Alcohol industry is allowed to increase exports
In May, export quotas for alcohol producers were abolished.
Alcohol production industry has annual production volume plans. Increased alcohol excise tax resulted in reduced vodka sales and overstocked warehouses. In order to prevent the industry’s collapse export quotas for alcohol production will be abolished.
In 2013 vodka and other alcoholic beverages production quota was set at 19 630 thousand dl, which is 20.7 liters per 1 person, including infants and the elderly. This is somewhat below the 2012 quota (20 020 thousand dl). In January – April 2013 Belarus produced 4,923 thousand dl of vodka and drinking alcohol, which is 5.5% less than in 2012. The decline in the production was due to the decreased consumption of vodka by population, and some problems with the distribution of alcohol quotas among enterprises.
State-owned alcohol producers are forced to meet the plans. Private producers do not have production plans. Due to increased excise duty on alcohol, retail vodka prices went up by 17.4% compared with early 2013 and consequently, vodka retail sales dropped by 12.7%. Due to unadjusted alcohol production plans, warehouses increased their alcohol stocks up to two months production volume by May 1st, 2013. On January 1st, 2013 stocks accounted for only one-third of the monthly production volume.
In the alcohol industry, state enterprises are virtually paralyzed. Alcohol production, even without consequential sales, requires them to pay the excise duty in the budget. Excise duties on alcohol make a large part in the final product’s price and distilleries are among the largest taxpayers in the country. However sales are falling and sellers delay settlements with alcohol producers. State-owned enterprises borrow at high interest rates to pay taxes. Warehouse stocks require additional funds to pay for storage space, resulting in high expenditures, particularly for Minsk-based businesses. The government is not willing to reduce the excise duties due to their great importance for the budget against the background of deteriorated economic situation. The government figured that the abolition of export production quotas for alcohol producers will help improving the situation since the growth of vodka consumption in the country is not envisaged.
Thus, the government’s desire to increase budget proceeds has resulted in significant problems for state-owned enterprises. Abolition of export quotas is an attempt to address the problem, but it is unlikely to substantially improve the situation in the industry due to the fierce competition in foreign markets.
Over the past year, military-political relations between Minsk and Kyiv have become complicated. Due to their high inertia and peculiarities, this downward trend would be extremely difficult to overcome.
The root cause of the crisis is the absence of a common political agenda in the Belarusian-Ukrainian relations. Minsk is looking for a market for Belarusian exports in Ukraine and offers its services as a negotiation platform for the settlement of the Russo-Ukrainian war, thereby hoping to avoid political issues in the dialogue with Kiev. Meanwhile, Ukraine is hoping for political support from Minsk in the confrontation with Moscow. In addition, Ukraine’s integration with NATO presupposes her common position with the Alliance in relation to Belarus. The NATO leadership regards the Belarusian Armed Forces as an integral part of the Russian military machine in the western strategic front (the Baltic states and Poland). In addition, the ongoing military reform in Ukraine envisages a reduction in the number of generals and the domestic political struggle makes some Ukrainian top military leaders targets in politically motivated attacks.
Hence, the criticism of Belarus coming from Ukrainian military leadership is dictated primarily by internal and external political considerations, as well as by the need to protect the interests of generals, and only then by facts.
For instance, initially, the Ukrainian military leadership made statements about 100,000 Russian servicemen allegedly taking part in the Russo-Belarusian military drill West-2017. Then the exercises were labelled quazi-open and military observers from Ukraine refused to provide their assessment, which caused a negative reaction in Minsk. Further, without citing specific facts, it was stated that Russia was building up its military presence in Belarus.
Apparently, the Belarusian and Ukrainian Defence Ministries have entangled in a confrontational spiral (on the level of rhetoric). Moreover, only a small part of the overly hidden process has been disclosed. That said, third states are very likely to take advantage of the situation (or have already done so). This is not only about Russia.
The Belarusian Defence Ministry officials are restrained in assessing their Ukrainian counterparts. However, such a restraint is not enough. Current military-political relations between Belarus and Ukraine are unlikely to stabilise without the intervention of both presidents.