Privatization: one step forward, two steps back – digest of the Belarus economy
On 4 May 2017 Belarusian president Alexander Lukashenka declared that Belarus plans to gain approximately $50bn in exports off goods produced in the Great Stone industrial park.
Meanwhile, on 3 April 2017, Moscow and Minsk resolved all their disputes in the oil and gas sector.
On 18 April 2017, Belarusian prime minister Andrey Kobyakov announced that the Belarusian economy has avoided recession, with 0.3 per cent GDP growth in the first quarter of the year.
Privatisation: standby mode
On 21 April 2017, the authorities once again announced that state-owned enterprises (SOEs) would not be privatised in the near future.
However, for the IMF, privatisation of major SOEs is a key condition if Belarus wants to receive a new credit line (worth approximately $3bn). More precisely, the IMF wants Belarus to prepare approximately 10 SOEs for pre-sale. The government has so far failed to begin any stage of this process.
Although the official list of state enterprises up for sale in 2017 includes 38 joint-stock companies, almost nothing has been transferred into private hands – neither auctions nor tenders of sale for the SOEs have been declared so far. The Belarusian government insists that this is due to lack of interest from potential investors.
This is unsurprising, as many SOEs are in a difficult financial position due to high credit indebtedness (see Figure 1). According to the National Bank of Belarus, at the beginning of 2017 the debt load of the real sector exceeded its monthly revenue by 3.2 times. These SOEs, suffering from chronic debt and a failed business model, have proved impossible to sell as whole business entities.
As a result, on 21 April 2017, Lukashenka stated that privatisation is unrealistic, essentially ending discussion about the fate of the largest SOEs.
Instead, the Belarusian authorities want to attract foreign investment. Each regional governor has been ordered by the president to bring in no less than $100m in investment each year. However, the Belarusian economy remains unattractive to foreign investors, which is reflected in the reduction of foreign direct investment in 2015 and 2016.
The oil and gas dispute: finally resolved
On 3 April 2017, Belarus and Russia resolved their longstanding oil and gas dispute and signed the corresponding documents on 13 April 2017.
As a result, Russia agreed to increase oil supplies to Belarus to up to 24m tonnes and sell gas to Belarus at a discount. Over the next year, the price of Russian gas for Belarus will fall to $129; in 2019 the price will decrease even more. Nevertheless, experts are dubious that the pursuit of a unified gas market by 2025 will encourage Russia to supply Belarus with gas at domestic prices.
According to the Scientific Director of the IPM Research Center, Irina Tochitskaya, if Belarus paid Russian gas prices, all other countries in the Eurasian Economic Union would insist on similar discounts. This would be a significant loss of income for Russia.
In turn, the Deputy Chairman of the Belarusian Scientific and Industrial Association, Georgy Grits, admitted that according to the agreement, independent gas operators would be able to sell gas to Belarus, not just Gazprom. However, if this were the case, the stock market would determine the price of gas, precluding preferential conditions for Belarus.
What's more, he also noted that the gas transportation system in Belarus belongs to Gazprom. Therefore, it would be difficult to deliver gas from independent operators without agreements with Russian authorities.
Thus, the dependence of Belarus on Russian gas supplies will only increase, guaranteeing new tensions in the oil-gas sector in the near future.
Economic growth: first time in 24 months
For the first time in two years, the Belarusian GDP has grown. According to the National Statistical Committee of Belarus, in January-March 2017 GDP growth reached 0.3 per cent year on year (see Figure 2).
On 18 April 2017, Belarusian Prime Minister Andrey Kobyakov stated that the economy was gradually recovering from an economic downturn and is on track for its forecasted targets, which include 1.7 per cent GDP growth. However, the authorities' optimistic forecasts are largely dependent on growth of oil refining and export of petroleum products.
Meanwhile, the IMF and the World Bank still predict that the recession in Belarus will continue. The Russian bank Sberbank has stated that given sluggish economic growth, the recession in Belarus will end only in 2018.
The considerable volume of foreign debt payments for the current year, the prolonged reduction in real household income, the limited effectiveness of monetary policy (due to high level of dollarisation in the economy), and the lack of significant resources for the state budget to finance its investment programmes all constrain possibilities for further growth.
Independent experts maintain a similar position, adding that the Belarusian GDP needs to improve by 7 per cent just to return to its 2014 level (in Belarusian constant prices).
According to the head of the analytical centre Strategy, Leonid Zaiko, if we compare dollar equivalents, the GDP must grow by nearly 40 per cent (from $47bn up to $76bn). Thus, he concludes that even with a 4 per cent growth per year, the economy will need more than ten years to return to its 2014 level.
All in all, it seems that the past two years of recession have not shaken the official economic policy of the last two decades. The authorities still rely on the public sector and oil revenues. Meanwhile, the lack of progress in privatisation limits Belarus's investment appeal and hinders further prospects for sustainable long-term growth.
Aleh Mazol, 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 state propaganda advocates mass repression
On 21 March 2017, the Belarusian authorities began a programme of repression against civil society activists, which is still ongoing. These measures followed mass protests of the population against the unpopular economic policies of the government, including the famous decree on 'social parasites'.
The work of the state propaganda machine goes hand in hand with this process. It aims to instil fear into the population with tales of terrorist and nationalist 'threats'. These stories also serve to justify the state's overblown response to the protests, as well as improve the image of law enforcement agencies.
However, the propaganda effort has largely failed. Instead, what became obvious was their plan to increase repression and control over society, as well as the poor quality of state media.
The state media has decided not to target all participants in the social protests, instead blaming the organisers and the independent media. The main message was that 'non-state media misinformed people', acting together with protest organisers, who 'took advantage of people’s discontent in order to achieve their own political goals'.
At the same time, state propagandists brought up the possibility of 'provocations' during mass protests to intimidate its audience. Trying to link the Belarusian opposition with the situation in Ukraine, the state media showed the Ukrainian Maidan as an example of such 'provocations'. Before the mass demonstration on 25 March 2017, Belarusian state television broadcast a report asking: 'Can you be sure that some crazy nationalist or volunteer from Donbass won’t bring weapons or explosives to the protests and use them?'
At first, state propagandists had decided that Belarusian anarchists were responsible for these 'provocations'. Mikalaj Statkievič, who was supposedly their leader, coordinated his activities with a Ukrainian businessman named Alexander Smantser. However, the state media didn’t specify why Ukrainian business should be interested in destabilising Belarus.
A terrorist threat from Poland
Following President Lukashenka’s statement regarding 'some armed groups near Asipovičy and Babrujsk' on 21 March 2017, the role of 'provocateurs' was passed on to the 'White Legion'. Speaking about those detained in the 'White Legion' case, state propagandists resorted to every possible cliché, including the tried and true fascist, Nazi, anti-Russian, and foreign financing threats, as well as more topical threats of terrorism, Maidan, and the Islamic state.
According to state propaganda, not only was the 'White Legion' planning armed provocations and terrorist attacks in Minsk, it was also working to organise a terrorist attack in Moscow. As one speaker in a Belarusian TV 'documentary' put it: 'The leader of the White legion has announced that in order to prevent Belarus from uniting with Russia, terrorist attacks in Moscow are necessary'. As usual, no evidence was provided The idea was to show that the Belarusian regime is a reliable partner to Russia in security matters, especially given the recent terrorist attack in the Saint-Petersburg metro on 3 April 2017. In this way, the Belarusian authorities are trying to secure financial bonuses from the Kremlin for showing its loyalty and 'protecting' Russia from a 'terrorist threat'.
The state-concocted German-Belarusian informer 'Frau A', whose denunciations were used by state propaganda to prove the 'White Legion’s' involvement, brought up another essential point. She directly stated that Poland and Ukraine had financed and trained the 'provocateurs', who were supposedly planning terrorist attacks in Minsk. Given the fact that state propaganda calls the White Legion Nazis and fascists, the situation becomes even more convoluted. Although Ukraine may be used to such accusations from Russian and Belarusian state propaganda, Poland is not. For the Polish, for whom the fight for independence during WWII is a point of national pride, this is a serious insult.
Breaking the law
It is also important to note that state propaganda has technically broken the law. First of all, the detainees cannot be called guilty until the court reaches a decision. Thus, the media cannot publicly call them 'terrorists', 'Nazis', etc. Secondly, propagandists have ignored the principle of 'investigation privacy' – they have illegally disclosed information on the investigation while it is still ongoing.
What's more, showing pictures of fake weapons as proof of the existence of an illegal armed formation, as the newspaper Belarus Segodnia did, demonstrates a lack of professionalism. The amateurish quality of state propaganda is also evidenced by the TV channel Belarus-1's decision to ask actor Vladimir Gostyukhin and a singer Anatol Jarmolienka to comment on the case of the 'White Legion' in a 'documentary' film.
All state propaganda pieces on the 'White legion', are published anonymously, which demonstrates the state's unwillingness to take responsibility for their falsehoods. As if that wasn't enough, YouTube deleted the most discussed propaganda film, 'White Legion of black souls', by Belarus-1, because it illegally used music from the Belarusian folk-band Irdorath.
Propaganda vs independent media
Finally, the propaganda is constantly disparaging independent and foreign media, accusing them of lying about protests and repressions. As usual, they do not provide any evidence.
The authorities also like to claim that the independent media gets financial support from abroad, meaning they must serve the interests of foreign states and are thus 'traitors'. Given that most people have access to different sources of information besides state-owned TV and newspapers, this argument beggars belief for most Belarusians.
State propaganda also uses other means to disseminate its messages. For example, on 18 April 2017, an Orthodox priest named Fiodar Poŭny, who is believed to be Lukashenka’s confessor, made a public statement during an Easter festival in Minsk insulting tut.by – the most popular online news portal in Belarus. On 8 April 2017, Hienadź Davydźka suggested a complete prohibition of forums and comments on the Internet on his programme.
The fall of the Belarusian state media
The state propaganda machine has failed to accomplish its goals. Instead of fearing 'Nazi-terrorists from the "White Legion'”, people are now supporting detainees and their families. The frontman of the famous folk-band Stary, Olsa Dzmitry Sasnoŭski, has started a 'help service' for families of detainees.
The 'White Legion' has become a symbol for the fight against repression from the regime. Instead of supporting repression of the opposition, civil society is accusing law enforcement agencies of fabricating the 'White Legion' story. The lack of professionalism of the state propaganda machine has even become a viral meme on the Internet.
Nevertheless, the propagandists seem to believe that they are still in control of the Belarusian information landscape and seek to moderate it according to their whims. State media repeat the same intimidating messages aimed at improving the image of law enforcement agencies. This is very telling of the authorities’ unwillingness to deescalate the protests and enter into dialogue with the population.
Dzmitry is an analyst at Belarus Security Blog