Threat to weaken control of EU border: attempt to lower stakes in next round of dialogue with West

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April 22, 2016 18:08

On April 18, a representative of the State Border Committee of Belarus said that because of the sanctions imposed against Belarus, the agency would loosen control over the out-migration, and give priority to inbound migration, in particular on the Belarusian-Polish border. 

Comment

The threat voiced by the Border Committee is clearly a political order from the country’s leadership. The sanctions had no impact on migration flows through Belarus and did not impose additional burden on the Belarusian border guards.

Special reference to the Belarusian-Polish border, where the control will be loosened in the first place, most likely is a political message to the Polish Foreign Ministry, which was the first one to react to the release of two political prisoners last week and demanded to release the rest.

Finally, border services’ statement reflected the “dissenting opinion” of the Belarusian security forces close to the eldest son of President Viktor Lukashenko. This group inside Belarus is the least interested in resolving the conflict with the EU, as political tension allows them to expand the sphere of their influence, and justifies the use of habitual repressive measures in the public administration.

Viktor Luakshenko’s Group” embraces the KGB leadership. The latter on April 18 issued a threatening statement about a network operating at the Belarusian-Polish taking illegal immigrants from countries with terrorist activity over to the EU. The KGB statement implies that so far this illegal activity was contained.

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Growth in real wages may disrupt macroeconomic balance in Belarus
October 02, 2017 12:12
Фото: Дмитрий Брушко, TUT.BY

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.