Putin and Lukashenko: there will be no emergency aid
At the meeting in Sochi on September 15th Putin and Lukashenko discussed Belarusian-Russian relations. In the short term no decisive breakthroughs, destructive conflicts, or ‘first aid’ financial assistance from Russia should be anticipated.
Belarusian media reported that the meeting in Sochi was initiated by Russia, but on September 11th, President Lukashenko phoned Putin to congratulate him on the success of the APEC Summit (Asia-Pacific Economic Cooperation), where the Russian President represented interests of Belarus and Kazakhstan as part of the Customs Union.
In Russo-Belarusian relations, the most important issues for Russia include: the introduction of utilization duty on motor cars by Belarus simultaneously with Russia, and in general – synchronization of trade policies and Belarus’ political support of Russian integration initiatives. For Belarus, the most important issues are to obtain the next tranche from the EurAsEC Anti-Crisis Fund, compensation measures for Russia’s WTO accession, new loans and / or sale of state enterprises.
On the Russian issues, “common issues” were discussed in a spirit of constructive and peaceful cooperation, but no concrete decisions were taken. On the issue of introduction of utilization duty on motor cars by Belarus, Belarus received the opportunity to sell its consent to such a measure, and to delay introducing the duty until a convenient date. Russia would like Belarus to introduce this duty at minimum for agricultural vehicles, as this would simplify the movement of imported motor vehicles within the Customs Union borders, reducing Russia’s control costs. Basically, Russia could motivate Belarus to take this step, if Russia in exchange could ensure lower costs for Belarusian agricultural producers after the utilization duty has been introduced by Russia.
Regarding Belarusian issues, there was no chance that the parties could find easy solutions. The only exception was a virtual guarantee that Belarus will receive the fourth tranche from the EurAsEC ACF with the only disagreement about the allocation terms. Russia is not set up to pay compensation to Belarus because of its WTO accession. Putin was hardly impressed by problems voiced by Lukashenko concerning migration control at the Customs Union border. It would be premature for Russia to consider new loans for Belarus: such option exists but not in 2012.
In order to close the funding gap, Belarus would either have to sell a large enterprise or focus on negotiations with the IMF. Since it is unlikely that Belarus will reach an agreement with the IMF in 2012, Belarus will have to find a buyer for some of the largest state-owned assets by the end of the year.
According to Belstat, in August 7,600 people were dismissed, including 4,800 civil servants. Dismissals of civil servants were due to the optimisation in the public administration by up to 30%. Some civil servants would retain their job however would lose the status of a civil servant. Vacancies on the labour market are likely to reduce in number, thanks to the optimisation, the state administration would increase wages for public servants. The payroll fund for retained employees is likely to increase and some former state employees are likely to get jobs in affiliated organizations. The optimisation of the state apparatus should complete by January 1st, 2018, and some former civil servants are likely to join the ranks of the unemployed.