Bialiatski case "sentenced" multilateral foreign policy of Belarus

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April 22, 2016 17:48

Belarus freezes its Western foreign policy direction. At the same time, the harsh verdict to Bialiatski implies an acute shortage of political strategies at the Presidential Administration.

On 24 November Vice President of International Federation of Human Rights and the Head of non-registered in Belarus Human Rights Center “Viasna” [Spring] A. Bialiatski was sentenced over large-scale tax evasion to 4.5 years of imprisonment in a medium security institution with confiscation of property.

The sentence to Human Rights Defender Bialiatski proves the authorities’ intention to resume a large-scale campaign aimed to clean up the alternative political and social organizations, which started after the presidential elections of December 19, 2010 in Belarus. The acute phase of the financial crisis in Belarus between March and October 2011 was the main argument infavour of the political liberalization and cooperation with foreign financial institutions (with the IMF in particular). Financial assistance from these institutions was preconditioned by the release of all political prisoners, including Bialiatski.

Regardless of a number of signals President Lukashenko sent last summer and in early autumn to the EU and the USA about his willingness to fulfill their political demands, he nevertheless decided to choose the opposite direction. The choice of the President was made for the favorable conditions of economic cooperation with Russia within the framework of the Common Economic Space and the future Eurasian Economic Union, also for the sale of shares of Beltransgaz for USD2.5 billion, as well as for a substantial gas price discount. All these decisions have been made either before or immediately after the human rights defender was sentenced (on 18 and 25 November respectively).

Regardless of a number of signals President Lukashenko sent last summer and in early autumn to the EU and the USA about his willingness to fulfill their political demands, he nevertheless decided to choose the opposite direction. 

The aforementioned agreements provide Belarus with the opportunity to postpone the solution of its most pressing economic challenges. Bialiatski’s sentence also implies that the resumption of a political dialogue between Belarus and the West has been postponed indefinitely. We predict that as a consequence, rehabilitation and release of other political prisoners will be delayed too.

A particular emphasis should be added to the fact that this sentence was not a forced decision – it was an exclusive initiative of the authorities. Minsk brought Kremlin a symbolic “sacrifice” in the form of a sentence to Bialiatski, however it became a burden for Russia, while Minsk gained no benefits. During 2011 the Kremlin has repeatedly declared at the highest level that Belarus must respect international standards in human rights and democracy.

Therefore, the sentence pronounced for Bialiatski implies there is an acute shortage of strategic policy planning in the President Lukashenko’s surrounding and that his office is incapable of a multilateral foreign policy. No one benefits from the appearance of another political prisoner, neither Minsk, nor Moscow; moreover, it results in even greater dependence of the domestic and foreign policy of Belarus on the decisions made in the Kremlin.

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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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