KYIV NOT KIEV with Sergiy Fursa: IMF, External Governance, Oligarchs and Reforms at Risk

24/ 06/ 2020

Two weeks ago the Ukrainian society cheered the progress in Ukraine’s cooperation with the International Monetary Fund and the new Stand By program, perceiving it as a positive signal to investors – but it’s too early to celebrate. Hardly had the investors signed the document when some oligarchs started using puppet deputies and investigative authorities to endanger the whole IMF story.

Why is the cooperation with the IMF important? Who is interested in ruining it? Is it only about money? And the main question – is the IMF a friend or foe?!

To answer these and to dive into the topic, enjoy the interview below with Ukrainian investment banker Sergiy Fursa by KYIV NOT KIEV – a weekly covering of most recent highlights from Ukraine by Tetiana Gaiduk and Polina Boichuk from the TRUMAN Agency team.

Polina Boichuk: When googling your name,  I`ve found that you are often called “sorosia”. So, could you please explain, who are “sorosiata” and what relationship do you have to the people who are called “sorosiata”?

Sergiy Fursa: There is a group of people who are connected with some oligarchs and pro-Russian parties, who try to say that Ukraine doesn`t need to integrate to the Western society. The oligarchs are quite influential, because they control the most popular TV-channels and they produce all these stories against Western society values. They fight with values. But you can`t fight with values, so you start fighting with Soros himself. Soros is just an old guy who is about 90 years old,who lives in New York and who doesn`t have any idea what happens in Ukraine now. So, the audience of this brand – the “sorosiata” brand, that could scary somebody – is, on the one hand, the Ukrainian society, and on the other – it`s the President himself.

Tetiana Gaiduk: I`ve heard that President Zelenskyy is a big fan of the conspiracy theories.

Sergiy Fursa: Every taxi driver is a believer in the conspiracy. The mindset of Zelenskyy is very close to that of a taxi driver.

Tetiana Gaiduk: But who are these people namely, the ones we can call an anti-Soros coalition or a Western external governance believers?

Sergiy Fursa: There are two big groups. One big group is pro-Russians, pro-Russian channels, influentials – the Opposition bloc, Medvedchuk mainly and his TV-channels, and the people who were somehow connected with the government of Yanukovych. On the other hand, it`s Kolomoyskyi and his buddies inside the ruling party. He was quite influential in forming the ruling party and the main topic of his TV-channel – 1+1- is anti-Western propaganda now. Kolomoyskyi is under investigation of the Big Jury, so if he just leaves outside the Ukrainian border, FBI will catch him and bring to the US. So, he needs to break any Ukraine’s relations with the Western world itself, because for him it`s the question of his life. He is trying to break the Ukrainian-Western cooperation and he pushes all these Russian propaganda stories inside Ukraine. And his TV-channel is very good at propaganda.

Tetiana Gaiduk: It`s good we`ve started to talk about the IMF in this context, because now we should explain to all, why the IMF isn`t that bad, as most people think it is?

Sergiy Fursa: Because, it`s not about money – it`s about reforms. Ukraine should follow its Western neighbors – all these countries of the Warsaw bloc, who made reforms in early nineties and are a part of the European Union now. Ukraine hasn`t been able to implement all these reforms, like the IMF recommends, for all these 30 years, because there wasn’t political will. The main reason for that is that stuff, recommended by the IMF, is not popular.

We need money, we need to finance budget deficit, but nobody will give us money without the IMF support, because they do not trust us.

Tetiana Gaiduk: Yes, the presence of the IMF in the country itself is the factor of comfort for foreign investors.

Sergiy Fursa: We did a lot of reforms for the last 5 years, but most of them were done under the Western pressure. I can`t say this is an external governance. I would be happy if we had an external governance, because it would mean that we have any governance.

Polina Boichuk: They often say in the media and even the President says that the IMF requires the reforms to be implemented in Ukraine. This is the main controversy, because I suppose that`s Ukrainians who need these reforms to be done, not the IMF.  

Sergiy Fursa: These are Ukrainians who suffer from not having these reforms. They do not understand they need these reforms, because you have to be a professional in some field to understand what you need.

It`s the main problem of Ukrainian authorities – they do not understand that institutions are important. They want to build roads and think of it as a structural reform. But it`s not. The Ukrainian President is like an average Ukrainian. He doesn`t understand what needs to be done to change the situation. The only indicator he trusts is his rating. Ratings, expressing Ukrainians’ hopes and fears, do not show thirst for the reforms. So, the only real power that could push you to do reforms is the IMF.

Tetiana Gaiduk: Let`s talk about the new IMF program for Ukraine. Instead of the three-year EFF we have the 18-months-long Stand By program. What is the difference in the concept of cooperation? Is the shorter program an evidence that the IMF doesn`t trust the Ukrainian government?

Sergiy Fursa: I think it`s the evidence of the critical situation in the world and the corona-crisis etc. But you are right, there is no trust, really.

The main idea of Stand By is not to break everything what was done for the recent 5 years. I think the IMF does understand that now it`s not a time for the Ukrainian government to implement reforms due to the corona-crisis and lack of political will.

Polina Boichuk: The Memorandum signed between Ukraine and the IMF states clearly all the terms of cooperation. As, if I`m not mistaken, Ukraine has never fully fulfilled all the IMF requirements, what is your forecast for the current program? Will Ukraine cope with all the assignments?

Sergiy Fursa: I do not believe that. Now we really need money. That`s why this Anti-Kolomoyskyi law was passed, that`s why the land reform was passed in some dodgy way. I do not believe that Ukraine could finish any program without sabotage.

Tetiana Gaiduk: And what reforms are the most problematic? What are the stakeholders interested in their failure?

Sergiy Fursa: I think all reforms are under attack now. The most important reform is independence of the National Bank. This reform was very successful. We see that in world crisis situation Ukrainian national currency remains stable. That`s one of the results of the banking reform. But there is Kolomoyskyi`s interest in taking control over the National Bank and interests of other guys saying “let`s print money, let`s give credits for zero”.

Tetiana Gaiduk: Like Minister Petrashko says?

Sergiy Fursa: Exactly. Petrashko represents Bakhmatiuk`s interest, another dodgy oligarch. These guys are trying to implement the style of behavior that we had before Maidan.

Another reform under threat is the reform of NABU, an independent anti-corruption institution that was implemented as a part of the IMF cooperation with Ukraine four-five years ago. NABU investigated the PryvatBank case. That`s why NABU is under attack from Kolomoyskyi guys and from Avakov. The PryvatBank case, Bakhmatiuk case, big oligarchs under investigation –that`s why these people are attacking NABU.

Tetiana Gaiduk: What can you say about people in power who prefer to declare default instead of further cooperation with the IMF?

Sergiy Fursa: People who stand for a default, who provide such a narrative, are working for oligarchs or for Russians. Both, Kolomoyskyi and Russians, need Ukraine`s default, since it means no connection to the Western world. They say that it`s gonna be a heaven after default, but it is not. Default hurts. Look at the example of Argentina or Lebanon.

Tetiana Gaiduk: If you were a chairman of the IMF Board, would you vote for a lone for Ukraine or would you take some time to think? Before you answer, I would like to remind you – you started negotiations with one government and proceeded with another, the President of Ukraine is still very much connected with oligarch Kolomoyskyi, the National Bank is still under threat of challenging its independence, so what would be your answer?

Sergiy Fursa: Look, if I were a head of the IMF, I would deel only with such countries with such problems. Yes, I would sign the deal with Ukraine, but I would ask my staff to be tough.

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