Hockey Championship in Belarus: Breaking the Ice with the World
Yesterday Aliaksandr Lukashenka asked officials to make sure that foreign journalists would face no restrictions on media coverage of the Ice hockey World Championship in May.
Next month Minsk will host a major international sports event for the first time in the history of independent Belarus. Yesterday Aliaksandr Lukashenka asked officials to make sure that foreign journalists would face no restrictions on media coverage of the Ice hockey World Championship in May. Next month Minsk will host a major international sports event for the first time in the history of independent Belarus. It represents a great chance for Belarus to open up to the world despite some logistical drawbacks and controversies over human rights violations in the country. Belarusian society should use the event to establish new international contacts and relaunch a dialogue with Western countries to strengthen its independence and promote the country's socio-economic modernisation. Construction Hurdles and Accommodation Problems As the championship is fast approaching, Belarusian citizens and international observers question the readiness of the Belarusian authorities and the methods of their preparation for the event. They point to the last-minute rush to complete the construction of hotels which may result in the absence of the necessary equipment or lead to mistakes with the buildings' construction similar to the notorious Sochi dual toilets. The construction work being done for the championship is almost complete, despite the criticism surrounding the possible use of involuntary labour. The authorities finished the reconstruction of the Minsk-2 International Airport, brought the new ice hockey Chyzhouka-Arena for 9,500 spectators into operating condition as well as 13 new hotels that are ready to host about 3,500 guests. The last construction project, the Beijing Hotel, will be operating at the beginning of May. Nevertheless, tourist agents expect issues with the number of available hotel rooms. Rental prices are likely to skyrocket due to the deficit. Citizens have already expressed their willingness to lease apartments for an average price of about $100 a day which is equivalent to a fifth of an average monthly salary. The Challenge of Intercultural Communication The Belarusian border authorities are operating on a visa free regime from 25 April to 31 May for all those who have a passport and a valid ticket for the tournament. According to the latest estimates, nearly 70,000 international tourists are headed to Minsk from more than 50 countries, including 33,000 people from the EU. The largest groups are coming from Russia, Latvia, Germany, Poland, the Czech Republic and Slovakia. In addition, about a thousand journalists have applied for official accreditation, though only 400 of them will be able to get it and cover the hockey games in line with the IIHF’s quota. At first the Ministry of Foreign Affairs wanted to restrict accredited journalists in their right to cover non-hockey related topics. However, in the end, they agreed to allow for non-restricted coverage after several Finnish media outlets such as YLE and Helsingin Sanomat protested the proposed restrictions. This will probably be the most massive inflow of foreigners into Belarus since 1991 and it is likely to produce an intense period of information exchange. Many natives of Belarus will be able to make friends with visitors from Western countries, breaking the monopoly of state-run TV channels on information about how people live outside Belarusian borders. Both Belarusians and foreigners may even disprove many stereotypes about each other. The championship may spark an interest in Belarusians to learn foreign languages to communicate better, but at the moment the situation is far from perfect. Official statistics say that only about 5% of Belarusians (approx. 500,000 people) can speak English, but in practise far fewer people are able to speak it fluently. This is why foreigners may struggle to get assistance from local people if they need help. The organisers have sent at least 500 policemen to intensive English courses and they plan to deploy more than 1,000 volunteers in the city centre to resolve the issue. However, foreign guests are still likely to face this problem whether they decide to spend time outside the city centre or enjoy the Belarusian countryside. Visitors may also be shocked by the lack of politeness and respect for personal space in public transportation and the service industry, but the organisers have promised to take preventive measures. Boycott vs. Engagement: Opposing Views Critics of holding the championship games in Belarus, such as activists of the campaign Don’t Play with the Dictator (Ostgruppen), argue that the event strengthens the authoritarian tendencies already at play in the country and legitimises Aliaksandr Lukashenka abroad. The Belarus Free Theatre holds the same view. These groups called upon the IIHF and national federations to change the event's location to force the Belarusian president to improve the human rights situation in the country and amnesty all individuals identified as political prisoners. Another segment of Belarusian civil society, represented by such people as the rock musician Lyavon Volski and the journalist Viktar Martsinovich, considers the tournament to be a good idea. They think it will bring some change to a very isolated society. A small example – the Minsk underground has begun to use English for making public announcements. Whatever position one holds, it is evident that Minsk now faces a boom in its service industry. Businessmen are opening new quality hotels, hostels and cafes almost every week and the authorities are improving the state's infrastructure. As for Belarus in general, it will attract a lot of attention in the coming weeks that can result in a higher long-term interest in developments within the country. It is better for civil society and the political opposition to use this media attention for the spread of valuable information, rather than to ignore the event altogether. A Chance to Open Up the Country The hockey championship in Minsk is a great chance for Belarus to open up to the world and make a positive impression upon it. For example, Belarus was in the top-5 Google search queries in the United States when the Belarusian athlete Darya Domracheva won her third Olympic gold medal in Sochi. To make the most of this opportunity, Belarus needs to release those people who are considered political prisoners by the EU and international NGOs. This would make Belarusian society freer and would foster its creative potential to facilitate the modernisation of the economy. It would also be an excellent basis to renew more active relations with the EU and the US. These are necessary moves to re-balance Belarusian foreign policy and strengthen its position to negotiate with Russia on a number of issues, including oil and gas supplies. The Crimean crisis has shown that non-NATO countries in Eastern Europe may face significant challenges to their security and independence. A well-developed national identity, strong international reputation and plenty of allies are necessary to survive the current period of regional instability. George Plaschinsky George is a graduate of the London School of Economics where he studied under the OESS scholarship financed by the European Commission. This April the National Bank decided to its reduce refinancing rate, which has remained unchanged for the past 10-months. This measure is, to some degree, a helping hand for the real sector that is facing significant difficulties at present. However, despite their best intentions, this move may actually lead to serious imbalances and create additional pressure on the national currency. Unfortunately, there are still no signs of improvement for the Belarusian economy. Its reduced foreign exchange reserves, the ongoing consequences of the potash conflict with Russia, and difficulties with accessing external financing support all have the authorities turning its attention back towards privatisation. However, despite the potential sale of state property, the government has to reconsider how it goes about supporting and motivating its state enterprises. Evidence of the authorities' continued inefficient use of its budgetary revenues are one of the first places they should look. Changes in Refinancing Rate In the beginning of April the National Bank of Belarus (NBB) announced its decision to reduce the refinancing rate by one percentage point. Thus, beginning April 16 the rate has been set at 22.5% while previously it was anchored at 23.5% over the past 10 months. The reasons for this rate reduction is raising some concern amongst experts, largely due to Belarus' rather high inflation rates. Moreover, the IMF, in its latest World Economic Outlook, expressed expectations that the annual inflation in Belarus will hit a mark of about 16.3% in 2014, which is even higher than the figure in its 2013 forecast (15.5%). There are a few possible reasons for the NBB lowering the refinancing rate. A reduction of the refinancing rate will decrease credit rates, which makes access to financing for the real sector easier. This will likely stimulate the economy and accelerate economic growth. However, at the same time, this measure can destabilise the nation's financial sector through an outflow of national currency deposits and put additional pressure on the Belarusian ruble. Therefore, a reduction in the refinancing rate forces the National Bank to monitor the situation in the market even more closely in order not to make it any worse. Reduction of Foreign Exchange Reserves and Obstacles with External Financing In March, the foreign exchange reserves of Belarus dropped by $429m (USD) and at the beginning of April they totaled $5.715bn, which is the lowest level they have seen since November 2011. Since the beginning of 2014 a 14.1% reduction in the nation's reserves has occurred, which is around $936m. These kinds of negative trends are the result of the government's payments on its external debt servicing, a deterioration in the situation with foreign trade and its attempts to control fluctuations, or at least minimise their effects, on the currency market. At the same time there was practically no inflow of foreign currency into Belarus' economy. Belaruskali, which is one of the main suppliers of foreign currency to Belarus, keeps facing problems and continues to suffer the consequences of its falling out with Uralkali. According to its report on profits and losses, there was a significant drop in all key indicators of its operations. For instance, its net income dropped 4.9 times in 2013 compared to 2012. In order to improve the company’s position, in the beginning of April the authorities extended its zero rate for export duties on potash fertilisers until the end of 2014. The introduction of a zero export rate first occurred in September 2013 as an act of support and guarantee for the enterprise’s sustainability. Extension of these preferential export conditions will likely help to stabilise and improve Belaruskali's position, taking into account that there are finally signs of market recovery. With limited access to foreign currency, the authorities have been forced to announce the sale of certain state assets. In the beginning of April the State Property Committee made public a list of shares for sale as well as whole state-owned assets. The list consists of 87 state enterprises and includes the sale of an equity interest in the Mozyr oil refinery plant. Before that Belarus expressed its desire to sell all of its shares in the Mozyr refinery plant. Today’s revised plan assumes a sale of around 30% of its shares and the state holding onto 25%. There is no clear information available about its price. But taking into account that a preliminary evaluation of the enterprise’s value amounted to $4bn, it can be expected that requested price will be around $1bn. Another possible source of external financing can come in the form of another loan from Russia. On April 10, 2013 the Council of Ministers of Belarus approved an agreement with the government of the Russian Federation on the allocation of financial credit. However, there has been no precise information made public regarding the amount, timing and terms of the line of credit yet. Changes in the Treatment of State Enterprises Financial limitations, combined with unsatisfactory economic results, are forcing the authorities to change the way they subsidise state-owned enterprises. The low level of efficiency of how the state allocates its budgetary resources is one key reason for reforming its current model of providing support. Beginning in 2016 a new mechanism for state support will implement several changes. First, a number of instruments of support, such as budgetary loans, will be no longer available. Second, it is likely that the lion's share of state financial support will be done using a traditional bank lending system, where enterprises will be responsible for paying interest on its loans. Third, the long-standing 'personal approach' towards specific state enterprises will also cease to exist. Therefore, it looks like the available channels of support will become considerably more narrow and enterprises will need to find other ways of maintaining their operations and increasing their efficiency. Change could come in many forms, including the restructuring of dated, inefficient enterprises. Those unable to adapt, however, may well just go bankrupt. Maryia Akulava, Belarusian Economic Research and Outreach Center (BEROC) This article is a part of a joint project between Belarus Digest and Belarusian Economic Research and Outreach Center (BEROC)
Belarusian border authorities are operating on a visa free regime from 25 April to 31 May Read more
This will probably be the most massive inflow of foreigners into Belarus since 1991 Read more
The hockey championship in Minsk is a great chance for Belarus to open up to the world Read more
National Bank Reduces Refinancing Rate – Belarus Economy Digest
