Case of Amriev: Minsk has discredited itself in eyes of international community
The Belarusian authorities are attempting to demonstrate to the Kremlin their reliability as a partner in sensitive issues. Conventionally, the Belarusian authorities prioritise practical solutions to compliance with formalities in emerging matters. However, what seems quite reasonable in Minsk, may negatively affect the country’s reputation in the outer world.
Last week, Belarus extradited Murad Amriev, a Russian citizen and the world champion in the Mixed Martial Arts, to the Russian authorities. Previously, the Belarusian authorities had extradited the driver of a Russian opposition politician Denis Voronenkov, who was recently assassinated in Kyiv, to the Russian secret services. Such extraditions form a common practice in Belarus.
Pragmatism bordering unscrupulousness creates difficulties in positioning Belarus as an independent player. By violating her international obligations and domestic extradition procedures in the interests of the Russian secret services, Belarus has damaged her reputation in the eyes of international community. In addition, the lack of official commentaries about the detention and extradition of Russian citizens could create an impression that the Belarusian authorities have no control over their power bodies. Indirectly, such a behaviour works in favour of conspiracy theories about the Kremlin’s unlimited influence in Belarus, especially amid the Russian authorities’ refusal to extradite Belarusian national Yuri Baranchik, accused of fomenting ethnic hatred for writing for Russian chauvinistic information resources, to Belarus. Such a difference in approaches emphasizes the unequal nature of the Russo-Belarusian relations to the international community.
Minsk will not complicate relations with Moscow over Russian domestic issues, which have no direct effect on Belarus’ interests. Hardly being a rule of law state, Belarus in such situations is guided by practical considerations, rather than legal procedures. This undermines Belarus’ image as a state which complies with its commitments. Yet evet worse, the Belarusian authorities create an impression as being dependent, untrustworthy and capable of placing the wishes of Moscow or even the Russian regional authorities ahead of the domestic legislation.
The rapid increase in wages has led to a decline in the ratio between labour productivity and real wages to one. Previously, the rule was that enterprises, in which the state owned more than 50% of shares in the founding capital, were not allowed increasing salaries if this ratio was equal to or less than one. The authorities are unlikely to be able to meet the wage growth requirement without long-term consequences for the economy. Hence, the government is likely to contain wage growth for the sake of economic growth.
According to Belstat, In January – August 2017, GDP growth was 1.6%. The economic revival has led to an increase in wages. In August, the average monthly wage was BYN 844.4 or USD 435, i.e. grew by 6.6% since early 2017, adjusted for inflation. This has reduced the ratio between labour productivity and real wages from 1.03 in January 2017 to 1 in the first seven months of 2017. This parameter should not be less than 1, otherwise, the economy starts accumulating imbalances.
The need for faster growth in labour productivity over wage growth was stated in Decree No 744 of July 31st, 2014. The decree enabled wages growth at state organizations and organizations with more than 50% of state-owned shares only if the ratio between growth in labour productivity and wages was higher than 1. Taking into account the state's share in the economy, this rule has had impact on most of the country's key enterprises. In 2013 -2014 wages grew rapidly, which resulted in devaluation in 2014-2015.
Faster wage growth as compared with growth in labour productivity carries a number of risks. Enterprises increase cost of wages, which subsequently leads to a decrease in the competitiveness of products on the domestic and foreign markets. In construction, wholesale, retail trade, and some other industries the growth rate of prime cost in 2017 outpaces the dynamics of revenue growth. This is likely to lead to a decrease in profits and a decrease in investments for further development. Amid wage growth, the population is likely to increase import consumption and reduce currency sales, which would reduce the National Bank's ability to repay foreign and domestic liabilities.
The Belarusian government is facing a dilemma – either to comply with the president’s requirement of a BYN 1000 monthly wage, which could lead to new economic imbalances and could further affect the national currency value, or to suspend the wage growth in order to retain the achieved economic results. That said, the first option bears a greater number of negative consequences for the nomenclature.
Overall, the rapid growth in wages no longer corresponds the pace of economic development. The government is likely to retain the economic growth and retrain further growth in wages. Staff reshuffles are unlikely to follow the failure to meet the wage growth requirement.