Winter 2011/2012 assignment



Winter 2011/2012 assignment


You can trust him – he is sincere in hatred, greed, envy. (Neyah)

Belaruswill outlive this winter. After Supreme Council of the Union State, took place 25 November, Moscow allocated incredible dimension of support to Belarus. Minsk has never got at once such a massive financial help in frames of Russian-Belorussian relations. In fact Russia took the Belorussian economy in its budget: reduce of the gas price in 2012 to 165.6$ (which means minus $2.1 billion for Gazprom), restricting of the debt for 2011 in amount of over $100 mln, loan of $10 billion for APS for ten years.

The last part of Beltransgaz shares is sold for $2.5 billion. In fact, the package price was about $ 4.6 billion (with a price advantages for natural gas in 2012), and the whole Belarusian gas transportation enterprise cost "Gazprom" more than 7.1 billion dollars (that is without price reductions for gas supplied to Belarus from 2007 to 2010), i.e. more than pipeline Nord Stream, whose first phase is two times bigger than the system of the system "Beltransgaz".


It is worth mentioning that Minsk has already received a credit from the Sberbank $1 billion, and an obviously late second tranche of the EurAsEC ($ 440 million) is not far away. In general, the money "rod" from all sides ... What's going on? It is clear that this is a political solution to the financial content of Moscow, which requires a very serious argument for the Russian political class.


Over the past 17 years, we have faced the phenomenon of generous Russian aid to the Republic of Belarus many, many times. Even with all the efforts of the Belarusian state propaganda, constantly trying to cover up Russian support, or present it is as a compensation for the hardships of constant crises with the West, some special tribute for the "Alliance", the contribution to the Russian-Belarusian integration (according to the statements of A.Lukashenko, Belarusian 4.6 million workforce provides jobs for from 10 to 15 million Russians (?)), it is impossible to conceal the huge economic dependence of the Belarusian economy on cheap Russian energy supplies, Russian market and Russian loans.


Russiaat one stroke freed the republic from the economic crisis; tighten it for almost a whole year. It is doubtful that the Kremlin does not understand that the success of Alexander Lukashenko economic stability for others he will ascribe exclusively for himself and his policies towards full conservation, ruining the country and enriching the ruling establishment Belarusian of the Belarusian economic model. It is also no doubt that the Belarusian leadership  will spend provided resources exceptionally fast. This is confirmed by ending foreign aid due to the crisis that began in spite of the fact that the country was in a relatively favorable conditions - Belarusian refineries were filled with Russian oil available and the country got the cheapest in the region, natural gas, and Belarusian products are free for the Russian market. Nevertheless, this did not save the country from almost catastrophic situation in April - June, when the Belarusian government is literally just a few hours before entering the first tranche of the Eurasian Economic Community ($ 800 million).


In order to understand this events, it is necessary to answer a few questions. In particular, why l Russia is so generous with Minsk, is it a key moment for Russia's domestic policy? Will a new round of financial and resource support reinforce the power of Alexander Lukashenko, will his rating grow or negative trends can be expected? The question remains concerning the nature of the agreements, as well as on relations between Moscow and personally with Lukashenko...


I would not want to repeat the previous article "Integration Prelude," in which detailed analysis on Russian Federation interests in a strong integration group in the former Soviet Union are described. It is clear that Belarusians are the "allies" only in words. The experience of Russian-Georgian war has shown the real cost of the entire Minsk Allied rhetoric. Same as Kazakhstan in 2008, who has decided not to express public support of the Kremlin. But unfortunately, there are no other allies... Apparently, this point is also taken into account in the Kremlin and the Russian White House.


Somehow the Ukrainian factor faded. The severity of the Russian-Ukrainian gas conflict partially subsided; the issue is going to an agreement. In the Russian establishment understanding that Ukraine will not be able to draw any vehicle, nor even in the EEA is growing.


How such large-scale agreements in the framework of TC-SES and  Union State of Belarus and Russia are linked to the Russian presidential political expediency? This issue is very important, as among the Russian and Belarusian expert community and the political classes one can find the view that integration projects will lose its relevance for the "tandem" in March 2012. It is difficult to accept these views as a closer look at integration issue leads to the conclusion that, firstly, it is certainly important and politically advantageous, but it does not specify the nature of the campaign. The Russian federal television channels have devoted the Supreme Council of SG meeting just a few minutes, which in total would not exceed half an hour of airtime. There is no continuation of this topic. Perhaps, the Russian authorities do not want to draw public attention to such huge preferences to the regime. In addition, given that the ratings of "tandem" are falling, appearance of Vladimir Putin and Dmitry Medvedev next to Alexander Lukashenko will not add them sympathy among intellectuals, business class, etc. So we can talk only about the Kremlin's strategic objectives - to create a hard integration center, which will in future include political superstructure. It is clear that along this way Alexander Lukashenko will be only a companion, and not for long. Sooner or later he will become an objective obstacle for deep integration, as it will necessarily strike his power. How soon? In this case, it all depends on integration, which Lukashenko pledged to foster and expand.


Does the Russian leadership want to deal with Lukashenka? Clearly, the answer is no. In principle, Russian president and prime minister are not especially hiding it. The problem is that there are no real figures to deal with in Belarus. Careful look on the Belarusian society, its political class, nomenclature suggests that the Belarusian president can be hated but as long as he supplies the republic with loans, subsidies and preferences from Russia, nothing and no one in Belarus, is threat to him. In the West, his role is also quite realistically estimated ...  In case of “color revolution", will Poland start gas supplies  o Belarus, will it purchase Belarusian butter, milk and cheese?


In this regard, ostentatious outrage of the Belarusian regime opponents, (they have been refining their Russophobia for years) as Lukashenka was once again in the circle of Putin and Medvedev cannot cheat anyone, because, unfortunately, the political opposition, who stubbornly continue its fly with only one, "western" wing, made almost more than the Belarusian authorities themselves to the success of the next Russian-Belarusian summit. Starting from participation in the electoral game and finishing with a continuous anti-Russian campaign in its information resources. At the same time we have to unwittingly point out that when the anti-Russian campaign in October - November 2011 for obvious reasons, was over, it was immediately picked up and fanned by the opposition media.


The opposition itself has left Moscow for Lukashenko, as apart from false assurances of some candidates for the presidency in autumn 2010, that they are "Kremlin candidates", they have done nothing. As a result of the crisis in 2011 a new wave of Belarusian workers went to the east, same as Alexander Lukashenko personally - the main Belarusian migrant worker, and, incidentally, the most successful. He has something to bring home after November 25.


And yet, is everything really so great for the Belarusian side after the signing of agreements on Union State Supreme Council? Astute observers noticed Alexander Lukashenko’s stiffness, an artificial tension of his smiles. When Putin suggested the gathering once again draw attention on critical details of the agreement, the face of Belarusian president was petrified. Of course, Moscow captures the fact that since December 2010, the Belarusian president clearly and timely fulfilling all his obligations under the agreements with Russia. But, apparently, there is still some delays. That was discussed in the sidelines. Details of that conversation, we cannot know, but we now that usual and regular Lukashenko’s “shuttle service” on the route “East-West” is not working , says a lot. The remaining agreements will emerge in the coming months. So, we have package deal. It could not have been done the other way.


Will the results of the Supreme State Council help Lukashenko? Yes, they will. He will strengthen his image of the main feeder of the republic and Belarusian oligarchy, directorate and members of the top brass will applause him.Along with the stabilization of the economy, currency crisis will fade away, wages will gradually rise. Only economic policy will stay the same. In the early spring of 2012, once in the EEA, all this will lead Belarusian president again raising the issue of "compensation»¸ that Belarus has "paid too much". Apparently, this consequences cannot be avoided.  Kremlin hopes that subsidies and preferences will make Belarusian president to start reform. Medvedev told this Lukashenko, but he pretended deaf…

Please note the following facts:


Alexander Lukashenko, October 18: "Many people say, prices, prices go up, stop them! In no case shall it be done now." But then he points out: "Yes, we must control them in order to prevent  overpricing. But they have already reached demand of the population. So prices cannot grow anymore."


Alexander Lukashenko, 22 November: "Our current economic opportunities and conditions do not allow us to make reckless experiments, which negatively affect the welfare of the people. We must not forget that the economy is not confined only to the business and protects only the interests of businessmen. It must support those who sow, plow, build houses, govern transport, treat patients, teach the children. They also have families. Prudent management of the economy is defined by the balances of interests of all segments of the population."


That’s it. Reforms are over before their start. It's time to split money...


So, Alexander Lukashenko has received a respite for a few months. Winter would be interesting.


Autumn assignment 2011


Be sure to see the previous article, "Autumn assignment 2011 (II part)" September 12, 2011 ( Coming autumn political season was described by following statements: "Autumn Marathon. The problem is compounded by the fact that the Belarusian authorities have to deal with several highly complex and contradictory economic and political problems:


- Despite the fact that the monetary chaos is the ideal condition initial accumulation of capital, a single exchange rate must be set by all means;


- Despite the fact that the "cost" of political prisoners on the virtual world's political market is very high - price is several billion IMF loan, however it is necessary to get the INF loan without releasing the only political reserve - political hostages;


- Despite the fact that in the conditions of the economic crisis the slightest disagreement with Kremlin is able to bring down the Belarusian economy, it is necessary at all costs to repair relations with the EU and then, in a "pendulum" mode try to get political and economic benefits from the next round of blackmailing the East and the West ;


- Despite the fact that it is impossible to conduct even small scale privatization before October, it is essential to get the second tranche from the anti-crisis fund of EEC ($ 440 million);

- Despite the fact that now «NordStream» is almost ready and therefore it is desirable to sell immediately the last shares of "Beltransgaz" because its asset’s value is falling dramatically, it is necessary to get advantage from the raging Russian-Ukrainian gas conflict (not crisis and not a gas war), which paradoxically overshadows a priority need of the Belarusian economy - reduction of the natural gas price to the level of Smolensk;


- Despite the fact that it is fatal for the government to allow active political opposition, the current government must at all costs start a "round table" in a shortened ("castrated") format, without preconditions;


- Despite the fact that the economic situation in the country remains extremely complex, rising inflation and labor force migration, it is a must to preserve at all costs to keep the illusion of "flourishing" Belarus in the minds of the majority of the population and constantly compare it to the "criminal, dirty, corrupted , hungry Russia, where the " oligarchs rule ";


- Despite the fact that Belarus is now extremely dependent from Russia, Russia's economic support and goodwill of Kremlin, it is essential to set Belarusians against Russia,  accuse Moscow of provoking the crisis in the country, blame the Russians for exporting Belarusian goods and Food from the stores, criticize Russian protectionism,  etc. etc. "


As you can see, much of this happened:


• Introduction of a single exchange rate;


• Not all political prisoners are released. Reserves for a "rainy day";


• Some kind of dialog with the West is organized;


• No privatization; the second tranche of the AF of EAEC has not been received;


• "Beltransgaz" is sold, gas prices are higher than those in Smolensk. If not, Belarusian "pipe" would be empty by January 1, without any transit gas;


• «round table" is not launched, though they have tried. The condition were almost impossible for Lukashenko - release of all political prisoners;


• the image of "Prosperous Belarus" is ruined. 100% inflation and a wave of migrant workers have turned the Belarusian "showing off" into the ashes, but state media official policy is: "We are the best";


• anti-Russian information policy is suspended, but A, Lukashenko still accuses Moscow of a "rising prices for raw materials (oil)."


However, life has become a bit easier ... But a serious challenge lays ahead.


Winter assignment 2011.


Luckily for Belarusian authorities, not all agreements of the single economic space coming into force on 1 January 2012. The solid portion of them will work with a delay of a year or two and even three years. Therefore, no one would require full collaboration with Russia and Kazakhstan on monetary policy or a common policy in the macroeconomics. If Moscow and Astana have demanded urgent action within the framework of integration, people would have been jumping out of windows in the Belarusian ministries...


Of course, four freedoms of movement: goods, services, capital and labor will not be implemented immediately either. The consequences of Russian exception to the WTO will take some time as well. 


But all this sooner or later inevitably will be implemented.


It is clear that prospects such as common gas prices, etc has been shown to A. Lukashenko. But Russia is only partially gasified, but Belarus – on 100%. Would Belarusian economy be able to deal with equal gas prices, which would be clearly higher than 2012 price? There are a lot of questions of this kind, and more are on their way. Meanwhile, Belarus, neither economically nor politically ready for real integration. Currently, republic willing only to consume. If Alexander Lukashenko hopes to get some money, oil, gas, and then "jump away", he is mistaken. Not for that he has been baited and fed.


Indicators: The second tranche of the EurAsEC, financing of nuclear power plant construction, etc. Just look in another direction or simply try... Wouldn’t wish such a fate even for an enemy.


Keep up with the song! That is his job for the winter...


A. Suzdaltsev, Moscow, 27.11.11