Viktor Lukashenko’s informal leadership in Security Council strengthens

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April 22, 2016 18:42

Appointment of Mezhuev as Security Council State Secretary implies that the agency and its leader have lost their footing in the Belarusian power hierarchy. The real authority to coordinate the law enforcement agencies has been assigned to President’s Assistant for National Security Viktor Lukashenko. If the socio-economic situation deteriorates, State Secretary Mezhuev might be held responsible for security lapses. In addition, Mezhuev’s appointment will not prevent budget cuts for power structures.

President Lukashenko has appointed Alexander Mezhuev as Security Council State Secretary.

Mezhuev is not from the president’s inner circle, which points to a revision in staffing policy. A one-month delay with the appointment could be due to difficulties in identifying the most suitable person for this position, and also linked to the review of mechanisms how influence is distributed inside the Security Council.

Prior to his appointment as the State Secretary, Mezhuev chaired the Parliamentary Commission for National Security. The Belarusian Parliament is regarded as the ‘staff reserve’ before deserved retirement. Thus, the MP’s appointment to lead the Security Council implies a significant reduction in the State Secretary’s functions and influence.

During his career, Mezhuev has played supporting roles in the Defence Ministry; he has little influence and few connections in any power structure. Moreover, he is not planning to lobby interests of the military – he said that “it is important to eliminate the ‘pain spots’ promptly and in time, especially in the sphere of housing and communal services, residential construction, job creation and so on”.

The president has a small pool of trusted persons from which he plucks senior managers for power structures. Until now, all Security Council State Secretaries have proved their loyalty to president Lukashenko either since his first presidential campaign or during their service in the president’s security agency. The president zealously watches over the personnel policy in power structures and over the balance between the various law enforcement agencies.

In 2007, President’s Assistant for National Security – Viktor Lukashenko – was incorporated in the Security Council’s structure. His functions in the SC are not clear, but with the current appointment as State Secretary of a person without influence or connections in the security services, his role is set to increase.

President Lukashenko is attempting to reduce risks in case of socio-economic destabilization and to balance out various law enforcement agencies. Ahead of the presidential campaign, the president cannot afford for influential persons to emerge in key positions, especially within the power structures. Therefore, presumably, he decided to enhance the national security assistant’s role – Viktor Lukashenko – by strengthening his informal leadership.

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Growth in real wages may disrupt macroeconomic balance in Belarus
October 02, 2017 12:12
Фото: Дмитрий Брушко, TUT.BY

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.