KYIV – The governor of the National Bank of Ukraine (NBU), Valeria Gontareva, is Ukraine’s most influential woman, according to a survey released two weeks ago. Yet she’s also being targeted for dismissal as part of a campaign being led by another powerful Ukrainian woman, opposition leader Yulia Tymoshenko.
The former prime minister joined oligarch Serhiy Taruta, also a national deputy, in attempting on October 17 to register a parliamentary resolution to dismiss Ms. Gontareva and launch a temporary investigative committee related to the National Bank’s failure to return money to depositors in banks that collapsed after the Euro-Maidan, in addition to alleged crimes.
“The living standards of people have fallen, 80 banks were destroyed and the interest on business loans has grown to 30 percent. A nuclear bomb to liquidate the economy of our state is practically in her hands,” Ms. Tymoshenko told the Verkhovna Rada the next day.
The political attack came as the opposition, led by Ms. Tymoshenko, continues to search for a lightning rod to rally the public against an unpopular president. Although she led a campaign to criticize the government over utility rate hikes this year, it failed to produce a mass protest campaign.
Criticizing the Ukrainian president – who’s now a wartime commander-in-chief – is not nearly as effective as striking at members of his close circle and holding them responsible for the country’s economic troubles, observers said.
On November 1, national deputies of Ms. Tymoshenko’s party, Batkivshchyna, asked the National Anti-Corruption Bureau to investigate allegations of corruption on the part of Ms. Gontareva.
“Tymoshenko recently was in Washington, where she has American lobbyists, and she understood that it wouldn’t be entirely convenient to criticize Poroshenko. But it’s convenient to criticize Gontareva, who is quite close to the president,” said Taras Berezovets, a political expert at the Ukrainian Institute for the Future. He added that Mr. Taruta has a personal grudge against Ms. Gontareva.
Indeed, the campaign against the central bank chief began when Mr. Taruta – whose fortune was estimated at $137 million in 2016 by the focus.ua news site– arrived at the annual meeting of the International Monetary Fund held in Washington on October 7-9 with booklets that were distributed among attendees.
Titled “Hontareva: A Threat to the Economic Security of Ukraine,” the 32-page pamphlet alleged among other things that Ms. Gontareva (as her name is spelled on the NBU website) ruined public trust in the banking system by allowing certain banks to be forced to shut down while propping up others that were supposed to be shut but were allowed to operate because they were favored.
While funds from the closed banks were alleged to have been transferred to the State Deposit Guaranty Fund to compensate depositors, this fund continues to lack money for that task, implying incompetence at minimum, the brochure alleged.
It also accuses Ms. Gontareva of ruining foreign investment by failing to lift the current strict limits on capital flows, while also failing to create conditions in which banks could have the ability to lend at reasonable interest rates, lower than 20 percent.
The brochure drew immediate criticism from the National Bank’s press service, which issued a press release on October 14 characterizing it as a “collection of false, provocative and distorted information and unfounded aсcusations against a state official of corrupt activity, the collapse of the banking system and threatening Ukraine’s economic security.”
Instead of the nation’s interests, oligarchs like Mr. Taruta are concerned about “their own greedy interests, in the path of which came the National Bank, which closed banks that extended loans to their businesses for decades and removed billions of hryvni from the country’s economy,” the National Bank’s release said, while suggesting that Mr. Taruta could be prosecuted for interfering in the activity of a state official and state treason.
On the one hand, the brochure inappropriately shifts much of the blame for the failed economy to Ms. Gontareva for things that no chief of the National Bank could have possibly influenced, said Alexander Paraschiy, the head of research at Concorde Capital investment company in Kyiv.
For instance, it was the fault of oligarchs that they failed to use their refinancing loans to save their banks from going bust, he said. To blame her for economic trouble such as inflation and devaluation is questionable, he said, considering Ukraine was in an unparalleled situation of being militarily invaded, losing about a quarter of its economy in the process.
“There are no standard criteria to judge her by,” he said. “So we could easily speculate, but it’s all very subjective.”
With regard to capital flows, Ms. Gontareva acted correctly in imposing harsh restrictions when Ukrainians were moving their capital off shore in the chaos of 2014, he said. But certainly some of the capital restrictions should be lifted now, he said.
Other legitimate criticisms include the haphazard way in which banks were closed, Mr. Paraschiy noted. For example, the financial community is aware of banks being allowed to remain operating because their shareholders enjoy close ties to key officials, Mr. Paraschiy said.
“The NBU’s approach to banks was not uniform. Some were quickly shut down, while others have been allowed to linger, despite everyone knowing they’re dead banks,” he said.
Ms. Gontareva has been a controversial figure in Ukrainian politics ever since she was appointed as National Bank chief in June 2014.
Before that, since December 2007, she served as board chairman of Investment Capital Ukraine (ICU), which handled a great deal of Mr. Poroshenko’s business. She built her career in large part by performing financial work for his companies for at least six years before joining ICU.
Economists such as Andriy Novak, the head of the Committee of Economists of Ukraine, referred to Ms. Gontareva as “virtually Poroshenko’s personal accountant.” He said it became immediately apparent that she would not be an independent figure, as compared to the head of the U.S. Federal Reserve.
Her popularity sank in direct relation to the hryvnia’s devaluation under her tenure, during which it lost more than half of its value and decimated the savings and earnings of Ukrainians.
At the same time, Ms. Gontareva has tamed inflation to 8 percent this year, compared to 61 percent in April 2015, said Dr. Anders Aslund, a senior fellow at the Atlantic Council in Washington and a Ukrainian political insider.
He offered one of the most spirited defenses of Ms. Gontareva in a column published on October 24, arguing that it’s a positive trend that almost half of Ukraine’s 180 banks were shut down and that this demonstrates her willingness to combat corruption. The political attacks are evidence of the old elite lashing back, he wrote.
The draft of the legislation calling for Ms. Gontareva’s ouster also seeks to amend the law on the National Bank of Ukraine that would “deprive it of its independence,” he wrote. Its main sponsors are Oleh Lyashko and Viktor Galasiuk, the chair and deputy chair of the Radical Party of Ukraine, which often cooperates with Ms. Tymoshenko’s Batkivshchyna parliamentary faction.
“It is presented as a populist act, but appears to be initiated by parts of the old elite,” Dr. Aslund wrote. “They want to return to a weak central bank that happily gives ample refinancing to close friends at the expense of the Ukrainian people.”