Medvedev dreams of buying Ukraine with his funny money. There are some willing to sell
By Oleksandr PALII
Russia’s Prime Minister Dmitry Medvedev urged his Ukrainian counterpart Mykola Azarov to include Russia’s ruble in the first group of currencies (according to the Ukrainian National Bank’s classification). As a reminder: according to the ruling of the National Bank of Ukraine, the first group includes freely convertible currencies, extensively employed as a means of payment in international transactions, traded in major global currency markets, and allowed for investment in Ukraine. Here belong Australian dollars, British pounds sterling, Danish kroner, US dollars, Icelandic kronur, Canadian dollars, Norwegian kroner, Swedish kronor, Swiss francs, Japanese yen, and euros.
Thus, the top ten includes the currencies of highly diversified economies with the highest standards for competitiveness.
Conversely, Russian currency is now extremely vulnerable to the fluctuations of global conjuncture. Moreover, Russia is virtually unable to control these fluctuations, pegged to oil prices. Little wonder, for 70 percent of Russia’s export worth is made up by energy carriers. This is in fact an economy of a banana republic, despite all the attempts to disguise it under the bombastic term “the resource superpower.” This is why the ruble is not widely employed as a means of payment in international transactions, nor is it a major commodity currency in the world’s chief currency markets. So it would be strange indeed, should it be mentioned in the NBU’s first currency group.
Russian politicians love telling tales of “funny American money,” which allegedly has no real value to it. Such talk is the result of envy, since the US can solve its economic problems through increasing its debt, and rely not only on the competitiveness of its economy, but also on its solid position in the international arena. Today there is an ongoing debate in Russia as to whether a ban should be imposed on Russian officials having banking accounts abroad. The opponents argue that such a ban could result in the deterioration of the civil service’s expert qualities. If top civil servants (and top experts at that) prefer to have their deposits in foreign currencies, they must know something about it.
Of course, many in Moscow dream of buying Ukraine’s transit services and enterprises with Russian rubles, the product of Russia’s printing industry. But what should Ukraine do with those bills? Exchange them at a loss, or purchase Russian uncompetitive goods?
Azarov responded to his Russian counterpart’s offer with an elusive promise of a decision, which would be made later. He said something along the lines that one year ago no one even imagined that Ukraine would pay for Russian gas with rubles, while today 40 percent of accounts in bilateral trade are settled in nothing else but the Russian currency. However, regardless of political orientation, no Ukrainian government should be delighted at such prospects.
There is something even worse than that. Valerii Muntiian, the Cabinet spokesman for cooperation with Russia and CIS, said recently that now Ukraine must “accelerate the creation of the Eurasian Union, implement the project of a new monetary tool, and ensure the adoption of the Russian ruble as regional currency. Then the Russian Federation will be able to declare itself a core power on the Eurasian continent, and consolidate around itself other states, first of all the CIS members.”
As matters stand now, there is no love lost between the incumbent Ukrainian government and the rest of the world, including the Ukrainian people. The regime allowed the use of Russian as a regional language, and is now standing at attention, while Russia keeps barraging it with new ultimatums, from cheese to gas to the Customs Union. Meanwhile, joining the Customs Union with Russia means nothing other than depriving Ukraine of its place in the world community and in the global division of labor, and pushing it at the back of behind – somewhere in Chukotka. It is the equivalent of depriving it of its convenient place at the crossroads between Asia, Europe, and the Middle East – a spot for which our ancestors spilled rivers of blood. It would also mean perpetuating our economic backwardness. For example, today Russia owns over 35 percent of the world’s mineral resources. However, Russian population, which comprises 2 percent of the world population, produces 2 percent of the global GDP. Resources or no resources, an average Russian citizen cannot benefit from them. This is the price of backwardness. True enough, without resources it would be even worth, due to the cold, severe climate in which no bananas will grow.
Meanwhile, the Ukrainian public officer Muntiian declares that Ukraine must see itself as part of the Eurasian Union “in a symbiosis of anthropogenic and non-systemic factors: ethnonational, cultural, moral, and ethic.” Thus, the post-Soviet standard of economic and moral degradation is presented as a benchmark. Sadly, a foreign prime minister’s call has found support among the Ukrainian decision-makers. Technically, Muntiian’s statement is nothing else but a call for the liquidation of Ukraine’s independence.
Oleksandr Palii holds a Ph.D. in political science