President Putin’s visit to Minsk boosts pro-Russian sentiments in Belarusian society
President Putin’s visit to Minsk bolstered pro-Russian sentiments in Belarus and added loyalty to the Kremlin’s integration project – the Eurasian Economic Union. Officials in Minsk have been prompted to adjust their rhetoric regarding the Kremlin’s foreign policy, thus sending confusing signals to Belarusian society. The Belarusian government seeks to balance out Russian influence in Belarus by stepping up the rhetoric about the need to develop an independent and sovereign state.
President Vladimir Putin visited Minsk, where alongside President Lukashenko he took part in the Independence Day celebrations – the 70th anniversary of Belarus’ liberation from the Nazis.
President Vladimir Putin flew to Minsk to celebrate the 70th anniversary of the liberation from the Nazis, but he did not stay for the celebrations and the parade. Official Minsk was prompted to reaffirm its loyalty to the Kremlin, since the latter sought to show off its allies amid tensions in relations with Ukraine and the West.
The Independence Day parade in Belarus was co-organised with the Russians, which made many Belarusians upset in the view of Russia’s annexation of Crimea and fears of Russia’s greater influence inside Belarus. According to the most recent poll by IISEPS, the majority of Belarusians support the Kremlin’s foreign policy and reproduce Russian propaganda myths against Ukraine. The Belarusian government cannot but be concerned about the pro-Russian sentiments therefore it puts more emphasis on the value of Belarus’ independence and sovereignty in public statements.
Ahead of President Putin’s visit, President Lukashenko said: “we are intimidated with hordes coming from the East and now we are intimidated by the East with hordes coming from the West to dismember, crush and tear us to pieces. As President, I shall keep this in mind and shall not shake off of the options, even the most absurd ones”. The president also underscored that “today Belarus is free and independent”.
Meanwhile, President Lukashenko’s dress code during the celebrations was a tie with orange-and-black stripes, reminiscent of the St. George’s Ribbon, which was used by the Russian propaganda as a symbol of the "Russian world" and Russian revival. Most likely, the president was prompted to prettify his rigid statements about the potential threat from the East with such a visual demonstration. It is worth noting that during previous Victory Day celebrations, the Belarusian authorities imposed a de facto ban on the use of St. George’s Ribbons.
At the meeting with his Russian counterpart, President Lukashenko as always assured him that "Belarus and Russia will always be together”. However, after Putin’s departure Lukashenko once again expressed concerns about the threat to national security: “Today we see the decline in the efficiency of the international security system, established after the war. New threats have occurred. The post-war borders are revised and redrawn. A tendency of global instability is present”.
Official Minsk is strengthening rhetoric about the value of Belarus’ independence and sovereignty. However, while adopting some theses of the Belarusian opposition, the Belarusian authorities are unlikely to reconsider relations with their opponents.
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.