Deputy Minister of Internal Affairs arrested on corruption charges
The ongoing in 2011 law enforcement agencies reform significantly weakens the role of the Ministry of Interior vis-?-vis the Investigative Committee. The arrest of Mr. Poluden downgrades the status the Interior Ministry and puts the new staff of the Investigative Committee through loyalty to President Lukashenko tests.
On 12 December media reported about the arrest of Deputy Minister of Interior of Belarus Mr. Poluden. On 16 December he was charged with abuse of power and official authority under Part 3 of Article 424 of the Criminal Code, which carries a sentence up to 10 years of imprisonment with confiscation of property.
There are two main interpretations of the arrest of Mr. Poluden: 1) the eldest son of President Lukashenko Victor tries to subdue the Interior Ministry and 2) the arrest of the Deputy Interior Minister is a continuation of the departmental war between the KGB and the MIA. Both interpretations do not take into account a fundamentally new situation in the security agencies of Belarus as of 2012 and are short on supporting evidence (both interpretations were disseminated via website BelarusPartisan.org, which quoted anonymous sources in the law enforcement bodies).
It is very likely that conspiracy has nothing to do with it and there are purely political reasons behind it. The country’s leadership needs to redistribute powers among the law enforcement bodies in favour of the Investigative Committee. In 2012 this new body will take over the investigation, which will make the Interior Ministry significantly weaker (the KGB will still be in charge of investigation of causes related to national security).
The authorities decided to consolidate the new “degraded” status of the MIA by arresting a high-ranking corrupt official of the Ministry. The charges of abuse of power seem quite plausible. According to unofficial reports, Mr. Poluden has not passed a bribe test, organized for him.
The arrest of Mr. Poluden also meant to come out as a warning. All Interior Ministry employees, who may have complained about the weakening role of the authority of the Ministry, received an unambiguous message. The main recipient of the message was clearly a Minister of Interior Kuleshov, who was at the hospital during the arrest and refused to comment on the situation.
Apart from improving its positions among the law enforcement agencies, the investigation of corruption cases against top-ranking MIA officials will be a kind of initiation for the new staff of the Investigative Committee, which is based primarily on the personnel of the General Prosecutor’s Office and the Interior Ministry. Finally, it is likely that ex-colleagues of Mr. Poluden in the Ministry of Internal Affairs will be investigating his case, which is also meant to test their loyalty to the main supervisor of the Investigative Committee, President Lukashenko.
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.