Belarus’ woodwork industry could be modernized, but only by private investors
Following Lukashenko’s visit to the Borisov woodworks last week, the company’s management and regional administration head have resigned.
The government has chosen the woodwork industry as a promising avenue for modernization. Although additional funds have failed to improve the industry’s financial performance, woodwork remains a promising industry for modernization which could be carried out by private investors. However Belarus’ government wants to remain the key player.
About 39% of Belarus is covered with forests, i.e. it has enough natural resources for woodworking. Exports of wood and products made of wood in 2012 exceeded USD 500 million and Belarus has a good potential for import substitution at circa USD 200 million per year (calculation is based on 2012 data). Belarus imported circa USD 100 million worth of woodchip boards in 2012 and in the future it aims to replace these imports entirely with domestic products.
The exact amounts allocated for the woodworking industry modernization are difficult to calculate, but Belarus has imported woodwork equipment worth at least USD 500 million. Some modernization loans date back to 2008-2009 and have not been repaid in full until now. The industry’s financial situation is critical: woodworking has been making profits only in May 2013. Compared with 2012, industry’s loss-making in 2013 increased by 2.4 times. New production lines have been launched, but imports of woodchip boards have not reduced.
In addition, there is a huge difference between how private and state woodworks develop. In Smorgon region, the privately-owned Kronospan woodworks is expanding according to a development plan, it produces goods for exports and for domestic consumption, and does not require constant monitoring by the head of state. State-owned woodworks companies are not developing so well. In general, state-owned woodworks have failed to implement modernization: imported technical equipment does not meet the technical requirements and is often stored outdoors. The only positive exception is Ivatsevichi woodworks, which has strengthened its exports on the Russian market.
Recent practices show that the state is unable to carry out effective modernization at state-owned woodworks due to the lack of incentives. Private enterprises can be successful, but that only shows the inefficiency of state ownership in this industry, which is unacceptable for the authorities.
Over the past year, military-political relations between Minsk and Kyiv have become complicated. Due to their high inertia and peculiarities, this downward trend would be extremely difficult to overcome.
The root cause of the crisis is the absence of a common political agenda in the Belarusian-Ukrainian relations. Minsk is looking for a market for Belarusian exports in Ukraine and offers its services as a negotiation platform for the settlement of the Russo-Ukrainian war, thereby hoping to avoid political issues in the dialogue with Kiev. Meanwhile, Ukraine is hoping for political support from Minsk in the confrontation with Moscow. In addition, Ukraine’s integration with NATO presupposes her common position with the Alliance in relation to Belarus. The NATO leadership regards the Belarusian Armed Forces as an integral part of the Russian military machine in the western strategic front (the Baltic states and Poland). In addition, the ongoing military reform in Ukraine envisages a reduction in the number of generals and the domestic political struggle makes some Ukrainian top military leaders targets in politically motivated attacks.
Hence, the criticism of Belarus coming from Ukrainian military leadership is dictated primarily by internal and external political considerations, as well as by the need to protect the interests of generals, and only then by facts.
For instance, initially, the Ukrainian military leadership made statements about 100,000 Russian servicemen allegedly taking part in the Russo-Belarusian military drill West-2017. Then the exercises were labelled quazi-open and military observers from Ukraine refused to provide their assessment, which caused a negative reaction in Minsk. Further, without citing specific facts, it was stated that Russia was building up its military presence in Belarus.
Apparently, the Belarusian and Ukrainian Defence Ministries have entangled in a confrontational spiral (on the level of rhetoric). Moreover, only a small part of the overly hidden process has been disclosed. That said, third states are very likely to take advantage of the situation (or have already done so). This is not only about Russia.
The Belarusian Defence Ministry officials are restrained in assessing their Ukrainian counterparts. However, such a restraint is not enough. Current military-political relations between Belarus and Ukraine are unlikely to stabilise without the intervention of both presidents.