President Lukashenka only talks about market economy without embarking on economic reforms

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April 22, 2016 19:34

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.

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Belarusian and Ukrainian Defence Ministries entangle in confrontation spiral
October 02, 2017 11:57
Фото: RFRM

Over the past year, military-political relations between Minsk and Kyiv have become complicated. Due to their high inertia and peculiarities, this downward trend would be extremely difficult to overcome.

The root cause of the crisis is the absence of a common political agenda in the Belarusian-Ukrainian relations. Minsk is looking for a market for Belarusian exports in Ukraine and offers its services as a negotiation platform for the settlement of the Russo-Ukrainian war, thereby hoping to avoid political issues in the dialogue with Kiev. Meanwhile, Ukraine is hoping for political support from Minsk in the confrontation with Moscow. In addition, Ukraine’s integration with NATO presupposes her common position with the Alliance in relation to Belarus. The NATO leadership regards the Belarusian Armed Forces as an integral part of the Russian military machine in the western strategic front (the Baltic states and Poland). In addition, the ongoing military reform in Ukraine envisages a reduction in the number of generals and the domestic political struggle makes some Ukrainian top military leaders targets in politically motivated attacks.

Hence, the criticism of Belarus coming from Ukrainian military leadership is dictated primarily by internal and external political considerations, as well as by the need to protect the interests of generals, and only then by facts.

For instance, initially, the Ukrainian military leadership made statements about 100,000 Russian servicemen allegedly taking part in the Russo-Belarusian military drill West-2017. Then the exercises were labelled quazi-open and military observers from Ukraine refused to provide their assessment, which caused a negative reaction in Minsk. Further, without citing specific facts, it was stated that Russia was building up its military presence in Belarus.

Apparently, the Belarusian and Ukrainian Defence Ministries have entangled in a confrontational spiral (on the level of rhetoric). Moreover, only a small part of the overly hidden process has been disclosed. That said, third states are very likely to take advantage of the situation (or have already done so). This is not only about Russia.

The Belarusian Defence Ministry officials are restrained in assessing their Ukrainian counterparts. However, such a restraint is not enough. Current military-political relations between Belarus and Ukraine are unlikely to stabilise without the intervention of both presidents.

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