Lukashenka in full control of power agencies in Belarus

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March 20, 2017 10:02
Фото: TUT.BY

The national security leadership in Belarus has no political personality and no aspirations to gain one. The Belarusian security forces have no corporate solidarity what so ever. However, there is a noticeable interdepartmental competition for Lukashenka’s attention, which manifests in the desire to fulfil his orders as promptly as possible and identify shortcomings in activity of other law enforcement agencies.

The harsh clampdown by the Belarusian law enforcement on the most recent protests has promoted talks about Lukashenka partially losing control over the security forces. Some analysts believe that the national security leaders have deliberately distorted information for the president in order to disrupt the Belarusian-European dialogue and prompt a political crisis to meet their own or Russia’s interests.

Since coming to power, Lukashenka has applied significant efforts to destroy alternative or potential centres of power within the state apparatus. In order to preclude a threat to his sole rule, he is constantly ensuring that the national security leaders remain loyal. For instance, he has fragmented the law enforcement and created two special services empowered, inter alia, to exercise control over the state administration. In addition, ensuring the internal security in the state is an often-duplicated function.

Currently, there are 16 government agencies in Belarus fully or partially involved in ensuring national security, law and order. By posting senior and middle security officers to unfamiliar regions, the president complicates the formation of influence groups at the regional and national levels.

The rivalry between the law enforcement agencies for Lukashenka’s attention (i.e. budgetary funding and personal career prospects for officers) is manifested, inter alia, through revealing the shortcomings in the activity of other security agencies. That said, the cases when security agencies were providing false information to the president were always associated with concealing own failures and never with political goals.

There is no question of manipulations or a conspiracy against the Belarusian president: there are neither conditions for it, nor officials, who would be ready to assume such a responsibility. Lukashenka has access to quality information about the state of affairs in Belarus. Lukashenka’s decisions are likely to base on his own opinion about a particular issue (except, perhaps, some foreign policy decisions). Power officials in Belarus tend to avoid political issues and choose to implement the president’s orders as is.

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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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