Past economic mistakes will be repeated in 2013
A detailed analysis of the approved economic forecast for 2013 allows for conclusions that the authorities have not learned from the Belarusian economy crises experiences in the last 4 years. In the medium term, without substantial external financial support, the existing social and economic model will suffer from a repetition of the past crises.
On September 25th, 2012 the President signed a Decree № 418 “The most important parameters of Belarus’ socio-economic development in 2013”.
Inflated and unrealistic plans and forecasts of socio-economic development in Belarus became the norm. Several parameters envisaged for implementation in 2012 have not been met and will not be met by the end of the year, despite assurances of their fulfillment.
Projected indicators for 2013 are comparable with the pre-devaluation period. Growth in 2013 at 108.5% is an unattainable goal, against 102.5% in 2012. The authorities anticipate achieving the forecast via increased domestic demand. In particular, there is a significant increase in housing construction plans – up to 6.5 million square meters. The population has an active role in financing housing construction. However, the population is not prepared to buy ready-made housing in such quantities, therefore concessional housing construction loans will be issued on emission basis.
Real incomes growth is planned to be achieved due to the rapid growth in labor productivity. However, 2012 data shows that incomes grow faster than labor productivity, and there are no reasons to believe the circumstances will change.
The planned increase in exports of goods and services is only feasible if there is a sharp increase in prices for Belarusian exported goods. And reasons behind such a forecast are unclear. Moreover, Foreign Ministry officials claim that this forecast is underestimated, that there is much greater potential for exports growth rate in value terms.
The outlook for FDI has failed this year in fact it has never been implemented since its introduction. It is only feasible to reach the FDI forecast (USD 4.5 billion) if there is mass privatization of state assets. And the authorities’ reluctance to give away control over state property implies that this task will be failed next year too.
Thus, the outlook for 2013 is a slightly modified economic development plan from the past, which has repeatedly resulted in crises. Some financial support from Russia, i.e. reduced energy prices will keep the Belarusian socio-economic model afloat for a little longer than in previous years. Since no lessons have been learned from the past crises, crisis is likely to repeat, because there is a disparity between plans and the real economic opportunities.
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.