New Agreement with EU, Reviving Embassies with the US – Belarus Foreign Policy Digest
Encouraged by "non-negative dynamics" in Belarus, the European Union is drafting a new kind of framework agreement with Minsk. It will take into account the realities of their relationship. In the meantime, Minsk and Washington are discussing the practicalities of resuming the normal functioning of their embassies, which have been frozen since 2008.
In two months from now, Belarusian and Israeli citizens will begin enjoying the convenience of a visa-free regime between the two countries. Several UN institutions have adopted their assistance programmes for Belarus over the next five-years amounting to $94 million in total.
Belarus and the US: Re-establishing Full-Scale Embassies?
On 11 September, foreign minister Vladimir Makei received a delegation from the United States Department of State led by Under Secretary of State for Management Patrick Kennedy. In their press releases about the meeting both the Belarusian MFA and the US embassy confined themselves to a vague formula about the deliberation by the parties on the status of their bilateral relations.
Belarus and US are ready to discuss re-establishment of full-scale embassies Read more
In fact, the true purpose of Patrick Kennedy's trip to Minsk was to discuss the modalities of resuming the normal functions of the American embassy in Belarus. In 2008, Belarus restricted unilaterally the number of US diplomats allowed to reside in Minsk to five (later six) persons. The United States also had to withdraw its ambassador.
Patrick Kennedy's primary sphere of responsibility is human resources, budget and foreign missions. In all probability, Belarus and the US have reached a point in their step-by-step strategy of improving relations where they can discuss practicalities of restoring full-scale diplomatic relations. Both parties assume at this stage that the forthcoming presidential election will clear the way for such an arrangement.
Belarus and the EU: A Formal Agreement in Sight?
Jean Asselborn, the foreign minister of Luxembourg, who's country holds the EU presidency, said to journalists on 4 September that the European Union was preparing new agreements with Belarus and Armenia. These documents would bind the parties less than the association agreements. The diplomat failed to find a name for such agreements or elaborate on their modalities. However, he noted that they would be a "lighter and less fundamental version" of the association agreement and would not include tariff concessions.
Jean Asselborn noted the "non-negative dynamics" in Belarus. "Europe should not lose an opportunity, which is emerging [in relations] with this country. We should not think about the regime, we should think about people".
Currently, no framework agreement governs relations between Belarus and the EU. The parties signed a Partnership and Cooperation Agreement in 1995; but the EU did not ratify this document. The Belarusian government has not commented so far on Asselborn's revelations.
Meanwhile, deputy foreign minister Alena Kupchyna went to Brussels on 3 September to attend the sixth round of consultations on modernisation between Belarus and the European Union. The parties took stock of the results of the previous discussion rounds and discussed prospects of cooperation in priority areas.
Belarus foreign ministry seeks recognition of "certain progress" in the presidential election Read more
A week later, on 8 – 11 September, Alena Kupchyna visited Romania and Sweden for political and economic consultations with her counterparts in the respective foreign ministries. The trip to Stockholm also included a meeting with Kent Härstedt, special coordinator of the short-term OSCE observer mission at the presidential election in Belarus.
Back in Minsk, Alena Kupchyna and her boss Vladimir Makei have been meeting on a regular basis with the observer missions of the OSCE Office for Democratic Institutions and Human Rights and the Parliamentary Assembly of the Council of Europe. The ministry's task and ambition is to have European observers find "certain progress" and "positive developments" in the forthcoming election while recognition of Belarus having a free and fair election is still out of the question.
Securing UN Assistance to Belarus
Several UN agencies at their regular meetings in New York adopted development blueprints for assistance to Belarus for the next five years.
On 31 August, the Executive Board of the United Nations Development Programme, the United Nations Population Fund and the United Nations Office for Project Services (UNDP/UNFPA/UNOPS) adopted the UNFPA country programme for Belarus for 2016-2020. The programme's indicative budget amounts to $3.7 million. The money will be spent primarily on strengthening sexual reproductive health policy, including family planning, prevention of cancer and HIV, as well as counteracting gender-based violence.
In two days, the same UN body adopted the UNDP Country Programme for Belarus for 2016-2020. The UNDP programme is the main UN development assistance package for Belarus with resources requirements estimated at $82 million. Under the new programme, the UNDP will contribute to strengthening effective governance systems, pursuing a green growth trajectory and ensuring universal access to basic services for vulnerable groups.
The EU and the US are among the main donors of UN assistance programmes in Belarus Read more
Finally, on 9 September, the Executive Board of the United Nations Children's Fund adopted the UNICEF Country Programme for Belarus for 2016–2020 with an estimated budget of $8.5 million. The programme will focus on children with disabilities, children deprived of parental care, juveniles in conflict with the law, children and female survivors of violence, as well as adolescents.
Only a small part of the funding will come from the regular UN budget. The bulk of the financing has so far been provided by international donors such as the Global Fund to Fight AIDS, Tuberculosis and Malaria, the European Commission and the US Agency for International Development. However, it is unclear whether UNDP and other agencies will manage to find the required resources for Belarus in the current global economic situation.
Facilitating Travel between Belarus and Israel
Starting on 26 November, citizens of Belarus and Israel will be able to travel visa-free between each country. The visa agreement only concerns holders of national passports and factors out holders of diplomatic and service passports. No biometric passports will be required.
The governments of Belarus and Israel signed the agreement on visa exemption for holders of national passports on 19 September 2014 in Minsk. Belarus completed all internal procedures in January 2015.
Thousands of people in Belarus and Israel may benefit from a visa exemption Read more
In Israel, the ratification of the agreement has taken much longer. First, a legal counsellor of the Israeli government blocked the procedure because of snap elections in Israel. Then, the Israeli ministry of the interior advised the government against the ratification, citing the threat of illegal migration as a reason.
The visa-free regime should facilitate business contacts, tourism and people exchanges between the two countries. Currently, over 120 thousand people of Belarusian descent live in Israel. Belarus has about 30 thousand ethnic Jews.
Looking Back at Lukashenka's Fourth Term
On 11 September candidates for Belarusian president officially started their campaigns. From the previous presidential campaign slogan “For independent, strong and prosperous Belarus”, Lukashenka left only “independent”.
In order to buy voters in 2010, Lukashenka embarked on excessive wage growth in the public sector, while exploiting international reserves to sustain the Belarusian ruble. However, this year, given the shortage of resources Lukashenka has to abandon his policy of cheap populism.
Despite promises in 2010, there has been no change in economic freedom, the private sector share in GDP remains at a minimum, and the number of the small and medium enterprises still remains low.
Belarus Moves Away From Populism
Until recently Lukashenka focused his election campaigns primarily on raising living standards. The authorities and society had an unwritten “social contract”. Lukashenka who has ruled the country for over 21 years substituted the lack of political change with a substantial increase in social welfare.
Lukashenka's current fourth presidential term has become his worst Read more
In each presidential campaign since 1994 Lukashenka had vowed to increase the populace's average wage by the end of that presidential term. So far, the economy in 2001 and 2006 delivered the expected outcome with ease, while in 2010 artificial help from the officials was needed. In 2010 Lukashenka promised to raise the average monthly wage to $1,000 by 2015. Yet, in July the average salary fell below the level that was reached by the end of 2010.
For the first time Lukashenka is running for re-election without any commitment to guarantee a certain wage. Unfavourable external conditions and the ineffectiveness of the Belarusian economy, has left the authorities with no sources to boost the economy in the near future. Minsk has simply no extra money to buy voters.
Economic Stagnation Instead Of Bright Promises
Lukashenka's current fourth presidential term has become his worst. In early 2011 the Belarusian authorities forecasted that GDP would increase by 62-68 per cent by the end of 2015. In reality, growth will likely only hit 6 per cent. The discrepancy between the official forecast and the performance of main economic indicators affects all other measurements.
The Belarusian economy faces a systemic crisis. In the period 2001-2008 economic growth amounted to 8.8 per cent annually, while in the period 2009-2015 growth was limited to 1.9 per cent. With such a performance the economic gap between Belarus and the EU, measured by GDP per capita on Purchaising Power Parity (PPP), has remained unchanged for the past five years. That has disappointed many Belarusians who are the absolute leaders in the world on the number of Schengen visas per capita. Through access to the EU, Belarusians can compare the living standards at home and abroad.
Minsk has avoided reforming the economy in the past five years. According to the main national forecasting document, the Socio-Economic Development Programme for 2011-2015, Belarus had to join the Top-30 countries in the world for the ease of doing business by 2015. However, Belarus’ position in the World Bank ranking has barely changed as the table below demonstrates. Despite promises, experts saw no change in economic freedom, the private sector share in GDP, and the share of small and medium enterprises.
The Doomed Future of The Belarusian Economy
During Lukashenka's current term for the first time since 1995 Belarus has experienced a recession. In January-July 2015, GDP plummeted by 4 per cent year-on-year. In addition, the IMF forecasts a minor recession in Belarus in 2016 (-0.1 per cent).
Lukashenka faces rising unemployment, the unpredictability of the automotive industry, a shorter working week in many industrial plants, declining real wages, and currency devaluation by 50 per cent since the beginning of the year. How to solve them remains unclear, and Lukashenka keeps silent about this.
The Belarusian economy in 2015 is more unstable than in 2010. In 2006-2010 the US dollar in comparison to the Belarusian rouble went up by 40 per cent, while in 2011-2015 the currency rate grew six fold. A similar deterioration happened in regards to inflation. Furthermore, Belarus has become more vulnerable to external shocks. The international reserves have decreased while foreign debt has increased.
Light At The End Of The Tunnel
Minsk seems to have learnt a lesson that populism has ruined the economy since the last political cycle of 2010. The new government, elected at the end of last year, has conducted in 2015 quite a reasonable economic policy which has gained positive feedback from representatives of the international financial institutions. Since the beginning of 2015, each IMF mission, the World Bank and the Eurasian Development Bank has praised the new authorities for a responsible economic policy.
On the positive side, the Belarusian government consciously decided to control the economy's total foreign debt. Because of that the foreign debt in terms of GDP has increased insignificantly in the past five years, only by 1.4, from 51.6 per cent. That manifests a profound change in Belarusian economic policy in comparison to the second half of the 2000s when foreign debt increased dramatically.
Belarus still has great potential to benefit from liberal reforms Read more
Belarus still has great potential to benefit from liberal reforms. Privatisation of state owned enterprises and a favourable business climate for establishing new entities could support Belarusian fiscal policy and boost the economy. For example, income from the privatisation of one of the biggest Belarusian company's, Belaruskali, could pay off a half of Belarus's total foreign debt.
The standard of living in the recent 5 years has slightly improved. Suddenly, Lukashenka has stopped declaring any progress in the social well-being in the near future. Deeply rooted traditional statement “if only there was no war” and national security issues has replaced economic rhetoric. The reason is simple: Lukashenka has nothing to boast about since no economic prediction for his current 5-year presidential term has come true.
Although many experts often predict the quick collapse of the Belarusian economy, it still allows for small growth. Yet, in the absence of decisive reforms and low oil prices Belarus could stay in stagnation for coming years. However, the stagnation would not bring immediate political changes since Belarusians have accepted living under state propaganda and are afraid of any revolution after the Ukrainian Maidan in 2014.
Time will show whether Lukashenka goes down in history as a reformer or as the captain of a sinking ship.