January brought Belarus a spike in its tensions with Russia, ranging from usual trade wars to blatant statements made by President Lukashenko.
Domestic Policy: Mobilization Rhetoric Intensifies
In January Aleksandr Lukashenko stuck to fairly active mobilization rhetoric. His New Year address (1)was focused on the task of ensuring peace and security for Belarus and its need to «keep the gunpowder dry». As he attended the Holy Spirit Cathedral on Christmas, President Lukashenko stated that there are forces that would like to see the independent and sovereign Belarus disappear. On January 10, at the ceremony for the distribution of awards, including the Spiritual Renaissance Award, a special award for artists and cultural leaders, and the Belarusian Sports Olympus award, Lukashenko stated (2) once again that «the common task of the current generations of Belarusians is to preserve the country and pass it on, free and independent, to those who come after them». Similar statements were expressed in Lukashenko’s address at the old-calendar New Year reception.
Lukashenko expressed a similar message on January 17 at the talks with Sudan President Omar Hassan Ahmad Al-Bashir. He highlighted (3) the fact that Belarus consistently implements its own foreign policy based on national interests rather than instructions from the world power centers, supports the development of relations with all states from the perspective of mutual respect, non-interference with domestic affairs, and recognition of diversity in development vectors.
On January 26, at the PhD and Professor diploma distribution ceremony, Lukashenko stated that science and state ideology need to intertwine, especially when attempts are made to question sovereignty and independence of Belarus. It was then that the President also said (4) that the “brotherly Ukraine” is now fighting for its independence.
The expert community has no doubt that in all of the above cases, Lukashenko was speaking of Russia as a source of potential challenges to the independence and sovereignty of Belarus.
Economy: Financial Burden on the Population Increases as Reforms Take Place
The economic situation in Belarus continued to evolve in line with the trends set in previously. On one hand, the real sector stabilized thanks to the stabilization of the Russian market and demand for Belarusian produce there. On the other hand, the continuation of negative trends has been propelled both by the distortions accumulated in the economy earlier, and by artificial problems such as limited supply of Russian oil, the restriction of Belarusian foodstuffs on the Russian market and others.
In order to balance out its resources, the state is increasing financial pressure on the population. From January 1, 2017, VAT grew 5% for all telecommunication services in Belarus. Heating charges have gone up 17% since the beginning of the year; gas charges for households during the heating season went up (5) 17% from January 1 as well. Electricity rate remained unchanged. The government’s plan to ensure 75% compensation by household consumers of the cost of utility services provided to them by the end of 2017, and 100% by the end of 2018 (as stipulated in the International Monetary Fund requirements) was approved.
The ban of Belarusian meat and dairy produce imports to Russia caused new tensions between countries
Therefore, the current actions of the Government and the National Bank fully comply with the requirements of Western and Chinese creditors and partners. It is probably safe to predict that these strategic priorities will remain unchanged in 2017. Meanwhile, the new Chief of Staff team will be smoothing out the image losses caused by these steps. In this context, President Lukashenko stated (6) once again that average monthly wages should reach $500.
Given all these developments, some progress is due in the most «hopeless» area of reforms: the reform of the state-owned real sector. In January, the State Community Property Agency initiated (7) a «national privatization» campaign for open joint stock companies in which the state owns less than 25% of shares. This is probably the first one of a number of positive signals the authorities are going to send to investors in 2017.
Foreign Policy: The Conflict with Russia Becomes Ever More Obvious
The relations between Belarus and Russia developed in the vector framed by the key points of conflict in the relations of the two countries. They continued to exchange sharp statements regarding the ban of Belarusian meat and dairy produce imports to Russia. Blamed by Sergey Dankvert, Head of the Russian Agricultural Produce Control Agency, both the officials of the Belarusian Ministry of Agricultural Produce and Aleksandr Lukashenko himself criticized the Russian counterpart. Notably, the attempts of pro-Russian lobbyists to push Belarus to sue the Russian Agricultural Produce Control Agency continued and intensified. Mikhail Miasnikov, First Speaker of the Council of the Republic of Belarus (the upper house of the Parliament) suggested this first, followed by the ministers of the Eurasian Economic Commission Sergey Sidorski (8) (Belarus representative) and Tatiana Valovaya (9).
However, such an action makes no sense (since the post-soviet space has no international courts that can issue binding verdicts). Moreover, it can turn into a political defeat for Belarus. The country can only file a complaint with the Court of the Eurasian Economic Commission regarding the violation of the EEC norms, not agreements within the Union State framework. This move can provide the ground for the soonest possible «writing off» of the bilateral integration project between Belarus and Russia. Minsk, however, is in no rush to do so: the legal framework of the Union State gives the Belarusian side more options to protect its positions and promote its interests compared to the EEC framework.
In the area of oil and gas relations, January saw growing tensions as well. Even the figures known as «doves» (such as the Russian Ambassador to Belarus Aleksandr Surikov) no longer speak of finding solutions to the issues of dispute in the shortest time possible. Meanwhile, the Belarusian government (Vice-Premier Vladimir Semashko) has claimed that the given issues should be solved within the first quarter of 2017. According to estimates by Russia’s Vice Prime Minister Arkadiy Dvorkovich, Belarus’ debt (10) for the Russian gas supply so far is $550 million. Because of this debt, Russian suppliers will cut oil exports to Belarus by another 12% (down to 4 million tonns). At the same time, the Russian side is trying to block Minsk attempts to find alternative energy sources or to make the search more costly to Belarus. On January 17, Sergey Lavrov, Russia’s Minister of Foreign Affairs, made a fairly tough statement (12) on the Russian-Israeli blogger Aleksandr Lapshin: Lavrov said that it is unacceptable to extradite Lapshin to Azerbaijan, as demanded by Baku. Yet, given the solid intention of the Belarusian side to meet the request of Azerbaijan counterparts, Aleksandr Lukashenko might have reached specific arrangements with Ilham Aliyev on mutual steps in political and economic spheres, and is willing to implement those steps.