Analytical Report: April 2011


The internal situation: power. Explosion in Minsk metro on 4/11/2011 has become the main event of the month, but it is early to make definite conclusions about the goals and motives of terrorist attack and accept any version of happened. The only thing we can say with confidence — the authorities are using the situation for gaining control over society, persecuting opponents, diverting attention from problems in the economy.
However, it should be noted that Alexander Lukashenko, speaking about the need to find the potential organizers of the crime, hasn’t excluded that it possibly could be «… someone from the government.» In fact, the presence of «internal enemy» among government officials, and, taking into consideration the nature of the crime, possibly even among high-level military commanders, was publicly acknowledged.
Although the terrorist attack on 11 April 2011 has become the main event of the month, in our opinion the attention should be also given to the following events:
1. Further deepening of the international isolation of the regime;
2. Annual Message of Alexander Lukashenko and his plans for changes in the electoral legislation of the country.
These events are the key to understanding of what is happening in Belarus today and of the development of the situation in the next 3-6 months.
At the end of March, the Belarusian authorities inquired the possibility of organizing a meeting of Alexander Lukashenko with Dmitry Medvedev. The Belarusian side expressed readiness to come to Moscow any day during the period of April 2-5, agreed on by Russian partners. Probably, the topic to discuss was the prospect of Russia providing emergency financial assistance to Belarus.
The Russian side has not agreed to the meeting. The reason of the refuse to meet Lukashenko is unknown.
Special attention is to be paid to the scandal surrounding the alleged operation of a casino on the territory of Belarusian embassy in Moscow. It’s interesting, that Russia has considered the conflict as the problem of public international relations, instead of solving it as a matter of routine procedure. Belarus and North Korea were accused of violation of the provisions of the Vienna Convention. This «neighborhood» is the actual discredit of modern Belarusian state and its authorities, and the attempt to make the regime of Alexander Lukashenko equal to the tyranny of the “Kims clan” in the public consciousness of Russian inhabitants.
Thus, the claims of Belarusian authorities about the normalization of relations with Russia are an attempt to pass the desirable for reality. The absence of clear evidence of the conflict is connected with the fact, that the Belarusian authorities can’t respond to Moscow in the usual manner due to internal weakness caused by the systemic (foreign and internal political and also economic) crisis in Belarus.
The Belarusian side will show restraint until the resolution of the problem with getting Russia financial support. After that the claims of Minsk are to get tougher.
On 4 April 2011 Lukashenko, receiving the credentials of Ambassador of Poland L. Sherepok, expressed the willingness to build the partnership between the two countries based on respect for each other’s sovereignty. Taking into account that Poland is currently one of the key (along with Germany and Sweden) moderators of eastern policy of the EU, the proposal can be considered as an appeal to the Union in whole.
In this situation, the detention and subsequent arrest pro-Polish activist A. Poczobut on 6 April 2011 looks quite strange. The aim, targeted by the arrest for completely farfetched reasons, is not clear. But the aim can be the following:
— Blocking the possibility of dialogue with Poland and also with the EU and NATO, deepening of mutual hostility;
— Reaction of Belarusian authorities to the known plans of Poland concerning Belarus and its leaders.
On 21 April 2011 Alexander Lukashenko addressed Belarusian citizens with the annual message. The message itself is not interesting, because it was the statement of the well-known problems, our country is facing, and also the installations, announced before. The most interesting things were the deviations from the main speech.
So, Lukashenko strongly criticized the government and Prime Minister Mikhail Myasnikovich, as well as the National Academy of Sciences, which was headed by M. Myasnikovich until his appointment to head the Government. As the relations with Russia are worsening, the prospects for M. Myasnikovich to keep the post of PM seem more and more doubtful.
In the message Alexander Lukashenko also declared his intention to supplement the existing system of pro-government organizations with political parties, as well as the urgent need for the moving to a mixed proportional-majority system. And although he said that the 2012 election to the National Assembly will be held under the current electoral law, the possibility of making amendments in the Electoral Code can’t be excluded.
It should be noted that Alexander Lukashenko spoke of the political parties in the plural. In fact, our predictions about the formation of «His Majesty’s Opposition» are getting real: the Belarusian authorities are preparing for the formation of the so-called managed democracy.
Existing pro-government unions are in fact incompetent bureaucratic structures. It is quite possible, that the party in power, and its «constructive opposition» will face the same fate. Speaking about the NGO «Belaya Rus», the technical turning of a public association into a political party can be expected.
It is unlikely that authorities will be able to change the national political landscape. Real progress in party building will be visible only in the formation of the «new opposition».
Until now it was believed that the transformation into a regime of managed democracy will be implemented through enhanced dialogue with the West in order to legitimize the existing political regime. However, on 26 April 2011 Alexander Lukashenko visiting Gomel region made another public insult of the EU and Ukraine.
Further, Lukashenko said that he, being the president of Belarus, “will not use” Belarusian nuclear power plant. The approximate date of commissioning of the first nuclear reactor is 2017.
Thus, we can not exclude that the transformation into a regime of managed democracy is the general background of the transfer of supreme state power of Alexander Lukashenko to his future successor. We should also keep in mind the fact, that for the first time this issue arose in early 2010, i.e. in the midst of thaw relations between Belarus and the West. This means that the reason making Lukashenka begin to build a mechanism for determining the receiver lies solely within Belarus and is not related to the international situation. One of such reasons may be the health condition of Belarusian leader. However, there is no reliable information confirming that fact.
In the message Lukashenko announced his plans to limit government support in housing for the habitants of Minsk. These restrictions, if adopted, would be clearly discriminatory. In our opinion it may be related with extremely bad result of Alexander Lukashenko on the elections in the capital of Belarus on 19 December 2010. By such unreasonable and aggressive actions the government is providing the opportunities for political opposition.

The internal situation: the opposition. In April the events of the greatest interest were ones occurring within one of the main political parties — United Civil Party (UCP). After being released from arrest the party leader Lebedko was expected to make the final decision about Y. Romanchuk. It was considered obvious that Romanchuk would be expelled from the party. However, instead of expelling Romanchuk, Lebedko not only retained his membership in the UCP, but also confirmed his high status in the party, despite explicit attempts of Y. Romanchuk to discredit Lebedko himself. In particular, Romanchuk said that he disseminated false information about the proposal to get a high post in the government at the insistence of Lebedko.
While during the electoral campaign in 2010 political analysts tried to determine the pro-Russian candidate, a pro-Polish candidate — Y. Romanchuk, took open and very active part in the election. It was obvious, that the candidacy of Y. Romanchuk was really weaker that one of Lebedko. But the international partners of UCP lobbied Y. Romanchuk. This was done under the pretext of the necessity of introducing new people in the Belarusian politics. In addition, Lebedko has been clearly told, that the only candidate on the UCP, which could get financial support was Y. Romanchuk. Romanchuk was expected to succeed Lyabedzka as chairman of the UCP according to the results of the election campaign. That is why Lebedko actually facilitated the participation of a significant number of UCP members in the activities of the public campaign “Speak the truth”, which was planned to be transformed into a political party.
After the events of 19 December 2010 Y. Romanchuk was completely discredited as a politician. Despite this, due to the active position of foreign, mainly Polish, partners Romanchuk managed to save the status of a public person.
In our opinion the fact of Romanchuk’s escape from liability for his actions in the party, shows:
— The critical dependence of the UCP on external sources of funds;
— That Y. Romanchuk managed to get the control over the substantial financial flows, or get direct funding for himself;
— Most likely the source of funds is Poland.
Poland currently claims to be the main moderator of the eastern policy of the EU. Polish Foreign Ministry is headed by a visionary and ambitious politician Sikorski. Creating pro-Polish political forces in Belarus fits into the framework of the project of transforming Poland into a regional force, spreading its influence on the countries of the Eastern Europe.

Economic situation. The hopes of Belarusian authorities to attract extra foreign financial support didn’t come true. Potential lenders have clearly defined the conditions of providing support: the macroeconomic reforms, including completely unpopular, under the control of creditors.
At the same time, the lack of coherent policy of the National Bank and the Council of Ministers, the reluctance of managers to take responsibility for making the necessary but very painful decisions, set the national financial system to the brink of a complete stop, and the brought the economy to the crash. Only in April of 2011 according to official data nearly 13% of the employable population were compelled to stop working in connection with the paralysis of the foreign exchange market.
At the same time the government actually took off the responsibility for the results of monetary policy, claiming the problem to be in the competence of the National Bank. In turn, the unreasonable and in some cases even alarmist actions of the National Bank (for example the ban on the sale of precious metals in Belarusian rubles) have only aggravated the situation.
Delaying a decision on the devaluation increases the fall of the value of Belarusian currency. If at the beginning of the month it was a 20-25% devaluation, now an adequate course is considered to be 5000 Belarusian rubles per one U.S. dollar.
According to the information from the banking circles, the authorities are now making a choice between one of two scenarios:
1. Preservation of the official exchange rate for critical imports, along with the establishment of a free exchange rate based on the demand/supply ratio and then step-by-step alignment of the rates;
2. Devaluation to actual market rate, ie 5000 rubles per dollar. In this case, the second option is considered to be the most acceptable in both business circles and Government. The approximate date of taking the decision on this question is May 10.
However, this date seems to be quite doubtful: the spring planting is currently taking place in the country, the agriculture has become the main consumer of petroleum products (ie, foreign oil). Sharp leveling of the rates carries three problems:
— Because of rising of the prices for raw material the farms won’t be able to complete the necessary agriculture works at the proper level, which will affect crop yields, and, as a consequence, national food security;
— The price shock caused by the need to adjust prices for socially important goods and services;
— In case of an administrative deterrence of the adjustments of the value of petroleum products, the refining industry will become completely unprofitable.
The most likely date of exchange rates getting equal is the end of the third — the beginning of the 4th quarter of this year: the agricultural works will be finished, the energetic system will accumulate the necessary winter fuel supply. The single exchange rate at the end of the year is a prerequisite for a smooth adjustment of the costs for energy and utility services.
Partial paralysis of the economy seriously affected the revenue side of the budget. Reaction of the authorities has been the move to a regime of rigid economic policy: state programs were partially closed, salaries in the public sphere were actually cut, lending for housing was suspended.
It is unlikely that in 2011 the targets for GDP growth will be achieved. You can rather talk about the prospects of its reduction.

Security. On 21 April 2011 Lukashenko, speaking in the National Assembly, said that the government priority in the defense sector is air defense system. He also announced the creation of the elements of the missile defense system, which is about developing and implementing complex radio-electronic warfare. Earlier, in 2010, press reported on the successful development of technologies of suppression systems, space navigation, including GPS, used for targeting cruise missiles, in Belarus.
Successful completion of the development of suppression systems would mean actually a technological breakthrough. Taking into consideration the huge interest in international arms markets for air and missile defense, it can be said Belarusian development will have good commercial prospects.
Terrorist attack on 11 April 2011 showed the absence of an action plan for emergency services in such situations. And although, according to Israeli experts involved, all the emergency services acted competently and expeditiously, which is an indication of professionalism of individual employees.
Explosion in Minsk metro and subsequent events have revealed catastrophically low levels of public confidence to the authorities. Citizens believe unconfirmed and often incredible rumors rather than the official information.
Attempts of law enforcement agencies to extinguish the rumors about the involvement of government in the terrorist attack, and to control the information about the investigation in order to reverse the public opinion, despite their hardness, were complete failure.
All this testifies to the failure of attempts to impose a kind of state ideology on the society. Despite the enormous material and organizational resources devoted to ideological indoctrination of the population, the authorities have failed to form an idea, comprehensible and, what is more importantly, acceptable to the majority of citizens. In fact, the ideology of consumer society in its extreme form has won in Belarus. Relatively small social layer of responsible citizens, in the overwhelming majority are the opponents of the regime. An acute need for consolidation of society around the ruling group is appearing during the deepening of the crisis. However, this would be impossible because of the weakness of the social base of authorities: in a situation of loss of confidence to the ruling group, consumers are likely to choose someone, who will promise to satisfy their material needs quickly and with minimal effort.
Lack of confidence among the population multiplied by the lack of ideological basis is making the current Belarusian state extremely vulnerable in situations of confrontation with both external and internal opponents, especially if they promote populist slogans.
So far, there is no information about the fate of the former — commander of the Air Force and Air Defense, Major-General I. Azarenak, who was arrested in December 2010. Progress and results of a criminal investigation against General haven’t been publicized. Given the fact that more than 4 months have passed since the detention I. Azarenak, the fact, that the general had already been convicted and sent to serve his sentence can’t be excluded. It should be noted that in the first days after the arrest it was reported that the ex-commander had been arrested for abuse of power, and later — for taking bribes. At the same time, an uncompromising fight against corruption – is a cup of tea of Belarusian authorities. Usually, the public is well-informed on the course and outcome of the investigations of corruption crimes of high-ranking officials. In our opinion, such a veil of silence surrounding the criminal case against Major-General I. Azarenak may indicate:
— That imputed acts are not the real reason for his arrest;
— Involvement in unlawful activities of officials, the permission to prosecute whom was not given.