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GOVERNMENT IN A STANDBY MODE Ina Ramasheuskaya
Summary
In 2013, the government was acting in a standby mode thus trying hard to demonstrate hectic efforts: having abandoned attempts to lobby for reforms and constantly expecting a resumption of Russia’s generous support, which is the only pillar of the Belarusian socioeconomic model, senior Belarusian officials have practically ceased to respond to calls and threats voiced by superiors. Interaction between the government and the Presidential Administration has reduced to unavailing communication devoid of much sense. The overall functioning of the government passed into a ‘ritual’ demonstration of loyalty and subordination to the highest political leadership.
The Mikhail Myasnikovich Government concentrated on three main objectives associated with imitation: (1) execution of the political leadership’s orders to upgrade industries; (2) planning of national socioeconomic development; (3) enhancement of state management effectiveness.
Trends:
• Patchy ‘modernization’ and ‘optimization’ adjustments without a reform strategy or determination to implement any;
• Relations between the government and the Presidential Administration turning latent, when an illusion of peaceful coexistence hides the lack of effective teamwork;
• Paralysis of government policy, as the policymakers conformably take orders of higher authorities, but actually do nothing to carry them out.
Failure of the industry upgrade program
The program of modernization officially announced in late 2012 is meant to give a new impetus to the ailing socioeconomic model, specifically to improve the quality of Belarusian industrial products and boost sales to remedy the issue of foreign trade deficit, from which Belarus’ economy has been suffering for long. Also, it is important to secure high-efficiency employment of those who will inevitably be selected for redundancy as a result of the upgrade.
Observers were however skeptical about this ambitious plan from the very beginning keeping in mind one of the
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first ‘modernization’ laws, namely presidential decree No.9, which, as a matter of fact, enslaved workers of woodworking enterprises for the period of modernization1. Even the president had to admit that the upgrade of woodworking enterprises failed except for the simplest part — the purchase of high-priced imported equipment. Lukashenko’s trip to the enterprises subject to modernization (since September) resulted in dismissals, criminal liability threats and demands to pay back foolishly spent loans from personal funds. Officials made excuses referring to the understaffing, lack of project documentation and construction permits, and other bureaucratic hurdles.
State Control Committee Chairman Alexander Yakobson, who was appointed to assess implementation of the modernization program, or, to be more exact, to investigate its failure, said that relevant monthly modernization schedules were either not drawn up, or not agreed on with the executors. Also, the required personnel capacity was not foreseen and, most importantly, the people involved had no idea what to do with new products. “We are putting enormous capacities into operation, thus the probability of sales problems is high. We need to see marketing outlets now. The enterprises however do not even have protocols of intent, not to mention consumer agreements in the domestic and foreign markets,” the State Control Committee chief said. Directors of the enterprises were “confused and uncertain,” he added1 2.
Something like that was observed in other industries covered by the program. For instance, cement produced with the use of new equipment appeared to be too expensive even to compete with Russian cement in the Belarusian market. In some plants,
1 “Lukashenko approves “carrot and sticks” for workers of nine companies” // TUT.byportal [Electronic resource] Mode of access: http:// news.tut.by/economics/324128.html.
2 A. Yakobson: “Terms of modernization, financial standing and human resources in the woodworking industry will be analyzed” // BelTA [Electronic resource] Mode of access: http://www.belta.by/ru/ all_news/economics/Jakobson-na-predprijatijax-derevoobrabotki-budut-proanalizirovany-sroki-modernizatsii-sostojanie-finansov-i-kadry_i_651588.html.
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the procured equipment simply did not fit the premises it was supposed to be installed in3.
The general policy has not been given a second thought despite one or two demonstrative dismissals and several criminal cases, which followed the failure of the upgrade program. Officials keep nodding and agreeing with new deadlines and assignments, which are just as unrealistic as previous ones. Only Assistant to the Presidential Piotr Prokopovich4 and Ambassador of Belarus to France Pavel Latushko5, who called for “taking a practical view of the situation”, stood out, although both neither pointed at the reasons of the dismal developments in the industrial sector, nor emphasized the need for reforms to find a way out (except the need for extra investments).
Imitation of socioeconomic development planning
Although the government passed through all usual stages of planning of major economic targets throughout the year, it looks like no real meaning was put into it this time. For example, before a scheduled arrival of the IMF mission, the government and the National Bank developed a plan to reform the economy and raise the competitive capacity of Belarusian goods, which was quite adequate in all respects6. However, the president and his administration made no comments whatsoever on this plan, which was also ignored by a number of ministers.
For example, the plan contained a paragraph, according to which the Ministry of Labor and Social Protection was supposed to work out proposals on development of a superannuation
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State Control Committee chairman shocked by modernization of Lyakhovichi flax-processing plant // Belarusian news [Electronic resource] Mode of access: http://naviny.by/rubrics/economic/2013/09/26/ ic_news_113_425495/
P. Prokopovich: “Our MAZ trucks and tractors are noncompetitive in the market” // EuroRadio [Electronic resource] Mode of access: http:// euroradio.fm/ru/prokopovich-lukashenko-nashi-mazy-i-traktory-nekonkurentny-na-rynke-video.
P. Latushko: “Our machines just break down during presentations” // TUT.byportal [Electronic resource] Mode of access: http://news.tut.by/ economics/386025.html.
See: http://www.government.by/upload/docs/file7466ecfD8fff7f6e.PDF.
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scheme, including a rise in the retirement age, and submit them to the Council of Ministers by June 2014. However, addressing the parliament at a joint session of the two chambers on October 31, Minister of Labor and Social Protection Marianna Shchet-kina said that the ministry was not considering the retirement age issue at all.
On top of this, the government displayed apathy and extreme formalism when it came to one of its primary tasks, i.e. coordination of socioeconomic development targets for the next year and preparation of a report on their achievement in the past year. According to forecasts made by Prime Minister Mikhail Myasnikovich, economic growth in 2013 was to depend on the new (suddenly emerged) high production sector — dozens of enterprises in each district. Labor productivity at those enterprises was supposed to be as high as the average productivity in the European Union7. To everyone’s dismay, this wonderful sector never materialized, and government officials therefore deferred their expectation for its miraculous appearance to 2014.
In 2013, economic growth was only one tenth of the target, so top officials stopped attaching any importance to economic forecasts given that prescriptive figures would be handed down regardless of the actual state of things anyway. The president noticed the government’s apathy. “Nobody works hard, sweats or disputes the targets. Generally speaking, this is nonsense. Usually, plenty of requests and complaints come by this time. And now? Dead silence!” he said anxiously. The same dead silence was the answer to Lukashenko’s logical question on what grounds the government made such optimistic forecasts8.
State administration reform: critical assessment
At the end of 2012, the president gave a special assignment to form a state committee for preparation of proposals on a reform of the state administration system, which, in his opinion, was excessively bureaucratized. In early 2013, the commission headed
7 Economic results of 2013. Expert outlook for 2014 // Belarusian news [Electronic resource] Mode of access: http://naviny.by/rubrics/ auto/2013/12/23/ic_articles_113_184032/print/
8 See http://news.tut.by/economics/376824.html.
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by Presidential Chief of Staff Andrei Kobyakov and Assistant to the President Natalia Petkevich submitted the requested proposals. The president was however dissatisfied with what the tandem was suggesting, in particular a revision of functions and the structure of government agencies, and sent them back telling to focus on overall performance and downsizing, in other words to trim unnecessary functions of the state machinery and reduce the staff9. In general, the president spoke highly of officials’ accomplishments and the draft ‘reform’ of state administration, which should have been taken as a model by the states where similar reforms resulted in managerial maladjustments or were a desperate measure to cope with a budget deficit.
The key idea of the reform — to reduce the number of state officials by a quarter and distribute the money saved among the rest as a raise in salary — was mulled over and made public through the media by the middle of the year. Decree No. 168, which enshrined this idea, was issued in April. According to the decree, the staff reduction was supposed to be completed by September 1, 2013. In the opinion of independent experts, “the mountain brought forth a mouse”, and “the public administration reform on the one hand resulted in a showcased reduction in already vacant positions and firing of retirees, and, on the other hand, in depletion of already overworked local administrations. The “optimization of functions”, except for one or two local reshuffles, was history. The raise in officials’ salaries, which, in fact, the whole thing was devised for, also turned imperfect, so that the proponent of the reform had to admit it himself10.
The government changed its view on the situation by the end of the year. Lukashenko started scarifying the machinery saying that “the government was not working”, “shiftless come-
9 “Alexander Lukashenko orders to optimize the structure, size and functions of government agencies within six months” // BelTA [Electronic resource] Mode of access: http://www.belta.by/ru/all_news/president/Lukashenko-poruchil-v-techenie-polugoda-optimizirovat-strukturu-chislennost-i-funktsii-gosorganov_i_620790.html.
10 “President concerned about shiftless persons in government offices” // BelTA [Electronic resource] Mode of access: http://www.belta. by/ru/all_news/president/Lukashenko-ozabochen-nalichiem-bezynitsiativnyx-chinovnikov-bojaschixsja-prinimat-reshenija-i-nesti-otvetstvennost_i_654283.html.
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and-go people were taking offices”, policy-making positions remained unfilled for years, and officials were often “afraid to expose their affiliation with executive committees.” A meeting on the staffing policy was urgently convened at the end of the year. Noteworthy is that the Kobyakov group was mentioned in the media again before the meeting, this time with a negative connotation probably because Kobyakov once again tried to approach the president with some new ideas, which annoyed the head of state. Nobody can tell what exactly they were talking about because the document was never made public.
Participants in the meeting held on December 10, 2013 did not produce any comprehensive solutions. They only described problems to deal with and told sob stories about the quality of personnel, which was not as solid as it used to be. The only more or less articulate point in the speeches made at the December meeting on human resources and the situation in the woodworking industry was that only few thoroughgoing people of the Soviet generation, who could work for peanuts for the glory of the Motherland, still remained in their positions, while the new generation wanted material incentives. Even the talent foundry chief, Rector of the Presidential Academy of Management Anatoly Morozevich joined the choir of complainers saying that only those who have a genuine concern for their country in their DNA should be admitted to high offices. Someone suggested involving effective managers from the private sector. But, no matter what proposals or diagnoses were made, nothing that could rectify the situation with human resources has been done or at least blueprinted.
Conclusion
In 2013, the Belarusian government was still busy with maintaining the status quo dealing with what has already happened rather than with something planned or prearranged. It is hard to predict what the government will do next primarily due to the typical national phenomenon: staying put in constant expectation of the next portion of outside financing. No attempts are thus made to qualitatively update the state policy. Meanwhile, government functionaries fully realize the threat of a budget
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deficit, as evidenced by increasing excise taxes, new taxes and dues, as well as the growing proportion in the cost of services provided by the state, which must be covered by the population.
Traditional patterns of interaction between the political leadership and the government seem to be outspent. We can say that the system of public administration operates by inertia when the main players perform the prescribed roles purely formal. Factors of personal motivation of officials, including economic benefits (whether they receive dividends from participation in major business projects, paving the way for the privatization of certain state assets with Russian capital or not, etc.) become important in this situation. Belarusian office-holders are generally known for their reluctance to take risks, and therefore the current simulated activity in combination with the rent-seeking behavior can go on endlessly provided that a relatively stable macroeconomic environment is maintained.
The balance may yet be disturbed by a combination of external factors. Belarusian officials can be pushed out of the imitation orbit among other things by an aggravated situation in Ukraine, when economic independence from Russia would become distinctly shaped and more desirable.
Belarus’ accession to the Eurasian Union can lead to a deterioration of the situation in the Belarusian economy as a fatal consequence of the poor competitiveness of Belarusian enterprises in the joint market, unless Belarus is given the long expected oil trade preferences. In this case, it is possible that Belarusian officials will more actively lobby privatization of loss-making enterprises.
Also, a sharp deterioration of the economic situation may induce the government to more actively promote structural reforms. However, given the previous experience, it is safe to assume that the Belarusian authorities will rely on populist measures and rigorous suppression of any manifestations of discontent as long as possible.
