Hybrid War, Belarusians Want Change, Crisis Provokes Crime – Digest Of Belarusian Analytics
New banknotes after denomination. Photo: onliner.by
Paul Goble: Minsk fears that Moscow may organise hybrid war and color revolution in Belarus. 65.5% of Belarusians want changes, according to fresh IISEPS poll. BISS`s Meĺjancoŭ: Belarus-EU relations have good potential for slow sustainable development.
Disappointment: economists Siarhiej Čaly Aliaksandr Čubryk analyse the results of the 5th Belarusian People's Congress. REFORUM study: economic crises have a negative impact on the criminal situation in Belarus. IMF mission in Minsk: Belarusian economy needs large-scale reforms. This and more in the new Digest of Belarusian Analytics.
Domestic politics
Belarusians Debate Their Development Path – Grigory Ioffe considers debatable a need in All-Belarusian People’s Assemblies as an extra-constitutional body to glorify the government’s achievements, legitimise its shortcomings and set plans for the future. The analyst compares the Assemblies with the medieval Slavic Veche – a ritual of direct democracy and a gathering at which communal leaders were expected to give their approval to the actions of the monarch.
IISEPS National Poll in June – Independent Institute of Socio-Economic and Political Studies (IISEPS) released fresh results of its national poll. Namely, 65.5% of Belarusians want changes, while 25.5% prefer to keep the status quo; protest moods have grown from 8% two years ago to 14.7%; 81% believe Belarusian economy is in crisis; 57% think things in Belarus are going in a wrong direction. Geopolitically, there is a slight movement towards the West.
Foreign policy and security
Minsk Fears Moscow May Organise Hybrid War and Color Revolution in Belarus – Paul Goble analyses different reflections on Belarus' new military doctrine, which was approved by the parliament on 16 June. The author makes a conclusion from all arguments that Moscow is likely to try to promote its own version of a colour revolution in Belarus rather than to invade, if it decides that it has to change Minsk’s direction in a radical way.
Belarus-EU relations have good potential – BISS’s Dzianis Meĺjancoŭ analyses the progress in normalisation of relations between Belarus and European countries. The analyst concludes that Belarus-EU relations have good potential for sustainable development, but such development will not be fast.
Economy
Economy 101. Complete Disappointment – According to economist Siarhiej Čaly and Director of the IPM Research Centre Aliaksandr Čubryk, the 5th Belarusian People's Congress has brought nothing new. And it's a bad sign for the economy. The Congress took place on June 22-23 in Minsk and approved the country's development program for 2016-2020. The experts analyse the report by Aliaksandr Lukashenka in the studio TUT.BY-TV.
REFORUM. Economic Crisis and Crime: What Belarus should be afraid of – Aliaksandr Aŭtuška-Sikorski, the Belarusian Institute for Strategic Studies (BISS), discovers that an economic crisis has a negative impact on the criminal situation in Belarus – thus, in times of economic crises of 1991-1994 and 1997-2000, the rates of all types of crimes (except robbery) grew up.
Innovation Brings Great Opportunities To The Belarusian Economy – Rumen Dobrinsky, country expert for Bulgaria and Belarus, considers that the Belarusian economy has still to be discovered by many potential investors, but it is worth the effort. Investors will find both innovative firms with their roots in the past and new technology firms born out of the innovative drive of talented young entrepreneurs.
Civil society
The Citizen of Minsk, Who Started the Fashion on Embroidery – Citydog.by magazine in its section Admetnyja/Special talks to Paviel Belavus, a founder of the online store of Belarusian goods Symbal, which introduced the fashion for things decorated with Belarusian ornaments. For two years Pavel and the team successfully promote their business, which not only increases the interest for the national culture but also brings a real profit.
Civil Participation in Decision Making in the Eastern Partnership Countries– The study examines the existing laws, agencies and procedures governing civil participation in political decision-making at national and local level in six Eastern Partnership countries. The study contains a chapter on Belarus to analyse the related components – from access to information to opportunities for citizens to participate in direct democracy.
Reforms review
IMF expects reforms in Belarus. International Monetary Fund experts predict a recession of the Belarusian economy in 2016 and 2017, with a slight resumption of growth only in 2018. This is stated on June 30 in the final statement of the IMF mission that worked in Minsk. Belarus plans to borrow $1 billion from IMF in 2017, according to a draft macroeconomic forecast drawn up by the government.
Belarus holds the ruble denomination. From July 1, Belarus moves to new money without four zeros in a third currency redenomination since August 1994. Now the exchange rate is the following: $1 costs 2 Belarusian rubles, 1 euro – 2 rubles 22 kopecks, 1 Russian ruble – 3 kopecks.
Lukashenka seeks compromise between supporters of market reforms and conservatives. Belarus in Focus believes that Lukashenka is attempting to find a compromise solution to economic problems between reforms and conservation. Apparently, the government is increasingly split over future economic development policy – either liberal, or conservative. Meanwhile, assistant to the president Kirill Rudy, known as an advocate of economic reform, is leaving the country to serve Ambassador of Belarus to China.
Belarus to establish regional centres for economic growth. Centres for economic growth will be set up in the regions of Belarus. The decision is envisaged in Belarus' draft social and development program for 2016-2020. Centres for economic growth will be established through the concentration of resources on the key areas, able to ensure efficient use of the local resource potential and competitive advantages.
Belarus Digest prepared this overview on the basis of materials provided by Pact. This digest attempts to give a richer picture of the recent political and civil society events in Belarus. It often goes beyond the hot stories already available in English-language media.
The Heavy Price of Belarusian Agriculture
Belarus diary products. Photo: bobruisk.ru
Belarus is one of the world's top 10 butter producing countries.
However, such an achievement comes at a price – every year the agricultural sector in Belarus requires at least $750m on average in government subsidies. This is more than the Belarusian army, police force, health care sector and education budgets all together, according to the Polskie Radio
Today, even in Belarus not many people are aware that the main share of the Belarusian agricultural sector is composed of cooperative farms or so-called agricultural enterprises.
Contemporary Belarusian cooperative farms are the legacy of the "kolkhoz" – a collective farm that formed the basis of agricultural politics in the Soviet Union for its entire existence. Belarus is the only country in the world that has retained such a system. More than 60% of such collective farms do not generate any profit.
Belarusian agricultural renaissance
For more than 20 years, the Belarusian agricultural sector has existed in a limbo state. While current decision makers talk about the necessity of reforms, collective farms continue to function according to the pattern established during the Soviet era. Between 2001-2006, some collective farms were renamed "agricultural enterprises" but the essence of the command economy and governmental subsidies persisted.
collective farms have been renamed "agricultural enterprises" but the essence of the command economy and governmental subsidies persisted Read more
Today, despite being called cooperatives, large scale Belarusian farms have little cooperation or local decision making powers. The workers don’t see themselves as owners, but rather as hired temporary employees. Their performance quality reflects low wages. Farm management is not locally elected, but appointed from the neighboring political district. Moreover, almost none of the managers are specifically educated and the management turnover period can be as little as one year.
Critics of contemporary collective farms see such agricultural politics as old-fashioned. According to economist Mihail Zaleski, current decision makers, and Lukashenka in particular, can’t seem to think outside the pattern set by the agricultural encyclopedia from the Stalin era. Industrialization of the agricultural sector remains a priority for the Belarusian government, while in Europe it is rather a result of corporatization and agricultural-industrial integration.
the size of an average collective farm in Belarus is 100 times bigger than those in Europe Read more
The Belarusian government currently thinks according to the motto ‘the bigger, the better.’ Today, the size of an average collective farm in Belarus is 100 times bigger than its European counterpart and the average size is around 22 thousand hectares. Given current scaling and management problems, it is clear that such agricultural enterprises are be unprofitable. Even enormous subsidies from the Belarusian state are not enough to assure the efficiency of such giants.
The financial drain
Around $43.8bn have been invested into the agricultural sector in Belarus over the last five years.
At the annual agricultural celebration "Dagynki", in 2014, Lukashenka admitted that the country invests around $2bn into the agricultural sector yearly. At the same time, 60% of agricultural enterprises would fail without governmental support. Around 1/6 of collective farms in Belarus generate losses that are greater than the financial investments poured into them.
Despite all the investment into giant agricultural enterprises, they are suffering from a declining workforce and lack of adequate technical equipment. For example, in the collective farm of the Biaroza district in the Brest region, harvest machine drivers were only able to work every other day due to broken or unavailable equipment during the summer months.
Salaries in the farms can be as low as 25$ a month during the low season Read more
Salaries in the farms can be as low as 25$ a month during the low season, while the highest recorded salary is about 350$ for narrow specialists in the agricultural sector. An average milkmaid in the Biaroza district works for 60$ a month in the winter season, despite the fact that the workday starts as early as 4 am and ends late at night.
Accordingly, the number of people living in villages and working for agricultural enterprises has decreased from 29,9% to 24,9% over the last 10 years. Around 620 thousand workers have left their workplaces to seek employment elsewhere. Those who remain generally have troubles with alcohol and are not able to find a job anywhere else. To combat such a decline, the Belarusian government has even attempted to run campaigns to attract foreign workforce, primarily from the former Soviet republics.
So where does the money go? In 2013 one hectare of agricultural land incorporated into the collective farm required $110 of donations. At the same time, private farmers received only $28 per hectare.
Experts think the problem lies in a lack of comprehensive privatisation processes which would allow for better, smaller scale management and more effective resource allocation. Moreover, there is another larger scale problem: the Belarusian government is reluctant to grant private land property rights and can currently revoke them at any time.
The second problem is that such agricultural enterprises have high debts. Nobody wants to acquire a farm when the cost is so much higher than theoretical profits. Today, the debt of agricultural enterprises is about 1.7 times higher than the average income they make. It would be rational to allow privatisation for a nominal cost, for example at a fixed basic amount that today equals roungly $10.
The future of the Belarusian agricultural sector
One solution attempted by the Belarusian government was to ‘attach’ the farms to industrial units or business enterprises. However, that also didn’t work out very well: the most successful farm “Agra-Kuhtichi” curated by Belarusbank, Belarus's largest commercial bank, made only about $90,000 in profits a year. The least successful of the three attached farms “Agra-Navatar” made only about $9,000. Recently, the bank refused to curate any agricultural enterprises.
According to most experts, it is impossible to adapt current agricultural enterprises to a market economy. The farms have to downsize and acquire local leadership and participation investment. Economist Mihail Zaleski is sure that sooner or later privatisation will occur, but its results might be far from ideal.
In the worst-case scenario, large agricultural farms would become private property of higher level functionaries in a way reminiscent of feudalism rather than contemporary enterprise.
One of the biggest problems in the agricultural sector development today is that all decrees and decisions are taken in Minsk, far away from the land. Lack of comprehensive agricultural sector reforms is dragging the whole country’s development down and does not permit proper capital accumulation.
Following the successful examples of neighbouring countries’ agricultural transformations, such as Poland, Belarus could be on its way to an economic revival.
Maryia Rusak
