Analytical Report: April 2012.

726

There were two remarkable events in April:

— The beginning of some kind of improvement in relations with the West, which resulted in discharge of Andrey Sannikov and Dmitry Bondarenko. The ban on travelling abroad for the opposition was also suspended;

— Populist claims by the authorities (a promise to bring the average salary up to USD 500). 

Perhaps these are the main events in April. The situation in whole is predetermined by already existing trends. Economic situation has improved considerably, but the situation is very unstable and no ways for its strengthening are seen. The opposition continued its attempts to expand the social base and discussions on the format of participation in the forthcoming elections to the National Assembly. The situation in the field of national security and defence hasn’t changed a lot, in spite of the decisions made by the governments of Belarus and Russia on the joint regional air defence system.

It should be noted that the Belarusian authorities’ contradictory behavior in domestic politics and in economics indicates the absence of a clear strategy for further development of the country, which is a result of lack of unity among the ruling group, which can be divided into two blocs: the protective-isolationist one and the liberal one. The boundaries between the two are quite blurred. The number of supporters of  any of these blocks varies with the mood of Alexander Lukashenko.

The absence of state development strategy is the factor that will be the reason for Belarus’ having foreign policy conflicts with the West and Russia in the future.

The internal situation: stability of state power. At first it’s necessary to note the change of claims by Alexander Lukashenka, who again have started to call Belarusians “our folk” and “our people”. The authorities seem to use the themes of paternalism and the care about the citizens. This may be connected with the improvement of the financial situation of the country, which in our opinion is unstable and temporary and is entirely dependent on foreign political and economic factors.

Generally, April was marked mainly by international relations. The discharge of Andrei Sannikov and Dmitry Bondarenko is connected with the urgent need to restore foreign policy positions of the authorities. But at the same time the internal policy continues to be repressive. Belarusian authorities tend to rely on the resources of third countries with the aim of strengthening the position in the dialogue with the West and Russia. However, they still have no success.

The discharge of Andrei Sannikov and Dmitry Bondarenko on the Orthodox Easter was considered by many analysts as a reaction of the official Minsk on the EU sanctions and the proof of the effectiveness of European policy towards Belarus. In our opinion, this opinion takes the situation simple and doesn’t reflect reality: the discharge of opposition leaders was the result of the coincidence of many factors. And the EU’s restrictive measures were only one of them.

Firstly, it’s necessary to note that the actions of Europe towards Belarusian authorities can’t be called sanctions, since they cause no direct damage to the regime. Rather, these are restrictive measures.

Secondly, the Belarusian authorities currently are quite safe, even taking into consideration the financial factor. The total foreign exchange reserves (foreign exchange reserves of the National Bank, foreign currency reserves of the companies controlled by the government and closed-end funds) are not known, but their volume is significant (at least USD 13 billion).

Thirdly, the point is, that the pressure on the opposition is not reduced. It’s just changing its form. Moreover, the threat of returning of Mr. Sannikov and Mr. Bondarenko to prison can be a deterrent against attempts to isolate the regime for the radical opponents of President Lukashenka.

Thus, there are no reasons to talk about some “capitulation”. The government decided to take a step towards the West without creating the situation of extreme tension and the inevitable depletion of its reserves. This is the main reason for such actions of Belarusian authorities: they have no confidence in the support of Russia, but have understanding, that there won’t be any. Russian statements of solidarity with the Belarusian authorities are just a ceremonial act of formally allied states. The conflict with the West, as we have previously pointed out, has three negative aspects for Belarus:

— Downward pressure on the value of state assets to be privatized;

— Blocking the transfer of technology, without which economic development of the country is impossible, since its own scientific school is in very poor condition due to chronic underfunding;

— Lack of access to western debt capital markets (especially through the international financial institutions), which makes it impossible to refinance debt and force the country to use its own resources in order to service the debts.

We emphasize that at the moment Belarus has enough resources. But it is all that the regime has now. And its ability to increase foreign exchange reserves significantly without privatization is quite questionable. Russia won’t compensate for the costs of conflict with the West. And some other external sources of support could not be found because of a failed foreign policy, which can be described as “from one failure to another”.

Thus, the authorities have gone to some easing of relations at the cost of a political image (but not at the cost of effective control over the situation in the country) in order to conduct further dialogue with the West as a subject, but not a petitioner.

However, it should be noted that Belarusian authorities have the time not on their side: the West can completely freeze the relations until the full implementation of all its requirements. Freezing means a situation in which the new restrictions against Belarus are not introduced, but the investment and credit cooperation is not resumed. This will contribute to the weakening of Lukashenka regime, which will be forced to spend its own funds to service the rapidly increasing national debt.

In any case, the return of Western ambassadors in Minsk should be viewed as a technical event, which doesn’t affect anything and is not actually a breakthrough.

Returning to the issue of Belarus’ foreign policy failures, we should emphasize the situation in Qatar. On April 17, 2012 it was reported, that there was an attempt of coup d’état. Political instability in that country could ruin long-standing efforts of Belarusian authorities on building partnerships, especially in the financial and economic sphere. It’s not a secret, that Belarus counts on massive investment from the emirate. It should be noted that there are no reasons for our country’s being potentially interesting target for Qatari investments.

In our opinion, it was about placing of assets of Emir Hamad bin Khalif and his entourage in Belarus. Taking into consideration constant accusations against the reigning monarch and his associates of corruption and abuse, it can be assumed that Belarus is trying to attract the “gray” capital of Qatar top bureaucracy under the personal guarantees of President Lukashenka. In any case, such plans have the dubious prospect, because our country can not be considered stable in the long run because of the conflict with the West. But there is another factor causing problems in involving of large Qatari capital in Belarus — a Russian factor. Qatar has provided active financial and organizational support to insurgents in Chechnya. According to Iranian analysts, from 50 to 70% of funding for Islamic extremists in Russia’s Dagestan, Bashkortostan and Tatarstan go through Qatar. Strengthening of Qatar in Belarus can be viewed as a direct threat to the stability inside Russia itself.

The postponement of the message of President Lukashenka to the National Assembly and the people in connection with the need to adjust a number of key moments in the text of the document had been unprecedented since 1994. According to our information, Alexander Lukashenka criticized the parts of the message connected with the privatization and foreign policy. At the same time each of these parts should be discussed separately.

We do not agree with those analysts who argue that privatization part of the document is populist by character. It is actually about the collision of two strategies. The first one (the strategy of the Government) is aimed at gradual modernization of the country’s economy through the expansion of the private sector and participation of foreign companies in the Belarusian economy.

In addition, it should be understood that in case of the privatization much of the property will be got by top bureaucracy. And its representatives, after receiving economic power, will naturally be eager to get political power in order to protect themselves and their property. The second strategy is conservative in nature and is represented by the Administration. In fact, it is traditional for Belarus: a point privatization on the basis of backroom arrangements and maintaining the possibility of recovering the administrative control of the privatized entities. Actually the claims, which may be considered populist, here play the role of the smoke, which overshadows the fire. The care about the social rights of workers is the care for the preservation of the existing regime of power and main actors in it.

The fact that Alexander Lukashenka supported the conservative ideology, despite the fact that in the past few months he tried to make some steps towards liberalization, shows lack of confidence and is a sign of a split in the ruling class. Thus, there is no reason to believe that the Belarusian authorities have worked out some strategy for socio — economic development. The policy in this area will continue to be inconsistent, opportunistic and determined by the well-known formula “We’ll get out of it!”

In this case we can say that there is some tension between Mr. Myasnikovich and Alexander Lukashenka. Taking into consideration the fact, that Mr. Myasnikovich is out of favour with Mr. Lukashenka, as he is largely imposed from outside the head of the Government, his status is under threat.

Speaking about foreign policy it’s necessary to note, that the statement that President Lukashenka hasn’t supported “overly harsh response” to the position of the West should be viewed sceptically. Due to limited resources and the absence of foreign policy strategy the only response measures of official Minsk can be only serious claims. It can be expected that the rejection of the “too hard measures” is a conciliatory sign to the West. But there is no reason to talk about the weakening of positions of the “hard-line” supporters: it is obvious that this group has influence and can use the weakness of the official Minsk’s foreign policy positions as a reason for self-isolation of Belarus.

It’s essential to draw the attention to the confrontation with the opposition on the construction of the Belarusian-Chinese Industrial Park (hereinafter referred to as BCIP) near Minsk. The authorities have already lost the conflict of information, and therefore started to use the only remaining measure — strength. This is proved by the charges of civil activists who oppose the construction of BCIP on April 12, 2012. At the same time, in our opinion, if the Chinese side wants it, BCIP project will be launched, despite the loss of reputation of the regime. Having rapidly lost influence in foreign policy during the previous year, the authorities are aware of the need for intervention in the “Belarusian issue” of other players, which can counterbalance Russia and the West. In case of launch of BCIP and the receiving substantial Chinese investment by Belarus, this project will become a strategic for China, which will provide the regime more possibilities for political manoeuvring. That is why Belarusian authorities are ready to receive the Chinese investments at any terms.

Note that according to Art. 10 of the “Agreement for free (special) economic zones in the customs territory of the customs union and the customs procedure of customs-free zone” the benefits on customs clearance and customs duties for the subjects of free economic zones of Belarus are valid only until January 1, 2017 (in case, if a business entity has been registered as a resident of this area before January 1, 2012). For the current year in free economic zones of Belarus only two new residents were registered. Meanwhile, according to the draft decree “On the Belarusian-Chinese industrial park”, the residents of BCIP are provided the granting of customs privileges for a period of 50 years. The contradictions between the basic documents of the Customs Union and the BCIP building plans indicate the critical importance of involving China in the “Belarusian issue” for Belarusian authorities.

There was another important event in April, which is a potential point of tension in the Belarusian-Russian relations: according to the decision of the Ministry of Economy on April 11, 2012 № 31 “On Amendments to the Decree of the Ministry of Economy of the Republic of Belarus of December 28, 2011 № 207” the restrictions on pricing for gas for “Beltransgaz” were lifted. Thus, the principle of free pricing effects business entities. Regulated prices are left only for companies receiving natural gas through the system of the State Production Association on Fuel and Gasification companies “Beltopgas”. We have already suggested that free pricing can be used by Russian capital as a mechanism to effectively capture Belarusian enterprises.

According to paragraph 6 of the “Agreement between the Government of the Russian Federation and the Government of the Republic of Belarus on the conditions of sale of shares and follow-up performance of open joint-stock company “Beltransgaz”, minimum level of margin for natural gas sold by the company to customers in Belarus is set at USD 15,95 per 1 thousand cubic meters. And beginning from January 1, 2013 the level of the annual surcharges should be adjusted according to the level of the previous year (on January 1) on the value of dollar inflation. Taking into account that this Agreement sets only a lower margins limit on gas, the important thing will be its actual size on December 31, 2012, which will determine future pricing. On the other hand, according to literal interpretation of the provisions of the Clause 1.2. Decree № 207 “Beltopgas” has the ability to sell gas to any business entities only at the price, established by the government.

Thus, there may be two sellers at the market: “Beltransgaz” and “Beltopgas”. Note that the average cost of one thousand cubic meters of natural gas for most consumers is around USD 275, excluding value added tax. And the gas price for Belarus is about USD 165. The difference between the price for consumers and the cost of imported gas, taking into account the minimum “Beltransgaz” margin is from USD 38 to more than USD 90 per 1 thousand cubic meters. Based on the total volume of gas delivered to the country, we can confidently say that we are talking about extra yield of domestic gas market at the amount of not less than USD 1 billion per year. It is doubtful that the Belarusian authorities with limited own financial base won’t this source of income. Otherwise, we can ascertain the betrayal of national interests on the part of some senior officials in the Government.

Belarusian authorities still have the ability to control the level of “Beltransgaz” margin, which follows from the requirements of the Decree № 72 “On some issues of regulation of prices (tariffs) in the Republic of Belarus”. In this case, there is a possibility of creation of a scheme, according to which “Beltransgaz” will sell the gas, coming from Russia, to “Beltopgas” with a minimum margin, and “Beltopgas” will sell it to the end users at the price, set by the Government. This scheme will allow Belarusian authorities to confiscate the profits from operations in the national gas market from “Beltopgas” by order, which can’t be no longer applied to “Beltransgaz”.

The internal situation: the opposition and the protest movement. April was remarkable mainly because of the discharge of Andrey Sannikov and Dmitry Bondarenko. However, the real internal political process was not affected by this fact: even before Mr. Sannikov was arrested his influence was quite limited. In addition, the discharge of political opponents of the Belarusian government is usually accompanied by the establishment of preventive supervision, which means a constant threat of being brought back to prison to them.

The debate regarding the format of participation of Belarusian political opposition in the forthcoming elections to the National Assembly is continuing. There is no reason to believe that the authorities would liberalize the practice of electoral law. At the same time there are no reasons for the opposition to unite in this situation. It is quite probable that every oppositional organization will act independently. The only thing that can unite the opponents of the regime is a coordinated withdrawal of all candidates.

It’s also necessary to pay attention to the new direction of political opponents’ of the authorities actions: the struggle for the support of the so-called “new majority”.

Belarusian opposition is intensifying its social work. At the same time the opposition are using different themes: landscaping, pollution of the environment, promotion of healthy lifestyle. The weak point of all these initiatives is the lack of information: the news on the activities can be found only on websites of the organizations that have low traffic. Even non-governmental alternative media, having several hundred thousand visitors daily, aren’t used. In addition, without questioning the importance and necessity of social issues, it’s necessary to note that in connection with the limited institutional capacity of opposition political organizations there is a question about the ability of the opposition to work in both social and political fields at the same time. At this rate it seems more rational to unify the efforts by establishing joint local social campaigns by several opposition parties and movements.

Social activities of opposition organizations can be considered as a strategy of struggle for so-called “new majority” — two thirds of citizens of Belarus, who are suspicion about both the power and its political opponents. In our opinion, the support of this category of citizens will become the main target of the political opposition. In this situation, and elections to the National Assembly can be considered as a mechanism for gaining the confidence of the “new majority”, as the election campaign will make it possible to inform the target audience about the views of opponents of the regime.

At the moment, the campaign “Tell the truth!” has the best position among all opposition organizations: having emerged relatively not long ago, it is not associated with a series of political failures of the regime’s opponents in the last 18 years. Being not a political party “Tell the truth!” has the ability to present their work not as a struggle for power, but as a service of responsible citizens to their country. The campaign brings together representatives of various political parties, which emphasizes its advantage over the eternal conflict between opposition parties. The campaign promotes a lot of new people in Belarusian politics, who were overshadowed by the leaders of opposition parties. At the same time, not being a political party with a clearly defined ideology, “Tell the truth!” has the ability to use a wide range of populist and nationalist slogans.

The prospects of the campaign “People’s control — for Fair Elections” are uncertain. There is no information about the activities of the campaign in April. It is unlikely that the organization will be able to perform its functions in the forthcoming elections to the National Assembly because of difficulties with funding. At best, it will be possible to observe just participation of the campaign members in the elections as observers. Although it is more likely (and logical) that “People’s control — for Fair Elections” will be quietly “buried” by its founders.

In April, it also became possible to confirm from reliable sources the actual termination of another political project: the organizing committee for the creation of “Belarusian Movement” party was practically paralyzed by internal contradictions between its members. This event was expected, and we pointed it out in the time of the announcement of the establishment of a new opposition political organization.

There is rather complex situation in the BCD party. The project “People’s Deputy” has been almost terminated. At the moment, according to our information, there is no unity among the leaders of the organization. The dissatisfaction of party members with the leader of the BCD Mr. Rymashevsky is growing. His influence among the Belarusian opposition politicians is falling. Also, there is an outflow of activists in the regions to other opposition political organizations, which, in our opinion, reflects a crisis in the party management, as at the moment there are no problems with funding. The crisis in the BCD has been brewing for a long time and has been determined by an inflexible line of its leader Mr. Rymasheuski. In general, we can predict a further reduction in activities of the party.

Economic situation. Belarusian economy continues to perform growth, which for the first quarter of 2012 amounted to 3%. Although below the target level of government (5-5.5%) it is significantly greater than the pessimistic expectations of experts and international organizations.

On the other hand, there are signs that the government of Belarus has now abandoned the idea of ​​structural changes in the economy.

In general, summing up the events of April, we can conclude that in the near future with high probability the increase of the dynamics of key macroeconomic parameters can be expected. Together with an increase of real income and GDP growth the gradual weakening of the ruble and worsening of foreign trade is likely to take place. Belarusian authorities are trying to save the country’s economic model for the maximum possible period.

The main contribution to economic growth was made by industry (2.4% of GDP) and trade and services (1.2% of GDP). The influence of agriculture was significantly smaller (0.2% of GDP), like transport and communications (0.3% of GDP), while the contribution of construction was negative (minus 1.2% GDP growth). Among the industries the best growth was achieved in the chemicals and chemical production (29.8%), manufacturing of petroleum products (24.7%), and production of transport equipment (17.8%). Simultaneously, a significant decrease in terms of investment in fixed assets was observed (the decrease by 15.1% in comparison with January-March 2011) due to the reduction of state programs within the tight monetary policy. For example, the amount of preferential loans in housing construction in January-February 2012 decreased by 66.8% compared with January-February 2011.

Thus, the main sources of economic growth were preferential supply Russian crude oil, growth in external demand for the products of Belarusian machine-building and growth in domestic consumer demand due to rising real incomes.

The achievements of the first quarter have changed the expectations in the expert community. Thus, the IPM Research Center has adjusted its forecast for GDP growth in Belarus in 2012 from 1.6% to 4.9%. And according to the new IMF forecast the economy should grow by 3%. There is also growing optimism among the Belarusian economic entities, which is confirmed by the results of appropriate monitoring of the National Bank. Thus, the index of business climate, aggregating the assess of the current situation by companies and their expectations, in March increased by 16.5 points to 19.7 points. In April-June 2012 the most companies expect an increase in demand and production, increase of price growth, increase of the number of employees and a slowdown in demand for loans.

Implementation of the optimistic expectations should contribute to increasing the availability of credit resources and the further growth of incomes. A stable exchange rate and slowdown of inflation has led to a drop in rates in the various segments of money market: the average rate on loans in the interbank market in April fell by 3.5 percentage points to 24.9%, short-term rates have fallen to the level of 42-44%, short-term deposits — up to 36-38%. Despite the fact that the pace of this process in April compared with February and March has slowed, the National Bank expects a further reduction of interest rates on loans, because the current level of them is still prohibitive for long-term loans, including housing ones.

The reduction of interest rates is slowed by relatively high inflation expectations of economic actors, connected with the new policy of the growth of average wages in Belarus to the level of USD 500 by the end of 2012, which has been repeatedly claimed by President Lukashenka the previous month (though it doesn’t coincide with the approved annual plan). As a part of this policy the public sector wages and pensions increase by an average of 25% and 18% respectively since May, while the average salary have risen by 6.6% to almost USD 400 in March. The inflation is also stimulated by the government’s decision to provide easy credits for unfinished housing facilities, which cost Br 2 588.1 billion (about 1.3% of consolidated budget expenditures in 2012).

These plans raise fears of easing of monetary policy and return to the practice of extensive funding of state programs through the emission of resources, although the government denies such possibility. Against this background the attempts to make credit resources cheaper create the preconditions for people and legal entities to refuse from the ruble-denominated assets, which can cause higher demand for foreign currency at exchange market.

At the same time the current monetary and fiscal policy of authorities is quite tough: the consolidated budget, together with the Foundation for Social Welfare is executed with a substantial surplus of 3.9% of GDP, the growth in lending and money supply is approximately at the level of nominal GDP growth.

The situation in the external economy is still stable: Foreign Trade Indicators (even taking into account the transfer of export duties on oil products to the Russian budget, which is USD 1,1 billion for the first quarter) are positive and even are improving. Gold reserves continue to increase slightly. This allowed Belarus to start repayment of liabilities to the IMF by transferring USD 99,8 million in April. In 2012 it is planned to make three repayments in the amounts from USD 83 million to USD 100 million, but the main repayment to the IMF will take place in 2013. Taking into account this fact, it cab be stated, that the attracting external funding remains extremely important for Belarus. At the same time, in April there were no significant changes in this direction.

The issue of receiving the next tranche of the EurAsEC Anti-Crisis Fund is still unresolved. Fund Administration has claims on the volume of lending to government programs and on the privatization. The Administration also wants to make Belarusian authorities sign a new letter of intent to tighten the requirements of the original anti-crisis measures. Belarusian side, in turn, insists on full compliance with all applicable requirements of the original set of measures, which is not correct in terms of the coverage level of expenditures on housing and utilities and transportation services by the citizens of Belarus.

Despite the increase of the forecast of the S&P agency on the sovereign rating of Belarus change from “negative” to “stable”, the possibility of involvement in global financial markets is still unavailable and the relations with the IMF are frozen. In such circumstances, the government of Belarus is trying to attract the Chinese resources to the country. For this purpose the sovereign ratings of a Chinese company “Dagong Global Credit Rating Co. Ltd” were obtained. They were significantly (by 5 degrees) higher, than the ratings from S&P: “BB +” for obligations in national currency and “BB-” for foreign liabilities, and the “stable” forecast. However, at the moment it is impossible to predict the cost and the time for involvement of potentially available Asian resources.

There is no progress in terms of structural change. Moreover, in April it became clear that the authorities decided to refuse from the privatization lists, which actually means the suspension of the Privatization Program in Belarus for 2011-2013, which included the sale of 276 non-strategic businesses. Because of preventing from “total” privatization, the April Message to the National Assembly and the people was even sent back for revision and postponed. The change in approach is explained by the fact that in Belarus absolutely all enterprises, including strategic ones, can be sold. Apparently, widely advertised public offering of shares of the Minsk grape wine factory with a limited number of shares for one buyer (the first “people’s IPO” in Belarus) should support this thesis. In case of success of the event, the experience will be used widely. It is obvious that the “people’s IPO” can act only as a source of additional funding for the issuer, but can’t be a tool for structural change. In other words, the government currently refuses to work on the system of carrying out structural changes.

The situation in the field of national security and defence. At first it is necessary to note, that two explosions on 19 and 25 of April (in Gomel and Kobrin) haven’t become the object of analysis because of lack of clear reasons, why these incidents have been classified as terrorist acts.

Of course, the main event of the month is a joint board meeting of defence ministers of Belarus and Russia on April 18, 2012 on the future development of joint regional air defence system (hereinafter referred to as JRADS) of the two countries. In fact, the implementation of the previously reached agreements on the creation of JRADS was discussed. The parties have decided on the structure of the joint group of forces and troops, have developed a mechanism for management and decision-making on their use.

Belarusian authorities in the traditional manner used the results of the meeting to manipulate the public opinion within the country.  The decisions of the meeting were presented as a breakthrough in bilateral relations that have exceptional value to Russia. In fact, there are not many reasons for such statements. A joint group of Russian and Armenian air defence forces already operates, and a unified regional air defence system of Russia and Kazakhstan is being created. Moreover, the analysis of the results of bilateral military cooperation doesn’t state its special character. And, according to it, Belarus is not a critically important partner for Russia in the sphere of security. Belarusian-Russian defence cooperation doesn’t usually go beyond the scope of similar contacts with other CIS countries and has really smaller range, that Kazakh-Russian cooperation in the sphere. It is enough to mention the fact, that Kazakhstan has received more than 60 combat aircraft, including MiG-29s and Su-27, 10 battalions of air S-300 defence systems from the Armed Forces of Russia for free. At the same time, the supply of four battalions of S-300s for Belarus was carried out for a fee, though with some benefits.

In the future Belarusian authorities will be trying to speculate on the topic of European missile defence system in order to obtain preferences from Russia in the field of economics and the supply of arms, which is quite rational. It is the material factor, but not the fear of foreign aggression, that is the main motive for the participation of Belarus in defence initiatives in post-Soviet Russia. Because of small financial possibilities of Belarusian defence ministry the purchases of large quantities of military equipment can’t be expected. The purchase of small number of even the most modern weapons is not able to increase the Belarusian military capabilities significantly.

Hope for supply to Belarus of the newest Russian air defence systems S-400 should be discussed separately. Firstly, the fact that the complex is a new model of weapons (but not just modernized S-300), as well as its high (theoretical) efficiency, was claimed exclusively by its developers and manufacturers, which may be just an element of self-promotion. Secondly, the program of supply of S-400 to Russian air defence forces is actually disrupted: at the moment only four battalions were put into service. Though, it is planned to put into service 56 battalions, which is the minimum level of needs of the Russian Army on the basis of the theoretical characteristics of the complex (actual performance is now much lower). Thirdly, there are almost no missiles for S-400: the complex was originally designed for the use of short-range (150 km), medium-range (up to 250 km) and far- range (400 km) missiles. At the moment there are only short-range missile available. At the same time the Russian military analysts (including Alexander Khramchikhin) are skeptical about the possibility of creating of long-range missiles because of the absence of relevant scientific and technological potential in Russian defence industry in the medium term.

Fourthly, the primary means of air attack (at least in the first hit) in the recent conflicts are the cruise missiles. The ability of JRADS to defeat a massive cruise missiles attack (more than 3500 rockets in the theoretical case of an attack by NATO) is questionable due to the fact that even having a comparable number of missile defence could be ineffective because of the lack of launchers for them. In addition, the efficiency coefficient of all air defence systems is lower than 1, which makes the expenditure of ammunition of the defending side higher. Fifthly, the financial factor should be also taken into consideration, especially the ratio of unit cost of attacke means to unit cost of defence means. Taking into account the size of a hypothetical conflict, an attempt to neutralize the potential threat can be financially overwhelming. In this situation it seems more rational:

— to deploy reconnaissance troops in order to have the possibility of  early warning of missile attack;

— to deploy the troops, responsible for the destruction of satellites of the probable aggressor and to be determined to use them immediately or preventively;

— the work out the possibility of making a massive counter-strike with cruise missiles on the areas of deployment of troops or the geographical location of the aggressor, including third countries;

— to be determined to attack third countries, which provided their territory for the aggression.

It’s essential to note one more thing that makes the existing air defence system ineffective in the long term: by the end of this decade the U.S. plans to develop and put into service the means of hypersonic air attack.

The work to develop the domestic unmanned aircraft systems (hereinafter referred to as UAS) and development of methodology for their use in the interest of national defence is continuing in Belarus. The preparation work on creating the UAS with a range of 300 km is being carried out. Besides that, technical issues to create a line of vertical takeoff and landing devices are being worked on. However, this is perspective for 2-3 years if there is sufficient funding. At the moment the way to implement the UAS in the army is being worked out.

Thus, at the “Osipovichi” training ground the trainings of units of missile troops and artillery of the North-Western Operational Command are held. On 10th and 11th of April 2012 the control training of 427th rocket regiment with 310th Guards Artillery Group of 120th Guards separate mechanized brigade and an artillery battalion of 231st Artillery Brigade was held. During the training the use of elements reconnaissance and firing system and ensuring continuity of reconnaissance using different vehicles (UAVs and reconnaissance and spotter helicopters, groups of advanced monitoring and adjustment of fire) was paid special attention. These units do not have their own UAS. At this rate the devices of the 927th center for training and use of UAS were used for reconnaissance, target acquisition and control of the targets. It’s necessary to note that the Belarusian army at the moment is at an early stage of implementation of unmanned aircraft. So, apart from the purely organizational issues, there are also some technical ones to be resolved: the absence of the home-made engines for UAS.

In April, the preparations for creating territorial defence units (hereinafter referred to as TD) continued. Based on the 6th Guards Mechanized Brigade a 10-days training of separate divisions of infantry battalion of the territorial defence forces was held. 150 reservists took part in it, which is only about ¼ of usual number of battalion. Thus, the funds for the preparation of TO do not allow to hold full basic training of the units. This is probably a positive thing: the concept of TD does not contribute to strengthening of national defence and there is no logic in spending big amount of money for it.

Up to date the Investigation Committee (hereinafter referred to as SC) isn’t functioning properly. As we have indicated previously, the new agency actively acquires bureaucratic state, which is not involved in direct fighting crime. Thus, in the district offices of IC the Secret Affairs departments were created. At the same time, unlike the police departments, where similar groups are staffed by civilian personnel, in IC these positions are occupied by officers. There are no reasons for IC to be able to solve the problem of personnel shortage at least in the terms of quantity. And it is even worse with the quality: investigators from public procurator’s office and Financial Investigations Department (hereinafter referred to as FID) refused to serve in the IC.

As a result, today the staff shortage in district investigative units is up to 40%. At the same time there is no employment pool. In addition, the agency is still unable to resolve the issue of a uniform wage. For example, in the Minsk region a premium for duty is not paid because of an unknown reason. It is possibly the chaos of the initial period of organization establishment. In fact, the immediate formation of the IC from the investigation department of Interior Ministry, public procurator’s office and FID led to degradation of the entire system of preliminary investigation. The decision to create IC was not weighed and lacked a theoretical and organizational basis. And the time period allotted to the formation of a new agency, was totally inadequate.

On April 10, 2012 an official visit to Belarus of Defence Minister of Ukraine Mr. Salamatin took place. Full list of issues discussed in the negotiations wasn’t made public. Only on the plans for the participation in bilateral and multilateral military exercises this year was reported. It should be noted that Ukraine is the second most important partner of Belarus in the military-technical sphere. Moreover, in a number of spheres the Ukrainian military-industrial complex can act as an alternative to the Russian one.

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