Two news stories published on Oct. 18
are quite telling. The first involves DTEK, Ukraine’s largest private
energy company, which obtained a 416 million euro ($541 million)
syndicated loan from a group of Western European and Russian banks.
The two-installment medium-term loan at undisclosed interest rates
will be used to upgrade the company’s production facilities, finance
modernization programs and for other purposes, according to the
company’s press-release. DTEK, a division of System Capital
Management group, is owned by Rinat Akhmetov, Ukraine’s wealthiest
person and a soccer aficionado who charged
his team Shakhtar Donetsk with winning the
Champions League this season. Akhmetov also happens
to be a key financier of the incumbent ruling Party of Regions as
well as a member of parliament.
The second story came from the city of
Donetsk on the same day. It’s the home region of current President
Viktor Yanukovych and much of the Party of
Regions’ top leadership, including Akhmetov. There an investment
conference was held at Akhmetov’s steel-making arm Metinvest. It
also staged the official public launch of newly-installed machinery.
President Yanukovych attended both events and effusively praised SCM,
and Akhmetov in particular, for his leadership in attracting foreign
investments to Ukraine.
The common purpose in both of these
stories is an implicit encouragement by the
authorities to maintain the status-quo in economic
policymaking. While Ukraine’s leaders
defend the policy of intervening to hold the hyrvnia-dollar
exchange rate at its current level, the consequence is high
interest rates, which have essentially halted domestic local currency