State Analysts Discuss Crimea, Corruption, Freedom Day Coverage – Belarus State TV Digest
Recently state TV widely covered Alexander Lukashenka’s official statements regarding events in Ukraine.
Journalists also reminded the harm to the state and society which corruption could pose. However, in their opinion Belarus, unlike Ukraine, is successfully combating the problem.
The Belarusian opposition commemorated Freedom Day, organising a rally through Minsk. On this occasion, it expressed its support for Ukrainians. State TV journalists depreciated the rally and compared with nationalistic movement.
The Belarusian opposition praises the Ukrainian nationalists? On 25 March, the Belarusian opposition commemorated Freedom Day, unrecognised by the state authorities. Journalist reported that it organised a rally through the centre of Minsk with slogans praising the Ukrainian nationalists.
‘Usually they celebrate the so called ‘Freedom Day with symbols that remain distant to the Belarusian history’, journalist critically noted. In his opinion, the annual rally also this time gather just a few people, and it did not present neither ideas nor historical facts.
In his coverage, reporter was persistently comparing the Belarusian opposition and the participants of the rally with nationalists. reminding the viewers that nationalists helped Hitler in Nazi operations in Belarus and Ukraine.
How to make small business driving the Belarus economy? The authorities want to increase the role of small companies in energising the state economy. In the opinion of (unnamed) experts small business’ contribution in GDP will increase twice, even up to 50%, until 2020. To achieve that, the authorities want to significantly reduce the cost of loans, and offer loans in the Belarusian rubbles, not only in the foreign currencies.
Corruption remains a serious threat to the state and society. However, the state successfully deals with it, unlike in the neighbouring Ukraine where it led to overthrow of the authorities. According to journalist, Belarus has a good legislation that prevents the corruption. ‘Other countries use our experience’, he proudly emphasised. Journalist presented the most critical statements of the Belarusian leader addressing the problem of corruption.
Lukashenka met with representatives of media. He widely discussed Ukraine and Crimea. The head of state sadly commented the developments in the neighbouring country, a ‘third part of our Slavic world’.
‘That was not a legal a constitutional process (…) This is not a normal thing when the legal authorities are overthrown and they establish the new authorities’, Lukashenka stated.
Although he took a note that the new Ukrainian government consisted of both professionals and shouters, he is ready to work with any authorities.
Commenting on Crimea, he noted that it has already become a part of Russia. ‘You can recognise it or not, but nothing will change because of that’, he strongly argued. The head of state laughed at the imposition of sanctions on Russia’s officials, who anyway did not travel that often to Europe.
Lukashenka’s interview to the Ukrainian talk show ‘Shuster’ is widely commented. The head of state gave the interview to the ‘most popular, democratic and liberal’ talk show on Ukrainian TV.
Political scientists and economists commenting upon Lukashenka’s interview, praised him for his adequate reaction to the development in Ukraine. Referring to Crimea, reporter pointed out that it has de facto become a part of Russia, and thus any negations of that appeared senseless.
Belarusian journalist reported that the audience gathered in the studio applauded and wholeheartedly supported Lukashenka. But also the Internet users in Russia and Ukraine also praised the Belarusian leader for his position in regard to the conflict between Kiev-Moscow. This unanimity brings hope that a dialogue between the neighbours will once again be constructive, journalist concluded.
The Ukrainian Maidan was scrupulously prepared. Journalist informs that the ‘main driving force of Euromaidan, the Ukrainian radical organisation "the Right Sector" has become a political party'. It embraces now a number of nationalistic organisations. Reporter also pointed out that the events on Maidan were not such spontaneous, as presented, but scrupulously prepared in advance. TV showed videos, found on the Internet, presenting people complaining that were not paid for their participation in Maidan.
ONT talk show Pazicija (Position) covered the recent developments in Ukraine. The first show called ‘The choice of Crimea’ focused on referendum.
How legitimate is referendum. The host of the talk show, Vadzim Hihin, invited the regime-friendly politicians, but also the opposition-minded analysts, including Aliaksandr Klauskouski, Andrej Jelisejeu, and journalist, Viktar Marcinovich, to comment on the Crimean referendum. The pro-regime guests did not express any concerns regarding its fairness and legitimacy.
Some argued that Crimea, as a part of Russia, would be able to improve the economy. Klaskouski noted that the official statistics on the referendum looked suspicious. In his opinion, it was impossible to organise a real political agitation within such a very short period of time, and clearly the violations took place.
The new Ukrainian authorities. Participants of the talk show argued also that the new Ukrainian authorities hold neo-Nazis views. Vadzim Hihin and the vast majority of his guests shared this opinion. He did not comment the opposing views.
Sanctions on Russia. ‘Some countries which criticised Russia that had acted in a similar way before’, one of the discussants argued. All economic sanctions will be harmful for Europe, Russia, but not for the US. Thus, Europe is not interested in imposing sanctions and nothing like that would happen – as one of the guest speakers emphasised.
On the other occasion, in ‘Lessons from the Ukrainian conflict’, participants of Pazicija talk show discussed how Belarus should get involve and help Ukraine.
The Orthodox Church and events in Ukraine. Participants commented upon the recent statement of Lukashenka on the situation in Ukraine. There was unanimity among participants and hosting the programme, Vadzim Hihin – all praised the Belarusian leader for his position on the conflict. An Orthodox priest, father Fiodar Pouny, also noted that Lukashenka felt the situation in Ukraine deeply. He presented the Orthodox Church’s statement, prepared by Synod in Istanbule, calling all who care about Ukraine to cease violence and further disorder.
Is Maidan likely to take place in Belarus? In the opinion of all discussants the Maidan scenario is hardly possible to happen in the country. Primarily it is because countries chose different paths in the early 1990s. According to one overwhelming opinion of the participants, the parliaments in both countries work differently, and in Belarus it works more efficiently than in Ukraine.
Belarus Digest prepared this overview on the basis of materials available on the web site of Belarusian State Television 1 (BT1). Freedom of the press in Belarus remains restricted and state media convey primarily the point of view of the Belarusian authorities. This review attempts to give the English-speaking audience a better understanding of how Belarusian state media shape public opinion in the country.
External Environment Poses New Risks for the Belarusian Economy
Economic performance during first two months of 2014 has been rather disappointing. First, almost all industries reduced their output which led to a decline in GDP by 1.6% year-on-year in January-February.
Second, Belarus has faced new challenges on foreign markets, which are a consequence of capital outflows and weakening growth in Russia.
These economic shocks will deteriorate short-term prospects for Belarus, although the scope and scale of the negative impact is still not clear. Nevertheless, the government will have to react to the new environment it finds itself in, as the volume of accumulated imbalances is too high to be ignored.
GDP Growth: Controversial Trends
Belstat reports that in January-February GDP fell by 1.6% year-on-year. The drop in output occurred in all major industries of the economy: manufacturing, agriculture, construction. The trade sector has become the only significant exception to this trend: it witnessed 7.8% year-on-year growth thanks, in large part, to retail trade (the value added of wholesale trade was roughly constant).
A number of controversial trends were seen developing in the Belarusian economy. For instance, it can be argued that the economic downturn has become more systematic, as some large sectors (e.g. construction, agriculture) have also become members of the long-term recession club in manufacturing.
At the same time a majority of branches in manufacturing (e.g.food, chemicals, woodworking) have begun to exhibit the signs of recovery. These manufacturers have already hit rock bottom in terms of their output and are now reemerging.
Nevertheless, the latter trend does not capture a number of the largest branches of manufacturing in Belarus including the production of transportation vehicles, electric equipment, and metallurgy. Overall, from a production point-of-view, the economic environment appears to be unstable and exudes a very low level of confidence.
When looking at demand, the only component that seems to be doing well is households consumption. It continues to provide a regular, positive contribution to GDP. For example, consider the fact that retail turnover, which is closely tied to households consumption, grew by 12.9% year-on-year In January-February.
However, this tendency seems to be more an issue of inertia than progress and can be attributed to a substantial hike in wages the previous year. Nowadays, the growth of wages has all but come to an end (see Figure 1), which is likely to diminish consumption in near future.
Capital investments, on the one hand, exhibited a huge drop of roughly 20% year-on-year in January-February. On the other hand, it does not necessarily imply a further recession in investment demand, as poor performance in January-February reflected high interest rates, though the authorities intend to bolster lower rates soon, and some statistical effects.
As for foreign demand, preliminary data appears to provide an argument for it being in a state of stagnation. Hence, demand tends to be rather sluggish and there are not any options apparent to provide its rapid improvement.
Macroeconomic Policy: Less Effectiveness and More Uncertainty
Macroeconomic policy during the beginning of 2014 was, to put it crudely, roughly neutral. For its part, the government intended to stimulate demand given its poor state at present. With this in mind, the authorities proceeded to somehow reduce policy interest rates and allowed for a minimal level of depreciation of the national currency.
Still, the government is concerned with the dangers of future financial turmoil, especially given its huge external imbalances and the fragility of the state's current financial equilibrium. The National Bank has subsequently decided to restrict banking activity, while the government abandoned its policy of wage stimulation.
Overall, stagnation with a high degree of uncertainty would be a good way to characterise the current domestic macro-economic situation. Weaknesses on many different fronts created this situation, and these weaknesses interact with each other, which influences the overall state of the economy.
First, a lack of natural mechanisms for growth has become a structural constraint that reflects the absence of incentives and sources for productivity growth. Second, unfavourable and volatile expectations propagate uncertainty and result in poor demand. Third, economic policy has fallen into a trap: the low effectiveness of traditional tools, given unfavourable expectations, results in uncertainty about the priorities of any potential policy.
External Environment: New Sources of Instability
In the beginning of 2014, capital outflow from emerging markets all over the world strengthened. In the case of Russia, the relative volume of outflow exceeded the average value for emerging markets (in relative terms), as weaknesses in Belarus' growth potential became more evident.
Furthermore, Russian involvement in the political tensions in Ukraine might have led more investors to withdraw from being exposed to Russian markets.
In this situation Russia has faced a considerable depreciation of its currency against all other major world currencies, including the US dollar against which it depreciated 10.8% in January-February. Moreover, other large CIS countries (Ukraine and Kazakhstan) also decided to undergo a round of currency devaluation as well.
As a result, the competitive environment on the markets of these countries has changed considerably. Alongside the capacity of these markets were shrinking due to their deteriorating growth prospects.
A new situation on foreign markets has created a new challenge for Belarus. Trying to restrain inflation and devaluation expectations, the National Bank preferred to follow a course of gradual depreciation in respect to US dollar, and actually ignored the devaluation happening throughout the CIS. This policy, however, led to a considerable appreciation of the national currency (see Table 1).
Table 1. The Evolution of Exchange Rate of Belarusian Rouble in January-February, %
vs. Russian Rouble
vs. Ukranian Hryvna
vs. Kazakh Tenge
Note: The exchange rates from 1 January – 1 March.
Thus, Belarus has faced a severe external shock, which is likely to hurt its exports considerably (and promote imports from other CIS countries). The already huge external imbalance that currently exists might increase even further, although it remains to be seen precisely what will be the effect of this phenomenon.
The economy has not yet fully felt the effects, which is rather typical, since there is usually a lag between the shock itself and its impact on the economy. For instance, the majority of foreign trade transactions that were finalised in January and February were negotiated before the shock set in. This means that the economy has yet to see the effects of the economic shock waves that hit the Belurasian economy.
Given the bulk of the already accumulated distortions, a new shock might trigger a more radical policy response by the authorities in near future. The government is doing its best to avoid intensive implementing either a policy of austerity and/or depreciation.
However, modest usage of these instruments cannot guarantee the successful neutralisation of new economic shocks. Most likely the government will try to provide rapid access to a new chunk of external financing, either due to political agreements and/or due to privatisation deals. Otherwise, automatic macro-economic adjustments in exchange rate and prices might pose a threat to Belarus.
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)