Minsk enhances negotiating position in dialogue with European Union
Minsk has deliberately aggravated relations with the EU believing that it strengthened its bargaining position in the Belarusian-European dialogue. By refocusing on the death penalty, Minsk aims to defuse Europe’s criticism over human rights violations and deficit of democracy in the country. Apparently, the Belarusian authorities attempt to translate enhanced contacts with European capitals into economic benefits, especially given the oil and gas dispute with the Kremlin.
Since early 2016, Belarus executed four convicts. Despite the desire to normalize relations with the European capitals, in 2016, the Belarusian authorities resumed executions after a long break since November 2014. The Belarusian authorities were ready to harsh criticism by the EU and the international community, because they knew how important the death penalty issue was for the Belarusian-European dialogue. The decision to execute three convicts was made during an active phase of the dialogue with the EU and increased contacts and official visits from Western capitals to Minsk.
The Belarusian authorities are convinced that the EU will not resume the sanctions policy and will retain the established dynamics in Belarusian-European normalisation. However, the Belarusian authorities have sent a signal to Western capitals that the current format of relations has reached its limits and that they would like to receive economic benefits from cooperation, rather than a boost in contacts.
In addition, by putting the death penalty issue at the top of the European-Belarusian agenda, the Belarusian authorities have diverted the focus of the EU from the criticism of the 2016 parliamentary campaign, the NPP construction near the border with Lithuania and other requirements put forward by Western capitals in human rights and democratisation spheres.
Overall, the Belarusian authorities anticipate reducing a broad list of problem issues on the Belarusian-European agenda to discussions about the abolition of the death penalty.
The Belarusian economy was shrinking for the second year in a row, in 2016, by 2.6%. Before 2015, the Belarusian economy was growing for 18 consecutive years. In order to stop the economic slump, Belarus needs a favourable international market situation and to settle all trade disputes with Russia. The Belarusian economy is unlikely to recover before 2018.
According to the preliminary reports, in 2016, Belarus had a 2.6% GDP decline. The Belarusian economy was shrinking for the second year in a row – a 3.8% decline in 2015. Most economic indicators in 2016, except in agriculture, had negative values. Wholesale trade had the most negative impact on GDP due to falling exports of potash fertilizers and petrochemicals, as well as construction, due to reduced investment in fixed assets by enterprises and decreased housing construction volumes.
In 1996-2011, the Belarusian economy was growing most rapidly, average GDP growth rate was 6.9% per year. In 2011, amid emission injections in the economy, disproportionate growth of wages against the background of low productivity and significant financial aid for loss-making agricultural, construction and industrial enterprises, the Belarusian rouble depreciated by three times. The absence of economic reforms and significant relative weight of state in the economy amid deteriorating external economic environment led to a sharp economic slowdown – circa 1% per year in 2012-2014; the slowdown was followed by the recession, caused by a slump in the prices for basic exports from Belarus and cuts in soft loans issued to maintain production volumes.
Belarus’ budget for 2017 is based on anticipated 0.2% growth. The expected decrease in the construction volume is circa 17% in 2017, which is unlikely to allow industrial growth with the renewal of fixed assets by legal entities. Even if wages grow, they will be offset by the 15% increase in utility tariffs by late 2017. Wholesale trade is largely dependent on the potash market situation and the oil processing volume at the Belarusian refineries. In view of the planned reduction in Russian oil supply in Q1 2017 to 4 million tons, wholesale growth is only possible provided the potash market situation improves. In late 2016, engineering output increased significantly, but amid the trade conflict with Russia, she may prioritise purchases from domestic manufacturers. In the given circumstances, Belarus’ GDP would only grow in 2017, provided the Russo-Belarusian dispute over energy supplies was fully resolved, Russia removed barriers for Belarusian exports and the potash market situation improved. That said, Belarus’ GDP in 2017 is likely to decrease by 0.5% - 1% and is likely to be followed by an attempt to overcome the recession in 2018.
The Belarusian economy has been in recession for two consecutive years. Amid anticipated decline in retail trade, construction and unresolved dispute over energy supplies from Russia, economic recession is likely to persist in 2017 and the economic recovery may be postponed until 2018.