"Never do they lie so much as during war, after a hunt, and before elections"—this famous saying by the "Iron Chancellor" and unifier of Germany, Otto von Bismarck, uttered back in the 19th century, is unfortunately relevant to Ukraine in the 21st century in many aspects and senses.
Our country has survived another election cycle and now once again looks to the future with hope. Will the political forces that entered parliament seize the opportunity for qualitative renewal? Will the new coalition and the government formed on its basis undertake the implementation of urgent economic reforms?
Low social standards amid soaring prices, job losses, and the lack of visible prospects for improvement amid plummeting living standards—these and other factors fueling growing social tensions have already triggered a countdown of public trust. And unless promised reforms are immediately implemented, no matter how painful, there's no hope of improving Ukrainian sentiment—economic, social, and protest—which is approaching critical mass. From the very beginning of the Maidan, Ukrainians have expressed a desire to move closer to European values and standards. But both "Ukraine in Europe" and "Europe in Ukraine" are impossible without fundamental reforms and comprehensive economic modernization.
The extended head start until the next elections offers a unique opportunity for those implementing today's unpopular reforms to take advantage of their future results, restoring and even increasing their electoral ratings. And the severity of martial law, as well as the accompanying economic crisis, is a powerful incentive, as painting fences won't suffice, no matter how patriotic the colors and slogans.
From the very beginning, the focus should be on reforms aimed at macroeconomic stability—ensuring the country's energy independence, improving the investment climate, implementing targeted social policies, etc. From the very outset, reforms should become balanced components of the country's development strategy. Moreover, this should be a proactive strategy, the individual elements of which are intended to create synergy for its breakthrough.
Why is a proactive strategy so important? Because it's crucial to address more than just immediate problems, the most progressive initiatives are sure to be lost in the hustle and bustle of daily life. For example, one can philosophize at length about the timing of the end of the Anti-Terrorist Operation (ATO), the beginning of economic recovery, and so on. Or one can begin to act, carefully analyzing even the most spontaneously generated idea. Today, it's not innovation that matters, but the present and the relevant. Ideas, inspiration, and enthusiasm are essential, along with everyone's contribution to the common cause, no matter how pompous this may sound. It's essential to be able to transform problems into opportunities by ensuring a zone of responsibility. At the same time, it's crucial not to give privileges to certain political parties or blocs to shape or hinder economic processes for their own benefit. Only a proactive strategy, carefully integrating the effectiveness of its actions with real steps to overcome the crisis, support prosperity, and increase employment, will help improve the country's economic situation and initiate its evolutionary development.
Ukraine's banking system is currently primarily concerned with survival. The situation is truly dire: according to the NBU, deposit outflow has already exceeded UAH 100 billion, and the foreign exchange market remains volatile, despite the projected inflow of foreign exchange earnings being positive. The results for the first three quarters of this year are still disappointing. According to the NBU's latest data, hryvnia loans have decreased by almost UAH 50 billion (8,3%), and bank capital by UAH 21,4 billion (based on the results of the first eight months of the year). Meanwhile, banks' total losses have exceeded UAH 5 billion. Despite these challenges, the banking system in most of the country (outside the ATO zone) continues to perform one of its key functions—maintaining money circulation—with virtually no interruptions (i.e., the economy's circulatory system is functioning normally).
Today's agenda includes: further capitalization of banks, finding sources and tools to restore lending and profitability, and, most importantly, restoring trust. Trust not only in the banking system as a whole, but also in the entire government and its ability to truly reform the country. Trust that is built by the ability to clearly communicate complex issues during challenging times, as 32nd US President Franklin Roosevelt did in his radio fireside chats. It was his speeches that built a bridge of understanding between the American people and the government during World War II. And here, it is crucial to formulate and implement the same proactive strategy: how to not just survive, but live and develop in the new market realities, seizing the opportunities arising from the challenges of the crisis.
Today, many bank colleagues and shareholders are asking themselves: what sources and tools will they use to make money once stability sets in? How, other than poaching clients from their peers, can they increase their market share? Their willingness to seek and grow the capital of their institutions will largely depend on the solutions to these questions. The government must formulate some of the answers by creating the conditions and preconditions for overall market growth and ensuring fair and transparent rules of the game. Some opportunities are already obvious. For example, even during the current downturn, many are noticing a dynamic growth in cashless payments and customer interest in electronic services. With the current prevalence of information technology, demand for online banking services is growing exponentially. And the future is yet to come—the generation growing up in this information environment is already eagerly embracing such services and will become their primary consumers tomorrow.
And yet, in our IT-infused era, we mustn't forget that human capital remains the most important asset. The experience of managers in the Ukrainian banking system is invaluable, as during the years of the country's banking system's development and the times of crisis, our specialists have acquired such crisis management experience that it's hard to imagine where else one could obtain such an internship! And how important it is today not to squander this experience, but to use it for the benefit of the country's development as a whole and the financial system in particular, capitalizing on a strategy of anticipation with innovative management technologies and creative potential.
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Speaking to the Budget Committee of the Chamber of Deputies of the German parliament in 1862, Bismarck uttered another famous statement: "The great questions of our time are not decided by speeches and majority resolutions... but by iron and blood." The realities of the 19th century may have been such, but a century and a half later, in developed and developing democratic societies, resolving issues by such methods is unacceptable. That's why the plans for the revival of punitive states and dictatorial states, nurtured by the morbid imagination of neo-imperialists, seem so monstrous. But these issues should under no circumstances be resolved by the now-weary speeches, for verbal populism is a direct path to the abyss. And here one cannot argue with the "Iron Chancellor."
Dmitry Gridzhuk, Mirror of the week
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