Top 5 Negative and Positive Events in Belarus of 2012
The outgoing year of 2012 has left a contradictory record in the modern history of Belarus.
It has seen numerous events that came as a real shock for Belarusians and foreign observers – primarily in the economy and politics. At the same time, 2012 gave the nation several moments of pride and satisfaction. However, with the exception of sport victories abroad, positive events of the year came as a mixed bag.
Below is a list of the top 5 negative and top 5 positive events that happened in the Belarusian economy and society in 2012. Belarus Digest reported about most of them throughout the year. Here is a retrospective glimpse at them.
On the Negative Side
1. Unprecedented growth of solvents schemes
The Know-How of the Year award undoubtedly goes to the solvents exporting scheme that the Belarusian government exploited with great enthusiasm until the Kremlin stopped in August. The authorities in Minsk and their partners in Russian business circles found a loophole in the legislation of the Customs Union of Belarus, Kazakhstan and Russia.
They disguised oil products as solvents and exported them in large quantities to the EU, predominantly to the Netherlands and Latvia. This way Belarus avoided paying export tariffs on oil products back to the Russian budget, because the Customs Union’s laws do not classify solvents as oil products and do not establish any export tariff on them.
This became a tricky path to economic growth for Belarus. The country saved about $2bn, which significantly helped to solve the problem of the trade balance deficit and eased pressures on the national currency. However, the easy money which came from exporting solvents took the issue of economic reforms off the government’s agenda. Solvents became a sort of alcohol that obscured the Belarusian authorities’ consciousness. And the hangover might be extremely painful.
2. Shocking nationalisation of Spartak and Kommunarka chocolate factories
The Most Shocking Event of 2012 happened in October when Alexander Lukashenka nationalised two leading chocolate producers in the country, Spartak and Kommunarka. He claimed that the owners and managers of the factories duped the state and all Belarusians by engaging in criminal production and export schemes. In Lukashenka’s own words, he had to restore justice and defend the interests of the people.
The nationalisation got extensive coverage in the international media and significantly damaged the investment climate in Belarus. No surprise that the ambitions investment forum that took place in Minsk a month later did not result in any investment projects despite the government’s high expectations.
3. Introduction of a new form of serfdom
The Madness of the Year prize can be awarded to Presidential Decree No.9, signed in early December. The decree essentially legalised a new form of serfdom in Belarus. It tied workers to their workplaces. Now they can only quit their current jobs with the permission of their boss. Otherwise, they will have to pay the state or be subjected to forced labour. At the moment this affects fewer than 20,000 employees. But many fear that the decree might well become a model imposed across the whole economy later.
No doubt the decree violates the rights of employees, which Belarusian and international labour unions quickly pointed out. But Lukashenka thinks that this is the only remaining option to make state-owned wood-processing factories modernise themselves. In fact, this is rather a sign of the Belarusian government’s growing dysfunctionality.
4. No lessons learned: salaries grew fast again
The obvious favourite for winning the Worst Student nomination is the Belarusian government for their failure to learn the major lessons from the 2011 economic crisis. Or to be more precise, for the failure to put into practice what they learned.
In the first half of 2012, Lukashenka and other top officials kept reminding the public that salaries in the country should no longer grow faster than the labour productivity indicator. They rightly concluded that the administrative increase of salaries in 2010 had been one of the factors that led to the macroeconomic collapse of 2011.
Nonetheless, in practice the government became more concerned about bribing the electorate before the parliamentary election in September. Raising salaries is a typical way of doing this. As a result, real wage growth surpassed the corresponding dynamics of labour productivity. In January-October 2012, according to the Belarusian Statistics Agency, the former grew by 18.1 per cent and the latter – by only 4.3 per cent.
5. Prompt executions of convicted terrorists that raised suspicions
The Suspicion of the Year prize should be awarded for the executions of Dzmitry Kanavalau and Uladzislau Kavaliou, whom the Supreme Court sentenced to death for organising the terrorist act in theMinsk metro in April 2011. The trial itself caused hot debates both domestically and internationally. Many observers claimed there were numerous procedural violations by the court and on those grounds questioned its decision. Others approved of the harsh sentence.
But the very prompt executions of the convicts looked suspicious in the eyes of all. Opinion polls conducted later revealed a growing number of Belarusians who oppose death penalty and who see the government’s actions as unjust. The executions also intensified Belarus’s conflict with the EU.
On the Positive Side
1. Macroeconomic stabilisation
Very few economists believed that the Belarusian authorities would be able to stabilise the macroeconomic situation after the crisis of 2011. But the government did manage to provide some fragile stabilisation.
It is, of course, difficult to talk about proper stabilisation when inflation reached almost 22 per cent. But compared to the 108.7 per cent a year before, this looks like an achievement. The same can be said of the national currency. After the three-fold devaluation in 2011, in 2012 the Belarusian rouble appeared more reliable.
However, as said above, the fragile stabilisation has to do not with any prudent reforms but rather with factors like the solvents exporting schemes. And this leaves no grounds for future optimism. In any case, the government gets the Stabilisation award.
2. Improved business climate in small and medium-sized towns and rural areas
The Best Piece of Legislation prize goes to Decree No.6 that Lukashenka signed in May. It became one of the most advanced legislative decisions that the incumbent has ever made. Essentially, the decree established an enormous special economic zone that is spread over half of Belarus’s territory.
Unfortunately, this is also a “half-happy event”. In the background of terrible implementation practices and barbarian acts like the nationalisation of Spartak and Kommunarka, Decree No.6 can hardly make a real difference.
3. Proclaimed administrative reform
A good candidate for the Hope of the Year award is the administrative reform that Lukashenka proclaimed in October. After long deliberations he appointed a commission to think about how to reduce government bureaucracy by 25-30 per cent and draft reforms of the government apparatus.
There is very little probability that such a reform will ever take place and be successful. Lukashenka will inevitably face strong resistance from his “power vertical”. Moreover, it is highly doubtful that the man who is constantly expanding state powers will ever be able to cut his own red tape. But the idea of administrative reform certainly points in the right direction.
4. Historical football victory
The Dream Come True award goes to the FC BATE Borisov. Its performance in the 2012 football Champions League made the whole world talk about Belarus. On 2 October the club from a medium-sized town near Minsk defeated the legendary Bayern Munich. This was the best achievement of any Belarusian football club since the country gained independence.
BATE Borisov brought pride and happiness to Belarus. It was one of those few occasions when the country featured in international news without its notorious tags of “dictatorship”, “economic crisis” or “diplomatic rows”.
5. Our No.1 in the world
Finally, the Achievement of the Year award goes to Belarus’s major sports star, Victoria Azarenka. For the first time ever a Belarusian tennis player climbed to the very top of the world tennis rankings. This happened in January after Victoria defeated Maria Sharapova (whose parents also come from Belarus) at the Australian Open.
Victoria did not win any other Grand Slam tournament in 2012. But she got close on a number of occasions. She also took a bronze medal in the individual tournament at the Olympic Games in London and won gold together with Max Mirny in the Olympic’s mixed doubles. As a result, Azarenka remained No.1.
Let us hope that the 2013 will bring significant positive events not only achieved by Belarusians abroad, but also at home.
Top 10 Stories on Belarus Digest in 2012
Topics ranging from Belarus travel topics for foreigners to economic sanctions and the Orthodox Church in Belarus drew the attention of Belarus Digest readers in 2012. Here are our top 10 most popular stories.
"We do not cultivate the idea of sex tourism in Belarus. But if [a foreign tourist] has an interest, let him look for it, meet girls and marry". This is how the Deputy Minister of Sports and Tourism Cheslau Shulha recently answered a question about the growing sex industry in Belarus on a state TV channel.
While the Belarusian authorities are talking about the prospects of sex tourism, the inflow of foreign tourists in general remains low. Belarus mostly attracts Russian citizens who come to rest at health resorts or gamble in casinos. Western tourists are still very rare. They do not want to pay for expensive visas only to find the lack of appropriate tourist infrastructure.
Although prices in Belarus are as high as in any European country, salaries are very low. The average monthly income is around $200, but people still manage to buy food, flats and smart phones. How is it possible to make ends meet with such a low income? According to the State Statistics Committee Belstat, between January and October 2011 the average monthly salary in Belarus was roughly $208.
After the second devaluation it fell as low as $135 per month at some point. $200 is not a lot and it means that the economic situation of many families drastically deteriorated in 2011. Just before the presidential elections, the average monthly salary was over $530, according to Belsat. But Belarusians still manage to survive.
On 23 January Lithuanian Foreign Minister Audronis Ažubalis stated that the EU should be more open towards ordinary Belarusians and increase pressure on the Belarusian regime. A year ago EU Commissioner Štefan Füle announced a “balanced approach” to overcome the harsh consequences of the 2010 post-election opposition crackdown in Belarus. However, in practice the EU imposes additional sanctions against Belarusian officials, but fails to offer new positive incentives to bring Belarusians significantly closer to the rest of Europe.
Alexander Rumak from the Ministry of Labour and Social Protection declared that the Belarusian labour market would not deteriorate this year. According to official figures, the unemployment rate in Belarus is merely 0.6 per cent of the economically active population. The reality, however, is different from the rosy picture the government is trying to paint. Thousands of young Belarusians migrate to Russia to escape unemployment and low wages. While Russia awaits Belarusian migrants who benefit its economy with open hands, the European Union keeps its doors shut, maintaining the highest visa fees in the region for Belarusian citizens.
Last week, leading independent Belarusian newspaper Nasha Niva announced that in Minsk there will be signposts put up in English and in Russian. This reveals several facts about contemporary Minsk. There are no signposts in English. Putting them up is so extraordinary that they publish an article about it… If you have travelled around Minsk without speaking Russian and reading Cyrillic, you will understand why. Apart from one road sign in the Western suburb of Minsk announcing the way to “Inturist”, there are no street names or metro stations in Latin script. Only in the newly renovated park around Komsomolskae ozero will you find signs indicating the way to "Youth Island" and other promising places in English.
At the beginning of the new year, Belarus made headlines in the Western press once again. Reporting on the new internet law showed that Belarus is a white stain on the European map for most people. This week the Toronto Star published an article called "Belarus: The North Korea of Europe". It’s those often misleading descriptions that most Westerners have in mind when going to Belarus for the first time … Based on Western media reports, it is impossible to imagine what Belarus is actually like and how people live here.
Last Friday the Library of Congress website published an article called 'Belarus: Browsing Foreign Websites a Misdemeanor'. The story authored by Peter Roudik raised a huge wave of attention first in the blogosphere and then in the mainstream media. The titles were truly sensational. 'Belarus Breaks the Internet, Raises the Digital Iron Curtain' wrote Forbes yesterday. 'Belarus Makes it a Crime to Visit Foreign Websites' was another title. Even the BBC repeated the story.
Last week Gunnar Wiegand from the European Commission announced that the EU was going to extend sanctions against Belarus. 135 more people may be added to the existing list of 208 Belarusian officials who are prohibited to visit the EU. Diplomatic sources also suggest that one or several Belarusian enterprises may be added to the ban list. Europe wants to show that it cares about the situation in Belarus.
Some even hope that Belarusians will soon revolt. But this 'tough love' approach is counterproductive. Despite the worst economic crisis in Belarus since the collapse of the Soviet Union, the number of those who are willing to protest diminishes. Ironically, the highest number of protesters in this century was in December 2010 when Belarusians were much richer than they are today and Europe pursued the policy of engagement.
Belarus is turning away from the Orthodox Church. That is what statistics presented last week by Lieanid Huliaka, the Commissioner for Religions and Nationalities suggests. Belarusian protestants are the most active churchgoers, while Orthodox Christians are the least active. Only state support allows the Orthodox Church to keep up the appearance that it dominates religious life in Belarus. According to the official statistics 59 percent of Belarusian citizens are Orthodox Christians, while just 12 percent are considered Catholics.
But while only 18 percent of Orthodox believers attend mass regularly – every second Catholic does. Indeed, during Christmas 2011, only 254,000 Orthodox Christians attended mass, just 14,000 more than the total number of Catholics who attended. And despite state repression and restrictions, the Protestant communities remain vigorous and numerous in Belarus.
As Russia is finalizing the terms of its accession to the World Trade Organization, Belarus struggles to understand what this accession will mean to it. The question is difficult and important because Belarus closely cooperates with Russia as member of the Customs Union and the Common Economic Area.
On 16 December, 2011 the WTO trade ministers accepted Russia’s bid to join the WTO. Even under the most optimistic forecast Belarus will only follow its larger neighbor in 2-3 years. The idea of accession of the Customs Union to the World Trade Organization as a single entity had been popular for a while but has now sunk into oblivion.