State property privatization could lead to anti-corruption fight in state apparatus
The Belarusian authorities avoid a wide public anti-corruption campaign and keep this topic low profile in order to reduce people’s discontent with the authorities. Meanwhile, the Belarusian leadership used anti-corruption prosecution to balance out different nomenclature and business groups in the regions and at the national level. Nevertheless, amid the decline in traditional economic sectors, attempts to redistribute state assets are likely to strengthen tension and spur anti-corruption inquests related to business interests.
According to the Global Corruption Barometer - 2016 by the Transparency International, 45% of Belarusians believe that the state is not doing enough to fight corruption.
The president seems to have abandoned the fight against corruption for quite a while now. He has clearly outlined the acceptable corruption level, which is determined by people’s attitudes and public discontent with public demonstration of personal well-being by representatives of the ruling elite. The lingering economic crisis and falling household incomes have distracted citizens from the corruption theme, which is not among the priority issues for the society, according to a study by Transparency International.
Nevertheless, corruption prosecution is among the mechanisms of redistributing the influence between regional nomenclature groups. The most recent high-profile case was in Bobruisk, where the city mayor Andrei Kovalenko was detained on suspicion of bribery. Kovalenko differed from the ‘conventional’ Belarusian mayors by being a more open, creative and somewhat democratic ruler.
In addition, apparently, the fight for state property in the centre of Minsk has prompted the president to look into the issue of transferring to the High-Tech Park a public building of Minsk Production Association of Computer Engineering. It is worth noting that so far, due to the economic success of the IT industry as compared with the traditional economic sectors, IT managers have been successful in defending their positions vis-a-vis the state and gradually promoting their interests.
The Belarusian leadership monitors corruption perceptions among the population in order to adjust the state anti-corruption measures and maintain government ratings.
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.