On Dec. 16, Prime Minister Oleksiy Honcharuk held a seemingly regular, informal meeting with a few ministers and top officials from the National Bank. The government website reported that the officials gathered to discuss recent currency fluctuations.
A month later, the audio allegedly taped during the meeting was leaked online in an apparent attempt to frame Honcharuk and poison President Volodymyr Zelensky’s opinion of him.
The recording shows Honcharuk and others in attendance looking for a way to explain recent economic developments in Ukraine to Zelensky. The Cabinet was scheduled to meet with the president in two days.
According to Honcharuk, Zelensky had the wrong understanding of the reasons for the strengthening of Ukraine’s national currency, the hryvnia, which hurt the country’s exporters and reduced tax income.
Honcharuk is heard saying that the explanation has to be simple, because the president doesn’t understand much about how the economy works.
“Zelensky has a very primitive understanding of the economy,” Honcharuk said, adding that he himself is a “dummy” in economics, too.
Honcharuk and other attendees neither confirmed nor denied the authenticity of the audio.
The audio’s publication was apparently meant to portray Honcharuk as incompetent or disrespectful to the president. No public reaction from Zelensky or his inner circle followed, while many officials and commentators spoke in defense of Honcharuk.
“Recently, there have been many attacks in the media and online against me personally and the government,” Honcharuk said in a video address, reacting to the leak. “This indicates that our team is on the right track. We have already blocked a lot of corruption schemes and are stopping robbers from continuing to rob the country.”
Appeasing the president
The three-part audio recording capturing a part of the Dec. 16 meeting hosted by Honcharuk was leaked online on the evening of Jan. 15. Also present at the meeting were Finance Minister Oksana Markarova, her deputy Yuriy Butsa, Economy Minister Timofiy Mylovanov, head of the National Bank Yakiv Smolii and his deputies Kateryna Rozhkova and Dmytro Sologub, and Oleksandra Betliy, a senior economist at the Finance Ministry.
Clockwise: Prime Minister Oleksiy Honcharuk, Economy Minister Timofiy Mylovanov, deputy heads of the National Bank Kateryna Rozhkova, and Dmytro Sologub, the bank’s head Yakiv Smolii, Finance Minister Oksana Markarova, her deputy Yuriy Butsa and Oleksandra Betliy, a senior economist at the Finance Minister, meet to discuss hryvnia fluctuation at the Cabinet of Ministers building in downtown Kyiv, on Dec. 16, 2019. (kmu.gov.ua)
After the meeting, the government website reported that the gathering concerned recent currency exchange rate changes and their impact on inflation and economic growth. In 2019, Ukraine’s hryvnia grew by 19% compared to the U.S. dollar.
The leaked recordings begin with Honcharuk asking those in attendance how to explain to Zelensky that the currency is strengthening after being highly undervalued before the April 21 presidential election that brought him to power.
“He has that bullshit about obligations in his head,” says Honcharuk, referring to an allegation that Ukraine’s sale of state bonds triggered the currency’s improvement.
Honcharuk goes on to say that Zelensky doesn’t understand why the currency is outperforming predictions when Ukraine has a Hr 50 billion ($2 billion) budget deficit. He added that he doesn’t know how to fix the budget deficit nor how to explain it to the president.
“We need to tell him, ‘Look, Vova. Just because the exchange rate is smaller right now, it doesn’t mean that the Olivier (salad) that will stand on your New Year’s table next year will cost more,” says Honcharuk, using the informal form of Zelensky’s given name and referring to Ukraine’s tradition of serving Olivier, also known as Russian potato salad, on New Year’s Eve.
“That’s not a given,” responded Markarova.
‘We need a plan’
Those in attendance were vocal in expressing their distress that the president and the general public don’t understand their work.
“You’re not going to prove anything (to Zelensky). He thinks you don’t have a plan,” says Honcharuk. “And you actually don’t have a plan.”
Rozhkova says that those in attendance need to draw a 3-5-year forecast to explain what the government is doing.
“In total, everything is good, but no one except us knows that,” says Rozhkova.
Markarova adds that the government needs to speak about economic difficulties awaiting Ukraine and how to solve them.
“We have real problems and imaginary ones, and to the president we need to explain the imaginary ones,” says Markarova, implying that Zelensky believes rumors. Honcharuk adds that the people will also begin criticizing the government when they see economic growth slowing down compared with the second quarter of 2019, the last quarter under the previous government.
“It will be 4% (in the second and third quarters), and then, according to the reports, (economic growth) will be 2% in the fourth quarter,” says Honcharuk. “(The people) will say that ‘those reformers murdered the economy.’”
“All together, it gives the president an impression that we aren’t controlling the (economic) situation,” says Honcharuk.
Honcharuk’s defense
The day after the tapes were made public, Honcharuk recorded a video saying that the economy in Ukraine is performing very well and that the audio was published by those who don’t want Ukraine to succeed.
“The inflation rate is historically low while the hryvnia is historically strong,” Honcharuk said. “If that’s not good news, then I’m a dummy in economics,” he added, making a joking reference to his words from the leaked audio.
Markarova shared Honcharuk’s video on her Facebook page. Another attendee of the December meeting, Milovanov, supported Honcharuk, saying he is the best prime minister in the country’s history.
All three recordings have a combined length of 21 minutes, while the meeting lasted over an hour. The tapes were also notably edited, missing parts in between.
“From an economic standpoint, it’s a totally normal conversation where people are trying to communicate hard economic questions to people who don’t understand it,” said Serhiy Fursa, the head of fixed income at Dragon Capital.
In a rather unexpected twist, former President Petro Poroshenko, leader of the European Solidarity party in opposition to the current government, defended the prime minister by saying that the government is under attack for its stance on the nationalization of PrivatBank.
Poroshenko was implying that the man behind the audio leak is oligarch Ihor Kolomoisky, former owner of Privatbank, who is accused of siphoning billions of dollars from the bank before it was nationalized in 2016.
PrivatBank is suing Kolomoisky in Kyiv, London and Tel Aviv, accusing him of stealing $5.5 billion from the bank before the nationalization. The oligarch denies wrongdoing and, in turn, is suing Ukraine to get the bank back.
Read also: Kolomoisky rides high again despite $5.5 billion taxpayer bailout of bank
Kolomoisky told the Kyiv Post that he doesn’t know who recorded the audio.
Denis Kazansky, a Ukrainian journalist, was one of the people who was concerned that the recording’s leak demanded an investigation of whether government offices were wiretapped.
“When its unknown who is listening in to top government officials,” Kazansky said, “and is leaking their talks in order to destabilize a country at war, it’s a threat to national security.”
