Minsk was unable to prove its independence in security matters

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September 10, 2017 23:48

Over the past three years, Minsk has been using regional security issues to gain a foothold as an independent actor beyond Russia’s control. This was facilitated by demonstrations of a special, different from Moscow, position. However, the Belarusian authorities have failed in achieving the desired effect, and the Kremlin has effectively used the insufficient information support for Belarus' foreign policy.

Minsk hoped that its openness and transparency during the preparations and the conduct of the West-2017 joint Russo-Belarusian strategic military drill could take it out of the Moscow’s shadow and prompt the West to recognise Belarus as an independent actor in the regional security policy, rather than an appendage to the Russian military machine. Belarus has embarked on an unprecedented openness in defence matters. For instance, the General Staff of the Belarusian army has held briefings during the OSCE Security Forum and in Minsk. In addition, circa 250 journalists have been accredited to cover the exercise.

Unexpectedly, despite the confrontation with the West, Russia has provided more extensive information about the joint exercise ‘West-2017’. For instance, Russia’s briefing for NATO was concise, informative and was positively received by the Alliance. The Russian Defence Ministry’s briefing on August 29th, 2017 was more detailed than the briefing of the Chief of the General Staff of the Belarusian army, held on the same day. Russia is maintaining high level contacts with NATO to inform about the forthcoming Belarusian-Russian exercise.

The West has noted greater transparency of Russia as compared with Belarus in terms of providing information about the West-2017 military drill. Hence, Russia has demonstrated the leadership in the Russo-Belarusian tandem. Nevertheless, not all concerns related to the West-2017 military exercise have been removed. For instance, issues related to combat training of the Russian army, which would be held in parallel with the West-2017 make an additional matter of concern beyond Belarus’ sphere of influence.

Yet another attack (carefully planned) on Minsk’s reputation was the abduction of Ukrainian citizen Pavel Grib from Belarus by the Russian special services. The lack of a coherent response to the case from the Belarusian authorities is regarded as a sign of Belarus’ strong dependence, bordering subject nation, on Russia in security matters.

The Belarusian authorities have failed in providing information and diplomatic support for their foreign security policy. In the near future Belarus is likely to focus on improving the state of affairs in this matter. However, she requires to implement new approaches in public relations, which could only be used effectively by new staff.

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Growth in real wages may disrupt macroeconomic balance in Belarus
October 02, 2017 12:12
Фото: Дмитрий Брушко, TUT.BY

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.