Belarus Helps Ukraine with Military Equipment
On Tuesday, a provocative article appeared in the pro-Kremlin Russian daily, Vzglyad. It demanded that Belarus hold a referendum on becoming a part of Russia or else face Ukraine's fate.
The article referred to Alyaksandr Lukashenka's recent interview with Bloomberg, in which he once more cautiously expressed his sympathy for Kyiv and criticised the annexation of Crimea.
Moscow knows these are not just words. Minsk has avoided using the strategic means at its disposal – like its control of the Ukrainian oil products market – to destabilise the neighbouring country. Instead, it has enhanced economic cooperation with Kyiv and even sold military equipment to Ukraine.
Strategically Important Support
Belarus has been consistent in supporting Ukraine since the Crimea crisis. In March 2014, Minsk could have made the life of Kyiv's new leadership much harder by demanding advance payments for oil products. Because Belarusian firms control about 60% of the oil goods market in Ukraine, this step would have further weakened Kyiv's bankrupt government. Instead, the Belarusian side increased the supply of oil products and offered delayed payments to its neighbour.
In January 2015, the Belarusian ambassador to Kyiv Valiantsin Vyalichka announced that Belarusian firms would conduct transactions in the Ukrainian national currency. Even though this decision facilitated better bilateral trade between the two countries, it entailed political and economic risks for Belarus. Minsk risked retaliation by the Kremlin, on the one hand, and financial losses due to the unstable exchange rate of the Ukrainian hryvna, on the other.
Small but Important Supplies
Belarusian-Ukrainian trade in military or dual-use goods further proves that Minsk has not succumbed to Moscow's pressure. As the crisis in Ukraine unfolded, the media reported that Belarus increased contact with Ukrainian defence firms, discussed joint ventures as well as the transfer of new technologies.
Less known is the growth in the deliveries of Belarusian military-relevant equipment, spare parts, and weapons components to Ukraine. According to Ihor Tyshkevich of Ukrainian Hvylya.net, the official bilateral trade statistics demonstrates a significant increase in "unspecified" Belarusian exports of an apparent military character. The military components of exports are usually hidden in official statistics under the category of “other.”
While the volume of military-relevant exports remains modest, these transfers may have played an important role in boosting Ukraine's defence by satisfying very specific needs of the Ukrainian army. For example, one of the problems Kyiv faced last year was a lack of engines and batteries for its armoured vehicles. Tyshkevich analysed official statistics and found out that the export of “other” engines from Belarus to Ukraine increased from $1.1m in 2013 to $1.67m in 2014. The export of spare parts for “other” engines has increased twofold, reaching $2.84m in trade.
Since the beginning of the war in Eastern Ukraine, Belarus has been supplying Ukraine with vehicle batteries. In 2013 Ukraine did not import any of these batteries from Belarus. In the second half of 2014, Minsk exported $125,000 worth of them. In 2014, Belarus also sold $2.19m worth of electrical engines, which can be used in tank turrets. It's an impressive rate of growth when compared to the previous year, in which only $16,000 worth of electrical engines were sold, writes Hlylya.net.
Minsk has also supplied Kyiv with optical and electronic devices, one of the specialisations of the Belarusian defence industry. According to official statistics quoted by Tyshkevich, last year Belarus delivered $1.7m (in 2013 – $184,000) worth of binoculars, monoculars and thermographic cameras to Ukraine, gun sights to the tune of around $1m, as well as range finders, monitors and other optic and electronic components for military equipment valued at over $1.1m.
Military Trucks and Jets
Belarusian exports also included some ready-to-use military equipment. There are indications that Kyiv bought Minsk Wheel Tractor Plant (MZKT) chassis for its missile and artillery systems. Despite the slowdown in the Russian market and the corresponding decline in Russian military purchases from MZKT, the plant has managed to earn more money in July-September 2014 than in the entire previous year – at least partly due to the growth in exports to Ukraine.
The Minsk Truck Plant's (MAZ) sales to the Ukrainian armed forces are openly publicised. In July 2014, Ukraine's Internal Affairs Minister Arsen Avakov revealed that the Ukrainian National Guard had placed orders for trucks and trailers from Belarus, and the media reported on a delivery of 44 new MAZ trucks. In October 2014, the National Guard reportedly bought 27 more MAZ trucks and several dozen trailers from Minsk.
Even more strategically important was Belarus-Ukraine cooperation in the field of aviation. The Belarusian 558th Baranavichy aircraft repair factory may have been speaking about Ukraine when it announced a $66m overhauling of MiG-29s for a “foreign customer.” The announcement coincided with the Ukrainian army receiving several overhauled MiG-29s in December 2014 and January 2015. The Moscow-based Nezavisimaya Gazeta commented that the Belarusians may have been behind the restoration of the Ukrainian aircraft.
Minsk has also dramatically increased exports of “flying vehicles” and parts for them, which likely includes drones, to Ukraine. If in 2013, Belarus's respective exports amounted to $12,000, in 2014, Minsk earned more than $5m, while in January-March 2015 – almost $4m, reports Hvylya.net.
Much for Belarus but too Little for Ukraine?
The full scale of these deliveries remains unknown. Recently, however, the head of the Belarusian Military Industrial Committee Siarhei Hurulyou commented on the rapid growth of defence exports. According to him, the national defence industry has earned more than $800m through exports last year. Undoubtedly, a portion of these military and dual-use exports went to Ukraine.
Russian daily Nezavisimaya Gazeta downplayed the significance of Belarus's military exports. It quotes a Russian military expert saying that Belarus “currently cannot provide large-scale aid in re-arming the Ukrainian armed forces because its specialisation includes only a limited range of defence products.”
While Belarus can hardly rearm Ukraine, Minsk seems to be helping as much as it can. Belarus clearly wants to maintain good ties with Kyiv and hopes to help Ukraine survive as a state. In doing so, Belarus risks enraging the Kremlin, who can easily retaliate against the Belarusian leadership.
Such policies prove that the noisy battles of rhetoric between Minsk and Moscow are not all just words. Belarus also pursues its own policies, even as it pays attention to Russia's own sensitivities and is treading carefully. Minsk is clearly willing to sabotage and resist the Kremlin's regional ambitions, so long as they do not suit them.
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.