Belarus Defense Digest: F-16 Fighters Stationed Closer to Belarus
Among recent events related to the national security and defense two stand out. First, the deployment of the U.S. F-16 fighters in Poland and the need for the adequate response. Second, new evidence in the criminal investigation against the ex-commander of the Air Force and Air Defense Ihar Azarenka.
Deployment of F-16s in Poland. Although the official explanation on this account was not provided by the parties, it became known that the relocation of a few dozen American jet fighter aircrafts F-16 to Poland from Italy is planned. In view of the fact that in the Polish Army the 48 planes of this type are in service, their total number will approach 90.
It should be noted that although F-16 refer to the class of fighters, they are designed primarily to attack ground targets, i.e. they are primarily offensive weapons. The aims and motives of the United States and Poland in deciding about the placement of the strike air group (if we exclude aggressive ones), remain unclear. The placement of a large number of offensive weapons near the Belarusian border will require adequate response. As such, the following options can be considered:
- additional supply of ZRK S-300 from the stock of the Russian army;
- supply of “Su” fighters and “Su-34” bombers;
- permanent deployment at the one of the national army airbases of the Russian airborne early warning planes “A-50”.
The possibility of supply of S-400 complexes is currently remote due to the low rate of their production for the Russian army and the need for primary coverage from the air strikes against the strategic targets in Russia in the first place – the places of the Strategic Rocket Forces destination in the European part of Russia.
Belarus authorities may decide to create a storage (base) of the Russian weapons, supply of which to Belarus is banned under the international treaties. In the first place these weapons would include cruise missiles and R-37, KS-172 missiles. The base staff can consist of unarmed Russian technicians. The protection of the base should be provided by Belarus. In parallel, it is necessary to carry out the training of Belarusian soldiers, so that they could act, if necessary, as operators of the stored weapons.
The presence on the territory of a neighboring state of a significant number of offensive weapons puts the question before the military-political leadership about the forming of a full-strength “long arm”. However, due to the financial crisis and the continuing conflict with Russia, all of the above response options are theoretical, it is unlikely that in the foreseeable future Belarus shall be able to take adequate for the threat preventive measures.
Ihar Azarenka. There is new information about the ex-commander of the Air Force and Air Defense Ihar Azarenka. Currently, he is released in his own custody. In a criminal case against the General a preliminary investigation proceeds, although on January 26, 2011 the Minister of Internal Affairs Anatoly Kuleshov said that the evidence in the case against Ihar Azarenka is sufficient and in the near future the criminal case would be transferred to the prosecutor for the referral to court.
The release indicates a weak evidence base and confirms our version that the main purpose of the criminal case was to discredit a military commander. This is a demonstration of a nearly unlimited power and capabilities of the current Minister of Defense Yury Zhadobin. In light of the systemic crisis facing Belarus authorities, the imbalance of the decision-making mechanism, the presence of the opposition sentiment among the high-ranking nomenklatura, it is not desirable to concentrate such a vast amount of information and capabilities in the hands of one commander, even if now there is no doubt about his reliability.
MILEX – 2011. The Belarus authorities are satisfied with the results of the exhibition MILEX – 2011, although the specific results were not reported. Interesting is the fact that almost immediately after the event the military delegation from Jordan visited Belarus. Although the details of the negotiations were not reported for obvious reasons, the most likely areas of cooperation can be the upgrading of armor and artillery systems, the production of the unmanned aircraft systems and the training of special operations forces. In our opinion, these areas are of the most concern for Jordan due to the neighboring Israel and the general growth of tension in the region.
In general, foreign consumers may be interested in the 927th center for training and use of unmanned aircraft vehicles (UAV) in terms of training the relevant specialists. A major shortcoming is the lack of the strike UAV in the Belarusian Army.
This material originally appeared in Russian on Belarusian Security Blog, which is operated by a group of young professionals in Belarus analyzing political, economic and security issues in Belarus.
Belarus Economy: In Search of More Loans
Last week Russian Minister of Finance Kudrin warned that Russia would reconsider any further loans if Belarus government continues to preserve multiplicity of exchange rates, restrict import and delay privatization. Over the last months all efforts of Belarus government focused on getting financial aid from Russia through the Eurasian Economic Community or the IMF. Unable to provide effective economic policy the government keeps applying for new loans, as it were the only solution to combat the deepening economic crisis. In the light of Kudrin's comments, even 3bn USD loan, approved by the Eurasian Economic Community in June, can be lost.
While waiting for the decision from Eurasian Economic Community, Belarus also applied to the IMF for another loan. The government expected to receive 3.5-8bn USD from the IMF. But instead of granting the loan,the IMF merely issued a number of recommendations on how to overcome economic and financial crisis following a two weeks visit. According to IMF official statement, Belarus government can count on financial support only when it really proves the readiness for structural reforms. That means that the government should implement concrete measures, instead of merely preparing drafts reforms.
On 4th of June the Summit of the Eurasian Economic Community in Kiev decided to grant Belarus a 3bn USD loan, to be paid over the period of three years. The first installment of 800m USD has been already transferred in late June. And this time Russia is going to be stricter with implementation of its requirements than before – to receive the loan Belarus should privatize its assets on the amount of 7.5bn USD over three years, by 2.5bn USD every year. If the government fails to implement the privatization plan and reduce budget expenditures, the future installments will be reconsidered.
Privatization was also one of the main requirements from IMF, when it granted Belarus a stabilization loan in 2008. But the government had never fully implemented it in spite of all declarations. The privatization agency, on which the IMF insisted, had never been created in Belarus. And only afew companies were privatized from the long list of those intended for privatization.
The price of the loan
Bargaining for the most lucrative Belarusian companies has already started. Beltransgaz, Belaruskali and MAZ remain the most frequently mentioned companies in Belarus and international media.
The negotiations for privatization of Beltransgaz by Gazprom have a long history. This gas transportation company is one of the most strategically important assets of Belarus, even though Russia declares that it is not particularly interested in it. Indeed, after Russia launch the oil and gas pipeline “North stream” onthe bottom of Baltic Sea, Belarus will lose its advantage of a major natural gastransit country. But as writes the columnist of Naviny.by Ivashkevich,without controlling its energy transportation system Belarus would find it difficult to diversify the energy suppliers in future and participate, for example, in BEMIP (Baltic Energy Market Interconnection Plan)financed by European Union.
Over the 2007-2010 Gazprom already purchased 50% of Beltransgaz for 2.5bn USD. Now Belarus tries to sell the rest of its share in the company for another 2.5bn USD in a bundle with the contract for lower prices of gas supplies. Gazprom is strongly opposed to mix these two deals and decrease gas price, which is already the lowest in the region. The average gas price for Belarus this year will be around 250 USD/1m3, while in Ukraine it is 290 USD/m3 and in Poland-401 USD/m3. But Belarus government insists that Belarus should have the same gas prices as Russian consumers. Thus, negotiations continue.
The second very important asset for the country and lucrative for investors is Belaruskali – one of the biggest producers of potash fertilizers in the world. Soon after Belarus received a loan from Eurasian Economic community, Belarus media began to discuss the news that Russian investor and large shareholder of Uralkali Suleyman Kerimov is already negotiating with the government (or more precisely with the Presidential Administration) the terms and price of the controlling stock of Belaruskali. According to Lukashenka’s estimate, the price of the whole company is 30bn USD. But a week later the next news came that Suleyman Kerimov was not going to buy any share in Belaruskali. It seems the negotiation with Belarus government became rather tough. Or Kerimov just realized that even purchase of major stock would not give him necessary control in the company.
The planned merger of Minsk automobile plant – MAZ with Russian automobile giant KamAZ is another deal, actively discussed in media. The negotiations are also postponed due to political reasons, as Belarus government wants to have higher share and bigger influence in joint company than it is suggested by KamAZ management.
Reportedly, Belarus prime Minister Miasnikovich suggested Azerbaijan to take part in privatization of key Belarus enterprises – oil refineries – Mozyr Oil Refinery and Naftan during his recent visit to Baku. What indicates that Belarus tries to weaken the Russian pressure and find other buyers of “family jewelry”.
So the number of companies intended for privatization will only expand. According to the requirements of the loan, received from Eurasian Economic Community, Belarus has to prepare a list of enterprises it is going to privatize until the end of the year. But Lukashenka, who acts as the sole owner of the whole country, will do as much as possible to postpone the privatization. Instinctively he understands, that privatization will inevitably change the structure not only of the economy itself but will also trigger political changes.
The persisting crisis
The June loan from the Eurasian Economic Community was almost unnoticed by Belarus economy. It is still impossible to buy US dollars or Euros in exchanges for the officially declared exchange rate, even though Belarusian rouble was finally devaluated by 50% starting from March. Belarus government refuses to let market itself to define the equilibrium exchange rate, because it simply cannot give up the illusion that this regulation will keep people’s saving from devaluation. Neither it starts interventions on the foreign currency market, as understands that foreign currency reserves are too small. Even with recently received loan the reserves are only 4.15bn USD.From the start of the year it comprised by 28.6% (in January-May).
Even the Ministry of Energy found it hard to buy foreign currency. It was not able to pay off the country's electricity debt to Russian energy company Inter RAO UES, which led to temporary suspension of electricity supply to Belarus.
Financial crisis and government restriction on interbank operations dried out the credit rivers – banks started to curtail their consumer credit programs. The important pillar of Lukashenka’s social program – preferential crediting of housing construction – is about to be canceled altogether. According to this program a large number of Belarusians received preferential housing credits with the interest rate of only 5% for 40 years (that was lower than inflation rate). And finally the government abandoned this program, gradually leaving its model of socially oriented economy, as there are no more sources to support it. For many years the preferential crediting of agriculture, state enterprises and housing construction was undermining the Belarus financial system. That in part caused the present economic crisis.
Belarus government has no strategy how to overcome the crisis. The previous month was marked by return of price regulation and introduction of few absurdist laws, which will have little or no influence on the economic crisis.
The only policy it is capable to make is to ban and restrict. With further worsening of economic situation Belarus government is likely to impose more bans and restrictions. Lukashenka simply tries to restrain the natural economic laws, which work against him.