Ostrogorski Centre Launches 2014 Issue of the Journal of Belarusian Studies
On 27 June the Ostrogorski Centre launched the latest issue of the Journal of Belarusian Studies during a gathering of the Belarus Research Council in Vilnius. Additionally, Ryhor Astapenia presented the Centre's Belarus Profile project to Belarusian researchers – an online directory of influential people in Belarus.
The Belarus Research Council (BRC) is an umbrella organisation that facilitates the development of independent analytical think tanks in Belarus. Established in 2012, BRC is a loose network of Belarusian think tanks, polling agencies and donors supporting social science research in Belarus.
The Ostrogrski Centre, formerly known as the Centre for Transition Studies, presented its first project under its new name. Named after a Belarus-born political science scholar and historian Moisei Ostrogorski (1854-1921), the Centre seeks to bring together Western-educated scholars and journalists living in Belarus and elsewhere in Europe.
In addition to Belarus Digest and the Journal of Belarusian Studies, the Centre's projects also include Belarus Profile, an online directory of influential people in Belarus and the CIS Arbitration Forum, a platform devoted to dispute resolution in former members of the Soviet Union.
The Belarusian independent TV channel Belsat called it one of the most promising analytical centres in its coverage of the meeting of the Belarus Research Council.
New Issue of the Journal of Belarusian Studies
The Journal of Belarusian Studies is the oldest peer-reviewed journal devoted exclusively to Belarusian studies. Since 1965 it has been published in London in English and Belarusian.
The 2014 issue of the Journal of Belarusian Studies features articles covering a range of topics – from the history of Belarusian statehood to relations between Belarus and Iran, and the activities of government-organised NGOs in Belarus.
Per Rudling of Lund University and Dorota Michaluk of Nicolas Copernicus University open the issue with a study of the development of the idea of a Belarusian state during the German occupation of Belarusian lands in 1915-1919.
They observe that the German administration regarded Belarusian nationalism as a useful political commodity which they supported as a counterweight to other regional nationalisms. They note how historical Lithuanian and Western Rus’ ideas of statehood dominated the minds of Belarusian intellectuals at the time.
Furthermore, they demonstrate that the establishment of the Soviet Belarusian Republic appears to have been directly tied to and dependent on the 25 March 1918 proclamation of the founding of the Belarusian Democratic Republic (BNR), without which it seems plausible to argue that the Bolshevik leadership would have simply adjoined Belarusian lands to Soviet Russia.
Siarhei Bohdan of the Freie Universität Berlin analyses relations between Belarus and Iran, ties which have undergone a series of quantitative and qualitative changes since their establishment in 1993. The rise of the United States as the world's sole super-power and its efforts to try isolate the Iranian regime has had an important impact on Belarus-Iran relations.
Belarus has managed to reach a number of deals with Iran despite the West's opposition thanks, in large part, to its alliance with Russia, who has defended and supported Belarusian foreign policy in many directions, including its move into the Middle East.
He concludes that the pattern of relations with Iran demonstrate the flexibility of the current Belarusian leadership, who are more interested in seeking out beneficial outcomes for itself rather than a regime trying to challenge the existing international order in any serious manner.
Anastasiya Matchanka focuses on the role of ‘pro-government non-governmental organisations’ in Belarus. Unlike genuine independent non-governmental organisations, government-backed NGOs work with direct support from the state.
The article looks at the extent to which the activities of pro-democratic organisations are copied by government-backed entities as well as to what degree the substitution of authentic civil society with government-organised non-governmental organisations takes place in Belarus.
She concludes that under the conditions of a repressive and consolidated authoritarian regime, reinforced by a weak civil society, substitution leads to distorted perceptions of civil society and NGOs.
This issue also features a book review by Vitaut Kipel of Living with a Scent of Danger: Adventures at the Fall of Communism. Arnold McMillin reviews 100 Words About Contemporary Belarusian Literature, while Lizaveta Kasmach looks at Soviet Belarusiasation on the Path to Nationhood and Ryhor Astapenia reviews The History of the Great Duchy of Lithuania: Belarus’ Medieval Origins.
Jim Dingley, the former Chairman of the Anglo-Belarusian Society, gave his account of Belarusian events organised recently in London, including a conference which brought together scholars from Belarus, the United Kingdom, Poland and Lithuania.
Publication of this issue of the Journal of Belarusian Studies coincides with the arrival of Brian Bennett, the former UK Ambassador to Belarus, as the new Chairman of the Anglo-Belarusian Society.
Pictures from the launch organised at the Belarus Research Council meeting are available at ostrogorski.org.
Output Grows, but Inflation Hurting Macroeconomic Stability – Digest of Belarusian Economy
The economy of Belarus is showing signs of rising levels of output with most industries increasing their overall output figures throughout May. At the same time foreign and domestic investment demand are exhibiting signs of recovery.
However, this recovery does not itself necessarily signal a return to high output growth. The growth rate is likely to remain weak in the coming months and a new challenge – climbing inflation – might hurt the economy.
Output: Growth is Reviving, but Remains Poor
The Belarusian economy has entered a period of recovery (see Figure 1). Belstat reported that in January-May output grew by 1.5% (0.5% in the 1st quarter, and 1.1% in January-April). Indeed, broad positive trends in output have become more systematic and noticeable.
On the production side, major industries displayed gradual output growth across different sectors (trade, manufacturing, agriculture, electric power production) in May. Only construction and a number of manufacturing sub-industries (mainly machinery and equipment manufacturing) seem to be exceptions to this general trend.
On the demand side, an increase in investment activity and on external markets set the stage for recovery. External factors have also played an important role in Belarus' economic revival through May. In particular increased potash fertiliser exports, having recovered after demand was driven down in 2013, has become one of the most notable changes. Consumer activity remained strong, although its growth is likely to weaken in the near future due to real wages stagnating.
Despite a number of encouraging trends in the real economy, in general the overall economy's prospects have not significantly improved. Several factors are hampering its growth. First, its poor growth potential remains one of Belarus' core issues. Even according to the most optimistic forecasts for 2014, the GDP's growth rate will remain extremely modest (up to 3% by the end of the year).
Second, financial markets and the monetary environment continue to be in a very fragile state. The authorities achieved some success in making them more stabile and reducing interest rates over the past couple of months. However, they will hardly succeed in sustaining it if another shockwave ripples through the economy, especially if they fail to find a way get access new foreign loans.
Should things start to fall apart, the authorities will have to tighten their interest rate policy against a backdrop of growing inflation. However, if they are able to continue to build momentum for sustained domestic investment, which has been successful thus far thanks to reduced interest rates and increased liquidity in the banking system, they might be able to reverse this negative trend.
Third, a contraction the volume of intermediary imports has had an enormous impact on improving the environment of the nation's net exports. However, there are doubts about the origins of this shift (i.e. was it driven by the preferences of firms or was it the outcome of an administrative restriction being placed on imports) and its sustainability (i.e. can firms maintain their current levels of production if they receive fewer imported intermediate inputs).
Monetary Environment: The Threat of a New Inflation Spike
In 2013, the inflation rate steadily fell, reflecting a gradual shift in inflation forecasts (which, nevertheless, remained high and volatile), contracting domestic demand for investment and a relatively strict economic policy. Growing inflation appeared to be relatively consistent in 2014, as the majority of the factors that contribute to it persisting in the economy.
However, recently the situation appears to have changed. Since the beginning of the year the rate of inflation has began to gain momentum with the annual CPI (consumer price index) inflation rate reaching 19% (see Figure 2) in May.
Administratively regulated prices for services are the main culprit. Since the beginning of the year the tariffs on utilities and transportation have grown considerably (by 20.6% and 15.5% correspondingly). In reality, raising these tariffs is sound policy, and despite the opaqueness of how the new rates were reached, it was necessary to adjust them to a more fiscally responsible and economically reasonable level.
Another contributing factor has been the government's decision to dealing with the Belarusian rubles exchange rate. Given its lack of access to external financing, along with a huge deficit of current account, they could not avoid employing this tool for mitigating the nation's currency deficit. A more rapid pace for depreciation also contributed to prices going up.
There was also a significant spike in foodstuff prices in 2014 (up 12% since the beginning of the year). Meat prices (particularly pork prices) lead the pack in terms of growth. Prices for meat and poultry grew by 25.3% from January-May, with pork jumping 51.0%.
A substantial reduction in the nation's pig stock (due to an outbreak of African hog cholera in 2013) the primary driver behind this trend. Still, trying to explain the sharp jump in foodstuff prices in terms of African hog cholera alone seems to be misleading.
In 2014, agriculture's growth rate of costs has been considerable, making it among the leading industries of the economy. In the 1st quarter, expenses in this sector grew 25.4%, while the average rate of expenses throughout the economy was just 10.6%.
Such a pronounced growth in costs cannot be explained away by African hog cholera. The low levels of efficiency witnessed throughout agricultural sector as a result of large direct and indirect subsidies to it may provide a better explanation, or at least an alternative one, for rising costs and the subsequent price adjustments.
A new round of inflation rate hikes has developed into a serious potential threat for the national economy. Read more
A new round of inflation rate hikes has developed into a serious potential threat for the national economy. Accelerating inflation may drive up expectations about its future direction. Alternatively, increased inflation expectations may lead to a new wave of deposits being tied to dollars. If this is the case, the authorities will have to enforce a strict interest rate policy in order to cease deposits being done in dollars, which would result in additional output losses.
Furthermore, a sharp spike in prices for a small group of goods and services (especially intermediate goods like fuel and utilities) may distort the structure of relative prices and correspondingly cause adjustments in other prices to eliminate these distortions.
Finally, increasing prices will lead to less a lower level of competiveness for the Belarus' producers and manufacturers. In battling to fend it off, it may become clear that a rapid pace of depreciation will become necessary. However, given the closer relationship between exchange rates and prices, the threat of a new inflation-depreciation downward spiral may arise alongside output losses.
Dzmitry Kruk, 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)