This November Belarusians observed highly unusual political developments. On 8 November Prime Minister Mikhail Myasnikovich denounced the Presidential Administration and the President’s aide on economic affairs Siarhey Tkachou personally for systemic mistakes in economic policy.

Myasnikovich argued that the Presidential Administration and Tkachou had personally been the key contributors to all the previous programs of socio-economic development. He also clearly hinted that those programs had paved the way for the present-day economic turmoil.

On 10 November a reaction to those accusations came from Aliaksandr Lukashenka. He publicly reprimanded Myasnikovich and blamed the Government for the plummeting living standards in the country.  'If the government wants to introduce the market everywhere and give everything away to private hands, then we don’t need such a policy’, emphasized  Lukashenka.

For the first time in many years it has become obvious even for ordinary citizens that there are cracks inside the governing elites.

Why did it go public?

Inconsistencies in the economic policy of different government institutions such as the Presidential Administration, Council of Ministers and National Bank have been visible to keen observers since the spring of this year. Several conflicting statements and uncoordinated decisions, such as the one on the exchange rate, signaled misunderstandings or even tensions. But only now has it become so visible.

It looks like two factors can explain what happened. First, in the midst of the rampant crisis and overall uncertainty about the future, the ‘bubble of intra-institutional contradictions’ started leaking at some point. Under the present circumstances the major corporate interests of each institution is to look less guilty for the socio-economic failures. Therefore, the more severe the crisis becomes the more decisively the conflicting institutions act to defend their corporate interest.

Secondly, only one and a half months are left until the New Year. It means that the core documents that will determine the life of the country in 2012 (like the budget and the outlook for socio-economic development) need to be adopted as soon as possible. And since the Presidential Administration and the Government have different views on what should be in those documents, the pressure of time only worsens those contradictions.

Who is who among the Belarusian elites?

Naturally, there is very poor information about the state of political elites in a non-transparent political system, such as that of Belarus. The events of 8 and 10 November shed some light only on the state of the ‘economic block’ of the governing elites, while, the ‘siloviki block,’ for example maintains its cover of secrecy.

When speaking of the ‘economic block’ we can identify two major competing groups. The first one is represented by those who want to prevent any significant changes to the ‘Belarusian model’. The top ideologues of this ‘status quo group’ are Anatoli Rubinau, speaker of the upper chamber of the Parliament, and Siarhey Tkachou, the president’s economic aide. These two persons are said to be convinced Marxists who have very nostalgic feelings about the Soviet command economy.

Their position was articulated by Rubunau: ‘Our economy works well. Nothing has happened to it. And the GDP is growing’. It is important to note that this group is also supported by numerous members of the elite who pursue rent-seeking in the situation of their privileged access to insider information, decision-making and distribution of resources. As recent events have shown, the group is mainly concentrated in the Presidential Administration.

The other competing group is often referred to as the ‘reformists’. Their leaders are deputy Prime Minister Siarhey Rumas and Economy Minister Mikalai Snapkou. They stress the need for macroeconomic stabilization because, in the words of Rumas, ‘the level of inflation in Belarus is a shame for the government’. It looks like reform-minded officials are scattered throughout various institutions. Nearly all of them work for the Government.

Where is Lukashenka in this confrontation?

It is too early to talk about a real confrontation within the regime. In the public eye at least, Lukashenka is still capable of keeping all intra-elite conflicts under control. But his main problem is that he no longer remains the outside mediator.

In the past, different groups in his entourage simply sought additional rents at the expense of one another. And Lukashenka just had to make sure that none of the groups became too powerful. His own position was comfortably safe. But now that the whole system is so shaky, Lukashenka has become a hostage of the mutually excluding interests of the conflicting elites.

On the one hand, those who want to keep the economic status quo offer him a road of minimal socio-political risk tomorrow, but without external credit (as all potential creditors demand reforms) and with the prospect of an instant total collapse one day. On the other hand, the ‘reformers’ want him to agree to some form of ‘shock therapy’ that will probably save the economy but would be accompanied by a myriad of socio-political risks that could come as soon as tomorrow.

There is no doubt that mentality-wise and intellectually Lukashenka is much closer to the first group. And at any critical point he will most likely take their side, which is more understandable and familiar to him. However, this will not give him back the psychological comfort he used to have. That is why Lukashenka is now doomed to constant and highly neurotic ‘jumping’ from one side to the other.

What are the implications?

There are several implications of this public confrontation. But the central one is that Belarus is entering a crisis of governance. Decision-maker number 1 is in a trap of inevitably risky decisions. He is paralyzed in his ability to be an effective outside mediator between the conflicting elite groups.

As a result, even despite the evident need for economic reforms, under the existing political conditions Belarus will never have a consistent and adequate economic policy. Any reform-oriented initiatives will surely face two insurmountable obstacles. First, Lukashenka’s fear of the socio-political repercussions of market reforms. And, second, multiple clashes of interests among the governing elites.

Yauheni Preiherman

Yauheni Preiherman is Policy Director at the Discussion and Analytical Society “Liberal Club” in Minsk