Lukashenko proposes Vatican to mediate Belarus-EU dialogue
On April 9, President Lukashenko met with Extraordinary and Plenipotentiary Ambassador of the Order of Malta, Paul Friedrich von Furherrom and on April 10 he met with the Apostolic Nuncio in the Republic of Belarus Claudio Gugerotti. During both meetings, the President noted that the Holy See could play a mediator role in the relations between Belarus and the Western European countries.
Lukashenko’s attempt to engage the Vatican in the negotiation process between Minsk and Brussels, first of all, implies the unwillingness of the Belarusian regime to fulfill the EU preconditions for normalization of relations. Therefore, the authorities propose to shift the Belarus-EU interstate dialogue to a new, inter-church level.
Secondly, Lukashenko made an allusion to a possible visit of the Pope to Belarus, which gives away a messianic desire of the Belarusian authorities to play a key role in the Eastern European region. If true, for instance, Belarus will be able to organize a historic meeting of representatives of the Catholic and the Orthodox churches in the country.
President Lukashenko has more than once talked about his desire to carry out such a civilizing mission and, apparently, did not part with this idea.
However, due to the low level of trust in the relations between the Belarusian government and the Catholic Church, as well as between the leadership of the neighboring countries, Russia and Poland in particular, this scenario is hardly probable. Therefore, the proposal made to the Holy See to mediate the Minsk-Brussels relations primarily demonstrates acute policy deficiency in the Presidential Administration.
Lukashenko’s milieu considers the Catholic Church as an alibi, which Minsk needs in the given circumstances to manipulate the political demands of the EU. In the best case scenario, the process of restoring the trust between the Vatican and Moscow will be mediated by Belarus. Such disproportionate geopolitical ambitions are rather common for Lukashenko’s policy, but in this particular case, they imply that in the confrontation with the West, the resources of Belarus are almost exhausted.
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.