Privatization via auctions

Category status:
April 22, 2016 17:59

The government stakes on the sale of assets at auctions: in December 51% of the shares of a mobile phone operator MTS will be auctioned. However, such privatization model will not secure significant foreign currency influx to Belarus.

On 6 September the State Property Committee of Belarus held auctions and sold shares of 3 of 20 enterprises put for sale. In particular, 100% of shares in the OJSC "Proton-M" (Zhitkovichi) have been sold. The new owner of the company became the “Gruzavtomarket” Ltd, which was the only bidder and agreed to pay the initial price plus 5%, accounting for nearly Br 1,314 million. Also, 99.3% of the shares of the JSC "Polymer" (Luninets region, VillageSinkevich) have been sold for Br2, 037 billion to a joint Belarusian-Lithuanian company “Torimeks”. The latter was the only bidder too, as well as the sale conditions: the initial price plus 5%. On similar terms, the initial price plus 5% have been sold 13.4% of the shares of the JSC “Zhitkovichles” for Br 556.1 million to the JSC “Univestsistem”.

On 1st December 2011 an auction to sell the state-owned shares (51%) of the largest Belarusian-Russian mobile operator “Mobile Telesystems” (MTS-Belarus) will take place. The co-founder, Russian JSC “Mobile Telesystems” has previously expressed interest in the controlling stake of MTS-Belarus however parties failed to reach an agreement. The initial price of 51% of the shares of MTS Belarus is USD 1 billion.

Comment

Belarus is trying to sell its assets at auctions hoping to get the maximum price and to avoid accusations of the lack of transparency and backroom agreements. However the main issue is that potential investors have little interest in the majority of auctioned enterprises. Moreover, the initial price is often inflated. With regard to the sale of 51% of shares of MTS at an auction, the announced starting price is exactly as indicated by Lukashenko. Russian co-owner refused to pay the price and it is unlikely anyone else would. Belarusian privatization model will not be able to secure significant foreign currency influx to Belarus. It should either start a genuine large-scale privatization (threatening with decline in output, unemployment, etc.), or continue a policy ofad hoc sales of strategic assets at a reduced (compared with the announced) price.

 

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Belarusian and Ukrainian Defence Ministries entangle in confrontation spiral
October 02, 2017 11:57
Фото: RFRM

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.