Analytical Report: July 2012.

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In general, the growing importance of China in Belarus could be noted in July. There contacts with China in the most sensitive areas of national security are getting closer. At the same time Russia may be sensitive to the Belarusian-Chinese cooperation because of the probable leak of Russian military technology to China.

The relations between Belarus and China can become an irritant for Russia and the EU, which closely tracks the intensity and nature of contacts between those countries in military field. And the statements by the Belarusian authorities only aggravate this irritation: the statements about China’s providing military-technical support to our country in the future and hints of the possibility of holding joint Belarusian-Chinese military exercises on the territory of Belarus are not necessary.

Multivector foreign policy has its limits, and sooner or later the Belarusian regime will face the need to set a priority. And if the development of relations both with the West and Russia are possible and do not contradict each other (which is demonstrated by that Kazakhstan and Armenia), the strategic partnership with China will impose severe restrictions on the ability to interact with Moscow and Brussels. In the worst case Belarus may be involved in the geopolitical game of foreign actors.

In July, the head of the State Border Committee Mr. Rachkowski was dismissed. His main guilt was a violation of the air border of Belarus by Swedish citizens on a light airplane. It’s necessary to note, that there are no reasons for such accusation: Belarus does not have a reliable system of low altitude air defense capable of spotting small aircraft. The only country in the world, which theoretically has a similar system, is North Korea, which has such possibility at the expense of thousands of Korean Peoples Army air defence posts and local Air Defense Forces, conducting visual surveillance of the airspace. Given the fact that Mr. Rachkowski belongs to the category of people close to the family of Alexander Lukashenko, the fact of his unjustified dismissal indicates the absence of the “Alexander Lukashenko team” as a concept: the Belarusian leader is actually a loner. And the state system, created by him, can’t be stable.

In general, by the end of July it can be said that situation in Belarus continues to be not really stable in the socio-economic and political field and remains highly vulnerable to the possibility of external pressure from the West or Russia.

The internal situation: the stability of state power.

Major events of the month. In our opinion, the most important events in July were the visit of Russian Prime Minister Dmitry Medvedev and the resignation of Deputy Prime Minister of Belarus Sergey Rumas.

On July 18, 2012 one-day visit of Dmitry Medvedev to Minsk, where the Council of Ministers of the Union of Belarus and Russia was held, took place. And even in the introductory part the difference in the approaches of formal allies became apparent: for example, Alexander Lukashenko made the emphasis on the threat of international instability, while Moscow was more interested in the situation with the export of oil products from Belarus in the guise of solvents in order to avoid paying the export duties to the Russian budget. Regarding the latter problem it should be noted that if the Belarussian side is commenting it as one of indefinite nature, requiring further study, the Russian side openly announced the existing violations. Moreover, before the negotiations, Moscow unilaterally conducted the investigation, the results of which proved to be disappointing for the Belarusian authorities, which was openly stated by the Russian side through the official source of information. Moreover, according to the words of Russian Prime Minister it can be stated, that Russia is not satisfied with a simple investigation and working out of a certain acceptable scheme of export of petrochemical products for the future. Dmitry Medvedev expressed the need to bring people, involved in the de-facto smuggling of Russian petroleum (or produced from Russian oil) products through Belarus, to justice and to pay the compensation to the Russian budget for the deficiency of export taxes at the amount of USD 1 billion. In case Belarus makes such a payment, the implementation of the plans of Belarusian authorities to achieve a positive balance of foreign trade is not probable.

Another sensitive issue in bilateral relations was the privatization of state property in Belarus. In the situation of international isolation and the legitimacy of the regime being challenged, in case of privatization it is clear that Russian investors will get certain benefit. Dmitry Medvedev said that the appropriate decisions to start the privatization “should have been made long ago”. And he also questioned the adequacy of the Belarusian authorities’ assess of the value of state assets.

As the result of the meeting of Prime Ministers of Belarus and Russia a general contract to build the Belarusian nuclear power plant was signed. Previously, we have repeatedly drawn attention to the rapid increase in the cost of construction of the object from initially claimed USD 3,5 billion to USD 6 billion in March last year. And in November 2011 final project cost exceeded USD 11 billion, USD 10 billion of which should be loaned by Russia. It’s necessary to note that we don’t think that the launch of nuclear power plant will give Russia an additional mean of pressure on Belarus because of technological dependence on Russian services for the operation of the station. The point is, that if the Russian side will take any action (or inaction), posing a threat to the functioning of the station or its safety, it would mean an immediate and complete closure of export markets for Russian nuclear power companies. Thus, Russia’s is interested in excluding any possible conflicts with our country in the field of the operation of nuclear power plant.

On July 31, 2012 the resignation of Deputy Prime Minister Sergey Rumas was announced. He will head the “Bank for Development”. According to our information Mr. Rumas was appointed to a government office in December 2010 against his own will and being under pressure. During his work in the government he belonged to the wing of supporters of liberal economic reforms and tight credit and financial policy. His resignation from the Government will objectively weaken the position of the supporters of economic reforms in the government and personally Prime Minister Mikhail Myasnikovich. Not depending on the Mr. Rumas’ successor it can be certainly said that the positions of opponents of market-oriented reforms in the Belarusian government will strengthen just because of the fact that the reformers represent the absolute minority.

The development of the situation over the last month. On July 3, 2012 Alexander Lukashenko presented a speech at a military parade in Minsk. For the first time in the past few years he was dressed in civilian clothes. The speech consisted mostly of traditional propaganda clichés regarding the events of World War II. But the part of the speech, dedicated to the modern politics of Belarusian state, was quite interesting. Firstly, he declared the inviolability of the choice in favor of national independence of Belarus. Secondly, Alexander Lukashenko reaffirmed the rejection of external dictates, mentioning the East along with the West. Thirdly, he once again spoke about his position on the equality of all countries within the Eurasian integration projects and non-participation of Belarus in them, if the principle of equality is violated, which had been already stated during his meeting with the President of Bashkortostan Mr. Khamitov in June 2012.

On June 5, 2012 the UN Human Rights Council by the majority of votes introduced the mandate of the Special Rapporteur on Belarus. At the same time a resolution demanding the immediate release of political prisoners, investigation of cases of torture in Belarus and the rejection of the practice of the repressive actions against opponents of Belarusian authorities was adopted. In response the Belarusian authorities didn’t recognize the decision and refused to cooperate with the special rapporteur. This reaction was expected and it creates the problems, above all, for the Belarusian authorities, because it will become one of the arguments in favor of a new package of EU restrictive measures. It’s necessary to admit, that the strengthening of such measures can not be infinite and logically leads to the introduction of full economic and financial sanctions. The official Minsk has not many time for action. The very initiation of the introduction of the mandate of the Special Rapporteur on Belarus by the EU indicates the absence of a backstage negotiations with the Belarusian authorities.

On July 11-14 Belarus was visited by a Chinese delegation, headed by a member of the Politburo of the Central Committee of the Communist Party of China, deputy chairman of the Central Military Commission of the PRC Colonel General Xu Caihou. More precise discussion of the visit can be found in the “Situation of national security and defense” section. Note that in recent months Belarussian government propaganda is using the same epithets to describe the relations with China, which were used to characterize Belarusian-Russian relations during the period of their greatest growth. Also, like it has been previously used with the phrases with the word “Russia”, Belarusian propaganda uses the prefix “great” regarding China (Russia isn’t considered to be “great” any longer). China’s influence in Belarus is increasing slowly but steadily. According to our data, it was predicted by experts of the Russian Foreign Ministry. However, it appears that Moscow has no clear strategy to counter China’s influence in Belarus.

It should be noted that China is acting cautiously, trying to avoid any possible complications and not to rise hostility towards the Chinese people in Belarus. Thus, Chinese workers, employed in construction and industrial sites in Minsk, rarely leave the territory of their enterprises. In other localities the tendency to minimize contacts of Chinese workers with the citizens of Belarus were observed as well. This is done to avoid potential conflicts and to prevent the surge of anti-Chinese sentiment, which is already quite widespread in the Belarusian society.

On July 23, 2012 Foreign Minister of Belarus Sergei Martynov took part in the ministerial meeting in the framework of the “Eastern Partnership”. This is the second consecutive event after the Chisinau meeting on June 5, 2012 in the framework of the “Partnership”, participation in which of representatives of Belarus was not accompanied by scandals and demarches by official Minsk. However, it wasn’t a breakthrough: the EU has confirmed the requirements, claimed previously, while Sergei Martynov had no mandate to conduct meaningful negotiations. In our opinion, the recent evidence of participation of Belarusian part in meetings within the framework of the EU shows the hope (which is illusory) of Minsk to hear from Europe proposals, acceptable for Belarusian authorities. However, there won’t be such proposals: the Belarusian authorities are not interesting as a partner, the West adequately assesses low stability of Belarusian regime to external pressure. And in this situation without meeting the requirements for the release of political prisoners no dialogue with Europe is possible.

Conclusions. The issue of privatization of Belarusian state property has the potential to turn into the most severe field in the bilateral relations with Russia. It should be noted that discussing the prospects of privatization in Belarus and the participation of Russian investors in the privatization projects, analysts tend to ignore the basic situation in Belarus and in Russia.

For Russian companies (as well as for any other ones) the economic expansion beyond their own country is a natural process of development of business structures. The peculiarity is that the main tool for business expansion is the Russian government. State power in Russia is largely privatized and is represented by large capital joined ​​with high-ranking law enforcement officers.

For the Belarusian authorities the maintaining control over state property is a matter of survival. In terms of challenging the legitimacy of the regime, the contracts and transactions made by it are questioned as well. In this situation the only way to preserve the property, purchased by an investor, will be the fact of possession during her term of office of a legitimate government. Thus, it is clear that after the privatization of major state assets the issue of legitimacy the regime will become urgent, which would require a replacement of the existing regime by one that would not challenge the results of privatization deals. In a republican system the legitimate authority can be formed through elections. At the time of such election it’s necessary to have agreements with all major political forces about the status quo with regard to the results of privatization. In this regard, it’s natural that, along with actions to stimulate the Belarusian authorities to take concrete steps to privatize state assets, Russia will try to increase its influence in the Belarusian political field. Thus it is now not the issue of the formation of pro-Russian political forces. Rather, we can talk about creating a common friendly attitude towards Russia in the Belarusian political environment.

The above represents a particular threat to the stability of the existing state system because of unfavorable foreign factors that emerged around Belarus. As we have previously stated, Belarus takes a back seat in international relations, in connection with which sporadic attempts to resume relations with the West should be replaced by long-term and well worked-out strategy on building the entire complex of relations, including policy, humanitarian cooperation, economics and security. In the situation of low human resource capacity it is doubtful that the Belarusian authorities are able to formulate such a strategy. And the attempts to draw attention using demarches and scandals will only exacerbate the isolation of our country in the international arena.

Moreover, during the past year, the tightening of the West’s position on the Belarusian issue can be stated. A year ago, you could say that the existence of political prisoners is not an obstacle to dialogue with the Belarusian authorities for the EU. Now the situation has changed. And apparently, before the release of prisoners, the Europeans will conduct negotiations with the official Minsk neither openly nor behind the scenes. This is the result of the provocative policy of Belarusian authorities, having strengthened their positions due to the resumption of economic support from the Kremlin.

The internal situation: the opposition and the protest movement.

Major events of the month. In July the authorities continued to use a tough approach to their opponents. At the same time, there was an expansion of repressive actions. So, if previously mostly political opponents of the regime were under pressure, now even the suppression of social protests, not connected directly with the struggle for power, takes place.

The political opposition is focused on the election campaign. At the moment the opposition can be divided into two parts: those, who hope for a constructive attitude of the authorities and those, who consider the authorities to be unable to negotiate and come to some agreement (BCD, UCP, “European Belarus”, the CCP-BPF). However, there is no reason to state the formation of two blocs or coalitions of opposition organizations. All agreements between them are situational and are not part of some strategy.

The development of the situation over the last month. In July the forecast, that the authorities won’t liberalize the practice of electoral law, was confirmed. There were some steps to counter the opposition’s campaign (both the electoral one and a boycott of the elections). According to the boycott of statement of the head of the Central Election Commission Mrs. Yarmoshyna at the OSCE conference by the U.S. and the EU, it can be stated, that there are no backroom agreements between official Minsk and the West on overcoming the political crisis in Belarus now, and there are no objective reasons for achieving them in the near future. At this rate, the pressure on the opponents of the regime should be considered also from the point if view of the socio-economic situation in the country, which, apparently, tends to aggravate.

And it should be noted that the pressure doesn’t reduce. Moreover, in July, repressive steps against the part of civil society in Belarus, which has traditionally claimed not to be connected with the political opposition and has always stressed its apolitical position, have been taken. Preventive detentions of environmental organizations activists on July 18, 2012 and of Mr. Mozhalsky (the leader of the inhabitants of the Minsk district Uruchcha-2, who are dissatisfied with city government plans for compaction of apartment blocks building on their territory), on July  6, 2012, were a clear intimidation. However, the effect was quite opposite. Thus, the detainee Mr. Mozhalsky involved in the political struggle, and announced his candidacy for the House of Representatives on his electoral district.

It’s essential to note, that the anti-compaction campaign in Uruchcha-2 district has been organized and coordinated by a little-known public initiative “European perspective”. It was able to mobilize the inhabitants of the neighborhood and get partial concessions from the authorities. The campaign resulted in the emergence of a new community leader, having the authority and support in his constituency, and in attempt to obtain the resignation of the Administration of Minsk Piershamaiski region head Mr. Kudrevich. Under the current election campaign the signatures in support of the initiative are gathered as well. This is the first organized mass requirement of resignation of a senior official, appointed to the post by approbation of President Lukashenka.

It’s necessary to note that in our opinion the campaign against compaction of apartment blocks building in the Uruchcha-2 district has become the most successful protest action this year according to “quality-price ratio”. According to information from reliable sources, the campaign was financed only by the residents of the district. At the same time the locals collected the money needed to pay the fine imposed on Mr. Mozhalsky.

One of the results of the protests was working out the scheme on giving effective response to the authorities in urban areas subject to compaction.

We should also note the activities of the campaign “Our House”, which has previously become famous because of direct mailing campaign, when the materials were sent to MIA officers and employees. In continuation of the campaign “Our House” has organized the production and distribution of colouring book for children “My dad is a policeman. What does he do at work?”, the main topic of which was the police violence against women. According to the title, the target audience of the book are family members of law enforcement officers.

An independent project to identify the officials, who abuse power, and present these facts to publicity, is also quite interesting. The project is actually an information platform, the filling of which can be participated by indefinitely wide range of individuals. The success of its implementation depends on the publishing and advertising the project.

Conclusions. Opposition political actors started the electoral campaign experiencing lack of funding. The reason for this was the failure of leaders to resolve conflicts within the opposition in the framework of dialogue without the demonstration of contradictions. Moreover, an attempt to strengthen positions in the competition involving foreign players has caused a negative reaction of foreign partners, and as a consequence, a pause in support of political activities. It should be noted even now the discredit in the eyes of external partners remains an important tool for the struggle of opposition politicians against each other.

Analyzing the election activity of opposition it can be said that, although since the previous election to the House of Representatives the political organizations have been unable to increase their capacity, there has been a kind of crystallization of the structures in the face of pressure that occurred after the events of December 19, 2010. Despite the splits, that took place in the opposition organizations, and the “migration” of activists from one organization to another, in general, the main opposition actors maintain the stability and viability, yet at different levels. Further progress in their development depends on improving management of political organizations and the ability to offer the society a coherent program of positive changes rather than not concretized slogans and appeals.

However, having the limited human capacity the political organizations will have difficulties in creating a team for developing realistic and highly specialized programs like issues of military reform, education, infrastructure, law enforcement, agriculture, energy, etc. At this rate, the ability of opposition leaders to collaborate with the expert community in the areas mentioned, or with non-political organizations involved in relevant subjects, will be essential. At the moment the programs of all the organizations, participating in the elections, are declarative, not specified, and often remote from life.

Therefore, in our opinion, the opposition is not objectively able to fight with the regime for political power now.

At the same time it’s necessary to admit a gradual increase in importance of the structures of the “rear echelon”, which, in fact, act as a generator of the most interesting and promising tactics of political struggle and social activities.

Belarusian authorities, widening the repressions against their opponents, risk facing strong resistance in case of violations of socio-economic interests of certain groups and local communities. In general Belarusian society is indifferent to the suppression of political rights and freedoms, but it has shown the ability to mobilize quickly and firmly resist the authorities if their actions affect the quality of life of citizens. It’s necessary to note, that the situation in the Uruchcha-2 district is the most well-known, but by no means the only example of battling of local communities for their interests. Similar processes take place in the East-2 and Uruchcha-4 districts. Moreover, in the confrontation with the authorities there were cases of sabotage, when unknown people, apparently from the local community, destroyed construction equipment and other property. In general, the inflexible position of the regime is able to generate both new leaders as well as autonomous self-governing protest structures in the field. At the same time, members of these structures are more inclined to radical action, rather than representatives of the political opposition.

In the situation of external pressures and limited resources, the authorities should be more careful in the actions that have the potential to increase the number of the disaffected. Although it should be stated, that at the moment the authorities gets more and more away from people and the end of the confrontation policy with the small groups and local communities of the society is not probable.

Economic situation.

Major events of the month. As before, the economic authorities have not worked out clear plans for structural reforms. At the same time the readiness to conduct deep reforms is declared.

However, the results achieved (the profit of privatization for the six months amounted to only USD 1 million.) are not meeting the plans, defined by the AF EurAsEC (the sale of state property to USD 2,5 billion in 2012), which has led to public criticism by the Prime Minister of Russia Dmitry Medvedev.

The further prospects of preserving the achieved level of exports of solvents and lubricants, which provided over USD 1,5 billion growth of export in 5 months in 2012, aren’t clear. A possible loss of this export position will have rather negative impact on the foreign exchange market of Belarus.

The development of the situation over the last month. The economic situation in Belarus in July has not changed significantly compared to the first half of 2012. But at the same time a number of negative trends revealed.

In June there was a slowdown in economic growth (from 3.1% based on the results of January-May to 2.9% in January-June) due to a slowdown of growth in the industry.

In the foreign exchange market the National Bank was a buyer of currency (the June the net purchases surplus amounted to about USD 120 million), but the first time since the beginning of the year the people were a buyer as well (USD 17,5 in cash and USD 93,3 mln. for non-cash currency). It is highly probable that with further increase in income this trend will strengthen, which is indirectly confirmed by the statements of economic authorities.

Certain changes are also observed in the money market. Compared with May, in June and July the acceleration of inflation (1.8% per month) not quite typical for the summer period, was recorded. This forced the National Bank to be restraint in reducing the refinancing rate (only for 1 percentage point in July).

The situation in the external sector is favorable: trade and payment balance remains positive, due to obtaining of the tranche of the AF EEC loan the international reserves increased. During the month there was an increase of Belarusian Eurobonds quotes (ranged from 97.3% to 99.5% of par), which was starting point for the discussions about the possibility of a new attempt of Belarus to enter the European credit market.

The decision of the rating agency “Standard & Poor’s” to change the short-term sovereign credit rating of Belarus on liabilities in foreign currency and local currency to the “B” level from the “C”, and also confirm the long-term rating at “B-“ with “stable” projection can be called positive news.

The uncoordinated government plans for next year are quite strange: while the Prime Minister Mikhail Myasnikovich, without looking at the world market situation, claims the planned growth of GDP in 2013 to be 8.5%, the Ministry of Finance is going to run a deficit-free budget and contain economic growth up to the 2015. The concern is also caused by resignation from the Government of the Deputy Prime Minister Sergey Rumas, who is considered to be the most consistent supporter of the macroeconomic stabilization policies and the creation of new sources of economic growth.

Conclusions. Thus, we can state the growth of risks in the economy of Belarus. Although the situation is far from the one at the beginning of 2011, but the simultaneous coming into life of unfavorable internal and external risks (recession in the Eurozone, a fall in commodity prices) against the background of significant liabilities in the external debt service in 2013 and the absence of coherent macroeconomic policy in the Government can be shocking for the country’s economy.

At the same time it can be stated that July was the month of worsening expectations of both national economic agents and major international partners of Belarus. Significant concern (even among the representatives of the Government) in terms of inflation and the weakening of the national currency is caused by a sharp rise in incomes, stimulated in order to achieve the average salary of not less than USD 500 at the end of the year. There are some signs of easing of monetary policy. In response to this, several international financial institutions (World Bank, EEC AF, IMF) expressed their concerns about the increasing risks of macroeconomic instability in the economy of Belarus in the situation of the weakening of government monetary policy.

Perhaps, this was the reason for postponing the increase in wages of public sector employees, originally planned for August 1, to September. And the volume of the increase wasn’t defined.

National Security and Defence.

Major events of the month. The main events in July were so-called “teddy bear landing” and the declarations on deepening military-technical cooperation with China.

Violation of the air border of Belarus by citizens of Sweden at light plane, which took place On July 4, 2012, in our opinion is not so significant to and shouldn’t have received such big attention. Technical inability of the Belarusian air defense system to detect low-altitude targets has been known for a long time and isn’t a secret. It’s necessary to admit, that choosing a way to penetrate the airspace of the country, the Swedes have used open sources of information. The best response to the “teddy bear landing” would be measures to modernize the air defense system.

However, Belarusian authorities chose the worst way to react this event. At first they denied the fact of border violation, in spite of its obviousness. And then they began searching for the guilty. The victims of the “Witch Hunt” were the Commander of Air Force and Air Defense of Belarus Major-General Pahmelkin and the head of the State Border Committee Major-General Rachkovsky, who lost their posts. It’s necessary to note, that there is no fault of generals here. The event was a consequence of obsolescence of air defense system, which hasn’t been modernized for quite a long time. In addition, on suspicion of helping the Swedes two citizens of Belarus were arrested.

During the month the Belarusian authorities have repeatedly publicly stated the strategic nature of military cooperation with China. During the parade on July 3, 2012 it was announced that China will provide military-technical assistance to Belarus. Further, on July 11-14, our country was visited by the Chinese delegation, headed by a member of the Politburo of the Central Committee of the Communist Party of China, deputy chairman of the Central Military Commission of the PRC Colonel General Xu Caihou. During the meetings the Belarusian party continued to speak about bilateral military cooperation, with joint training of Belarusian and Chinese troops in July last year “Swift Eagle-2011” being repeatedly mentioned. At the same time, the commander of Combined Arms People’s Liberation Army Major General Liu Syaou expressed the hope that “fraternal friendship” between the two countries and their armies will be “eternal”.

The development of the situation over the last month. On July 4, 2012 under the chairmanship of the State Military-Industrial Committee (hereinafter referred to as SMIC) Sergey Gurulev a meeting of board of the Committee was held. The main attention was given to the results of work of the subordinate organizations and business entities for the current year, the issues of development and modernization by 2015, and encouraging the innovative development of Belarusian military-industrial complex (hereinafter referred to as MIC).

The heads of the Committee noted that the overall economic performance of the system of Belarusian military-industrial complex meets the plan. However, in terms of creation and production of new high-tech products significant results weren’t achieved.

At this rate SMIC plans to radically restructure the financing of innovation: the number of existing programs will be reduced, and the funds will be invested only in the most promising areas, where quick returns can be expected. The agency plans to launch a specific mechanism for investment in innovative projects with the terms of the implementation of two or three years. The transition to a new funding system will be implemented during the current and the next years, all existing scientific and technical programs will be reviewed.

On July 12, 2012 the supply of eight anti-aircraft missile systems (hereafter SAM) S-300PMU1 from Russia to Belarus was announced. At the same time, four systems are already in Belarus, the other will be transferred soon. In addition, the continuation of the supply of air defense system “Tor-M2” was announced as well. With regard to the latter weapon system it is not clear whether it has been provided according to the previous agreement on supply of one “Tor-M2” Division to Belarus, or there is an additional agreement to increase the number of such air defense systems for the Belarusian Army.

It’s interesting whether the S-300PMU1systems, supplied to Belarus, are new or taken from the stocks of aerospace defense forces of Russia. Currently, this modification of SAM is made only for export. The Russian producers have a number of complexes, which were ordered by Iran, but weren’t delivered to this country. Theoretically, they could have been transferred to Belarus, but this is unlikely. Possibly Belarus got the C-300PMU1, which were in service in Russia. Thus, the decision to supply S-300 systems to Belarus was made in April last year, which is earlier than the refuse to Iran to deliver the systems. It’s essential to note, that the agreement on the supply of both air defense systems (S-300PMU1 and “Tor-M2”) was achieved during the most severe financial crisis in Belarus. There is no information about our country’s paying for this equipment. So, Belarus gets the weapons for free. In this case, it seems more probable, that the Russian Army will get the S-300PMU1, that should have been transferred to Iran, and the Belarusian Army will get the systems, previously used in Russia. In our opinion, it is unlikely that it has been originally planned to supply new S-300PMU1to Belarus. It is more likely, that Belarus should get the complexes taken from the Russian Army in connection with the delivery of S-400 systems to the Russian Army. In any case, the S-300PMU1 Division will be the most modern long-range air defense battalion in the National Army.

So far, there is no concrete information on the MIA structure reform declared previously. At the moment the heads of the Ministry only announced the initiatives aimed at improving the public perception of MIA (the creation of the Public Council) and the morale within the agency (following the Code of Honour). It’s necessary to note that both initiatives won’t have the desired results because the quality of the police staff continues to decline, and the cultural level and professional competence of the officers in the field often doesn’t meet the relevant requirements. In addition, it is well-known fact, that the promotion in the MIA and related agencies mostly depends on kinship relations, but not on a professional level of the officers.

Conclusions. The situation with the violation of air border of Belarus (July 4, 2012), despite the lack of consequences for the security of the country, has shown the inability of Belarusian authorities to assess the situation adequately. As a result, the regime has suffered yet another information defeat, firstly denying the fact of violation of the border, and then admitting it. In addition, it’s necessary to pay attention to the fact that President Lukashenko has responded to the event with a delay, which may indicate, that he hasn’t been informed on time. Moreover, his statement on the quick detection of violators of the Belarusian air border by Belarusian air defense forces has left the impression that President Lukashenko has been informed not only late, but also, perhaps, inadequately.

At the same time we do not share the opinion, that the “teddy bear landing” has been a provocation of the Kremlin in order to get the control of the Belarusian air defense system under the pretext of its modernization. This version seems ungrounded: the technical level of the Russian and Belarusian air defense is not so different. In the situation, when Russian authorities are striving to develop relations with the West, including cooperation with NATO, there is no urgent need to invest in the development of defense systems of the neighboring country. Otherwise, the issue of supply of 18 Su-30 fighters, that were previously in use of Indian Air Force, to Belarus would have been resolved.

The supply of S-300PMU1 and “Tor-M2” systems to Belarus should be viewed as a manifestation of the strategy of Belarus’ staying under the Russian military-technical impact and strengthening of Russia’s position in the view of Belarusian military authorities. Moreover, the actual value of arms supplied is relatively small and is around USD 180-200 million over three years in case of supply of new air defense systems.

We tend to consider the resignations of Mr. Pahmelkin and Mr. Rachkowski to be temporary. The authorities do not have enough personnel reserve just not to use such professionals. In the worst case, the generals will have the opportunity to be involved into research and teaching activities. It is most likely that after a few months they will take new positions in the public system. Speaking about Mr. Rachkovsky it’s essential to point out, that along with Defence Minister Yuri Zhadobin he was one of those Belarusian military leaders, who were appreciated in the West.  

The change in the system of financing the development of Belarusian defense industry, declared previously, consists not only in reducing the total number of programs, but also in reducing the total investment allocated for this purpose. The reason for this revision is quite interesting. The most likely variants are either the rationing of the budget with investing only into projects offering a quick return, or the inability (current one or possible in the near future) to finance military-industrial complex, which forces to support only the most promising projects.

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