The authorities try to solve a dilemma: how to raise salaries and to keep citizens’ money in the economy?
At a meeting on May 3 with the Chairman of the Federation of Trade Unions, L. Kozik, President Lukashenko announced that the average salary in Belarus by the end of 2012 should amount to 500 USD, and that this should happen in tandem with a rise in labor productivity.
Lukashenko’s statement concerning the average salary increase of up to 500 USD in equivalent suggests that, firstly, the authorities are afraid of protest moods among workers who are unsatisfied with low salaries. That is why several governors have stated earlier that salary increase according to the stated level is inevitable and the KGB has reported that measures on social tension relief were successfully implemented in several enterprises in 2011.
Secondly, the fact that the President has joined a “salary rush” demonstrates Lukashenko’s desire to fulfill his famous election pledge of 2012 (the average salary shall be equivalent to 500 USD) and that finances therefore are likely to be raised. A reservation concerning the corresponding rise in labor productivity made by the President shall be treated as an essential backstop: the President will use this to justify a broken promise and to postpone its fulfillment.
The majority of Belarusian experts think that as far as it is extremely difficult to raise labour productivity (according to official figures, in March the average salary in Belarus approximately amounted to 390 USD), the Belarusian authorities will resort to money printing in order to implement its plan.
In this case the main task will be to prevent the most common citizens’ behaviour scenario: translation of Belarusian roubles into foreign currency as it happened in 2010.
For this purpose, the Government and the National Bank launched two large information campaigns in April and May. Firstly, Deputy Prime Minister Rumas personally advertised a so-called \"people’s IPO\": the first public offering of the Minsk Plant of Sparkling Wines on May 2 in which citizens were actively offered to participate. Secondly, in April the National Bank launched a campaign to promote financial literacy during which it is planned to tell Belarusians about various ways of investment.
Nevertheless, it is expected that in the case of the promised salary increase by the year’s end (1.3 times), the authorities will simply not manage to educate its citizens about types of investment which are safer and more favorable to the economy. Most likely the population will habitually continue to transfer extra money into foreign currency. This steady trend in the behavior of Belarusian investors has been observed for at least the last four years. In summer 2011, the Administration of the President of Belarus estimated the foreign currency cash holdings of Belarusians to be 7 billion USD.
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.