Kremlin is ready to provide limited support for Belarusian econom
The Kremlin offered support for the Belarusian economy by enabling Belarusian enterprises to participate in the Russian import substitution programme. The Belarusian authorities count on financial assistance from Russia to stitch-up economic imbalances if negotiations with international creditors, such as the IMF lead to no avail. Meanwhile, amid growing crisis in the Belarusian economy, the Belarusian authorities want to ensure socio-political stability in the country.
Last week, Presidents Lukashenko and Putin held a bilateral meeting and discussed prospects of Russo-Belarusian cooperation. The meeting took place right before the Supreme Council of the Union State, which focused mainly on mutual trade barriers and ways to remove them.
Belarus’ Prime Minister Kobyakov and Russian PM Medvedev signed an intergovernmental plan to improve conditions for trade and economic cooperation. According to the plan, in the following six months, favourable conditions for mutual trade should be restored. In addition, Minsk and Moscow signed a number of intergovernmental agreements on migration and social issues.
At the opening session of the Supreme State Council, President Lukashenko spoke in favour of greater powers and functions of the EAEC. Most likely, his statement has meant to set a good background for talks with Putin. In particular, after the bilateral talks, President Putin said that Belarus and Russia intended to create a common visa space. However, official Minsk is unlikely to grant additional powers to supranational bodies. The Belarusian Foreign Ministry’s Press Secretary Mironchik later underscored, that single visa space was “not a matter of one day or even one year”, that it required “involvement and participation of our common foreign partners”.
There were no official reports about Russia and Belarus reaching a loan agreement. Russian Finance Minister Siluanov confirmed that the parties did not consider "the issue of a loan for Minsk”. In addition, the EurAsEC Anti-Crisis Fund deterred the consideration of the remaining tranche for Belarus until May. In June 2011, the EurAsEC ACF decided to allocate a USD 3 billion loan for Belarus, however the last trance of that loan had not yet been transferred due to the fact that the Belarusian authorities had not complied with 10 of 14 loan requirements.
Meanwhile, Minsk is counting on positive response from the IMF regarding the Government’s package of measures to stabilise economy, which the authorities are trying to present as structural economic reforms. The annual regular IMF mission will work in Belarus until March 16th.
Since the authorities do not have sufficient funds to buy the loyalty of the population with wage growth, they strengthen their power policy. Upon his return from Moscow, President Lukashenko met with senior staff of the Interior Ministry, MIA Troops and students from the Internal Troops Faculty of the Military Academy. In recent years, the president has been meeting the stat security forces regularly, including his recent visit to the Defence Ministry.
During the meeting, President Lukashenko warned against possible destabilisation in socio-political environment, “I have reiterated this many times, but I find it necessary to emphasise once again that ‘maidan’ will not happen in Belarus. We have to fully preserve the rule of law and our own country”. In addition, amid Russian invasion of Ukraine, there are fewer supporters in the Belarusian opposition of the revolutionary scenario, which could lead to the change of power through mass protests on election day.
President Lukashenko underscored that provocations could take place during the Victory Day celebrations (May 9th). In the face of rising tension in the region, the Belarusian authorities seem to fear attempts to destabilise the situation in Belarus, demonstrating therefore their readiness to cope with such threats.
Official Minsk continues to regard the Kremlin as the main creditor in the event of a crisis in the Belarusian economy. Simultaneously, the authorities believe they should demonstrate their willingness to control the socio-political environment in the country independently.
According to Belstat, in August 7,600 people were dismissed, including 4,800 civil servants. Dismissals of civil servants were due to the optimisation in the public administration by up to 30%. Some civil servants would retain their job however would lose the status of a civil servant. Vacancies on the labour market are likely to reduce in number, thanks to the optimisation, the state administration would increase wages for public servants. The payroll fund for retained employees is likely to increase and some former state employees are likely to get jobs in affiliated organizations. The optimisation of the state apparatus should complete by January 1st, 2018, and some former civil servants are likely to join the ranks of the unemployed.