Belarusian authorities manage to protect their interests vis-à-vis the Kremlin

April 22, 2016 18:14

The Belarusian authorities are successfully practising ‘political judo’ with Russia: they receive the necessary economic benefits and do not make required concessions in return. Minsk’s strategy is to get the most from the Eurasian integration project and to justify the lack of reciprocal concessions by the economic and political risks associated with this same integration.

On July 18, a meeting of the Council of Ministers of the Belarus-Russia Union State took place in Minsk. As a result, an intergovernmental general contract for the construction of a nuclear power plant in Belarus with 2400 megawatts generating capacity has been signed in Minsk.

This project, worth about USD 10 billion is critically important for the image of Belarus. Long-term energy generating facilities construction is not only a symbolic investment into the future Belarusian energy independence, but also a significant enhancement of the President Lukashenko’s political legitimacy for at least the next 5 years (launching of the first energy unit is scheduled for 2017).

In turn, Belarusian authorities have once again managed to postpone reciprocal measures concerning assets privatization. On the eve of Prime Minister Dmitry Medvedev’s visit to Minsk, President Lukashenko visited Belaruskali headquarters and said that the controlling stake in this company will not be sold. The President did not rule out sales of individual shares, given the overall enterprise’s costs assessment at USD 30-32 billion. De facto, such high assessment effectively means the refusal to sell Belaruskali shares.

Moreover, Belarus postponed the privatization of MAZ until the beginning of the autumn and got away with solving another controversial issue – the probable oil exports from Belarus under cover of solvents and lubricants in order to avoid duties’ payment to the Russian budget.

Concerning the latter, a mild request of Prime Minister Medvedev “to find out and punish those responsible” is most likely to be ignored by Belarus, while the very profitable scheme of evasion of export duties will be upgraded (for example, solvents exports will be replaced with another product with similar production technology). Experts assess that Belarus makes from USD 700 million to USD 1 billion per year from this scheme, while Russian budget fails to receive relevant amounts from duty payments.

Therefore Belarus’ negotiating strategy remains unchanged and so far successful: to get the maximum possible benefits from the economic cooperation with Russia and to postpone the fulfillment of counter measures as far as possible. Belarus did the same after the visit of the Russian President Vladimir Putin to Minsk on May 31st, when privatization of MAZ was discussed. Repeated reference to this issue by Prime Minister Medvedev during the Summit on July 18th, implies this issue has not been resolved.

Therefore, one should anticipate that the same rules will apply to the future visit of the new Russian government delegation to discuss privatization issues. For instance, Belarus will point out to the risks associated with Russia’s WTO accession and will try to add additional compensational conditions to the already reached agreements, which, de facto, will once again postpone their implementation.

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Amid budgetary cuts on social protection, the Belarusian public sector is experiencing a management crisis and a balance shift in the state resource redistribution system. The authorities are forced to revise their most unpopular decisions during the implementation due to the pressure from affected social groups. The state is unlikely to oppose to some civil society and opposition organisations in strengthening their role in society in order to retain touch with the population and to be able to respond to the most harsh criticism of state initiatives.

The Architecture and Construction Ministry has acknowledged that the decree No 585 on assistance to large and young families in building and buying housing was prematurely rescinded.

The authorities are often forced to revise their decisions on curtailing social assistance to different social groups during their implementation, without preliminary impact assessment and feedback from the population, so as they lead to the growth in social tension. Due to the centralised decision making, languishing state resources and the lack of public debate as a balancing instrument in issues related to social protection, the state administration is losing control of the population.

Perhaps, the compensatory mechanisms of the state apparatus lack the time to adjust to dwindling state resources for supporting the existing social model, even in a reduced form. The authorities have completely or partially paralysed operations of independent public institutions and representative bodies, through which they could monitor public moods and receive feedback from the population, such as local councils, the parliament, political parties and NGOs. Last year, under the pressure of the authorities, the last independent institute for measuring public sentiment, IISEPS, suspended operations.

President Lukashenka’s self-removal from the decision-making on current socio-economic issues, also could have affected the state apparatus’ operations. The president has always been very sensitive about adopting unpopular decisions which could lower his popular support, hence demanded a careful preliminary assessment of such decisions. However, recently, especially after the introduction of the tax on social dependants, the president has mainly focused on the foreign policy agenda.

Hence, a lacuna has formed in the state decision-making after the president reduced participation in the current socio-economic policy formation, which leads to an increase in manifestations of dysfunction in the public administration.