Belarus: Between independence and economic benefits


Belarus further tightens control over its domestic political field. Without Russia’s support, the outlook for its economy is gloomy. Meanwhile, the standoff with Moscow switches from open to positional.

Domestic politics

Discipline of the bureaucracy

Two important events have marked Belarus’s domestic political life lately, outlining Aleksandr Lukashenko’s harsh pursuit of further mobilizing the government apparatus and strengthening the control. On January 22, the meeting on the new bill On Public Administration took place. The Presidential Administration had been drafting it throughout 2018.

Its key message was to strengthen discipline among civil servants. Lukashenko demanded the development of a common approach to some sections of public administration, including civilian, military and militarized services. He listed executive discipline and common norms of conduct for civil service in office and beyond, including in social media, as the core components of his demands. The objective is to bring civil service as close to military service as possible. How exactly these common requirements can be implemented is not yet clear enough. For example, restrictions of social media activity applied to the military can hardly be transferred to civil service without risking a serious loss of feedback and trust between public authorities and the population.

The meeting with Aleksandr Lukashenko to discuss new approaches to information security was the other important event. The key question was how the state should effectively counter black PR and campaigns, especially those launched in social media, including in Telegram channels. It is an open secret that the main vector of information resistance is Russian. Secondly, the issue of “isolating” Belarusian TV advertising market from the Russian market was raised. In order to become independent of Russian sellers and sign ad contracts with transnational companies directly or through a national seller, Belarus has to establish a system of media measurements that the international community, including employers, will accept.

The approval of requirements for mass events was an important step towards tightening the screws. By requiring the organizers to sign contracts to ensure security, medical care and other services for such events, those in power have seriously raised the cost for them and narrowed the room for “unauthorized” street activity.


Recovery growth stops

Belarusian economy grew 3% in real terms in 2018, 15% in Belarus rubles and 9.3% in the dollar equivalent. The first estimates by BelStat, the statistics bureau, put GDP at BYN 121.568bn (US $59.7bn) in 2018.

International institutions, including Fitch, International Monetary Fund, and Eurasian Development Bankoffer a predominantly negative outlook for further development of Belarusian economy. The phase of recovery growth stopped in Q3’2018 when the economic growth began to slow down dramatically. No solutions have been found to improve the productivity of its economy, no structural reforms have been implemented, and all vulnerabilities of Belarusian economy remain unchanged or have aggravated. In the IMF’s gloomy forecast, Belarusian economy would grow 0% or less (down to a recession of 2% a year) if the country has no compensation for the losses caused by Russia’s oil tax change. The lack of compensation for the loss means that Belarus’s oil refinery industry would have to switch to international market conditions. This indicates that Belarusian economy can only stagnate or shrink without the support from Russia.

At the same time, the government has set a task of cutting 5% of spending in the utility sector in 2019.Coupled with the raise of utility tariffs, this will make these services generate far more revenues at the expense of payments from households. In other words, the government is coming close to fulfilling the conditions for an IMF loan program via privatization and reform of the utility sector. The current situation is most likely forcing the administration not to wait until all election campaigns are over but to try and conduct the presidential election as soon as possible, then start negotiations with the IMF during the preparation and conduct of the parliamentary election in 2020 as losses from Russia’s oil tax manoeuvre increase and uncertainty over the price of Russian gas mounts.

Foreign policy

Positional standoff with Moscow

After the Kremlin raised stakes and formulated an “integration ultimatum” for Belarus, offering cheap fuels in exchange for a deeper integration late last year, and Minsk responded harshly that bargains over independence “for a barrel of oil” are unacceptable, the sides changed their tactics. The public discussion of integration problems has transformed into a “positional standoff” where each administration is unilaterally pushing for progress in the agendas it deems important.

On January 23, Russia’s Ambassador to Belarus Mikhail Babich commented on the work of the Belarusian-Russian intergovernmental working group on further integration. According to Amb. Babich, “the Russian part of the group” has started working and is examining all provisions of the Union State of Russia and Belarus Treaty to develop its proposals on “deepening the integration”. In his view, these proposals should not overlap with the mechanisms implemented on the level of the Eurasian Economic Union. The first meeting of the intergovernmental working group can only take place after the Russian side has prepared its proposals and the Belarusian side has come up with its proposals in response.

But another clash is looming between the positions of Russia and Belarus within the Eurasian Economic Union framework. It manifested itself in the meeting of the EEU Intergovernmental Council in Alma-Ata. Belarus Prime Minister Sergei Rumas traditionally focused on confiscations and restrictions in bilateral trade in his public speech, but it was generally correct and “constructive” otherwise. By contrast, Russia’s Economy Minister Maksim Oreshkin stated after the Intergovernmental Council meeting that the talks of the smaller group lasted three times longer than the time scheduled initially and did not result in agreement on a number of issues because of the position of “one” side (Belarus). Oreshkin pointed to another key issue — the continuation of “free economic zones” — on which Minsk is not in agreement with other EEU partners. It supports them primarily because of the Great Stone, a Chinese-Belarusian industrial park project. Also, Oreshkin criticized Minsk of Belarus’s involvement in re-exports of sanctioned products from the EU to Russia. He said that Russia’s Prime Minister Dmitriy Medvedev presented “kompromat” against the Belarusian side about the re-export schemes, specifying the goods and the company involved, at the smaller group meeting.

As the Belarus-Russia relations deteriorate, Belarus MFA Vladimir Makey notified Washington on January 10 of lifting the restriction on the number of American diplomats in Minsk. No progress is expected in this anytime soon, however, especially after Wess Mitchell’s resignation from the office of Assistant Secretary for European and Eurasian Affairs, given his personal role in the affair of diplomatic normalization with Belarus.