Belarusian Authorities Battle Street Vendors to Save the Textile Industry
Entrepreneurs protesting in 2007, photo: nn.by
On 17 March, Belarusian President Alexander Lukashenka paid a personal visit to a popular bazaar in Minsk, the capital, to resolve a conflict between the authorities and local street vendors.
Earlier this month, a new government request was issued requiring all street vendors to obtain quality certificates. That prompted the vendors to go on strike.
Although Belarusian officials handpicked the vendors who met with Lukashenka, the president's speech at the bazaar at least acknowledged the main cause of the conflict. He stated that the Belarusian textile sector is being undercut by cheap imports from Russia.
What Lukashenka failed to mention is that Belarusian clothing chains also want the government to introduce new regulations in order reduce competition from street vendors.
Although the authorities pretended to make concessions, the street vendor strike has been a lost cause. The fragmentation of this small business movement is one of the main reasons it has failed to achieve its goal.
The Force that Does not Feel Its Power
Individual shop owners play a much greater role in Belarusian commerce than is commonly believed. Official figures show that 248,952 people were registered as individual entrepreneurs at the beginning of this year, representing 2.5% of the Belarusian population. Since this group employs roughly the same number of people, the total workforce active in this segment of the economy could represent as much as 5% of all Belarusians.
Although accurate data is lacking, it is estimated that about 100,000 of these self-identified entrepreneurs are sole proprietors of stalls who trade in the markets where many Belarusians still buy their clothes. The authorities have sought to clamp down on the activities of this group of entrepreneurs. The sheer size of the street vending sector has not prevented the authorities from introducing tedious regulations every few years.
The most egregious example is a 2008 ban on the hiring of non-relatives, which effectively forces sole proprietors to set up firms in order to hire workers legally. Also in 2008, the last private kiosk disappeared from Minsk; the authorities deemed this type of business outdated, even though it was quite cost-effective and doing well at the time. Eight years ago, Minsk had 4,000 such kiosks.
Moreover, the regime often arrests local leaders who seek to organise the interests of street merchants. Anatol Shumchanka, head of the business association "Perspective", served prison sentences in 2003, 2008, and 2013.
Explaining the Recent Conflict
The 17 March visit of Lukashenka to the Minsk market was a rare show. The president, now at the outset of another reelection campaign, likely wanted to show who is in charge. The secret service officers who accompanied him hand-selected street vendors with congenial attitudes to serve as his audience. The market was also full of police who frisked shoppers with metal detectors.
Lukashenka proposed his idea on how to resolve the conflict: Rather than apply for a quality certificate, street vendors will now be asked to pay higher taxes. The hand-picked audience of street merchants dutifully applauded the announcement.
Lukashenka's staged meeting with the street merchants could possibly end their strike, which dates back to 1 March. According to the association "Perspective", around 80% of local street vendors took part in the strike.
Belarusian entrepreneurs lack quality certificates because they buy clothes from Moscow wholesalers who do not have them either. If the new regulations are enforced, the retail price of clothes could rise so much that ordinary Belarusians may not be able to afford them. Lukashenka stated that the new regulation will be postponed and introduced only next year.
The president accused individual entrepreneurs of "decimating" the Belarusian textile industry by procuring cheap clothes in Moscow. Since most of Belarus's textile industry is run by the state, the choice seems simple: either state employees or private businesses will be deprived of income.
Lukashenka stated that Prime Minister Andrei Kabiakou takes responsibility for supplying Belarusian commodity distribution centres: "If entrepreneurs cannot acquire [here in Belarus] the types of garments or footwear they get at the Cherkizovsky market [the most popular market in Russia], Andrei Kabiakou will answer for this." The reality is that made-in-Belarus products are more expensive and of worse quality than those sold in Russia. Forcing vendors to procure locally will fail to solve the problem.
Another interest group lobbying the government behind the scenes are supermarket chains. They already have the requisite quality certificates, and so have good reason to demand that individual street vendors obtain them as well. Aliaksandr Mashenski, one of the most influential Belarusian businessmen, stated that "entrepreneurship should be pursued in a civilised manner."
Mashenski may be right, but the new regulation still looks strange, as such a rule has not been instituted for over 20 years. Reduced competition will simply help large retailers stay afloat during the current economic crisis.
At the same time, it seems the authorities have realised that small entrepreneurs cannot afford to comply with the new requirements. Aliaksiej Novikau, a small entrepreneur from Salihorsk, told Belarus Digest that "the Minsk traders can take on the burden, but for vendors elsewhere it would spell the end of their business."
Survive or Die
Why are the authorities making such a fuss about fighting a group which represents a small segment of the national economy? In fact, this conflict could become the most difficult for private businesses in Belarus since the early 1990's. It's not just that the authorities are making unreasonable demands in the form of certificates and higher taxes; the worst thing is that this is happening at a time when the Belarusian economy is preparing for a recession.
It is precisely the threat of economic crisis that strengthens the government's hand. Relations are tense among individual entrepreneurs who are struggling to make ends meet, so they cannot concentrate on battling Lukashenka together. “Many try to somehow negotiate with the government officials because they need to feed their families," Novikau said.
Such internal conflicts could reduce the leeway for entrepreneurs to lobby for their interests in the future. Many will be forced to close their businesses and let go of their workers. They will only stand a chance of influencing the authorities if they stay united, but it seems they will not.
Lukashenka's postponement of the certificate demand looks like a temporary victory, but that will not change the fundamental relationship between individual entrepreneurs and the government. Every step Lukashenka takes, the businessmen follow, even at great cost to their livelihoods.
EHU Rector Selection: Time to Fix Mistakes and Improve Credibility
Lithuanian FM called for a meeting to discuss EHU in January 2015
The “Rector Selection Saga” at the European Humanities University (EHU) in Vilnius, the Belarusian university in exile, has been going on for more than half a year. It enters its third season with the Governing Board’s Rector Selection Committee making every mistake in the book – again.
It appears that the current Selection Committee (with no Belarusians on it) has no capacity to legitimise any candidate it would raise, especially after many criticised the process of pushing a hand-picked candidate, Dr. Garry David Pollick.
By 1 March 2015 the Governing Board was expected to recommend a final candidate for the rectorship position to the General Assembly of the Part-Owners (GAPO). This, however, has not happened.
Postponing the process further significantly increases the damage to EHU's credibility just as prime time for student recruitment descends upon the institution. This decision also pushes GAPO to take the initiative into its own hands and act without consent of the Board, for first time in the history of EHU.
Laying Eggs, Executive Style
The current acting rector Dr. Garry David Pollick has incomprehensibly made his way through on to the final rounds of the selection process. He was introduced as a provost and COO of the European Humanities University slightly over a year ago and became EHU Acting Rector in October 2014.
Pollick’s engagement at EHU has been marked by an astonishing rise to the top. But what did this candidate achieve in the year that he has lead EHU? And why does the Selection Committee keep pushing him to the top with such sustained vigour?
The critical point in this whole discussion is how the Belarusian focus of the institution has lately become somewhat of a marginal idea. This problem – probably for the first time in the last 10 years – has finally engaged Belarusian civil society in a discussion of what the role of EHU is in developing the national project for democratic Belarus. Three months ago, 40 leading minds from Belarus and abroad signed in January 2015 an open letter calling to keep the ‘Belarusian heart’ of EHU and not abandon its legacy.
Under Pollick’s leadership, EHU has suffered from the disastrous losses of reputation as well as increased financial losses Read more
Under Pollick’s leadership, EHU has suffered from the disastrous losses of reputation which, among other things, include unnecessary legal disputes over dismissals of former employees and breaches of the EHU Statute by particular administrative bodies of the university.
Dr. Pollick oversaw a hiring process that gave rise to a budget deficit of nearly €1 million (there was no comparable budget deficit before). This caused major donors like the European Commission and Norway to suspend funding, pending a plan to reduce this deficit to a manageable size – a plan they have been waiting to receive from Pollick since last summer.
One of his few accomplishments – a rather self-serving redraft of EHU’s Statute, created a University Council that Dr. Pollick boasted would help make EHU more democratic. According to the Statute, it is supposed to meet every two months. Dr. Pollick has not called a meeting of the Council in months. This is, very likely due to the fact that he decided that he can no longer work there with EHU’s CFO, who was asking uncomfortable questions about a number of financial matters that involve Dr. Pollick.
Lithuania’s Centre for Quality Assessment in Higher Education gave EHU poor marks for strategic management Read more
Not surprisingly, a report released by Lithuania’s Centre for Quality Assessment in Higher Education in early February gives EHU poor marks for strategic management – the area that Dr. Pollick, probably the most expensive education consultant in the whole region, currently supervises. The university spent well over a hundred thousand euros on his compensation rather than on the development of academic programmes or campus renovations over the span of a single year.
Losing the Battle, saving Face
Presumably, the Board will no longer support Pollick, since few Board members are willing to take personal responsibility for choosing a candidate who has almost no support outside the Selection Committee. Unfortunately for EHU, a small group of influential and desperate Board members continue to push Pollick further along the selection process for the university's top post.
According to some sources, last month, in an almost comically desperate effort to shore up their candidate, two individuals from the current EHU governance structures made their way to New York in the hopes of enlisting George Soros in their dubious adventure. Since George Soros is the founder and chairman of Open Society Foundation (one of three Part-Owners of EHU), his opinion on who becomes rector is of crucial importance. No surprise, however, that George Soros refused to support the legitimisation of a shady candidate and insisted on a fair selection process before it is too late.
What else could select members of the Governing Board do further to discredit the current selection process? Arrange a “members only” Board meeting without the presence of student representatives and the EHU Trust Fund Manager (who are usually invited as observers) at Frankfurt Airport to further delay the final decision and keep Pollick on board as the most highly-compensated temporary rector in the history of Lithuania and Belarus for another month or two for the sake of an “exchange of opinions”? Fantastical as it may sound, this is precisely what they did. The airport meeting will take place at the end of March.
The Rule of Law, the Rule of GAPO
If the EHU Board is so misguided as to nominate a candidate who has failed to perform the work for which he was hired, and GAPO to approve this, it will most likely mean a terminal loss of credibility for the European Humanities University as a whole. However, the current degree of dissatisfaction with the selection process may well warrant a negative decision by GAPO, should the Board decide to nominate Pollick.
GAPO, not the Board, officially appoints and dismisses EHU’s Rector and can even dismiss the existing Governing Board Read more
According to the EHU Statute, it is GAPO, not the Board, which officially appoints and dismisses EHU’s Rector and makes all fundamental decisions in the life of the university. GAPO could even dismiss the existing Governing Board, if it so chooses. If they were to reject a Board nominee or fully reboot the selection process, a new page of democratic governance would be opened in the history of EHU. GAPO has never voted against a Board decision before and is likely to act independently for the time in its history.
Such a scenario would become a clear signal to alumni, students, faculty, donors and other stakeholders that GAPO takes seriously their obligation to properly govern and manage a Belarusian academic institution. If GAPO starts anew the search for a rector and dissolves the existing Selection Committee, Belarusians will achieve their first institutional success on the way to real engagement for change and this, in turn, will restore hope for a European future for Belarusian higher education, starting with EHU.
That said, no matter who becomes a finalist at this point, given the existing selection process, without a new, reliable procedure, his or her legitimacy would be very low in many people's eyes. So now the question is not just who and how will actually become the next rector, but also whether the current Governing Board will continue to exist in its present form.
Serge Kharytonau
President of the Alumni Association of the European Humanities University
