New round of confrontation between Moscow and Minsk over air traffic
The Ministry of Transport of Russia, as of April 13, banned the Belarusian airline Belavia from operating in all regions of Russia, except Moscow. Previously Belavia also performed flights to St. Petersburg, Kaliningrad, Sochi, Yekaterinburg, and planned to start flying to Novosibirsk in June.
Therefore the conflict of the past week broke out with renewed vigor. Belarus insisted on parity of traffic en route Minsk - Moscow, performed by the Belarusian and Russian companies and refused to allow the Russian airlines to open the fifth flight (both airlines carry out four daily flights each between Minsk and Moscow). In response the Russian airline decided to interpret the parity broadly and withdrew the Belavia’s authorization to fly to Russian regions (because Russian companies do not operate flights to the Belarusian regions), regardless of the formal grounds for revocation of authorization - gross violations of safety regulations, lack of insurance, etc.
This confrontation is a good illustration of unpreparedness of Belarus for an open competition with Russian companies within the common economic space. Russian companies, being more modern and financially stronger offer better services to passengers. Belarus strongly resists such competition and opening of its market.
Regardless of the outcome of the conflict, it is safe to assume that such conflicts will emerge again and again in various fields. Belarus has benefited from the integration within the CES with lower prices for fuel and energy resources, with this Russia’s understanding of the integration ends. Russia traded off profits in the energy sector and wants to promote its interests in other sectors - banking, insurance, engineering, food processing, etc., but it faces with constant attempts of Belarus to protect and to close its market. With the end of the Putin’s election campaign, Russian “raiding” activities (as they are referred to in Belarus) will intensify, often disregarding the law and previous agreements. Actions of Russian companies will be accompanied by media campaigns. Therefore the Belarusian authorities should prepare for new episodes of TV series in the spirit of “The Godbatka” [«Крестный батька»].
The country's leadership has instructed the local authorities to raise minimum wages at enterprises by the end of 2019 to BYN 1,000, which would lead to an increase in the average wage in the economy as a whole to BYN 1 500. The pace of wage growth in 2017 is insufficient to ensure payroll at BYN 1000 by late 2017 without manipulating statistical indicators. In order to fulfil the president’s order, the government would have to increase budgetary expenditures on wages in healthcare and education, enterprises – to carry out further layoffs and expand the practice of taking loans to pay wages and restrict investment in modernisation of fixed assets. In 2010, the artificial increase in wages led to a threefold devaluation in 2011, an increase in the average salary to BYN 1500 will not match the capabilities of the economy and would lead to yet another devaluation.