Belarus: Pandemonium in Ukraine, Russia’s Aid, and Domestic Silver Linings

Publication: Eurasia Daily Monitor Volume: 11 Issue: 26

(Source: AP)

The events in neighboring Ukraine have spawned multiple publications in which Ukraine and Belarus are compared and contrasted and the potential effect of the Ukrainian events on Belarus is analyzed. “Yanukovych may not survive politically even until the 2015 elections,” writes Alexander Klaskovsky, one of the stars of the opposition-minded Belarusian press. “So how has [Alyaksandr] Lukashenka managed to be at the helm of power in Belarus for nearly 20 years? To say that he has accomplished that exclusively by coercion is to prevaricate. The agitated Western politicians who talk about Belarusians as a nation groaning under the heel of dictatorship do not get it, to put it mildly. The current president has consummated his skill of extracting benefits from Russia and he provides his unpretentious compatriots with an acceptable standard of living. At least it is considerably higher than in Ukraine” (http://naviny.by/rubrics/politic/2014/01/28/ic_articles_112_184397/).

Indeed, though among the lowest in Europe, Belarus’s average monthly wage is higher than in Ukraine—410 and 254 euros ($559, $346), respectively, in August 2013 (http://nn.by/?c=ar&i=105448&lang=ru). Despite the umpteenth appeal by the International Monetary Fund (IMF) for Minsk not to raise salaries and pensions as they have already been set above the level afforded by labor productivity (http://naviny.by/rubrics/economic/2014/01/27/ic_articles_113_184383/), the upward march continues. Thus, from February 1, 2014, pensions increased by 5.3 percent (http://www.belta.by/ru/all_news/president/V-Belarusi-s-1-fevralja-povyshajutsja-pensii_i_658328.html). In Minsk, where more than one-fifth of all Belarusians live, the average monthly wage was $827 in December 2013. In 2013, the real (i.e., adjusted for inflation) monthly earnings were 16.9 percent higher than in 2012 (http://www.belta.by/ru/all_news/regions/Srednjaja-zarplata-v-Minske-priblizhaetsja-k-Br8-mln_i_658307.html).

Also on February 1, 2014, benefits paid to families with children and one-time benefits paid at childbirth rose, simply because they are calculated as a percentage of the country’s average monthly wage. In 2013, those benefits increased four times due to the continuing growth in wages (gorad.by/by/page/finance/7713?).

At the same time, Belarus is experiencing not only an economic slowdown but also a rising international trade deficit. Thus, in 2013, the excess of imports over exports amounted to $5.7 billion compared with just $344.6 million in 2012. This excess was caused by a significant, 19-percent decline in exports (http://news.tut.by/economics/384800.html).

How is it possible to sustain the material standard of living when its basic formative factors show a negative dynamic? Any prediction of economic sustainability makes sense for an entity that performs its vital functions on its own, with only marginal outside aid. But if this template does not fit quite a few members of the European Union, there is little to suggest that President Lukashenka’s vision of Belarus is any different. In times of need, his “homeland” stretches from Brest to Vladivostok—thus, he clearly counts on the continuation of Russia’s subsidies, direct and indirect, and he views his transit location and industrial assets as bargaining chips.

Whether one chooses to castigate Lukashenka for securing Russian aid or to praise him for doing so is a matter of interpretation and/or affective disposition. Either way, commentators already argue about the effect of the events in Ukraine on Russia’s and the EU’s relations with Belarus. According to Klaskovsky, the pandemonium in Ukraine benefits Minsk on both of its geopolitical flanks. This is because Belarus is viewed by Moscow as a unique strategic foothold and because the transit of Russian hydrocarbons through Belarus is potentially more reliable than through Ukraine. Also, the EU sees Belarus as a more predictable and business-oriented neighbor (http://naviny.by/rubrics/politic/2014/01/28/ic_articles_112_184397/).

Valer Karbalevich of Radio Liberty disagrees with Klaskovsky. Since Ukraine’s geopolitical loyalty and leanings are for sale, Ukraine is Belarus’s competitor in their fight for Russia’s aid. Moreover, Karbalevich believes that without the $15 billion promised by Russia to Ukraine, no promise of $2 billion for Belarus would have been made. According to Karbalevich, there are no signs the EU makes concessions to Minsk (http://www.svaboda.org/content/article/25249244.html).

Yet, some shifts in the EU’s position vis-à-vis Minsk have arisen. Both an increased frequency of high-level contacts as well as the start of visa-regime simplification talks testify to that. On January 29, in the Minsk Press Center (Dom Pressy), a roundtable titled “Belarusian-European relations after the Vilnius summit of the Eastern Partnership” took place. Three parties were engaged: the official EU representative, government, and opposition-minded experts—an unusual format. Denis Melyantsov from the Belarusian Institute for Strategic Studies, a Minsk-based think tank funded by the West, gave a talk in which he opined that the EU-Belarus relationships would benefit if a legal framework of their dialogue were established. This framework would help reconcile democracy promotion (that the EU supposedly wants) with non-interference in domestic affairs (that Minsk does). Melyantsov’s talk was subsequently profiled by Belta, a government press agency (http://www.belta.by/ru/all_news/politics/Dvustoronnim-otnoshenijam-Belarusi-i-ES-ne-xvataet-polnotsennoj-juridicheskoj-bazy—ekspert_i_658472.html). This was fairly unusual for Minsk, where the degree of confrontation and mutual detachment between government and the opposition is greater than in any of the other member countries of the Eastern Partnership.

There are, however, silver linings in the stagnation-prone Belarusian economy, and those are not immediately related to either Russia or the EU. Today, in the EMEA region, comprising Europe, the Middle East and Africa, Belarus is second only to Israel on per capita revenues from information technology (IT), including software development. The leader in this business is EPAM Systems, the first Belarusian company to have held its initial public offering (IPO) on the New York Stock Exchange. According to Yury Zisser—the owner of Tut.by, Belarus’s most visited non-government news portal—in the IT area, the Belarusian state lends a helping hand. “Instead of unprofitable iron trash fit only for the Russian market, the development of IT is becoming the forward-looking business in Belarus, claiming for it a new niche in the international division of labor (http://news.tut.by/ec”onomics/384746.html), says Zisser.”

However, the government will need to sustain a sufficient standard of living in Belarus until that new niche can acquire critical mass—and Minsk has, arguably, been successful at this. Besides higher salaries, life in autocratic and statist Belarus is much more orderly, secure and safe than in oligarchic and pseudo-democratic Ukraine. This is what political pundits usually overlook while reasoning about lofty matters, but ordinary people never do.