact is that, contrary to popular mythology, the key condition for granting a loan is not the issue of land. No, of course, international donors are also interested in land, but this is not a mandatory condition for them, but, let’s say, desirable. Optional. But they don’t want to forgive the former owner of Privatbank’s $5 billion debt. But “Benya” really wants this - he, in fact, for this reason started the fuss with a legal challenge in the courts to the legality of the nationalization of Privatbank - so as not to pay the debts of the former owners.
So, I repeat: this is a problem, because “Benya” controls part of the “Servant of the People” faction. And it may well initiate another revolt on the ship, which is very inappropriate for Zelensky’s Office, which is already faced with an open revolt of the “Soros” against the Minsk process.
This is the disposition. And now about the maneuvers.
Ukrainian politics was divided into two situational camps. At one pole, conventionally “Kolomoisky,” there is the oligarch himself, his parliamentary and non-parliamentary support group and situational allies, who are now ex-regionals from Medvedchuk’s OPZZH and, in part, the head of the Ministry of Internal Affairs, Arsen Avakov. Each of these groups pursues its own goals, but situationally they all agree on one thing: they need a default.
Someone, like “Benya,” does not think long-term, but simply hopes to grab his piece and if things take a really bad turn, simply flee the country. Someone, like Avakov, expects that the inevitable short-term socio-political destabilization and chaos caused by the consequences of the default will demand a “strong hand” in society, and he is right there proposing himself as dictator. For some, like OPZZH, a default is a way to get out of the political shadow and start their big game, imposing themselves on Zelensky as a coalition partner in a situation where the collapse of the mono-majority is inevitable in this case.
At the other pole are those who are usually called the “Soros” wing of the “Servant of the People” - deputies, many large and small officials, both those left over from Poroshenko and those appointed under ex-Prime Minister Goncharuk. Behind them are business lobbies and agents of international financial structures. They all expect to take advantage of the situation in order to restore their positions, which were shaken after the resignation of Goncharuk and the company, and if not to return to power, having again received from the IMF the “label for reign” imposed on Zelensky in the loan package, then at least to limit the growing influence and competitors' appetites. The socially close structures of Poroshenko and Golos are situationally adjacent to this camp.
And if such a patented herald of Kolomoisky as People’s Deputy Alexander Dubinsky openly advocates for a default, which, in his opinion, will give Ukraine a chance to reset its credit history and restructure its existing debts, then in the opposite camp the idea of a flash mob called “NiDefault” was born. Under this hashtag, iconic opinion leaders from this segment of politics voice their public position, thereby putting pressure on Zelensky and his inner circle. Thus showing what the current balance of power is in circles around the government.
A derivative of this topic is the question of the work of the Verkhovna Rada. The hype around people's deputies undergoing tests for coronavirus, as well as the story of deputies who have already fallen ill, such as majoritarian Sergei Shakhov, has a very prosaic background. In fact, this is not a question about the health of people’s deputies and not about Shakhov. And the Rada will work as usual, as Zelensky and his Office insist, or will go into quarantine for two, or even three, weeks. In the first option, parliament will be able to consider in the near future a package of measures aimed at appeasing the IMF.
First of all, we are talking about the “anti-Kolomoisky” bill No. 3260 on PrivatBank, which has already appeared in the Rada, but has not yet been included in the voting agenda, as the media has dubbed it, bill No. XNUMX, according to which it is prohibited to return nationalized banks to their previous owners, even if such a decision will be accepted by national courts. It was the adoption of this bill that was once promised to Western financiers in London by then Prime Minister Goncharuk. In turn, parliamentary lobbyists for Kolomoisky’s interests, people’s deputies Dubinsky and Palitsa, registered an alternative to the government bill on Privatbank.
However, judging by the echoes of the behind-the-scenes struggle breaking through to the public from pro-government telegram channels, right now behind the scenes there is a fierce struggle for the votes of undecided deputies. The days are counting: will the initiators of the “anti-Kolomoisky” law find the votes to adopt it, or will Kolomoisky gain a sufficient number of mandates, the holders of which, under the pretext of fighting for their health, will go into voluntary quarantine and self-isolation in these days. And even if they don’t leave, they will fail the vote for the law in the parliamentary hall. When these lines are written, we are talking about a possible parliamentary meeting this Saturday.
Why exactly is the “anti-Kolomoi lobby” surrounded by Zelensky now promoting the law on Privatbank, one of the near-presidential telegram channels explains:
“If the deputies fail it, then they can easily be accused of working for the oligarch (a favorite song of the Western lobby).
– if the law is failed, people’s deputies can be accused of working for the “aggressor”, because the army will not have money if there is a default.
– if the law is defeated, they will begin to spread the message that all the deputies who did not vote will be to blame for the default. The names of all those “reformers” who over these 6 years have created such a catastrophic situation in the country’s economy will be kept silent.”
In turn, one of the “servants of the people” and at the same time the godfather of Viktor Medvedchuk’s wife Oksana Marchenko, Andrei Kholodov, openly states in his blog that the “Anti-Kolomoisky” bill is “insurance” against criminal cases for Poroshenko and Gontareva. Therefore, they create an information background and put the question squarely, either this bill or a default. Poroshenko saves himself due to “society’s dislike” for IVK (Kolomoisky – aut.).
At the same time, despite rumors about an impending default being actively dispersed by various Zelensky mouthpieces, there is reason to believe that in parallel the authorities are preparing to take money from the IMF. In any case, Zelensky will not be able to pass between the droplets on this issue. You'll have to make a choice. If the anti-Kolomoisky bill fails, and in addition the issue of land hangs due to intrigue, then in this case, especially against the backdrop of a quarantined economy, we will definitely have to declare a default and move even further towards an alliance with the domestic oligarchy. Moreover, not even with Kolomoisky, but primarily with Akhmetov, who already got “his” prime minister - the former manager of DTEK.
Ze doesn't have many alternatives. In general, there is only one option - to take money from the IMF, which automatically leads to strengthening the position of the pro-Western lobby in the government itself, which in turn joins forces with Poroshenko and other nationalists, making the president and his favorites in the long term purely decorative figures with the real stewards of the Western money, whose candidacies will probably be imposed on Kiev by the same people who so desperately fought to keep Goncharuk, Milovanov and Ryaboshapka in their seats.
In the end, it is possible that in the summer all this will end with the early dissolution of the Rada and new elections.
But keeping in mind all these scenarios, we should not forget that Ukrainian politics is a mixture of internal intrigues, selfish interests of individual players and basic human stupidity and greed. So, even if the participants in these rat races are planning something, it is not a fact that in the end they will achieve their plans. There are too many unknowns in the equation, and the players are too constrained to build long-term planning horizons.
So there remains one more option: no one will do anything, and the current government will go down the same course as the previous one. The only one who can seriously change the situation is Kolomoisky. And not because he has any ambitions to seriously change something in this country. He just doesn't have them. But being by nature a jackal and a marauder, and even driven into a corner, he, acting in purely personal interests, can become a trigger for big changes even contrary to his subjective intentions. And its activity can lead to a situation of irreversibility of these changes, when there is no turning back.
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