Military cooperation with Russia as guarantee of Kremlin’s support for Lukashenko in 2015 presidential election
On September 20th – 26th, a joint Russo-Belarusian strategic military exercise ‘West – 2013’ will be held.
Russo-Belarusian military cooperation aims to achieve primarily domestic political objectives set by Russian and Belarusian leaders. Despite the number of joint Russo-Belarusian military projects which have been announced, the countries lack resources to support them in full. For Lukashenko, the expansion of Belarusian-Russian military cooperation is a guarantee of the Kremlin’s support during the 2015 presidential election.
National defence is not the ultimate priority for Belarus, since Lukashenko sees no real threat from NATO countries. Russia also does not believe that the West poses a serious military threat. Russia is increasingly concerned about its Eastern and Southern borders.
Since 1995, Belarus has been consistently expanding its cooperation with NATO in the framework of the ‘Partnership for Peace’ Programme. As a result, in April 2013 Belarus announced its readiness to send its peace-keeping company to participate in the programme.
The ongoing joint Russo-Belarusian military exercises ‘West – 2013’ are much smaller than exercises held in Eastern and Central Russian military districts. In the ‘West – 2013’ exercise, 12,900 soldiers and 350 armored vehicles will take part. Recent exercises in two Russian military districts involved about 160,000 soldiers, 1,000 tanks and armored vehicles, 130 long-range aircrafts, military transport, fighters, bombers and the Army Air Corps, as well about 70 Russian Navy ships.
Domestic political interests of elites in both states are the driving force behind the military exercise. Alexander Lukashenko allows Russian military presence in Belarus in exchange for Russia’s political and economic support. Back in 1996, Belarus and Russia adopted a package of documents, according to which Russia was provided military facilities for rent in Vileika and Gantsevichi, and, if necessary, access to Belarusian military infrastructure. In return, Russia supported Alexander Lukashenko during the 1996 political crisis, and subsequently provided free access for Belarusian goods on the Russian market. Even when Russo-Belarusian relations deteriorate, the Belarusian president avoids raising the issue of Russian military presence. During the recent ‘potash conflict’, Lukashenko remained Russia’s loyal military ally and on August 29th appointed Dvigalev as Unified Air Defence Commander.
Establishing an airbase in Lida, Western Belarus, is a necessary move to ensure domestic political effect in Russia, where Vladimir Putin’s position in recent years has significantly weakened. Integration projects and military cooperation in the post-Soviet space are old methods the Kremlin uses to play on the Russian population’s post-imperial sentiments.
Simultaneously, Russia lacks the resources to maintain its military presence in Belarus, or provide assistance for Belarusian Army in its efforts to modernize. Plans to build an air base in Belarus or upgrade the aircraft fleet have been discussed for a decade. Aircrafts in service in Belarus date back to 1970-1980s and are unable to provide full protection. The ‘Teddy bear drop’ last summer confirmed the vulnerability of Belarus’ airspace.
The Russian air base in Belarus should be deployed by the 2015 presidential elections. For Alexander Lukashenko, this would be a guarantee of the Kremlin’s support. Most opposition leaders have traditionally opposed Russia’s military presence in Belarus, which is unacceptable for the Russian leaders. Polls say that over one-third of the Belarusian population opposes Russia’s military presence in Belarus. The campaign against Russian airbase deployment launched by some oppositional parties plays into the hands of Lukashenko. Lukashenko becomes a guarantor of the Russian military presence in Belarus.
Thus, despite the close military cooperation between Russia and Belarus which has been declared, it is still far from being put into practice. Both Russia and Belarus lack funds to develop this cooperation in full. Establishing a Russian airbase in Lida, as well as greater military cooperation with Russia are Lukashenko’s priorities in the coming years. This will allow the Belarusian president to enlist the Kremlin’s support during the upcoming presidential election. Nevertheless, it is unlikely that the military cooperation agreement will be implemented in full by 2015.
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.