Why Lukashenko does not release political prisoners?

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April 22, 2016 18:05

On March 5, the one-month period for the consideration of a pardon filed by Dmitry Bondarenko, a proxy of former presidential candidate Andrei Sannikov expired. Mr. Sannikov signed his appeal yet on 23 December 2011, however, both of them still remain in prison.

Comment

President Lukashenko’s delay with the decision on clemency overrides our previous assessment about the imminent release of political prisoners. On December 23, 2011 at a press conference Lukashenko expressed the willingness to release them based on clemency appeals, however he never fulfilled his promise. There are a number of reasons behind such behaviour of the Belarusian authorities.

Firstly, the most likely explanation is the unwillingness of Lukashenko to give way in conflict with the EU, which has escalated dramatically after the expansion of the EU visa “black list” with names of a number of Belarusian officials and the subsequent recall of EU ambassadors on February 27-29. Intransigent stance of Minsk can be explained by analogy with the non-introduction of moratorium on the death penalty: recently one of the Deputies of the Belarusian Parliament said that such a decision could have been taken long time ago, if not for the continued pressure on Belarus by the EU.

Secondly, the political conflict between Minsk and Brussels is compounded by the likely introduction of economic sanctions against businessmen close to Lukashenko on March 23. The Brussels-based EUobserver with reference to unofficial source in diplomatic circles wrote on 1 March about the possibility of such action with respect to 4 Belarusian businessmen.

Even if the economic sanctions are not to be extended, the EU statement significantly increases its stakes in the conflict and puts Lukashenko in an extremely awkward position: in order to resolve the conflict, he is forced to make concessions and fulfill the EU requirements, namely, the release and rehabilitation of political prisoners. At the same time, business elite of Belarus gains negative attitude towards Lukashenko blaming him for increased business risks.

However, in the current situation concessions of Lukashenko will not guarantee benefits for Belarus, as in 2008, when the release of the former presidential candidate Alexander Kozulin enabled the cooperation with the IMF Stand-by loan programme. The failed negotiations with the recent IMF mission in Minsk on February 22 - March 6, imply in 2012 that scenario is unlikely to repeat.

Belarusian authorities are usually prone to the short-term thinking. Therefore, most likely, the release of political prisoners in exchange for ending of the conflict with the EU is perceived by Minsk as a very bad deal. Firstly, it brings no economic benefits for the country. Secondly, the Belarusian elite, raised by Alexander Lukashenko, will certainly perceive such a move as a weakness of the President.

From this perspective, President Lukashenko does not choose from long-term exit strategies of this political crisis, alien to his political experience. On the contrary – he is trying to gain the most from the escalation of the conflict in short-term benefits: he is mobilizing state apparatus and tightens business discipline.

Therefore, it is likely that one of the reasons behind the detention of the Chairman of the Supervisory Board of “Technobank” Mr. Kotsarenko on 6 March on suspicion of tax evasion and complicity in the crime was to demonstrate the inevitability and unopposed nature of the president as the guarantor of the interests of business elite.

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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.

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