Normalisation of Relations with the EU, Oil Negotiations with Russia – Belarus State TV Digest
Housing remains among a top priorities for ordinary Belarusians, as Belarusian state television noted. This topic became unquestionably the number one issue over the last week. The issue of housing attracted lots of attention from the state media after Aliaksandr Lukashenka’s public sharp criticism of the authorities and demand for firmer control over the construction business.
Is Minsk sending a positive message to Brussels? At a meeting with foreign diplomats, the head of state stressed several times his desire to normalise relations with the European Union.
Belarusian state television reported the current events unfolding in Kiev, but without a deeper analysis. In its coverage, journalists rather critically assessed the protesters and portray them as causing a mass disturbance.
International Affairs
The Ukrainian (dis)order. The Ukrainian police tried to dismantle barriers raised in the centre of Kiev. Journalist commented that in the aftermath of a visit of European politicians to the so-called Euromaidan, the protesters felt as they feel they would not be punished. State TV mentioned data from the Ukrainian Ministry of Internal Affairs showing that the protesters from Kiev sprayed tear gas on the police and threw smoke bombs at them. So far 11 persons were detained due to their activity in the demonstration.
Lukashenka: “We are ready to stabilise relations with the European Union”. Belarusian state television widely covered an official presentation of credentials awarded to ten new diplomats to Belarus. Lukashenka a few times stated that Minsk was ready to discuss potential projects with other countries. In his words, Belarus is pursuing a peaceful foreign policy and is refraining from starting or joining any conflicts. He also emphasised how significantly the country has contributed to global and regional security and stability.
One of the priorities in the nation's foreign policy is, in the words of the head of state, the development of good-neighbourly relations with the EU, political dialogue with the Latin America and co-operation with Asian, African and Middle Eastern countries.
Referring to the EU, Lukashenka said, "We cannot escape one another. It is predestination [he indicated the above] coming from God, to live together, as neighbours. […] we will take any steps to normalise our relations”.
Economy
A new state budget – socially oriented. Recently the Belarusian Parliament adopted a new budget for 2014 already during its second reading. Journalists reported that it would be a socially oriented budget. Half of the budget will go to the social sphere. Of equal importance, the Belarusian authorities will not be holding back on salaries or pensions. Education and medicine remain on the list of priorities of the state and thus, spending in these areas will continue to increase.
Belarus-Russia negotiations. State TV reported a recent meeting of the Belarusian Prime Minister, Mikhail Miasnikovich, with Dmitry Medvedev in Moscow. Both sides discussed a number of issues, including an agreement on how much Russian oil will be supplied to Belarus. Minsk proposed 23 million tonnes in 2014 against Moscow’s proposed 21 tonnes. Both parties, it is expected, will come to a compromise by the end of 2013.
State TV noted that Belarus remained number one for Russia in terms of its mutual trade turnover among the Commonwealth of Independent States. Interestingly, Minsk is higher than the former leader of the ranking, Ukraine, who know is in second place.
The Astraviec nuclear power plant openly discussed in Vilnius. Belarusian journalists proudly covered a meeting which gathered prominent Lithuanian officials, scientists and environmentalists. All learned about the results of the recent monitoring of the impact of Astraviec plant construction on the environment. Reporters underscored the fact that the Belarusian side provided exhaustive answers to all questions raised by the Lithuanians. It proves that in terms of safety, the power plant meets all the necessary criteria. However, Minsk proposed to Vilnius to carry out its own monitoring and system of control over the construction project, because “Belarus has nothing to hide”.
Domestic Affairs
“Republican” meeting with the head of state. Belarusian television took note of the meeting chaired by Lukashenka with over 250 representatives of regional authorities from the whole country. Beginning 1 January a new era in the construction sector will begin, state TV optimistically commented. This comment was made in reference to new principles and legislation that will regulate the sector soon. Their goal is to make the construction business more transparent. One state TV journalist emphasised that Lukashenka will personally control the situation in the sector. Curiously, at the end of the report she asks, "Could it be any other way?"
Reporter mentioned that housing remains one of the most consistent spheres of interest for ordinary Belarusians. Thus the head of state decided to pay special attention to this issue. In Lukashenka’s words, the local authorities should deal with the housing problems more efficiently, because they have all the tools to do so.
The new changes include the former state control over the construction organisations and companies, but also an adequate punishment for breaching the norms and law. A state tv reporter concluded that the economic input of the construction sector to the GDP of Belarus has remained around 10 per cent.
Minsk is vitally interested in co-operation with Ecuador. The head of state met with the Vice President of Ecuador, Jorge Glas Espinel. The station noted that this visit was a continuation of the strategy of rapprochement between Minsk and Quito, in many different areas, from agriculture to technology.
Lukashenka mentioned that the economies of both countries are quite complimentary. “You need what we have, we need what you have”, he was convincing and declared they would start conducting joint projects soon.
Belaya Rus wants to exchange experience with the Tajikistani political party. The civil society organisation “Belaya Rus” signed an agreement with the People’s Democratic Party of Tajikistan. Both sides aim at tightening ties and exchange experience in spheres such as energy, agriculture, but also the economy and protection of human rights and freedoms. Aliaksandr Radzkou, a leader of the Belaya Rus, stated that together they could address a number of issues on the level of the civil society organisations and also as political parties. Importantly, both countries share a common history, “We come from the same state”, he said.
The agreement with the Tajik political party is not the first form of co-operation the Belaya Rus with foreign political organisations. Journalist noted that in February the organisation signed an agreement with a Polish party, “Samoobrona of the Republic of Poland” (“Self-defence of the Republic of Poland”) and in March with a Latvian social-democratic party “Sogliasie” (“Agreement”).
Belarus Digest prepared this overview on the basis of materials available on the web site of Belarusian State Television 1 (BT1). Freedom of the press in Belarus remains restricted and state media convey primarily the point of view of the Belarusian authorities. This review attempts to give the English-speaking audience a better understanding of how Belarusian state media shape public opinion in the country.
Modernisation in Belarus: the Process is More Important than the Result?
On 20 December, Deputy Prime Minister Piotr Prakapovich announced the need to accelerate the modernisation of Belarus.
According to him, it was necessary to carry out not only its technical modernisation, but also its economic modernisation, including improving public administration system.
But what Prakapovich's speech actually proved was that modernisation of Belarusian enterprises has failed. The state invested over $1bn in the cement and woodworking industries, but businesses are still generating only losses.
At the same time some Belarusian companies cooperate with developed countries and update new technologies in their enterprises successfully. These examples serve as a good lesson for today's leaders of Belarus.
The authorities have adopted a number of modernisation programmes over the past 19 years, though they started talking about it much more since 2012. Belarusian economist Leanid Zlotnikau links it with the reduction in revenues from the export of solvents.
Although the authorities state that modernisation goes beyond simply modernising equipment, in reality they are not ready to change their management style. On the one hand, they waste valuable resources on huge projects, yet they do not even try to prepare adequate business plans.
Many Belarusian officials are interested in the process of modernisation, rather than in its results.
Plenty of Expensive Cement
Over the past years, the authorities have modernised four cement plants in Belarus with a price tag of about $1.2bn. China gave a conditional loan to finance new equipment and specialists who carried out the modernisation of the enterprises. Despite all of this, the introduction of the actual usage of these new capacities at cement factories has been postponed for two years, which in effect has led to a $0.5bn loss for Belarus.
Before investing money, the authorities failed to take into account any possible market changes and how competitive their own products would be. As it turns out, the cost of Belarusian cement, unfortunately, has remained too high. Belarusian officials wanted to make these plants were export-oriented, but Belarusian cement appeared to be more expensive than its Russian counterpart.
The authorities have to sell their cement at lower prices to offload their stockpiles and thus, all of thews recently modernised cement plants remain unprofitable.
Other Challenges of Modernisation
The defeat of a programme of modernisation in the woodworking industry has become a part of many anecdotes in Belarus. Over six years, the state invested more than $1.3bn to modernise the woodworking industry. Last year, Lukashenka even introduced compulsory work at woodworking enterprises. No employee of the nine companies in the industry could resign without the permission of their superiors.
A month ago, Alexander Lukashenka once again visited Barysaudreu, a woodworking company in the Minsk region. He was shocked by the lack of results. Barysaudreu, as with most other enterprises in the sector, not only failed to become more competitive, but did not even begin to undertake the first steps towards its own modernisation. Mastydreu, another enterprise in the industry, has been unable to produce anything since 2010.
Many other firms have similar problems. Mikhail Miasnikovich, Prime Minister of Belarus, said that "20 percent of companies cannot cope with the modernisation and another 37% are modernising with a lag." And still, Lukashenka's regime continues to waste money on other major projects.
Integral, the largest manufacturer of microelectronic components in Central and Eastern Europe, is also in decline, as the authorities failed to modernise the enterprise. Alexander Abukhovich, an economist who worked at Integral, explains that the company needed about $2bn to modernise, but the state allocated only $284m: “That is not enough to even reduce the backlog as competitors modernise even faster.”
This January, the Belarusian Ministry of Finance published financial reports of Belarusian enterprises for the first three quarters of 2013. According to their data, Belarusian companies succeed primarily in areas related to raw materials.
| Most Profitable Open Joint Stock Companies of Belarus | Most Losing Open Joint Stock Companies of Belarus |
| Navapolatsk Oil Refinery | Barysau Meat Processing Plant |
| Mazyr Oil Refinery | Slutsk Meat Processing Plant |
| Belshyna (tire producer) | Svetlahorsk Pulp & Board Plant |
| Belaruskali (potash producer) | Vityas (TV set plant) |
| Homeltransoil Druzhba (oil transit) | Krychau Cement Plant |
Why the Process is More Important than Result
The failure of these and other modernisation projects have their roots an economy dominated by the public sector. Responsibility for improving enterprises' capacities remain divided between many officials who try to pass it on to someone else, usually the directors of the companies.
But directors have little interest in the long-term success of state firms. Thus, the government have no tools to motivate the directors of these enterprises, except criminal liability for failing to modernise their operations.
Siarhiei Chaly, a Belarusian economist, explains that nobody cares about the final result of these modernisation projects, but many people want to earn money from the modernisation process: suppliers, builders, or as Chaly states, "there is a large number of people who do not earn on a project's profitability, but on its expensiveness."
The more expensive the project, the better for its implementers.
Opportunities for Belarusian Enterprises
Many Belarusian officials are surprised that major modernisation projects have failed to yield the desired results. They believe that the purchase of new equipment immediately would translate into revenue growth. The result indicates that Belarusian enterprises still require specialists who are good in strategic planning, marketing, quality control and other areas not related to the equipment itself.
However, not all Belarusian companies have gone this way. Horizont, a manufacturer of TV sets and household appliances, invited Japanese engineers to modernise the enterprise. The engineers are still in Minsk introducing new technologies. As a result, Horizont produced 530,000 TV sets last year, and most of them are not under their own brand, but rather Toshiba or Sharp.
The Belarusian Automobile Plant, one of the world's largest manufacturers of dump trucks, established a subsidiary company in Germany to build outside contacts with producers from the European Union. For its part, the company is seeking new technologies and opportunities to modernise Belarusian mechanical engineering.
Looking at these examples, Belarusian officials understand the need to have links with more developed countries to reform. In such conditions, cooperation with the West and initiatives such as the European Dialogue on Modernisation with Belarus has become precisely the kind of thing the country's leaders need today.
The authorities often try to reinvent the wheel and find their own unique methods to modernise the country. But sooner or later they will be forced to initiate a real modernisation programme, one which should go far beyond simply buying new equipment.
