Belarusian government forces large business to support socio-economic model

April 17, 2017 12:24

The state has resumed the quest for additional budgetary resources and stepped up the pressure on large business. Amid high affiliation of the Belarusian business with security forces, businessmen wanting close contacts with the authorities are the most vulnerable. In order to support the existing socio-economic model amid languishing state resources, the authorities are likely to increase the costs for large businesses.

Co-owner of the Fenox Global Group Holding Vitaly Arbuzov has come into view of Belarusian law enforcement on tax evasion suspicions.

Amid lingering recession and languishing budgetary resources, the Belarusian leadership is scaling up practices of milking large private business. The authorities have resumed redistributing proceeds of large businesses engaged in public procurement in favour of the state. The most recent high-profile case concerned criminal allegations against businessman Yury Chizh, who was close to the president. He was released from the KGB jail after paying a damage compensation to the state (the amount was not disclosed). In early 2017, among other managers at state enterprises, the authorities arrested successful businessman Knyrovich, who was known for his publicity, liberal rhetoric and criticism of the government's economic policies.

The state has stepped up the pressure on large business and launched criminal persecution in order to prompt business to donate funds to the budget and to chasten business representatives. According to media reports, Arbuzov was under close surveillance of law enforcers since last year and avoided coming to Belarus, which could imply that he disagreed with the state claims against him.

Apparently, the authorities are attempting to take away part of proceeds from large businessmen, who could transfer their assets abroad. In 2011, Arbuzov registered Fenox Venture Capital company in the Silicon Valley and was engaged in venture capital investments. Analysts note that large business in Belarus is closely affiliated with security forces; however, such ties may weaken if entrepreneurs shift their activity abroad. That said, the Belarusian leadership is attempting to ease tension among entrepreneurs by declaring an intention to relax business environment in Belarus.

Overall, the Belarusian leadership is likely to continue to persecute some large businessmen in order to milk some funds for the state budget.

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Yet Minsk has not decided on the "patriots' case" and is attempting to break new grounds in relations with the West. Meanwhile, Brussels is ready to lower cooperation levels with the Belarusian authorities in anticipation of new political prisoners to appear after the trial against former White Legion activists, irrelevant of the charges, either preparation for riots, or creation of illegal armed groups, or any other. Minsk is unlikely to cross the red line in bilateral relations with the West and new political prisoners are unlikely to appear in Belarus.

The harsh clampdown on protests and arrests this spring in Belarus are unlikely to lead to new moves by the European Union, however, the EU would closely monitor ‘some investigations’, including the ‘patriot’s case’ aka the ‘White Legion’ case.

According to human rights defenders, 17 people remain in custody, of which 16 are former members of the White Legion and one supporter of Statkevich-led the Belarusian National Committee, Sergei Kuntsevich. The law enforcement has been releasing former activists of the White Legion and members of the Patriot Club, most likely in order to mitigate criticism from Western capitals. Amid Minsk Dialogue expert conference with the participation of Belarusian and EU officials, the authorities released from custody head of the Bobruisk "Patriot" Club Nikolai Mikhalkov. In addition, the Belarusian leadership expects to ease some tension by demonstrating greater openness to a dialogue with civil society on human rights issues. For instance, for the first time the Belarusian authorities and human rights defenders held consultations on Belarus’ fifth periodic report to the UN Human Rights Committee.

The Belarusian leadership has attempted to mitigate the West’s attitude towards the criminal prosecution against former activists of the "White Legion" by adding charges of creating an ‘illegal armed formation’ to ‘preparing for mass riots’ charges.

Apparently, Minsk also gains from speculations about possible disagreements among the executives - supporters of stronger ties with Russia, and "pro-Western" reformists lead by Foreign Minister Makei. That said, the Presidential Administration and President Lukashenka have full control over the foreign policy agenda and the law enforcement.

Overall, Minsk is determined to develop relations with Western capitals. The Belarusian authorities are likely to take controversial actions, i.e. to demonstrate the desire for liberalization in some areas and occasionally tighten repressions against the opponents, however without creating new political prisoners.