Russian troops’ movement to Belarusian border increases risk of confrontation between Moscow and NATO

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July 25, 2016 22:55

Military build-up in the western regions of Russia is both a consequence and a symptom pointing to the fact that ‘hawks’ have taken over in the Kremlin. This means, the Russian government is preparing for a long-lasting confrontation with the West. Evidently, it is going to complicate the environment for all countries in the region, especially those on the ‘confrontation line’: Ukraine-Belarus-Moldova.

The news about the relocation of the 28th Motorised Brigade of the Russian Ground Forces from Urals to the Bryansk region has raised concerns in Belarus. That said, apparently, the actions of the Russian military leadership are not connected with the Belarusian-Russian relations in any way. Moreover, their connection with the Russian-Ukrainian war is rather indirect.

It should be recalled, that during the reform held by former Defence Minister Anatoly Serdyukov, military units have been drastically reduced and division level units abolished (except for the one in the Far East). Priority districts included South (Caucasus region) and Centre (formerly Soviet Central Asia). The former Russian Defence Ministry leadership regarded Western Military District as the support area. Of the 50 armoured and mechanized infantry battalions of the Russian Ground Forces in 2008 by late 2010, only 22 battalions were scattered from Murmansk in the north to Belgorod the south and from Kaliningrad in the west to Komi in the east.

Russian generals, who negatively perceived NATO’s eastward expansion, have criticised a sharp reduction in the military forces in the west. Military experts pointed to the mismatch between the territory size and its defence capacity. In 2009, Russia planned to place an Airborne Brigade and the Smolensk region. But the plan has never materialised. Appointed in late 2012, Defence Minister Sergei Shoigu started recreating large military formations. For instance, in May 2013, based on Kantemir and Taman Division teams, truncated divisions were recreated, which were later incorporated into the newly formed 1st Tank Army. In November 2014, the Russian Defence Ministry announced its intention to place Motorized Infantry Brigade in Yelnya (Smolensk region), which was stationed there before the Serdyukov’s reform.

In addition, the local administration played an important role in the Ministry’s decision: due to the closure of the military unit, unemployment had increased so as the burden on the local budget to maintain facilities previously used by the military, as well, already drastic socio-economic situation in the region has worsened. In January 2016, the Ministry said it would reinforce the brigade in Yelnia into a division. Overall, in 2016, the Russian military leadership is going form three divisions on the ‘western front’. In addition, several teams will relocate from the Russian hinterland to the western border. One of them has relocated to Klintsy.

Official reason for the relocation was NATO activity. However, the new units have been deployed quite far from the Russian border with the Alliance member-states, which means that Russia had to come to terms with the need to enhance its defence against NATO without Belarus.

Meanwhile, the fact that motorised infantry and armoured divisions are shock-purpose compounds designed for offensive operations raise concerns. The Kremlin has thereby demonstrated its willingness to escalate the confrontation with NATO. The Russian command is unlikely to be serious about invading a NATO country. The fact that new units have been placed near Belarusian and Ukrainian borders points to what regions Russian generals regard as the most likely for ‘harsh’ confrontation with the West. Such an approach is in full compliance with Russia denying the independence of Ukraine and Belarus, particularly noticeable in recent years. Apparently, the Kremlin has adopted a vision of Belarus, Ukraine and Moldova as a theatre for the struggle with the West for geopolitical influence.

Enhanced Russia’s military presence in the west, coupled with Moscow’s belligerent rhetoric has demonstrated that the ‘war party’ has taken over in the Kremlin. Their main ideological attitudes include: uncompromising confrontation with the West and the United States in particular, reducing the threshold for the use of armed force in international relations, denying the independence of the post-Soviet states and the inviolability of their borders. Evidently, there are no grounds to believe that the confrontation should reduce in the near future; the ‘Second Cold War’ has begun in the region. And it is becoming the new ‘normal’ for many years to come.

Image: klintsy.info

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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.

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