Belarusian government forces large business to support socio-economic model
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.
Last week, Belarusian Foreign Minister Makei participated in the foreign ministers’ meeting of the Eastern Partnership and Visegrad Group initiative hosted by Warsaw. The Belarusian FM emphasized Belarus' interest in cooperation in the transport sector, which could be due to Belarus’ desire to export electricity surplus after Belarus finished construction of the nuclear power plant in Ostrovets. Minsk expressed concerns about Warsaw’s stance on the Belarusian NPP, as it refused to buy electricity from Belarus and supported Vilnius’ protest on this issue. Following accusations by the Belarusian leadership and the state media against western states, including Poland, of training "nationalist militants", Minsk did not agree on the visit of the European Parliament deputies from Lithuania and Germany to Belarus and to the NPP construction site near Ostrovets in particular. In addition, the Belarusian authorities have stepped up efforts to enforce education in Russian in Polish-language schools in Grodno and Vaukavysk. Should a rift in Belarusian-Polish relations persist, the Belarusian authorities are likely to step up the pressure on the Polish-speaking minority in Belarus.