Last month ended the trial against former leader of the Belarusian Republican Youth Union Leanid Kavalyou.
Police caught Kavalyou with a major bribe. The sentence was harsh – seven years of imprisonment in a maximum security colony with property confiscation. The criminal case represents a telling example of how good the "new governing elite" in Belarus is.
In 2012 Lukashenka surpassed Brezhnev with regard to the term of reign. A new generation appeared in Belarus during this time period, the generation that does not remember the country being governed by someone else. Pro-government youth in Belarus is corrupt and opportunistic while opposition-minded young people have to work in extremely difficult circumstances.
Two Ways To The Politics
The overwhelming majority of Belarusian young people are not interested in politics or private business. Belarusian state started creating favourable conditions for the business and this has somewhat started to attracted the youth there. But politics still remains an almost closed sphere. In today’s Belarus, the youth politics has only two forms: pro-Lukashenka associations or opposition organisations, which function in the regime of permanent repressions. It is worth mentioning that neither of them influences the society much.
The consequences of membership in these organisations may be diametrically different. On the one hand, there’s Usevalad Yancheuski. He used to be the First Secretary of the Belarusian Patriotic Youth Union in the middle of the 90s. Today he works as the closest assistant of Lukashenka and is the youngest official who forms the state ideology in Belarus.
On the other hand, there’s Paval Syevyarynets, who headed the opposition Young Front. Today, he is serving his second criminal term. The first one was for organisation of mass protests after the referendum-2004, when Lukashenka changed the Constitution and got the right to run for President for as many times as he liked. The second sentence was for the mass protest after the latest presidential election. At present, the politician is serving the punishment in the form of forcible hard labour – the prisoner is obliged to live in the special facility and to work at the enterprise appointed by the authorities.
The “For Lukashenka” Youth
Authoritarian regimes often create youth organisations which do their best to support the regime and prepare new personnel. The Belarusian Republican Youth Union (Belarusian abbreviation BRSM) performs this function in Belarus.
The BRSM was founded 10 years ago. Then the government decided to unite the two biggest pro-authoritative organisations. The first one was the Belarusian Youth Union, the successor of the Lenin Communist Union of Belarusian Youth, and the second one was the Belarusian Patriotic Youth Union. It is worth mentioning that the BRYU is often called Lukamol in Belarus, as if to compare it with the old Komsomol (Communist Union of Youth).
Lukashenka pays the BRSM for the support open-handedly. For example, in 2011 the BRSM received 20.5 billion Belarusian roubles (approximately 6.6 million dollars). This makes 98% of all the finance which is provided to the youth politics in Belarus in total.
In the reality, the BRSM gets even more. On 13 January 2003 Lukashenka signed a decree which required that the BRSM local branches were financed by the local authorities’ budget. The government was also responsible to repair the organisation's main office. It is obvious that the authorities created very favourable conditions for the development of a strong loyal youth organisation in Belarus.
However, there appeared no strong organisation, although half a million Belarusians are already members of the BRSM. A large number of members does not mean that all of them support the current regime. The majority of people signed up for the BRSM either forcibly or because it gave an opportunity to get a place in the hostel for the term of study in the university or technical school.
The BRSM also uses the so-called “secret recruitment”. The mechanism is simple: an order comes “from the above” that new members should join the organisation. A head of a branch (usually this is a school employee who has even his own office at school) takes a list of school students and sign them all up to the BRYU.
The BSU student Kryscina Karcheuskaya came across such situation when she found out that she had to pay the membership fee to the BRSM on graduation of the university, otherwise they would not give her the diploma. When these facts become known and Krystina demand to investigate the case, the BRSM refers to “technical problems” and hushed up the matter.
Despite the great financial support, administrative resource and half a million members, the BRSM failed to become a strong organisation. In the first place, it is connected with the lack of new ideas. The BRSM, as well as other branches of the regime, realises more and more that the social-economic model which Lukashenka’s regime praised for so long has no future. The second reason for the BRYU’s weakness is the absence of competition. The pro-Lukashenka youth lives in the conditions when the organisation exists by itself and has no contacts with other organisations or the independent media.
The “Against Lukashenka” Youth
Although the Belarusian youth takes no genuine interest in the BRSM, it does not mean that the opposition movements are popular. On the whole, the Belarusian youth is not as opposing as many would think. Just think about administrative detentions, fines, expulsions from universities make the daily routine of the youth opposition activists, it becomes clear why the opposition youth movements are not so popular in Belarus.
For example, the Young Front activist Raman Vasilieu, has been detained many times during this year and has spent 69 days in the Akrestsina Street detention centre. Besides, Young Front is the only organisation in the country which can compete with the BRSM with regard to popularity.
However, the conditions in which the Young Front and the BRSM conduct their activity are totally different. Several Young Front activists are serving criminal sentences today (including leader of the organisation Zmitser Dashkevich). Any activities on behalf of the organisation is banned by the Criminal Code because it was not registered. Activists do not have offices and often serve administrative detentions.
The Bleak Future
The only thing that the Belarusian Republican Youth Union and the Young Front have in common is absence of new ideas. The Young Front is coming through a crisis, the same as the whole opposition, and cannot offer anything new to the society in order to attract new adherents.
Belarusian youth does not want to live in a country with no political and economic reforms and no long-term opportunities. They also do not believe that they can change anything in Belarus. For many the only way out is emigration. The research of the Independent Institute of Socio-Economic and Political Studies showed that 65 % of young people want to leave the country. It is interesting that not only the democratic youth emigrates, but the officials’ children as well.
Soyuzkali is Hustled to the Finish Line
On 10 September during his meeting with managing director of the Belarusian Potassium Company (BPC) Aleksandr Lukashenka made the following statement:
"In the events involving BPC, even if some issues are still not resolved, then they became less relevant: there are no conflicts or even matters of argument. However, we need to streamline the work and may be even the structure of the company."
What matters of argument have been taken from the agenda related to BPC? What structural reform of the company is Lukashenka likely to contemplate?
Belarusian Potassium Company Moves to Switzerland
Change of jurisdiction of the Belarusian Potassium Company CJSC to Switzerland was initiated as early as last year by Uralkali, the Russian shareholder of BPC. It happened straight after division of the potassium market in Russia by merger of two of its main players, Uralkali and Silvinit. Businessman Suleyman Kerimov, currently a co-owner of Uralkali, was involved in this process.
In April 2011, new top managers of the amalgamated company Uralkali-Silvinit came to a meeting with Aliaksandr Lukashenka with an idea to move the office of the special exporter of Belarusian and Russian potash fertiliser to Switzerland. The following arguments were put forward. Switzerland, due to particularities of local laws, ranks among the low-tax jurisdictions. This is why relocation of the office of BPC to another jurisdiction would allow the company to raise cheaper finding for implementation of joint investment projects.
Besides, this would also help avoiding possible sanctions against Belarusian products if they are introduced (at that time, this matter was brought into focus).
"The first integration project of Belarus and Russia"
It was not easy for the Belarusian government to decide on the change of jurisdiction of BPC. The government held a number of meetings dedicated to this topic but the matter was still under discussion and did not get unequivocal support among concerned officials.
Because repartition of the Russian potassium market was carried out at the instigation of political forces in the Russian leadership, we may suppose that managers of Uralkali had recourse to these forces in order to close the chapter on the Belarusian discussion.
The project to create Soyuzkali – this "first real major integration project of Belarus and Russia", as it was qualified by First Deputy Prime Minister of Belarus Uladzimir Siamashka, – was brought to the highest political level.
In late July 2012, First Deputy Prime Minister of Russia Igor Shuvalov and Deputy Prime Minister of Belarus Siarhiej Rumas instructed the concern Belnaftakhim and the Ministry of Industry and Trade of Russia with participation of Uralkali and Belaruskali to submit proposals regarding establishment of a joint venture Soyuzkali by 1 September 2012.
Shortly thereafter, Aleksandr Lukashenka also reminded the government to resolve the issues related to the work of BPC. According to him, "there should be no more doings around this, even if we have to review our relations with the Russians". As it was said, the shareholders should either work together or go into free floating.
It was evident from the beginning that none of the parties intended to break off relations. Uralkali, which declared synergetic effect of joint work with the Belarusian producer of potassium chloride in the world market, does not need it. Moreover, as most analysts say, Uralkali was bought for reselling (the timeframe of possible resale has not been announced yet), and thus the company needs only positive signals to encourage the stock price growth.
Belaruskali, which does not have its own trader network, also does not need a breakup. Besides, the Belarusian party expects a particular payoff from the joint export policy with the Russian company. A year and a half ago, Aleksandr Lukashenka called unification of potassium assets in Russia "a revolution in the world potassium market", probably expecting that such "revolution" would unfailingly affect growth of the global prices on potassium.
The Russians insisted on a technical audit
So, it was clear from the beginning that the shareholders would have to come to terms on outstanding matters regarding establishment of the successor of BPC. "Nobody speaks of a breakup. There are some peculiarities… Some people who would like to get back to "muddy water", Uladzimir Siamashka said earlier.
However, despite an instruction to come to terms by 1 September the shareholders were not able to take the outstanding issues off the table at the meeting of the board of directors of the Belarusian Potassium Company on 21 August.
Two key questions remained unsolved just a few days before 1 September. The first regarded the balance of sales volumes of potash fertilizer in external markets. An issue of pricing policy – elaboration of the price formula for potash fertilizer – was not fully solved.
While establishing BPC, Belaruskali and Uralkali signed an agreement which provided that the export quotas would be divided among principal shareholders on the basis of their established production capacities. Initially, the share of Belaruskali amounted to 60%, and the share of Uralkali amounted to 40%. However, after the merger of Uralkali and Silvinit the maximum production capacities of Uralkali reached 12.5 million tons this year, and those of Belaruskali amount now to 10.3 million tons.
The shareholders agreed that Soyuzkali would work on the same principles which were agreed at the creation of BPC: the shares of Uralkali and Belaruskali in sales would depend on the maximum production capacities of each of the companies. At the same time, they did not agree what the current ratio was and how often it should be revised.
The Belarusian party deemed unfair the existing allocation of the sales volumes in BPC between Uralkali and Belaruskali: 47.5% to 52.5% in favour of the Russian shareholder. The Belarusian party would like to have 49.15%, and the Russian shareholder would have 50.85% of the sales.
The outstanding issues in the establishment of Soyuzkali were discussed at a meeting of the presidium of the Council of Ministers on 30 August. Press secretary of BPC Filip Hryckou said after the meeting that "the parties came to terms on the matters of principle, disagreements were removed, and currently we work on the details of the algorithm of interaction between the Russian and Belarusian shareholders".
Reportedly, the parties were not able to agree on all positions regarding the terms of establishment of Soyuzkali. The Belarusian party continues to insist on a single-channel system of sales through an exclusive trader, while Uralkali would like to maintain sales through its trader, Uralkali-Trading.
The issue of allocation of quotas for sales and export of potash fertilizer between the Belarusian and Russian founders of BPC also remained problematic. Aliaksandr Lukashenka spoke of it during his meeting with managing director of BPC Valiery Ivanou on 10 September.
According to Lukashenka:
"In fact, the Russians themselves insisted on an independent audit of production of potash fertilizer, and we agreed that the sales of potassium would depend on this. How is this question being solved now? As far as I know, the Russians are very reluctant to agree on increasing export of the Belarusian part of potash fertiliser, and it would be legal."
Will Soyuzkali be managed from Minsk?
Managing director of Uralkali Vladislav Baumgertner confirmed on 11 September that all matters were not arranged conclusively, and there were outstanding issues related to shares of two companies in the sales volume of Soyuzkali as well as issues related to calculation of the average price. "But these are technical issues. They cannot remain unsolved because both Belaruskali and Uralkali are very interested in continued existence of the joint trade company".
It is already known that Soyuzkali will be created on a parity basis – Uralkali and Belaruskali will each own 50% of Soyuzkali. The new trader will be registered in Switzerland. The Russian party estimates that the process of establishment of the company will take additional six to nine months. As a result, Soyuzkali may start operating in the second half of 2013.
For some time, BPC and Soyuzkali will legally coexist in parallel but at a certain point of time business will be fully transferred to Soyuzkali and the contracts will be renegotiated, Vladislav Baumgertner said. "As soon as Soyuzkali starts working normally, we will leave BPC", he added.
However, the question of expediency of transfer of a number of regulatory functions to a new potassium trader remains one of the most sensitive for the Belarusian government. Concerned Belarusian officials still do not have concurrent views about it. It is no coincidence that Uladzimir Siamashka pointed out repeatedly earlier that while Soyuzkali would be registered in Switzerland, the field of competence of this company would remain in Minsk. As he said, "BPC will operate in accordance with the same algorithm as before".
BPC earlier also pointed out in its official commentary that "change of jurisdiction of the company does not imply in this case an actual transfer of its office from Belarus to Switzerland" – "the activities of Soyuzkali will be coordinated from Minsk, while the company gets a number of new possibilities related to preferential tax treatment as well as to access to bank credit resources". Now, there is no word about any kind of coordination of activities of Soyuzkali from Minsk. At least, neither party speaks about it.
Earlier, Aliaksandr Lukashenka also said that "the potassium company should deal not only with sales of potash fertilizer but also of complex, mixed fertilizer", which is now in demand in the world market. It seems, however, that this issue is not among the Russian party's priorities.
The Russian shareholder does not exclude that Soyuzkali will deal with sales of other types of fertilizer along with the potassium chloride. "If it creates additional value and gives us some synergetic effect in the context of reducing costs, it will be possible. But it is not being studied seriously yet", Vladislav Baumgertner said in this regard.
This original article originally appeared in Russian on Nashe Mnenie. It is published as a part of collaborative arrangement with the Agency of Political Expertise.