Belarus will not change economic policies
The IMF mission has continued its work in Minsk. The Belarusian authorities do not hide their reckoning on the new loan. However, the IMF has not demonstrated much excitement about the Government and the National Bank’s Joint Action Plan for structural reform and improving economy’s competitiveness.
The Action Plan for structural reform was designed for external creditors, but its implementation depends entirely on the political will of the Belarusian leader. Belarus talks about a gradual transition to a market economy in order to improve its image among investors and creditors. However, de facto, Belarus carries on with its current economic policies, as President Lukashenko will not allow economic reforms ahead of the 2015 presidential campaign.
The Belarusian authorities are aware of the problems in the economy and understand the need to remedy the economic situation. While talking about the Government and the National Bank’s joint Action Plan, Finance Minister Maxim Ermolovich said, that “the Plan had to be developed due to the economic imbalance, rapidly increasing since early 2013”.
The Belarusian authorities seek to solve the economic problems by attracting new loans, without introducing significant changes in the economic policy. The scale of economic transitions (to meet the IMF requirements) will depend on the outcomes of negotiations about oil and other subsidies between Belarus and her Eastern neighbour.
Belarus regards Russian subsidies as the main source of financing. Unlike the IMF, Russia sets much less stringent requirements for structural economic reforms. In Belarus, economic policy depends on the election cycle (next peak in 2015). Therefore, Lukashenko is unlikely to agree on any reforms ahead of the elections and government and National Bank officials are well aware of this.
Belarus wants to demonstrate economic policy progress to the IMF and to receive a positive feedback, which would improve Belarus’ image in the eyes of foreign investors. For instance, Economy Minister Snopkov said, that “I do not want money from them [the IMF], I need a positive feedback, because positive assessment by the IMF is a positive sign for investors”.
In 2015, President Lukashenko will be the least willing to reform the economy. However, Belarus’ actions will largely depend on the outcome of negotiations with Russia about economic subsidies to Belarus. The Belarusian authorities would rather ‘cut down’ social benefits for population, than make fundamental changes to the economy ahead of the elections.
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.