President Lukashenka only talks about market economy without embarking on economic reforms
Lukashenka is holding out for the existing economic model, which enables to maintain social stability at an acceptable level. The head of state is afraid of reducing the state’s role in the economy, seeing it as a threat to the stability of his rule. Nevertheless, some in the president’s inner circle, especially in the government, expect partial reforms of the most problematic economic sectors.
Last week, President Lukashenka held a meeting on topical issues of Belarus’ development.
Lukashenka sees no need in changing approaches to managing the economy; he counts on external funding to avoid major reforms and on administrative measures to retain control over economic processes. If crisis in the economy builds up, the president may resume usual micromanagement practices.
The president is attempting to mobilize state managers and bureaucrats. Despite the failure of a large-scale industrial modernization programme in 2012-2015, the President has once again requested woodworking industry to provide modernization performance reports by the next meeting. In the past, there were numerous meetings and working field trips to control the modernisation progress, however, in most cases, to no avail.
In addition, the president has replaced previously used term ‘modernization’ with a more popular now ‘structural reform’, which he uses in a peculiar way: “The strategy was that we needed structural reforms in our economy (and this [modernisation] was a structural reform), so that a share of manufactured products sold on domestic and foreign markets was made with our own raw materials in order to avoid dependence on raw materials from other countries, as is the case in other economic sectors”.
The president has proposed to strengthen control over pricing policy and step-up the state’s role in redistributing profits from the most profitable sectors to the loss-making enterprises, which partially help the authorities to solve the unemployment issue. It is worth noting that previously Lukashenka had promised to put a leash on prices, so as he had no funds to raise wages.
Despite high levels of hidden unemployment, the government keeps silence about this matter in an attempt to preserve the existing structure of the economy, in which public sector and large state owned enterprises predominate. In addition, amid rising unemployment and falling wages in Belarus, labour migration, especially to Russia, enables to relieve social tension.
Meanwhile, what the president says is at odds with the government’s plans for 2016, which envisage some market reforms in the economic policy. Nevertheless, President Lukashenka said he did not intend to make fundamental changes in the government, which should imply continuity of the economic policy for the next presidential term, “the future government for next five years and all governmental agencies have been formed before the presidential election”.
Analysts say that the likelihood and depth of economic reforms largely depends on Belarus’ ability to attract foreign loans. If Lukashenka were able to raise sufficient funds, the changes would be purely cosmetic and if not – they might be more substantial.
Overall, if Belarus obtains foreign loans, the Belarusian authorities will combine market rhetoric with micromanagement of the economy, especially if economic imbalances occur.
The Belarusian authorities regard the Catholic conference as yet another international event to promote Minsk as a global negotiating platform. Minsk’s proposal to organise a meeting between the Roman-Catholic Church and the Russian Orthodox Church is rather an image-making undertaking than a serious intention. However, the authorities could somewhat extend the opportunities for the Roman-Catholic Church in Belarus due to developing contacts with the Catholic world.
Minsk is attempting to lay out a mosaic from various international religious, political and sportive events to shape a positive image of Belarus for promoting the Helsinki 2.0 idea.
Belarus’ invitation to the head of the Holy See for a meeting with the Patriarch of the Russian Orthodox Church should be regarded as a continuation of her foreign policy efforts in shaping Minsk’s peacekeeping image and enhancing Belarus’ international weight. The Belarusian authorities are aware that their initiative is unlikely to find supporters among the leadership of the Russian Orthodox Church in Moscow. In Russia, isolationist sentiments prevail.
In addition, for domestic audiences, the authorities make up for the lack of tangible economic growth with demonstrations of growth in Minsk’s authority at international level through providing a platform for religious, sportive and other dialogues.