Share |

Thursday, January 03, 2008

Shortchanged on Soviet Savings

Every election campaign, talk of refunding Ukrainians for their Soviet-era savings finds its way into the hearts of voters. Now that Tymoshenko has found her way back to government, it’s about time she walked the talk. But will she?

Under the Tymoshenko plan, each account holder will be entitled to an equivalent of $200 in compensation payments. According to earlier statements, only 60 percent of Ukrainians who held accounts with Sberbank, the Soviet savings bank, will be “fully compensated.” Deposits of less than 2,000 Soviet rubles will have priority. So, unless your savings put you south of 2,000 rubles, you’re a fat cat. Here’s a quote from PM Tymoshenko:

After an account check with Oshchadbank [the Ukrainian successor to Sberbank], everyone owed by the bank will receive up to 1,000 hryvnias in cash depending on the amount deposited. In the near future, we will allow the owners of lost savings to pay for consumer goods, utility bills, and other services out of their bankbooks.

So, if my parents had 6,000 rubles on deposit in the mid 80s, which could buy a Zhiguli, all they get is $200, a free haircut, and that's it? And you call that fair? And what about those coal miners and industry workers who had up to 20,000 rubles on deposit?

“This amount is approximately half of what was usually cited. We plan to initiate a comprehensive refund” is another cryptic quote. Exactly what indexation rate are we talking about? Does it reflect the time value of money? Does it take into account the value of a deposit at the time it was made, as measured by the chronologically equitable basket of goods and services?

For deposits made prior to perestroika and the ruble overhang of the late 80s/early 90s, there is no equitable indexation rate below 1:5, plus interest owed. In other words, once we arrive at CPI figures, one Soviet ruble of savings should at least translate into five Ukrainian hryvnias. A deposit of 1,000 Soviet rubles made in December 1981 does not equal a deposit of 1,000 Soviet rubles made in December 1991.

In fact, there is no economic vehicle for turning around the issue of “lost” Soviet-era savings without righting some of the wrongs of the privatization/grabitization era.

By law, every Ukrainian citizen received a piece of paper called the “privatization certificate,” a legitimate ownership claim on Soviet public property. But somehow only a fraction of Ukrainians received value for their claims — and some received billions of dollars worth of property. Why?

Unless this question gets some serious consideration, the idea of $200 as a compensation sounds as another bad joke. We’ve already heard the unfortunate suggestion of making the coal miner’s job a dream for every Ukrainian kid. And guess what — hardly a month passes by without a coal mine accident.



Anonymous said...

I don't want to add fuel to the fire, but here's an article about how corruption (and pollution) are killing Ukraine.

If the oligarchs don't stop their grabitization, even they will have to leave Ukraine and find solace only in whatever they've managed to stash into foreign or offshore accounts. And Chornovetsky ought to be sent to where he belongs - Mars.

Taras said...

You mean this article? I've already gleaned it from your comment at Orange Ukraine:)

As for Cherno, I would recommend an intergalactic space shuttle mission — to keep as much distance as possible.

After all, if there is life on Mars, it won’t be long before the Martians start experiencing acute land shortages and will be motivated to colonize Earth.

Anonymous said...

From Jan. 8th Oschadbank will have a telephone "hot line" all calls are toll free 8-800-501-34-10 (усі дзвінки в межах України безплатні) і (044) 278-02-57. The line will work from Mondays to Thursdays from 9 to 6 pm. and on Fridays from 9 am. to 4:45 pm.


Taras said...

I just called to say I love you
I just called to say how much I care
I just called to say I love you
And I mean it from the bottom of my vklad:)

[Ukr. for deposit]

Anonymous said...
On Tuesday, Prime Minister of Ukraine Yulia Tymoshenko has personally called up to open “hotline” of the “State Saving Bank of Ukraine” public corporation and failed to receive any answer within an hour. It is an impossible situation, the Head of Government believes. According to the government’s press-office, Yulia Tymoshenko has issued a warning to the Oshchadbank leadership and commissioned urgently to open fifty-channel phone “hotline” in order every interested depositor of Oshchadbank of the USSR could obtain information about mechanisms of repaying savings on-the-fly.


Taras said...

Everybody knows how the system works. I think her failed test call was intended to share in some of the pain that her voters' may feel while standing in the freezing cold for 3 hours to get those $200.

Btw, she will speak about the savings in an evening address to the nation.

Anonymous said...

Gov begins payback of lost savings

by Dariya Orlova, Kyiv Post Staff Writer
Jan 09 2008, 22:13

Ukrainian depositors of the former USSR’s Savings Bank will be able to receive up to Hr 1,000 ($200) in compensation through the state-owned Oschadbank beginning Jan.11, Prime Minister Yulia Tymoshenko said during a Cabinet of Ministers meeting on Jan. 9. Earlier this month Oshchadbank announced it will compile a registry of depositors who lost their savings and opened a telephone hotline to field questions.

Compensating former Sberbank depositors who lost all their savings after the USSR collapsed was a central issue in the Yulia Tymoshenko Bloc’s election campaign and one that has received much attention since Tymoshenko’s return to government.

The total volume owed to Ukrainian depositors is estimated at over Hr 120 billion ($24 billion). Political opponents and some analysts criticized Tymoshenko’s plans to pay back the lost savings as “populist” and dangerous for Ukraine’s economy. Tymoshenko, however, promised to resign if the government does not repay the lost savings in two years. Her government plans to reimburse Hr 6 billion ($1.2 billion) through direct payments this year.

An additional Hr 2 billion ($400 million) will be virtually compensated as reciprocal payment for housing and communal utility debts. According to the procedure, depositors will receive up to Hr 1,000 ($200) three days after inclusion into Oschadbank’s registry.

Along with monies already earmarked for compensation in the state budget, the government plans to raise additional funds through privatization. Vasyl Yurchyshyn, director of economic programs at the Razumkov Center for Economic and Political Studies, a Kyiv-based think tank, noted that privatization has not been successful in the past three years and relying on the sale of state assets to raise extra funds is problematic. Nevertheless, the government’s compensation mechanisms seem to be quite sensible, despite presenting certain risks, Yurchyshyn said.

“Compensations are accompanied with increased pensions and social transfers, and it may lead to higher cumulative effect, which in turn may cause inflation and result in higher prices,” said Yurchyshyn. He added the government should pay more attention to non-cash mechanisms of reimbursement, like state bonds and securities and should closely monitor the compensation process.


PS I love the woman complaining about the number of people who showed up at the bank today - it was bizaare - she going off about the people showing up like they should come in groups not en masse, etc. very much a Sovok attitude toward to customer relations. I mean who knows how long the Cabinet will actually be in office? Why shouldn't people come when they are able to? or why should it be a problem to spend 40 minutes on the phone with a senior citizen? was no one prepared for the number of people who would express interest in getting their $200 if possible? It is chicken feed to what was deposited but it ain't nothing to sneeze at either.

Anonymous said...

The PM is also asking people not to show up in person. :( Exactly what did she expect? people to stay home and trust the government? People already waited 17 years and what will they do regarding people who moved away or died?


Taras said...

You’re absolutely right, Luida.

Like Chernobyl, Soviet corporate cultures still haven’t reached their half life. The "moments of truth" one can get from dealing with the many tiers of the Ukrainian bureaucracy lead to no other conclusion.

Unless you show up in person and show them what you can, nothing gets done — ever. This is the voice of experience.

Let me deepen our discussion of the savings issue by reposting some of the stuff I’ve already shared with you.

>>In a perfect world, no populism would be attached to the saga of the “lost” Soviet-era savings. And the word “lost” hardly does it justice. Let’s set the record straight: The only way those savings could have been “lost” is if the assets that they had financed — now property of Cyprus-registered corporate Ukraine giants — had somehow vanished too.

Of course, the Warrior Princess won’t dig that deep into the “lost and found” political economy of stabilnist. It gets too dirty and dangerous. That’s why watching her trumpet those ridiculous $200 payments as a great victory for the Ukrainian people doesn’t make me happy.

If Ukraine had “a government of the people, by the people, for the people,” that government would never put itself in the business of packaging its citizens’ savings as a handout. It would never exploit them politically. Essentially, these savings represent a huge pile of hard-earned money that the government of Soviet Ukraine borrowed to finance the economy. So, following the breakup of the USSR, a democratic and competent Ukrainian government would have allocated the financial capital of these savings to the real capital of the post-Soviet Ukrainian economy. It never happened. And it never will.

Now that that everything is grabitized and stabilnist is the order of the day, it’s all a pipe dream. Needless to say, grabitization would have never blossomed under a democratic government. Admittedly, Ukraine had a somewhat democratic government in the early years of independence. But that government was largely incompetent, and it wasn’t too long before it became corrupt and despotic.

Even though my elderly parents receive a net monthly income of $300 in pension, they will not accept $200 as a settlement. The money they put in the bank could buy a brand new Soviet car. (A crappy one by Western standards, but still a car.) The money the bank offers them today can’t even buy them a goddamn fridge. Their deposit of 6,000 rubles makes them "high net worth individuals" — a category of people who are not eligible for compensation until further notice. That about ends our political economy class.

Repaying a debt should not be confused with doing a favor, especially if the amount being repaid pales by comparison to the return favor being sought.

Anonymous said...

btw the following newscast REALLY did not explain much at all "after the evening news, television channels ICTV, 1+1, and UT-1 will air information from Yulia Tymoshenko regarding compensation for lost deposits in the USSR Savings Bank (Oshchadbank)"

The statement made was vague enough to be a typical politician's speech and not specific enough to answer anyone's questions - should have done at least 15 minutes covering specifics which would have been great had it been in advance of the opening date and could have been public service announcements in papers as well.

Taras - I agree with you and more about the whole situation - and let's face it all the oligarchs, businesses, etc. have done really well out of the fact that Ukrainian pay scale is so low and remains so, pensions are lower than the min. subsistence wage and will remain so, etc. And yes, the money that went into private pockets could have built/renovated hospitals, clinics, roads, public utilities, etc. instead of purchasing real estate abroad, fancy cars at home and paying for grandiose digs. Every single Ukrainian who remains and is gone has helped subsidize the extremely wealthy and whether it is Tymo and Oschadbank or Chernoco and the ice skating rink in Sofiayivska square Kyiv - it all comes down to the same for me - "purchasing" voters. Which is why I have such a hard time writing about it as it is hard not to get angry and emotional about it. And yes, I do believe it will only spur on inflation Tymo herself stated that excess liquidity was the reason for inflation - which makes her actions all the more odd. (actually I do not buy into the liquidity argument wholesale - the high GDP, crop failure, higher gas prices are clearer reasons for inflation and the rising costs of production with more and more imports being purchased - trade imbalance.)