"Unfair," "catastrophic" and "just plain crazy" - are some of the more polite descriptions being used to describe a law passed by Ukraine's parliament, the Verkhovna Rada, on July 2 for converting foreign currency loans into the exchange rate at the time the loan agreement was signed.
Given that most
of the loans the law covers were extended in 2008, when the official exchange
rate was Hr 5/ $1, experts say
the law has the potential to ruin Ukraine’s vulnerable financial and banking
system and could cost Hr 100 billion (nearly
$5 billion).
“[The law] risks the sustainability of not
only the banking system, but the welfare of all citizens,” the National Bank of
Ukraine said in a statement on July 3. Finance Minister Natalie Jaresko called the law
unfair to those who are repaying their loans and said the measure would cost
more than will be spent on defense and law enforcement in 2015. American
Chamber President Andy Hunder said the law “will have a drastically negative influence on
the banking system” leading to bankruptcies
and inflation.
The law also
violates provisions of Ukraine’s agreement with
the International Monetary Fund and is sure to provoke concern among
international partners which are keeping Ukraine’s public finances afloat.
While financial
experts chewed over the possible dire consequences of the law, doubts are
already being raised about its legality.
Pro-presidential member of parliament Serhiy Leshchenko said in a post on Facebook that the voting procedure had
been flawed.
“It’s too early
for the populists to celebrate,” he wrote.
“There were many
instances of piano voting… Parliament has to vote again on this bill,” he said,
referring to the illegal but still common practice in the Ukrainian parliament
of MPs voting on behalf of absent colleagues.
According to the
official tally, a total of 229 members of parliament voted in favor of the law,
while only one MP from the pro-presidential bloc voted against it. Others
either abstained or were absent during the vote.
Ihor Lutsenko from the Batkivshchyna
faction wrote on Facebook that he had been “an idiot” for voting for the law,
which he had not realized was at the final stage of approval.
“I was shocked when I came
home and found out that the law had been adopted as a whole… I’m waiting for the
written report of the sitting… I did not hear [Parliament Speaker Volodymyr]
Groysman say it was the final vote,” Lutsenko wrote.
Another pro-presidential
MP, Oleksandr Chernenko wrote: “The sitting was a mess. I got confused. I have always
publicly opposed this law.”
The head of the
pro-presidential Bloc of Petro Poroshenko, Yuriy Lutsenko, said after the vote
that only a few tens of thousands of citizens would benefit from the law, while
the entire population would lose out. Moreover, he said it would cause a jump
in the exchange rate and even put Ukraine’s security at risk. He also claimed
several MPs who were recorded by the Rada’s electronic voting system as having
voted for the law were not even in Ukraine at the time.
Meanwhile, some MPs have
already started to collect signatures for a motion to recall the vote, although
Pavlo
Pynzenyk, the deputy head of the parliament’s organizational committee, said
there is no official procedure for recalling votes.
“If members of parliament
believe there were some procedural violations, they have to introduce a
resolution [about this] in parliament,” he said on July 3.
But with the law
officially approved by the Verkhovna Rada, at least for the moment, Ukraine’s
president still has a say on the fate of the controversial legislation.
The first deputy
head of the Bloc of Petro
Poroshenko, Ihor Kononenko, said he thought the president would veto the law.
The law was submitted to parliament
on Dec. 23, 2014 at the request of foreign currency borrowers.
Kyiv Post’s legal
affairs reporter Antonovych Mariana can be reached at [email protected].
