“Everything happened very quickly. On June 30, immediately after the end of the National Reform Council, Smoliy was invited to the President. When he entered, Yermak and Saakashvili were already there. They immediately started attacking Smoliy. Yermak, in particular, was very aggressive. The President was merely watching. As a result, Smoliy agreed to resign. He didn’t expect such a harsh attack and just said that okay, he would leave. When people at the National Bank asked why he didn’t put up a fight, Smoliy said, “What for? If they have already decided to dismiss me, I will have to leave. It’s either now or in two or three weeks but with a bunch of criminal fabricated cases.”
Apostrophe’s source shared exclusive details on the dismissal of Yakiv Smoliy, the head of the National Bank of Ukraine. When Mr. Smoliy said that he was forced to resign due to political pressure rather than health issues or personal plans, it turned out a surprise for the man’s entire inner circle.
"He’s defending his position, yet he’s not a conflicting person. He’s never had any conflicts with the country’s leadership, although many tried to provoke him. He would not have gone into conflict this time, either, if he had not understood what they would start doing the day after his dismissal. If we don’t make it public now, explaining the true reasons behind his resignation, they’ll destroy the banking system in a few weeks. If we do it, the banking system will be able to survive for at least a few months. After that, they might see some reason...,” another insider told Apostrophe.
Leaving with honor
On Friday, July 3, Ukraine’s Parliament voted to dismiss the head of the National Bank Yakiv Smoliy. The decision was supported by 286 MPs; Mr. Smoliy, in turn, said that there was systematic pressure on both him and members of the NBU administration. His words, however, did not convince Ukrainian MPs to investigate who and how could have directly violated the law on the NBU, pressuring the National Bank’s head. In any other country, the Parliament would have established a temporary investigative commission before dismissing an official who directly announced political pressure.
The European Union and the G7 ambassadors have already expressed their concern regarding Smoliy's resignation, calling on Ukraine’s government to respect the principle of the banking regulator's independence. Mr. Smoliy’s resignation has even made it to European and global headlines. The IMF, the EU, and other Ukrainian partners could not believe what’s just happened: mere days after receiving the IMF loan, which is conditioned on respect for the independence of the banking regulator, the head of the NBU resigned due to political pressure.
The Ukrainian Parliament, however, didn’t give much care to the reasons behind Yakiv Smoliy’s resignation, submitting to another bout of populism. Rumors of his dismissal started in May when the specialized parliamentary committee demanded a report from the head of the NBU. President Zelensky’s chief of staff Andriy Yermak, who was previously noticed in promoting the idea of appointing 100% his man to head the NBU, made an official statement claiming to be unaware of any negotiations regarding changing the NBU’s leadership. Yermak’s words had slightly eased the situation, yet, as we know now, the pressure did not stop.
Apostrophe’s sources in banking circles are unanimous in their opinion that it was Ihor Kolomoisky who pressured Mr. Smoliy. The odious oligarch, who wants to regain his control over Privatbank, was joined by the government and former Georgian President Mikheil Saakashvili. Saakashvili, in turn, was pulled out of political non-existence and now heads the executive committee of the National Council of Reforms.
"Smoliy did not make any deals with oligarchs on their individual requests. He also didn’t agree with the Cabinet's desire to turn on the printing press and fill the country with hryvnia. On the eve of local elections, authorities need to show voters the construction of new roads, increase in pensions and salaries. Everything has changed dramatically when Yermak and Levochkin started attacking Smoliy," our source shared.
The Black Mark
Regardless of who is going to become the new head of the National Bank, the story of Smoliy's resignation allows one to draw serious conclusions
The law on the National Bank clearly requires the body to be independent. It’s a standard for central banks in both civilized and not quite civilized countries. The violation of this principle, in turn, leads to horrific consequences, like with the Turkish president's interference in the bank’s work. It can easily result in inflation, the collapse of the national currency rate, economic downfall, etc.
First, unfortunately, Ukrainian authorities have illustrated that they do not understand or adhere to the concept of independent institutions as such. According to the ideologists of the attack on the NBU, the institutions should obey the government.
Second, Smoliy's resignation showcased the influence of oligarchic groups. Despite Zelensky’s election promises to deprive the oligarchs of their political influence, their power appears to increase.
Thirdly, printing hrryvnia will not solve economic problems, which are caused by corruption, unprofessionalism, and are multiplied by the COVID-19 pandemic. Inflation and devaluation will not build roads – they will, however, create queues to banks and ATMs. Hungry and angry, people might start protesting.