Privatization in favour of local investors is gaining momentum
Privatization in favour of local investors is gaining momentum in Belarus. For instance, in the first ten days of July shares in the following companies have been sold:
- Shares in “Baranovichigazstroy” have been acquired by a private equity Belarusian unitary enterprise “AnvoyInvest” at an auction. The investor has bought 80.7% of the capital shares of the enterprise for Br 1 billion 98 million;
- Stakes in the JSC “Promstroysistema” (75.4% of the statutory capital) have been sold for Br 168.6 million rubles to “Sog Story” ltd;
- Shares of the JSC “Borisov repair and mechanical plant” (42.1% of the statutory capital) have been acquired for Br 2.8 billion by the JSC “ATEP-5”;
- 15.4% of the statutory capital of the JSC “Lesohimik” (Borisov) has been bought for Br 3.705 billion by the JSC “Polesezhilstroy”;
- 42.1% of the statutory capital of the JSC “Borisov repair-mechanical plant” has been bought for Br 2 billion 800 million also by the JSC “ATEP—5”;
- 1.8% of the statutory capital of the JSC “Baranovichi Shoe Factory” has been bought by a Russian investor.
Sale auctions concerning “Pukhovichi Experimental Plant”, “Slonim car repair factory”, “Special vehicles”, “TransMozyr”, “Polymer” and “Bobruisk shoe factory” did not take place due to the lack of bids from potential buyers.
Privatization of municipal property is gaining momentum on the ground (small-scale providers of services).
Since the beginning of the year (and in fact in June-July) local investors have bought shares of 10 local enterprises. It seems the authorities thereby try to compensate for the lack of “large-scale” privatization. All these transactions have a lot in common:
1) all auctioned companies are small;
2) as a rule, there was no competition;
3) takes bought by a local investor;
4) the sale price was only slightly bigger than the initial price (book value of about 5-10%);
5) whether an enterprise provokes interest of some profile investor, the amount of stake put on sale is under 50%.
The sale of enterprises raises the revenues of the republican and local budgets in particular and shows the willingness of the government to continue with its ambitious three-year long privatization programme. However, judging upon the carried out transactions it would be too premature to talk about the beginning of a mass-scale privatization and about active participation of foreign investors in it. It is linked to the unwillingness of President Lukashenko to privatize large property in particular in favour of foreign capital (the State Committee on Investment has no authority over privatization of large enterprises).
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.