Lessons of the year for the authorities and the people

Problems of our result trouble God (Office folklore).

As scientists say, memory is a complex system of interrelated physical and chemical processes. At the same time, memory is very difficult «issue», that has its own, obviously sovereign life. So, sometimes the attempts to «stretch memory» are not successful,  quite often the sought information is unattainable, but rather lost in the maze of your own memory.

Felt into oblivion the Soviet Union was a country where attitude to the historical memory was very peculiar. A real life, all country's successes and joys in personal life began only after 1917. All events, that happened before this event, were presented by the Communist propaganda as a mixture of propaganda and fantasy far from historical reality. Tsar era was described as the darkest period in the life of the country in the spirit of the famous trilogy of Maxim.

1913 was chosen as a starting point to prove the advantages of socialism. It is worth recalling that 1913 was the most successful year in the development of the Russian economy. And its growth was interrupted by the entry into World War I (war of seven Empires, four of which have disappeared by 1918 ). Soviet propaganda repeated this sacramental phrase for decades: «And in comparison with 1913 ...». And further it was stated that the production of metals has increased tenfold, potato fivefold, producing cars a thousand - fold, and deforestation and fishing tripled...

It is clear that 1913 was chosen as a kind of virtual starting point, aimed to confirm the legitimacy and historical necessity of the October revolution.

One hundred years have passed since that starting point. Soviet Union had disappeared long time ago, young generation, that did not have any associations with the USSR, entered into adulthood.  But we can not exclude that 2013 will find its place in the future history of the Republic of Belarus. I wonder how will it be remembered by the country, its people and the government, as well as neighbors of Belarus? How did global positive and negative trends influence economic and political life of the country? Let's pay attention primarily to the economy.

Money search

No doubt, 2013 will remain in the memory of the Belarusian population because of exhausting waiting for another economic collapse in the form of shock devaluation of the Belarusian ruble. Belarusian people deserve from their president contemptuous term «unwise people» because of permanent duty near currency exchange. Of course, this reflects all dissatisfaction of the «people's president» to his electorate only partially.

 

The devaluation of the Belarusian ruble, which had to take place already in early October, did not happen. First of all, the National Bank still learned something and moved the process of devaluation in the stage of slow increase in the dollar rate. Secondly, the currency of the closed presidential funds and money of commercial banks, which were subjected to rigid blackmail, were used to save the financial «front».

Of course, robbery of the commercal sector, as well as the attack on the sector of individual entrepreneurs - a solid currency consumer, is emergency measure. But in terms of modern Belarus such action is not something unusual. The problem is that in 2013 the country continued to live beyond the means - ate away more than earned.

After the period of prosperity of smuggling solvents (Belarus is the only country in Europe whose existence depends on the smuggling business) , the foreign trade balance was negative again. And all the regular statements of the Belarusian leadership that the exports would finally exceed imports next year are nothing but fantasies. The expiring year has clearly demonstrated that it is impossible to reach a positive balance of foreign trade in the framework of the current economic policy the republic 's leadership. This is the most important lesson of 2013.

The failure of industrial policy of the Belarusian authorities is the second lesson. On the one hand, highly publicized modernization of individual sectors of the Belarusian economy - wood, cement, etc., failed miserably. («If you can not compete in the market with the cement, then the question arises: for what purpose did we conduct the modernization? We are modernizing enterprises to be competitive, to get a high quality product and sell it at a good price. Otherwise, why do we need this modernization, and other nano-technology? And how do we sell? No results! ... We invested money, took foreign loans and got a product that nobody wants». Alexander Lukashenko, December 2013).

Even assembly of Chinese cars in Borisov did not make the revolution at the market. On the other hand, warehouses, full of useless products, led to an objective decline in industrial production (up to 4.6 % compared to 2012). Belarus is moving to the status of the agro- industrial country. At the same time, it is worth recalling that the situation in agriculture is not well. Milk products crisis in Minsk in October was very clear indicator of the problems in the Belarusian agribusiness, which exported everything, including probably the cows along with the milkmaids.

Belarusian authorities will remember 2013 for another lesson – employable population has left Belarus in search of high-paying jobs. And this process was irreversible. Belarus has lost the competition for its own labor, finally becoming a reservoir of relatively cheap labor of secondary qualification. All attempts to solve this problem by imposing certain taxes and other punitive measures will only lead to an acceleration of departure from the country Belarusian workers, professionals and representatives of both technical and creative intelligentsia, including their families.

In its turn, 2013 became a kind of stage in the growing phenomenon of importation of the foreign labor into the country. It is worth recalling that North Korean builders participated in the construction of the iconic building of the Palace of Independence. So, 2013 has left its prominent place in the process of labor migration.

Potash war was the brightest political and economic event of 2013. No doubt, on the one hand it will go down in history of modern Belarus as a well-defined and, at the same time, the negative result of the Russian-Belarusian economic integration (major international row and the collapse of a single joint corporation). On the other hand, it was a «point of no return» in the history of the investment of the country. One can say that in 2013 the Republic of Belarus has disappeared from the world map of investments. And it is the most important lesson of the outgoing year.

Russia

There was no any significant «breakthrough» in Russian- Belarusian relations, that could change not only the socio - economic situation in the country, but also the place of Belarus in the system of Eurasian integration. In this regard, the arrest of a top manager of the Russian campaign «Uralkali» could be considered a gesture of despair, which only significantly added negative in relations between Moscow and Minsk. Curiously, but according to Alexander Lukashenko's attempts to use the oligarchs to gain control over the «Uralkali» , the theme of potash war will be continued in 2014.

All year the basic problems in relations between Moscow and Minsk have been concentrated in the financial and resource sector and grouped on several issues:

- Russian oil to the maximum large volumes;

- Russian money for the modernization of the Belarusian enterprises;

- New Russian loan (Anti-Crisis Fund of the EEC) of 3 billion dollars.

 

It is worth recalling that, apparently, the Belarusian Ministry of Finance will not get the sixth tranche of the previous loan this year.

Official Minsk planned to get money for the modernization as a result of the summit in the format of the Supreme State Council of the Union State, which took place in St. Petersburg on March 15. However, as it turned out, Moscow did not want to finance the modernization of the public sector enterprises of Belarus, which would then compete with Russian manufacturers at its own market. Russia has a counter-proposal  - modernization in exchange for top five industrial assets (JSC «Minsk Wheel Tractor Plant», OJSC "Integral" , JSC  «Peleng», JSC «Grodno Azot» and joint project «KamAZ « and JSC «MAZ»). However, this proposal did not fit into the Belarusian tradition of using Russia as a meek ​​and trouble free sponsor.

Alexander Lukashenko rejected Moscow's proposal, although, Russian President reminded about «five» during Russian - Belarusian military exercises.

However, in December the Belarusian authorities needed industrial «five» again in order to  soften at least partially Russian position to restrict supplies of crude oil to Belarus.  Moscow, relying on regular vows of the Belarusian government to promote the implementation of «five project», announced the delivery of 11.5 million tons of oil in the first half of 2014, which is half of the requested amount of 23 million tons.  First of all this decision by the Russian side has made a positive background for the Russian-Belarusian summit scheduled for December 25 in Sochi. Secondly, nothing prevents Moscow to repeat the experience of 2013 and in 2014, when the oil was delievered to Belarus quarterly, but the volumes fully satisfied the Belarusian side.

At large, in 2013 Belarus continued a tendency of getting the final status of subsidized satellite of the Russian Federation. In parallel, there is no doubt that the Belarusian side lies on the issue of industrial «five» and there will be no progress in this important sector of the Russian- Belarusian relations in 2014. Privatization of Belarusian oil refineries in the coming year will also remain in the sphere of propaganda. Belarusian authorities will try to impose Russian companies endless negotiation process and get financial advances, but will sell nothing. On the other hand, the Belarusian authorities will tear between the desire to get more Russian oil and unwillingness to fulfill its obligations in the sphere of ​​privatization. But in any case, we should note another important lesson of 2013 - real modernization for its own account under the authoritarian regime is impossible in Belarus.

At the same time, in 2013 the Belarusian authorities have found that the current level of Russian support (up to $ 9 billion per year) did not provide economic stability in the country, not to mention the economic growth. Differences in the level and quality of life of citizens of Russia and Belarus in recent years become increasingly acquire political significance, discrediting economic policy of Alexander Lukashenko. This process got its own tendency in 2013.

Defence

By the way, there was one more significant event in Russian- Belarusian relations in 2013 - Moscow got under control the Belarusian sky. Belarusian General (to be rotated) took the post of the commander of the joint Air Defense, bit it did not hide the main problem - the catastrophic decline in the defense capability of the Belarusian army, including air defense and border troops. This is the more incredible as in the 1990s Russia has invested much money in the modernization of the Belarusian border - built outposts and detachments , etc. However, as it turned out there are smuggling corridors, including air routes, on the Belarusian -Lithuanian and Belarusian-Latvian border, which are used to transport illegal migrants to the EU countries.

 

Deployment of Russian air base in Belarus means that the strategic cooperation between Russia and Belarus in the format of the Union State passes a stage of deep reform and in this case we can not speak about any equality of the partners.

In all fairness it has to be added that Alexandr Lukashenko would not be himself, if he did not try to got some dividends from the deployment of Russian air base in the city of Lida. Anyway, the story of the choice of place of deployment of Russian air group in Belarus remains very «cloudy» and probably will be continued in 2014.

The deepest lesson of the expiring year – Belarus is not able to protect itself.

Integration

Belarus joined the Common Economic Space of the Eurasian integration project two years ago. But up to this day the country's leadership has not taken any system measures to implement the agreements that form the basis of the Customs Union and the Common Economic Spaceship.

Moreover, throughout the 2013 both Russian Federal Service for Supervision of Natural Resource Usage and Federal Customs Service had repeatedly attracted the attention of Russian and Belarusian leadership to the fact that the goods of third countries, including food products that are prohibited from being imported into the territory of Russia, crossed the Belarusian customs border and appeared on the Russian market. Russian Federal Service for Supervision of Natural Resource Usage has repeatedly expressed doubt about the supply of milk and meat products from third countries under the guise of Belarusian food products. Belarusian authorities have attempted to organize the supply of Russian diesel on the Ukrainian market under the guise of the Belarusian biodiesel ( this scheme is similar to duty-free export of solvents, and was used by the Belarusian government in 2011 and 2012 in 1 and 2 quarters of 2013).

In summer 2013 the Central Bank of Russia published information on the amount of capital derived through fictitious export contracts. 15 billion dollars have been moved from Russia to the EU through companies registered in Belarus only in 2012.

In general, Belarusian leadership attempted to bypass the existing rules of the Customs Union and the Common Economic Space in 2013, trying to achieve increased revenues from its status as a member of the Eurasian integration. In particular, the Belarusian authorities continued to limit the spread of the four freedoms of a single economic space (movement of goods, services, capital and labor) on the territory of the Republic, tried to protect its market from Russian goods, developed import substitution programs, demanded from retailers to sale primarily Belarusian products (up to 85 % of range ). Actions of the Belarusian authorities were determined by the difficult financial situation of the Republic and the fear that deep structural economic reforms would undermine the political monopoly of Alexander Lukashenko to the power in the country. 

Official Minsk's attempt to consolidate its actions with Astana made a sense. It was clearly seen the Supreme Eurasian Economic Council on October 24 in Minsk, where the Russian leadership was under harsh criticism for actually Moscow's attempts to extend the four freedoms of the Common Economic Space at the markets of Kazakhstan and Belarus. According to the Belarusian and Kazakh leadership, the rule of a single economic space should be provided to Minsk and Astana exclusively at the Russian market.

These aspects of the integration policy of the Belarusian authorities, as well as attempts of the Belarusian government (through its security agencies) to conduct information war against the Customs Union in the Belarusian media space, are under the scrutiny of the Russian leadership. Russian Prime Minister Dmitry Medvedev at the meeting of Union Council of Ministers on December 15 drew attention to the fact that the main cause of stagnation in Russian-Belarusian relations is the unwillingness of Minsk to real and deep integration.

Most likely, the issue of Belarusian integration «stagnation» will be the main theme of Russian-Belarusian summit in Sochi. Alexander Lukashenko, encouraged by the success of Viktor Yanukovych in Moscow ( 17 December 2013 ), went there with desire to get his part of Christmas gifts from Vladimir Putin. Scenario of the meeting is unknown, as it is worth recalling that in the issue of Ukraine Vladimir Putin went against developed opinion of the Russian political and expert community that Kiev would not withdrew from the process of association with the EU. So, something unexpected may happen and after a conversation in the residence «Bocharov Stream».

It is worth recalling the disappointment of Alexander Lukashenko in October 2013 that Moscow did not cancel export duty for the exported Belarusian oil products in 2014. Belarusian government continues to dream about becoming a major intermediate seller of Russian energy resources to the European market.

People's life

As always, in 2013 the Belarusian population continued to show remarkable ability to economic survival, maneuvering between the harsh economic realities of your homeland and the temptations of your neighbors.

Authorities, focusing on political tasks, have repeated its own negative experience of 2010 and brought the average monthly wage in the country by the end of 2013 to $ 600 in-equivalent of the Belarusian rubles (growth by 18% in 2013).

Growth rate of average wages exceeded several times the growth rate of labor productivity. However, the Belarusian leadership, had no economic reason for the rapid increase in revenues, but decided to return the population the level of income, that was artificially created in advance of the 2010 presidential election and lost as a result of large-scale devaluation in 2011.

On the one hand, wage growth, aimed to reduce labor emigration from the country, has led to increase of sales of goods of domestic production. On the other hand, it should provide the necessary confidence of the electorate to the head of state in preparation for the next presidential elections. Alexander Lukashenko plans to run for president of the Republic of Belarus for the fifth time in 2015.

However, growth of income of the population has not met the expectations of the government concerning the increasing consumption of the Belarusian goods. In contrast, the demand for cash currency sharply increased in the second half of 2013, that coincided with the exodus of the population in hypermarkets of Poland and Lithuania for the purchase of cheaper consumer goods and food production of the EU countires.

However, there is a «positive outcome» in 2013 - Independence Palace, a fine example of the completion of the authoritarian paradigm of the Republic of Belarus. It is worth recalling that for another Russian loan Alexander Lukashenko may build five more similar palaces among the poverty. And he will build ...

Final result: a country in the centre of Europe is continuing to live in a frenzy of madness and empty vanity in 2013. At the same time it hopes for a miracle and the help of its neighbors, and in 2014 will be living on a principle of «survive by any means».

А. Suzdaltsev, Moscow, 22.12.13