Belarus At War With Its “Social Parasites”
On 2 April, Alexander Lukashenka signed a decree against “social parasites”. From now on, individuals who do not pay taxes will lose be forced to submit around $240 annually into the the state’s coffers.
This law is designed to help stimulate employment and fill any number of budget gaps, but it should be viewed in terms of how it reflects the natin's rising unemployment rate and inability to collect taxes.
Despite its good intentions, it is almost certain to harm many individuals who are in real need of assistance. According to the IPM Research Centre, in the near future the unemployment rate in Belarus will rise to a historic high of 8-9%. Moreover, many Belarusians are presently working either part-time or have been laid off as the economy struggles to recover.
The rising level of unemployment has only extended the gap between the authorities and society. Lukashenka’s approval rating has dropped by more than 10% over the last six months. The latest round of ill-conceived legislation clearly demonstrates that the authorities are helpless when it comes to adverting further economic decline.
The Belarusian Fairy Tale of Full Employment
The pre-election campaign programme of Alexandr Lukashenka in 2010 claimed that by 2015 “everyone will be guaranteed a job”. According to official statistics, the Belarusian authorities have gotten pretty close to reaching their prescribed goal over the past couple of years. As of 1 March, for example, only 0.8% of Belarusians are officially registered as being unemployed.
This figure does not reflect reality. The majority of Belarusians do not apply for social welfare assistance and do not officially register as unemployed for a number of reasons.
unemployment benefits in Belarus amount to roughly $8 a month Read more
First of all, unemployment benefits continue to be miniscule and amount to roughly $8 a month. Second of all, to obtain this financial support, the average Belarusian must perform poorly paid public monthly work like street cleaning. Both of these issues make it pretty clear why only a small percentage of Belarusians have registered themselves as being unemployed with the officials.
Despite unreliability of the state's data, the unemployment rate in Belarus is much lower than in neighbouring countries. A low unemployment rate has allowed the Belarusian economic model to remain attractive for many Belarusians, many of whom have been reluctant struggle through economic liberalisation, a path that has dominated the policy agendas of all of its neighbours to some degree.
Unemployment in Belarus and its neighbours in 2013 (%)
Data: World Bank
A high employment rate largely explains why Alexandr Lukashenka has quickly become a popular president, not only among Belarusians, but also in neighbouring countries. As of late, however, a rapid transformation is under way – a chance that challenges this dominant paradigm.
Belarus Prepares for High Levels of Unemployment
Unemployment in Belarus is very likely to reach historic levels in the near future. A recently published study by the IPM Research Centre, for example, shows that an unemployment rate of 8-9% may be just around the corner.
Even official statistics have shown a growing level of unemployment – from February to March it officially increased 0.1%. The number of labourers has steadily declined in Belarus even in traditionally strong sectors like construction and trade.
Unemployment is only the tip of the iceberg. Many businesses have closed their doors and are sending their employees home. Near the end of March the Minsk Automobile Plant shut down its main conveyor belt. Some enterprises, like the Minsk Tractor Plant for instance, literally have no place to store their finished products. Many enterprises are currently working only two or three days a week as a result of the ongoing economic slump.
Since the disparity between Belarusian and Russian salaries has decreased, Belarusians have fewer incentives to go to work in the east Read more
Businesses have huge debts that they owe banks and, by all appearances, are unable to satisfy them in the current economic climate. Many of them are unable to pay their employees' salaries at present, like the Homel Agricultural Plant. Data from the Independent Institute of Socio-Economic and Political Studies shows that more than two thirds of Belarusians believe that the Belarusian economy is in a state of crisis.
The economic decline of Russia has made Belarus' problems even more acute. Since the disparity between Belarusian and Russian salaries has decreased, Belarusians have fewer incentives to go to work in the east. Many Belarusians will stay at home and look for a job, even though the number of positions has declined. One collective farm director told Belarus Digest that refugees from Ukraine have created additional pressure on the market and lowered local salaries due to competition.
A Decree on “Social Parasites”: A Goofy Means of Meeting Budget Demands
The Belarusian authorities are trying to encourage Belarusians to take up any job they can find. A recent law, more popularly known locally as a decree on "social parasites", forces Belarusians to pay a tax for being unemployed. This law is unique to Belarus and many individuals question how it will be enforced given the current climate.
Belarus has problems with collecting taxes and largely appears to be unable to punish tax evaders in the usual way, so it has been forced to create push out nontraditional measures. According to Alexander Chubryk, Director of the IPM Research Center, the presidential decree on the issue largely avoids the main issues and will help tax evaders profit and develop into the next generation of "social parasites" all while avoiding paying usual taxes, which are much higher.
The law will, however, punish people who really need help during the economic crisis. People, who really cannot find a job and make ends meet will receive adequate financial support from the state.
Unemployment is Already Changing Belarus
Alexandr Lukashenka is paying for the economy's ongoing decline. According to the Independent Institute of Socio-Economic and Political Studies, in September 2014 his electoral rating was sitting at 45.2%, and in March 2015 only 34.2% of Belarusians were behind him. If not for the war in Ukraine, Lukashenka’s rating would likely be even lower than this.
As the Belarusian economy will continue to be in crisis for at least another two years, Lukashenka’s ratings may yet reach new historic lows. Although mass demonstrations are unlikely at the moment, the situation will open a larger window of opportunity for other forces inside and outside of Belarus.
Isolated Academia, Capital Punishment, and Lukashenka Speaks Up – Western Press Digest
The Belarusian head of state continues to raise his profile in the West, most recently in an interview with a major western press outlet. In the interview Lukashenka snubs Putin and says that a repeat of the events in Ukraine are out of the question in Belarus.
Former partners Belaruskali and Uralkali are competing on the global potash market to secure business, and the Belarusian state-owned company appears to be willing to take financial losses to do so. In Minsk, the IMF says that Belarus needs to do much more if it wants financial support from the international financial institution.
Belarus' refusal to once more abolish capital punishment has surfaced again. While Minsk is being compared to the self-proclaimed separatist peoples republics in eastern Ukraine, an exiled Belarusian theatre troupe takes their play about the issue to the stage in the US. All of this and more in this edition of the Western Press Digest.
International Relations and Politics
Lukashenka On the Rise? – In an interview with Bloomsberg Business, Aleksandr Lukashenka discusses the state of the Belarusian economy, what the United States' role in the conflict in Ukraine should be, and the domestic political scene. His recent rise in popularity in the international community has come as a result of his willingness to use Minsk as a forum for negotiation peace in eastern Ukraine. As one of Russia's closest allies, Lukashenka has seen the need to balance the interests of all his neighbours following the growing turmoil in the region.
Concerned with the economy, the Belarusian head of state bemoans the fact that his nation has not yet had enough time to put distance between itself and Russia, but is working on it. Both Lukashenka and some members of the opposition revealingly state that they are concerned that the upcoming presidential elections could be manipulated by Russia to create a conflict similar to that in Ukraine in Belarus. While joking that he was no longer Europe's last dictator, he cautioned that Russia would not take over the country.
Belarus Unlikely to Join Bologna Area – It is looking increasingly unlikely that Belarus will be granted admission into the European Higher Education Area, more commonly known as the Bologna zone. Times Higher Education writes that while the ministers have no apparent issue with admitting other life-long rulers, such as Kazakhstan, Belarus is not a candidate due to its lack of progress on meeting the standards of the European higher education zone that has a unified set of standards.
Citing a lack of academic freedom and the dismissal of instructors and students who have opposed the official line, it is unlikely that Belarus' isolated higher education community will see a breakthrough this year, though thawing ties with the EU may give higher education integration some more impetus.
Belarus-China Potash Deal Upsets Russia – Bloomberg reports that Belarusian state-owned company Belaruskali, one of the leading potash producers in the world, has inked an important deal with China. With this new deal, Belaruskali will sell potash to China for what many believe to be under market price. The move is significant, as it is the first contract between Belarus and China for potash.
While the exact length of the contract is unknown, former Russian potash partner Uralkali and analysts say that it will lead to a negative reaction from the market. It also fits a trend in which Belaruskali has been selling potash cheap in other countries, likely to secure a market share and muscle out competitors. India is now seeking to get a better deal as well.
Seeking IMF Deal, Better Monetary Policy Needed – If Belarus hopes to secure financial support from the IMF, it will need to show that it is serious about reforming its monetary policy according to its chief envoy to Minsk. The Belarusian rouble is struggling due to the overall economic climate in the region and the Central Bank has sought to shelter Belarusians from the impact by propping it up according to Reuters. In addition to switching over to a flexible currency exchange rate, Minsk needs to introduce a number of other structural reforms as well before the IMF will consider lending it money.
Currency Union Between Customs Union Members – In a recent meeting between the heads of state of Russia, Kazakhstan and Belarus, Russian President Vladimir Putin said the time was right to consider creating a single currency for the three original Eurasian Economic Union members. The International Business Times reports that, despite the Russian rouble losing half its value over the past year, Putin feels that it would be better for everyone as it would help them negotiate with external markets and deal with common economic threats. No comment was offered by the heads of state of Kazakhstan or Belarus.
Capital Punishment Back in the Spotlight – Euractiv reports that like the separatist peoples republics in eastern Ukraine, Belarus is among the only other European entities that supports capital punishment. If Belarus is serious about thawing relations with the EU, it would need to rid itself of the practise of executing individuals accused of crimes, a stance that is shared by all 47 members of the Council of Europe, including Russia.
Banned Belarusian Theatre Troupe in NYC – In their latest upcoming theatrical performance, the Belarus Free Theatre will perform 'Trash Cuisine', a play that addresses capital punishment through utilising 'a documentary style and food metaphors'. According to the New York Times' blog, the play was well received in both Edinbough and London, though its New York City performance will be the first time it is performed in English. Many of the troupe's players have lived in exile in London since leaving Belarus, a status that has made it difficult for them to perform in the United States.
Minsk Clamps Down on Internet Freedom – In an apparent move to cut down on the illicit drug trade in Belarus, the authorities are demanding that all Internet service providers will need to keep records on users' complete browsing history. Global voices reports that the new law, which is set to take effect next year, are viewed by human rights groups and experts as a means to indiscriminately monitor Belarusian Internet users' activity.