An attempt is underway in the Ukrainian parliament to deprive the National Bank of Ukraine (NBU) of its independence and oust its governor, Valeriya Hontareva. This would be a major reversal of Ukraine’s economic reforms and must be stopped.

In the last two years, Ukraine has carried out its most fundamental economic reforms since its independence in 1991. NBU has been a driving force in this reform wave. Since June 2014, Hontareva has led the bank, and hardly anybody has done more for economic reform than she. Focus magazine recently named her the most influential woman in Ukraine.

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An attempt is underway in the Ukrainian parliament to deprive the National Bank of Ukraine (NBU) of its independence and oust its governor, Valeriya Hontareva. This would be a major reversal of Ukraine’s economic reforms and must be stopped.

In the last two years, Ukraine has carried out its most fundamental economic reforms since its independence in 1991. NBU has been a driving force in this reform wave. Since June 2014, Hontareva has led the bank, and hardly anybody has done more for economic reform than she. Focus magazine recently named her the most influential woman in Ukraine.

Under former President Viktor Yanukovych, Ukrainian bank owners developed a habit of making 80-90 percent of their loans to themselves, with little intention of returning them. The best way of robbing a bank is to own a bank. In effect, they robbed deposit holders and NBU, which provided ample refinancing. Often they used such funds to buy more banks.

Hontareva has fearlessly taken out one after the other of these corrupt and bankrupt banks. Roughly half of Ukraine’s twenty biggest businessmen have lost their banks, and almost half of Ukraine’s 180 banks have been eliminated. Their assets have been transferred to the Deposit Guarantee Fund, which has reimbursed individual depositors up to a reasonable limit.

The NBU is also responsible for exchange rate policy. The exchange rate of the hryvnia has slumped from eight hryvnia per US dollar at the end of 2013 to currently twenty-six hryvnia per US dollar. This has been highly unpopular, because Ukrainians measure their income and wealth in dollars, but it was necessary because Ukraine had an untenable current account deficit of 9 percent of GDP in 2013. That was brought to zero last year.

Since April, the hryvnia has stabilized, as Ukraine’s reserves of international currencies and gold that were critically low at $5 billion in February 2015 have risen to $16 billion, thanks to NBU’s responsible monetary and exchange rate policies.

Because of the sharp depreciation of the hryvnia and energy tariff increases, Ukraine’s annualized inflation surged to 61 percent in April 2015. As a result of its strict monetary policy, NBU has reduced inflation to 8 percent since May.

No Ukrainian institution has been more reformed than NBU. Hontareva brought in a highly-qualified team from the private banking sector and cut the excessive staff of 11,000 in half; she is aiming for a further reduction to 2,500.

These laudable policies have hit at a large segment of the old elite. During Hontareva’s first year in office, NBU faced persistent demonstrations that seemingly represented the interests of some of the failing bank owners, but these protests eventually ceased, as they had no material effect.

This fall, however, NBU has encountered a new offensive. At the annual meetings of the International Monetary Fund and the World Bank on October 7-9 in Washington, Ukrainian businessman and independent parliamentarian Serhiy Taruta distributed a thirty-two page pamphlet titled “Gontareva: A Threat to the Economic Security of Ukraine,” which called for her ouster. This booklet, written in English, had no named author, and a careful reading did not uncover evidence of any of the sharp accusations. Apparently it is not publicly available.

As a follow-up to this pamphlet, a number of parliamentarians from four parties submitted a draft law to parliament on October 10, calling for amendments to the law on NBU to deprive it of its independence. The draft also demands the ouster of Hontareva and her deputies.

The two most prominent proponents are Oleh Lyashko and Viktor Galasiuk, the chairman and deputy chairman of the Radical Party, but as is often the case in Ukraine, it is unclear who is really behind this draft law. It is presented as a populist act, but appears to be initiated by parts of the old elite. They want to return to a weak central bank that happily gives ample refinancing to close friends at the expense of the Ukrainian people.

Refreshingly, the chief executives of twelve of Ukraine’s biggest commercial banks have signed a joint letter in support of NBU’s independence and Hontareva. The International Monetary Fund, the US government, the European Union, the European Bank for Reconstruction and Development, and the World Bank understand this drama well and are all highly appreciative of NBU and Hontareva.

If the parliament were to adopt this law and abolish the independence of the central bank, financial assistance from the West would likely cease: this is a fundamental issue of good economic governance.

President Petro Poroshenko and Prime Minister Volodymyr Groisman should put their feet down and tell parliament that such a law is impermissible and would be of great harm to the nation. Poroshenko has many reasons to do so. It was he who appointed Hontareva, who was his investment banker before she joined the NBU, and they have cooperated well.

Hopefully this misdirected initiative will be stopped. Ukraine must not waste its efforts in such a fashion; it should instead focus on important reforms that will allow the country to reach high, sustained levels of economic growth.

Anders Åslund, a UkraineAlert contributor, is a senior fellow at the Atlantic Council and a member of the supervisory board of Bank Credit Dnepr. He tweets at @anders_aslund.
Developing countries need a concrete strategy, backed by political will, that is focused on using clean energy for growth, according to a nonresident senior fellow at the Atlantic Council’s Global Energy Center. 

As the date on which the Paris climate agreement goes into effect draws near and participating countries begin to take steps toward implementing their goals to reduce greenhouse gas emissions, Robert F. Ichord, Jr. sought to “emphasize the key role that developing countries will play in the future of the energy matrix in the world, and [how] that’s going to have profound implications for Paris.” He said “80 to 90 percent of energy growth is going to be in these countries.” 

However, Ichord, who formerly served as the deputy assistant secretary for energy transformation in the State Department’s bureau of energy resources, added that these countries are “going to need huge amounts of energy if they’re going to develop, and that energy needs to be clean and efficient.”

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The presidential debate on October 19 was the final one between Hillary Clinton and Donald Trump before election day. Historically, the third debate is heavily focused on foreign policy, while the first two are dominated by domestic issues. Other than a few mentions of China, the military campaign to take Mosul back from the Islamic State of Iraq and al-Sham (ISIS), NATO member states’ defense commitments, and Russia’s meddling in the election, foreign policy did not come up very often.

For the Strategy Consortium, led by the Atlantic Council, this was disappointing. The Consortium promotes an “ecosystem” of strategic thinkers from the think tank, corporate, government, and academic worlds who collaborate on strategic foresight, strategy development, and strategic implementation.

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In an election season marred by cyberattacks—an activity the White House has blamed on Russia—the security of voting machines is a prominent concern for voters.  Such concerns could undermine voters’ faith in the system as well as the legitimacy of the result of the presidential election, the Atlantic Council’s Daniel Chiu said in Washington on October 19.

“Hackers may not even need to actually compromise voting computers or systems to undermine the people’s trust in the election results,” said Chiu, who is director of the Strategy Initiative in the Atlantic Council’s Brent Scowcroft Center on International Security. “[M]erely a credible claim of doing so could compel voters to cry foul, undermining the legitimacy of the vote, at home in the United States, and abroad,” he added.

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When does a Russian warlord become a “pro-Russian separatist?” Newsrooms around the world may want to ask themselves this question following Russian militant leader Arsen Pavlov’s assassination in Donetsk in mid-October. In the wake of the killing, one news report after another ran with headlines referring to Pavlov as a pro-Russian separatist leader, creating the impression of a Russia-leaning local who was defending his democratic rights by force of arms.

In reality, Pavlov was much more than simply “pro-Russian.” He was an actual Russian. This is not a matter of mere semantics—it is the crux of the entire conflict. Pavlov was one of tens of thousands of Russian citizens who have traveled to neighboring Ukraine in order to wage war. The forces Russia has deployed for this purpose include a mixture of regular army troops without insignia (“little green men”), paramilitaries drawn from Russian army veterans, Russian nationalists, common criminals, and local recruits. Together, they form a hybrid army of occupation that is larger than the armed forces of all but a handful of European states. Describing such people as "pro-Russian” is clearly absurd, and yet it continues. By almost any rational measure, Pavlov’s nationality should have been central to the international media coverage of his demise. Instead, in most reports it appeared as a mere footnote.

The media response to the death of Pavlov has highlighted the problems international reporters continue to face when covering events in Ukraine.

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The United States and Europe have entered a “dark period” of Islamophobia, and no easy solutions are at hand, panelists contended in a discussion at the Atlantic Council in Washington on October 20.

In the wake of deadly attacks by sympathizers of the Islamic State of Iraq and al-Sham (ISIS) in Paris, Brussels, and San Bernardino, hate crimes against Muslims in the West have soared to levels last seen in the period after the terrorist attacks on the United States on September 11, 2001.

The Atlantic Council and the Aydın Doğan Foundation jointly hosted a panel discussion in Washington to discuss the challenge of Islamophobia and to seek solutions to counter the spreading sentiments. The event was convened ahead of the Smithsonian Institution’s exhibition on “The Art of the Quran,” which opens on October 22.

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This week’s meeting in Paris of the Normandy Four is a critical one. If there is no measurable progress there to advance a framework for peace in Ukraine, public sentiment that Minsk is exhausted as a peace process will only grow. (Editor’s note: On October 19, 2016, France, Germany, Russia, and Ukraine agreed to a preliminary roadmap for implementing the Minsk ceasefire agreement.)

The recent resolution passed by the Parliamentary Assembly of the Council of Europe (PACE) has prioritized security before elections in Ukraine—a major diplomatic breakthrough that needs to be consolidated in Paris. If the Normandy Four process cannot deliver provisions that stabilize the security situation, Ukraine risks being locked into Russia’s war of attrition. Russia’s strategy is to grind Ukraine to the point of collapse through a persistent loss of resources and public support, eventually bearing out Russian President Vladimir Putin’s view that Ukraine cannot govern itself.

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The next president of the United States must build on the opportunity provided by the nuclear deal to normalize ties with Iran, said Ellen Laipson, a distinguished fellow at the Atlantic Council, in Washington on October 19.

“Iran is not a pure adversary of the United States. We should be able to manage the challenge of Iran in a slightly more agile and productive way than we have in past decades,” said Laipson.

She said that while the United States has to ensure its security priorities and those of its partners in the Middle East, “I would like to see us take a little more risk in deepening the channels for engagement [with Iran]…I would like to think of the nuclear agreement as a new factual reality that would allow the next president to think of a decade-long process to begin moving toward normalization.” 

Normalization of relations will depend to a large extent on Iran’s domestic politics and US national security interests, “but it should be a long-term objective of the United States to try to get to a more normal relationship,” with Iran, she added.

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Russia’s President Vladimir Putin rules supreme. On September 18, his United Russia party won its largest-ever majority—enough to change the constitution—in the parliamentary elections. He seems to be running circles around the West in both Ukraine and Syria.

Yet, Russia’s stability must not be overestimated. Last year, retail sales fell by 10 percent and this year by more than 5 percent, reflecting declining living standards, though social protests remain insignificant. But the real source of instability centers on conflicts in the security services. Putin is attempting a major transformation of Russia’s security services and state administration, trying to consolidate his power, but KGB generals in their 60s still dominate the security council and stand in his way.

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