Belarusian shadow government defined their strategy

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April 22, 2016 18:11

On June 1, the Organising Committee of the National Revival Rada published a memorandum on their goals and aims of their activities. The members of Rada are several former officers of law enforcement agencies.

Comment

The initiative to establish a government in exile acquires more meaning and is becoming more organised. The project is launched under conditions when there is no political support inside and outside Belarus. 

An important achievement in the process of creation of a shadow government was statutory meetings held in April-May 2012. According to  Vladzimir Baradach, approximately thirty people took part in the meetings, mostly they were the Belarusian refugees who used to work in law enforcement agencies.

A next step was to prepare and publish a memorandum. The fact that the memorandum was introduced to general public without gaining support from influential politicians indicates that the initiators of the project set to lower ambitions.

Despite the negotiations with several opposition leaders and movements, none of the politicians has openly agreed to join the initiative. It therefore signals that the project lacks a “face” not only in terms of a recognisable political leader, but also “arms and legs” in terms of even minimal mobility of human resources.

 The memorandum gives traditional evaluation of Belarusian reality: Lukashenko’s regime is illegitimate and needs to be changed; there is a need for economic reforms etc. Also, the authors of the document suggest challenging the legitimacy of the decisions taken by the Belarusian authorities and carry out re-privatization of Belarus’ assets in the interests of the Belarusian people.

The latter objective is quite relevant, especially with regard to an ongoing privatization in Belarus. For example, after Belarus had sold a 50% stake  in Beltransgas to Gasprom in November 2011, it was repeatedly stated in the media that the transaction costs were reduced. It contradicts the rule of law; therefore the transaction can be revised. It is clear that to do so, Lukashenko’s regime should be significantly weaker, which is not yet the case.

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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.