Lukashenko recognised Crimea ‘de facto’ part of Russia
By supporting Russia’s annexation of Crimea, Lukashenko attempts to preserve good relations with the Ukrainian authorities and delays recognising the legality of Russian actions and offers himself as a mediator in talks between Russia and Ukraine. Meanwhile, the Belarusian authorities are taking some steps, albeit inconsistent, to consolidate Belarusian society.
On March 23rd, Alexander Lukashenko assured Russia of his support and recognised Crimea ‘de facto’ part of Russia with the reservation that no one asked Belarus to recognise it ‘de jure’ and that the situation would not change regardless of the recognition or non-recognition.
Before March 23rd, the day of local elections, official Minsk limited itself to ambiguous statements regarding the referendum in Crimea, on which Russia based its annexation decision.
When speaking on March 23rd, Lukashenko said he neither approved the Russia’s actions vis-a-vis Crimea, nor endorsed the ‘unconstitutional’ change of power in Ukraine. He laid the blame for the situation on the transitional authorities in Kiev, which ‘were set up’ and gave Russia a reason to ‘chop off’ Crimea. He also accused ‘the West’ of being unable to fulfil its obligations under the Budapest Treaty or its threats to restrain world order violators.
In the given situation, when Crimea is already part of Russia, Ukraine has failed to defend its integrity, and the West has not really ‘punished’ Russia (he pointed out that punishment of Russia was ten times weaker than that of Belarus, as it fears Russia), Lukashenko sees no option but to support Russia. Meanwhile, Lukashenko believes that the accession of Crimea is a very dangerous precedent, which could contribute to the proliferation of nuclear weapons around the world.
Supporting Russia in such a peculiar way, Lukashenko also expressed his views about Russia’s agenda vis-a-vis Ukraine. He said he was against Ukraine as a federation, because it would destabilise Belarus’ neighbour for a long time and would eventually result in its disintegration. Lukashenko said he was for the presidential elections in Ukraine and was ready to cooperate with any Kiev government. Otherwise, Lukashenko supported Russian requirements: Ukraine’s non-aligned status, elections to the Vekhovna Rada in the near future, Ukraine’s membership in the CIS, and the political forces disarmament.
With his speech, Lukashenko laid out the guidelines for Belarusian propaganda, which had been floundering since early March, unable to oppose to aggressive Russian propaganda in Russian and Belarusian media space. Events in Ukraine, their coverage by Russian media, and the influx of Russian commentators in Belarusian media resources have split Belarusian society and radicalised positions of both Lukshenko supporters and opponents.
Nevertheless, the Belarusian leadership is aware of the threats that such dependence in the information space creates. The Belarusian authorities, using state-run media and other channels are trying to balance out public opinion in the country. For example, the state television has started showing films about anti-Russian uprising heroes of 1863-1864.
Official Minsk will delay the official recognition of the Crimea annexation until Russia prompts Belarus to make a clear-cut choice. The Belarusian government will increase efforts to reduce tension and division in Belarusian society in order to minimise the possibility of political destabilisation following the Ukrainian scenario.
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.