Belarus attempts to limit West’s role in Ukraine peace negotiations
The Belarusian authorities are taking a pro-active role in resolving the crisis in eastern Ukraine in order to limit ‘western’ participation in the negotiation process and to increase the Customs Union ‘Troika’s’ role. President Lukashenko’s actions imply that he wishes to reach a new international level: not only as a negotiations platform, but as an active participant in the de-escalation process. Whether his ‘peace-making’ mission is a success or not, Lukashenko hopes for Belarus-EU relations to be normalised without any conditions.
President Lukashenko said the presidents of Belarus, Russia, Kazakhstan and possibly Ukraine were expected to have talks soon.
Throughout the Russo-Ukrainian crisis, the Belarusian leadership has repeatedly stated its unwillingness to participate in it as a mediator. Recently, however, President Lukashenko has publicly stepped up his activity in the negotiations on the Russo-Ukrainian settlement. “In the near future we - Presidents of Belarus, Russia, Kazakhstan, and Ukraine (if Ukraine agrees, has not rejected so far) – shall hold a series of meetings to have a principled discussion about what is happening here with us”.
President Lukashenko seeks to engage official Kiev to negotiate settlement of the situation in the east of Ukraine and he is limiting participants in the negotiation process to the Kremlin and its allies - Belarus and Kazakhstan. Moscow is happy with such a solution and is ready to support Minsk’s initiative.
While Belarus did not mediate the Trilateral Group’s negotiations (Ukraine-OSCE-Russia), her role as a state-peacemaker had increased – not only because she provided the meeting place, but also due to her constructive position regarding the Russo-Ukrainian conflict.
In addition, despite the fact that the Trilateral Group managed to achieve some agreements – a cease-fire in the area of the MH17 crash and the release of hostages by the parties – de facto they were not fulfilled. Moreover, relations between Western capitals and the Kremlin have deteriorated (Russia has imposed restrictions on imports of some agricultural products from the EU, USA, Australia, Canada and Norway).
Previously Lukashenko had phone talks with the presidents of Serbia and Kazakhstan about ways to normalise the situation in Ukraine. Last week, he held telephone conversations with President Putin (inter alia, they discussed the Ukrainian issue), and with Ukraine’s President Poroshenko, who “expressed hope that the consultations could continue and yield concrete results”.
Lukashenko also met with the leaders of Russian and Ukrainian Communist Parties – Gennady Zyuganov and Petro Symonenko. The Russian Communist Party leader underscored during the meeting: “We are looking forward to your mediation efforts, we know how much authority you have, including in many circles in Ukraine, and we will strongly facilitate the peace-making and solution-oriented efforts”. In addition, President Lukashenko said that he had offered a viable option to resolve the situation in Ukraine to the West, so far to no avail: “Once I proposed a solution, and the West agreed with me – those who I had talked to – that it was a sound option".
In response to his “peace-making” mission regarding the situation in Ukraine, President Lukashenko hopes that Belarus-EU relations will normalise ‘unconditionally’: “They have put pressure on us for many years already – westerners, Americans and Europeans – with sanctions, and so on. I always tell [them], for Belarus’ heroic deeds in that horrible war, you have to kneel down and thank Belarusians”.
Belarus wishes to impose her own agenda on the negotiation process to settle the situation in south-eastern Ukraine. The Kremlin will support Belarus’ initiative to restrict the circle of those negotiating with the authorities in Kiev (to the Kremlin and its allies). Meanwhile, Russia is unlikely to facilitate the work of the Trilateral Contact Group with representatives from Western countries.
The rapid increase in wages has led to a decline in the ratio between labour productivity and real wages to one. Previously, the rule was that enterprises, in which the state owned more than 50% of shares in the founding capital, were not allowed increasing salaries if this ratio was equal to or less than one. The authorities are unlikely to be able to meet the wage growth requirement without long-term consequences for the economy. Hence, the government is likely to contain wage growth for the sake of economic growth.
According to Belstat, In January – August 2017, GDP growth was 1.6%. The economic revival has led to an increase in wages. In August, the average monthly wage was BYN 844.4 or USD 435, i.e. grew by 6.6% since early 2017, adjusted for inflation. This has reduced the ratio between labour productivity and real wages from 1.03 in January 2017 to 1 in the first seven months of 2017. This parameter should not be less than 1, otherwise, the economy starts accumulating imbalances.
The need for faster growth in labour productivity over wage growth was stated in Decree No 744 of July 31st, 2014. The decree enabled wages growth at state organizations and organizations with more than 50% of state-owned shares only if the ratio between growth in labour productivity and wages was higher than 1. Taking into account the state's share in the economy, this rule has had impact on most of the country's key enterprises. In 2013 -2014 wages grew rapidly, which resulted in devaluation in 2014-2015.
Faster wage growth as compared with growth in labour productivity carries a number of risks. Enterprises increase cost of wages, which subsequently leads to a decrease in the competitiveness of products on the domestic and foreign markets. In construction, wholesale, retail trade, and some other industries the growth rate of prime cost in 2017 outpaces the dynamics of revenue growth. This is likely to lead to a decrease in profits and a decrease in investments for further development. Amid wage growth, the population is likely to increase import consumption and reduce currency sales, which would reduce the National Bank's ability to repay foreign and domestic liabilities.
The Belarusian government is facing a dilemma – either to comply with the president’s requirement of a BYN 1000 monthly wage, which could lead to new economic imbalances and could further affect the national currency value, or to suspend the wage growth in order to retain the achieved economic results. That said, the first option bears a greater number of negative consequences for the nomenclature.
Overall, the rapid growth in wages no longer corresponds the pace of economic development. The government is likely to retain the economic growth and retrain further growth in wages. Staff reshuffles are unlikely to follow the failure to meet the wage growth requirement.