Belarus - EU – Russia trichotomy
The results of the presidential elections in Russia ruled out the small chance the authorities were reckoning on to get Russia involved into the conflict between Belarus and the EU. Not without the pain, the transfer of power took place in Russia and the central government has the legitimacy to adhere to a relatively moderate political policy. Accordingly, the value of Belarus in Russia’s foreign and security policy remains relatively low.
Statement by the Heads of Governments of Belarus, Kazakhstan and Russia is quite formal, and does not envisage any retaliatory actions on part of Russia and Kazakhstan if the calls for a good will do not have any effect. It is worth to mention that this statement, similar to the joint statement of Lukashenko and Medvedev, focuses exclusively on the threat of economic sanctions, without mentioning the visa issues. Regardless of any declarations, Russia will not get involved in the conflict between Belarus and the EU.
In the meanwhile, the costs of Russian business in Belarus due to the increased threat of economic sanctions against a number of Belarusian enterprises are not necessarily greater than the likely benefits, at least in the short term. Sanctions will trigger a large scale shift of the Belarusian business to Russian jurisdiction. The infrastructure for such transition has been prepared during the currency crisis in the summer of 2011 and the Belarusian authorities had to apply considerable efforts to return foreign currency revenues to Belarus. At the same time, reputational risks increased, as well as problems with settlements with Russian partners of Belarusian business.
All in all, if Russia is not interested in the introduction of European sanctions against Belarus, it has enough leverage on Lukashenko to resolve the conflict. The fact that Russia refrained from action in the Belarusian-European conflict implies that the ratio between costs and gains in a given situation, depending on further development has not yet been assessed unambiguously.
In turn, Belarusian authorities base their policy on “mobilization”, maintaining the status quo in the country. The lack of financial resources, limited ability to buy the loyalty of the ruling class, loss of instruments to protect the interests of the Belarusian population and private business – all that is pushing Minsk towards the escalation of the conflict and increases the tension inside the country. Reserved attitude towards Lukashenko, along with declared by a number of European analysts readiness of Belarus to “return” to the “zone of responsibility” of Russia may induce the ruling group to reconnect with “European lobby”.
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.