The first 2020 presidential candidate, a split in trade unions, a visit from Chinese corporations – Belarus state press digest
The Belarusian Liberal Democratic Party nominates its deputy head, Alieh Hajdukievič, as candidate for the 2020 presidential elections and seeks to reform the parliamentary election system. The leader of the Congress of Independent Trade Unions sides with the authorities in the REP tax evasion case.
Aliaksandr Lukashenka reprimands senior officials for delays in collecting the harvest. A delegation of top Chinese corporations visits Minsk to inspect the Great Stone High Tech Park.
Lukashenka demands that the population of Belarus reach 15 million; he also demands that 300,000 citizens go to work. This and more in the new edition of the Belarus state press digest.
Domestic politics and security
Deputy head of the Liberal Democratic Party will run for president in 2020. Belarus Segodnia reported the results of the LDP party congress. The leader of the party, Siarhiej Hajdukievič, who has run for president four times, will now yield to his deputy and son, Alieh Hajdukievič. The Liberal Democratic Party has the largest membership of any political party in Belarus, with around 45,000 members. It is one of the few parties with representatives in parliament, other governmental agencies, and the business world.
In anticipation of the presidential elections, the party plans to participate in the 2018 local elections and hopes to put forward the largest possible number of candidates. The party will also lobby for a referendum on the introduction of a mixed-member proportional voting system, which will let more political groups into parliament and strengthen the country’s political culture and democracy.
Leader of the Congress of Independent Trade Unions sides with the authorities in the REP tax evasion case. Narodnaja Hazieta discussed the recent arrests of the leaders of the Independent Trade Union of the Radio Electronic Industry (REP) on tax evasion charges. While civil society claims that the authorities are repressing REP for political reasons, the investigation denies any political pretext, calling it a purely economic crime.
The article quotes the head of the Congress of Independent Trade Unions, Aliaksandr Jarašuk, who accuses the Danish trade union 3F of selective cooperation with Belarusian organisations and thus splitting the independent trade union movement. He claims that REP was involved in ‘dirty business’ and that he will not criticise the authorities for the criminal charges brought against REP.
How illegal migrants get to the European Union via Belarus. The number of migrants detained at the Belarusian border for illegal attempts to cross is on the rise, reports Respublika. The majority of migrants arrive in Russia and then travel to Belarus from there, taking advantage of the free customs agreement. They use GPS navigation systems to cross borders or pay smugglers who arrange their transportation to the EU. The profiles of such immigrants are varied, and include a significant numbers of student who ‘care not about knowledge, but a better life in the EU.’
Border control agencies have successfully identified the major routes for illegal migration and have the situation under control. Border control forces are also supported by voluntary, ‘patriotic’ border squads from the local population who identify and report suspicious travellers to border control agents.
Delayed harvest puts senior management in hot water. Despite the fact that agricultural enterprises have everything they need to operate, the latest reports reveal that 30% of them have violated technical regulations and will thus fall short of the normal harvest, reports Belarus Segodnia. Aliaksandr Lukashenka warned top executives not to attempt to use ‘bad climate’, data on infrastructural barriers, or other ‘systemic challenges’ as excuses.
He reprimanded senior executives for failing to fulfil their managerial responsibilities and mandated that the governors of three southern regions, Brest, Homiel, and Hrodna, reach the target harvesting goals – higher than in the previous years – ‘even at the cost of death’. Urging the senior executives to address poor management immediately, Lukashenka underlined the need to put to work ‘7-8% of non-functioning equipment nationally’ and ensure that the required financial and administrative support to achieve the harvesting goals is in place.
Top Chinese corporations consider the potential of the Great Stone High Tech Park. A delegation of the heads of the largest Chinese corporations, led by the Chairman of Assets Supervision and Administration Commission of China’s State Council, visited Minsk to discuss investment projects. The delegations focused on the opportunities afforded by the Belarusian-Chinese Great Stone High-Tech Park.
Aliaksandr Lukashenka suggested that the delegation set up high-tech military enterprises at the park. The parties also agreed to establish an investment fund in order to attract residents to the park, as well as provide market research and training for park employees. The Belarusian president underlined that Belarus and China are not ‘ganging up’ against anyone and are not violating the stability of the region.
Belarus develops a strategy to deal with nuclear waste. The construction of the Belarusian nuclear power plant is causing concerns regarding the future of nuclear waste management, writes Respublika. According to the National Nuclear Waste Management protocol, radioactive waste will be kept in special storage in Belarus, while used nuclear fuel, which is less radioactive, will be reprocessed and shipped to Russia, its country of origin, after 10 years.
Despite concerns regarding risks, the director of the Sosny Joint Institute for Power and Nuclear Research, Michail Žamžuraŭ, has stated that over the years Belarus has gained adequate experience in waste management and its practices are now up to international standards. Russian consulting companies are helping to develop their strategy, with the first disposal site expected to be designated by 2028.
Lukashenka demands that the population of Belarus increase to 15 million. After listening to a government report on the demographic situation in the country, the Belarusian president stated that Belarus has the capacity to maintain a population of 20 million, and reaching 15 million should be a future target. This will ensure the economic security and power of Belarus, reports Soyuznoye Veche.
Lukashenka has also ordered 300,000 citizens to get to work. ‘We have half a million people who do not work. 200,000 of them are families with many children, the disabled, or the ill, whom we can leave alone. But where are the remaining 300,000? We must force them to work’, Lukashenka said.
Plans to transform the old economy into a new IT-economy – digest of the Belarusian economy
According to Belstat, Belarus’s official statistical agency, in the first half of the year the Belarusian economy sped up, improving four months in a row.
Meanwhile, on 17 July 2017, the authorities announced plans to transform Belarus’s IT-sector into a full-fledged economic driver, aiming to create new jobs and increase tax revenues.
Finally, on 25 July 2017, the government announced a new modernization strategy for the manufacturing industry – the plan involves building a new tractor factory.
Economic growth: rising from the ashes
In the first half of the year, GDP growth was 1 per cent. By year-end however, GDP growth should reach 1.7 per cent according to the official forecast (see Figure 1). Industrial production has increased by 6.1 per cent and exports of goods by 23 per cent (in January-May).
As a result of these positive half-year economic figures, the government has started to think about new drivers of economic growth. However, according to the First Deputy Minister of Finance, Maxim Ermolovich, artificial stimulation of the economy (through the budget or monetary policy of the National Bank) should not be considered an economic policy tool.
The IT-economy: thinking about a prosperous future
On 17 July 2017, the authorities announced plans to transform Belarus’s IT-sector into a full-fledged economic driver. At present, approximately 30,000 IT-specialists work in the country, providing about $1bn of foreign exchange earnings annually. The average IT-specialist, with a salary of $1,500, delivers twice as much tax revenue as the average non-IT worker.
Although these plans are still only on paper, the authorities have already hammered out the main ideas of their new revolutionary presidential decree for the IT-sector.
The most significant changes have to do with the following issues: first, the decree opens up the Belarusian IT-market for new companies from high-tech industries (electronics, machine engineering, medicine, and biotechnology) and foreign organisations (for example, Google, Facebook, Microsoft, Apple) which monetise IT-products through advertising and paid subscriptions.
Second, the decree creates the necessary legal basis for opening a centre for scientific and technological development of driverless cars in Belarus. What’s more, the decree would allow said cars to navigate on Belarusian roads.
Third, the decree aims to develop educational activities in the IT-field, such as teaching modern IT-subjects in English in universities and schools.
Fourth, the decree opens up the Belarusian market for international investment funds and venture capital organisations. In particular, it would liberalise economic legislation in the event of bankruptcy of an IT-project – this measure would limit investor obligations in terms of their invested money, but not their entire property.
Fifth, the decree intends to create favourable conditions not only for Belarusian IT-specialists, but also to poach talent from Ukrainian and Russian IT companies. For example, the decree simplifies the procedure for obtaining a residence permit for qualified foreign IT-specialists and introduces long-term visas for them.
Finally, the decree would introduce cryptocurrency into civil circulation (the consumer market).
Thus, the government plans to create new jobs and increase tax revenue. According to experts, state tax revenue from IT may increase by two or three times if the number of IT-specialists in the country triples.
Manufacturing: promoting a new tractor factory
On 25 July 2017, President Lukashenka decided the fate of the Belarusian tractor industry at a meeting: the government would organise the production of new technologically advanced types of heavy tractor. However, in recent years, this manufacturing sector has shown substantial decline.
Over the past five years, the production volume of tractors in Belarus has decreased by half, from 71,000 to 34,400 units (see Figure 2). The amount of people employed by MTZ (the Belarusian tractor producer) has shrunk by a quarter. Likewise, exports have also decreased significantly – from $1bn in 2012 to only $425m in 2016.
The decline in exports of Belarusian tractors (90% go to foreign markets) was mainly caused because the primary market (Russia) has in recent years experienced recession (due to reduced oil revenues). Therefore, subsidies for the purchase of agricultural machinery (including Belarusian) has also decreased.
In 2017, the export of Belarusian tractors finally began to grow. According to Belstat, in January-May tractor sales increased by 12.2 per cent in comparison with the same period last year, mainly due to improvements in the Russian market.
Thus, Russian subsidies for agriculture have reached $1bn, providing buyers a discount (from 15% to 20%) for agricultural machinery, including purchase of tractors assembled in Belarus.
According to the Director of the IPM Research Center, Alexander Chubrik, the Belarusian authorities plan to take advantage of the recovery of the Russian market to accelerate economic growth. One of their primary strategies will be establishing production of new tractor models.
According to Deputy Prime Minister Vladimir Semashka, this project could cost around $300m-350m, financed by Chinese credit resources. However, the use of Chinese loans may not please Russian partners, who may rethink the subsidies for new tractor models.
Thus, Deputy Chairman of the Belarusian Scientific and Industrial Association Georgy Grits has proposed joint production with Russia (which already has factories for such tractors). This would provide favourable conditions for the sales of the new Belarusian tractors on the Russian market.
All things considered, the positive external economic conditions have helped the authorities get back on a path of economic growth. However, the economy still lacks new drivers for economic growth which could more than double GDP growth. The new tractor factory remains a project for the Old Economy while the new IT-economy still seems a distant prospect.
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)