Alexander Lukashenko leaves the most interesting companies to non-transparent privatization

April 22, 2016 18:01

Lukashenko banned preferential sale of shares of 54 state-owned enterprises (for employees). Lack of minority shareholders increases the value of the privatized enterprises and also increases the control of Lukashenko over the deals. At the same time, it deprives Belarusians of participation in privatization, as well as destroying the stock market.

Alexander Lukashenko signed a decree that banned preferential sale of shares of 54 state-owned enterprises (for employees). The list includes such companies as the Belarusian Steel Works (BMZ), SvetlogorskProduction Association "Khimvolokno",

Baranovichi cotton production association, Krichevcementnoshifer, the Belarusian Cement Plant, Rechitsa metizny plant, Beltsvetmet, Minskvtormet with subsidiary unitary enterprises, Minsk Automatic Lines Plant named after P. M.Masherov, and SKB Camerton.

All more or less attractive enterprises were joint-stock companies with 100% of state-owned stock in 2011. The formal pretext - the shares of such enterprises would be sold to strategic investors, as well as to create large corporate structures. Thus, the Belarusian citizens were consistently and cynically denied the right to participate in the privatization of national assets both by a removal of the most attractive enterprises of voucher privatization (and its subsequent withdrawal), and deprivation of share repurchase of even the employees of the corresponding enterprises.

Absence of minority shareholders increases the value of the privatized enterprises, and increases the control of Lukashenko for possible transactions (as even the enterprises’ management will not have shares).

All this creates a great opportunity for shadow income in the case of non-transparent transactions (and all attractive companies in Belarus have been privatized during the backroom negotiations to date) and formalized by Presidential decrees.

Thus, there are new transactions with attractive assets in 2012 (both within the EurAsEC obligations on the loan, and also because of banal lack of currency in payment of debts), but their formal and informal terms will be determined solely by Lukashenko.

In addition, the concentration of shares in the hands of the state or a strategic investor negates the possibility to create a stock market.

A total of 38 companies’ state holdings of shares have been sold at auctions and tenders for more than 232.5 billion rubles ($ 28 million) and $ 2.5 billion in 2011.

 

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The Belarusian authorities are attempting to strengthen some elements of the ‘Soviet’ education to ensure the ideological loyalty of new generations to the state. Most likely, one of the major tasks of the educational reform is to prevent growing discontent with the existing education system among the population. The educational reform aims to strengthen centralisation and adjust the system to the needs of the public sector.

In Belarus, the Ministry of Labour and Social Protection and the Ministry of Economy would determine the university enrolment figures.

The Belarusian authorities do not seem to have a long-term vision of the educational reform. The education system changes depending on who leads the Education Ministry and has access to President Lukashenka. For instance, former head of pro-government communist party and Education Minister Igor Karpenko reintroduced some "Soviet" elements to the school and strengthened ideological components along with the de-politicisation of the curricula. Current generation of students and youth have not spoken against the authorities, unlike previous generations raised during the Gorbachev thaw and socio-political transformations of the 1990s.

In addition, the Belarusian authorities are attempting to adopt measures aiming to prevent discontent among the population with the Belarusian education system. The authorities are mobilizing those nostalgic for the USSR and propose to return to 5-marks grading system, school uniforms and reduced curriculum. The Belarusian leadership also aims to blur the growing social stratification in society and to relax social tension due to the growing income gap between the richest and poorest.

Should the authorities adopt plans to reduce university enrolment, they would re-certify universities in order to close some of them and would reduce competition from private educational institutions. The Belarusian leadership is attempting to adjust the education system to the needs of the real economy, to reduce pressure on the labour market and to cut government spending on higher education for specialists low in demand by replacing them with graduates of secondary vocational schools requiring less time to train.