Conflicts within ruling group result in contradicting laws
On March 30th, the government issued a regulation No 241 “Small and Medium Enterprises Development in Belarus”, which bans the revision of state property privatization results.
Conflict of interest between President Lukashenko and the Government head Myasnikovich, as well as the need to comply with the international obligations on privatization force the government to implement palliative measures. In general such behaviour has a negative impact on the Belarus’ investment attractiveness and reduces international financing opportunities.
The ban on the privatization results’ revision should be regarded as a Government’s attempt to mitigate President Lukahsenko’s harsh line. The latter has not only revised privatization results (Kommunarka and Spartak cases), but also created the legal grounds for public intervention in the operation of a private enterprise in the future (amendments to the law on privatization were introduced, enabling minority shareholders’ interests to be represented by state agencies).
Formally, the Government’s proposal aimed at protecting private property and investors’ rights, and is consistent with the adopted in 2010 Presidential Directive No 4 “Development of entrepreneurship and stimulating business activity in Belarus”. But in reality, since 2011, Belarus’ state policy aimed at purposeful limitation of private investors’ rights in favor of expanded state’s authority to interfere in private property matters – regardless, of the reached international agreements.
In particular, the recent governments’ initiative reflects Prime Minister Myasnikovich’s desire to fulfill government’s obligations within the planned Belarusian state property privatization programme, linked with the EurAsEC Anti-Crisis Fund’s loan. Myasnikovich was in charge of the loan agreement in 2011, and a co-signatory, along with the then Russian Prime Minister Putin.
Presumably, the President considers these privatization plans, not only as a threat to his authority, but also as a platform for Myasnikovich to gain political influence. Therefore Lukashenko initiated a privatization legislation review, and a media attack against Prime Minister Myasnikovich. So far, Lukashenko wins in this confrontation.
However, even if Myasnikovich is dismissed, the main issue will remain unresolved: what are the funding sources for the Belarusian economic model in the future? Clearly, this issue is much less important for the ruling group than the issue of power preservation by them.
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.