Government: Optimistic paralysis

Polina Makarova

Summary

The state of affairs in the government as a collective body in 2020 can be described as progressing paralysis manifested in its inability to carry out coherent national development policy. In this paralyzed government, the security bloc came to the fore, only using means of control and punishment as state policy instruments. Pushed away from the decision-making centers, the social and economic blocs were left with nothing but medium- and long-term hare-brained plans out of synch with both baseline data and popular demands.

Trends:

Paralysis as a consequence of the coronavirus pandemic

The beginning of 2020 was quite routine in terms of the government’s performance. Experts praised the Sergei Rumas Cabinet for revenue growth and low inflation, subtly hinting that planned economic growth by 5% per year was impossible without systemic reforms, for which the government had no political mandate1 regardless of how many market advocates were there. The appointment of Alexander Chervyakov as new minister of economy did not suggest that breakthrough initiatives were about to begin, considering that he had been building his career for the most part in this very ministry and the affiliated research institute.

Upholding the reputation of moderate marketeers, the government once again hinted at the need to “significantly reduce the involvement of the public sector in the economy” to achieve hoped-for GDP of USD 100 billion by 2025.2 The presidential election, which was supposed to be approached without any shocks and with positive dynamics in all areas, was regarded as the main test for the Cabinet in 2020. Shocks were nowhere in sight, except for a regular dispute with Moscow over crude oil prices.

However, the black swan decked out in the spiky COVID-19 virus shell showed up long before the start of the election campaign. Despite the political leadership vacuum at the beginning of the pandemic (COVID denial and scoffing recommendations to use tractors and goats as means to combat the disease3), the government failed to fill the void and to effectively respond to any of the challenges posed by the pandemic in all areas, from logistics to sports.

It was the coronavirus spring that suddenly brought to realization that there is no council of ministers as a coordinating institution in the country, and that the line ministries retreated into their designated shells.4 The prime minister did not show up in public for half of the spring (he was only seen bargaining with Russia over oil supplies), and neither did his deputies, while some other ministers had to find their own ways out of the situation, which often contradicted each other.

The economic bloc was still mechanically collecting proposals from business associations on measures to support the economy during the pandemic. A certain anti-crisis program was mentioned,5 but none of the proposals was accepted, and support was only provided to state-owned enterprises. The statistics published in 2021 showed that Belarus provided the least support to households and businesses (1.4% of GDP6) to compare with other members of the Eurasian Economic Union. For instance, Kazakhstan spent 9.0% of GDP on this support, and Russia provided 6.5%, not to mention the European Union.

Public appeals to take social distancing measures for the period of the pandemic were left unanswered. It is noteworthy that while understating the gravity of the situation and refusing to take any decisive measures to alleviate the burden on the population and the economy, the government repeatedly requested international financial support during the first wave of the pandemic.7

When the socio-political crisis came along in the post-election period, the government went on the defensive and stopped responding to appeals of the business community to support private businesses until the crisis is over. A prime minister’s meeting with representatives of business associations was deemed inexpedient and was postponed indefinitely.8

A micromanaging prime minister

In May, after the date of the presidential election was specified, Alexander Lukashenko announced that a new government would be installed.9 He did not specify what the sitting government was to be blamed for, but replacement was the order of the day, so Presidential Chief of Staff Igor Sergeyenko was instructed at the meeting on a new composition of the government to consider the matter and “look once again at the available top officials.” “We should decide on them as well: either to leave them where they are, or find them new jobs,” said Lukashenko.

For some reason, he cited a certain “tradition” to appoint a new government after an election is called, although, in the recent history, new members of the Cabinet had been appointed either after elections or without any reference to them. Those in attendance at the meeting are worth noting in this respect. Alongside the presidential chief of staff, i.e. the head of the body in charge of staffing, there were the speakers of both chambers of the National Assembly and the state secretary of the Security Council. Based on this attendance list, observers came to the conclusion that the government was replaced not for some actual or implied failures, but in view of the forthcoming election campaign.

The Sergei Rumas government was dismissed on the same day. However, contrary to the experts’ assumptions, the office of prime minister was taken by a dark horse–ex-chairman of the State Military-Industrial Committee Roman Golovchenko–instead of Deputy Prime Minister Dmitry Krutoy, who was appointed deputy chief of staff, or Finance Minister Maxim Yermolovich, who was sent to the UK as an ambassador after a while.

Those replacements were basically of little importance. The deputy prime minister and deputy chief of staff switched places, which was the only more or less noteworthy reshuffle. Also, four ministers and three heads of committees were appointed. This gave grounds to assume that the appointment of the new prime minister was the main objective. Interestingly, the moderate liberal and market-driven economy advocate (as experts tended to believe) was replaced by the person with first-hand knowledge of how the production sector and the entire economy work, yet he had been mostly dealing with foreign policy and the defense industry. Lukashenko explained that this choice was based on the trust and patriotism considerations. “Most importantly, he is a reliable person who can be trusted, the man who rose from grassroots settings. He is a reliable person, a patriot of his country, who was born and raised in Belarus,” he said.10

Experts interpreted the new appointments as mobilization of president’s supporters in the pre-election period. According to analyst Alexander Klaskovsky, “bets were apparently placed on loyal hard-liners, people with administrative, militaristic and security mentality, the ‘yes men’ free of hesitation.”11

In one of his first statements on the functioning of the economy, the new prime minister spoke in favor of micromanaging state-run enterprises. “From my own experience gained, in particular in the Orsha District, it is possible to bring enterprises to the trajectory of development by micromanaging them,” he said.12

Daydreaming as a consequence of the paralysis

In late March, in the heat of the first wave of the coronavirus pandemic, the government appointed an ad hoc group to draft a socioeconomic development program for 2021-2025 under the supervision of the economy minister. Two days prior to that, Lukashenko criticized the government’s preliminary plans, reiterating his demand that GDP must reach USD 100 billion before 2026.13

Independent experts criticized the very fact of the appointment of the group in a situation of high uncertainty. Academic Director of the Belarusian Economic Research and Outreach Center (BEROC) Katerina Bornukova said “it was time to put aside the five-year program and all fantasies about a bright future, and get to handling the negative effects of the ongoing economic processes in the country.”14

Even in the acute phase of the post-election political crisis, i. e. in mid-September 2020, the government continued working on a five-year plan, forecasting economic growth above the global average, inflation below 5%, an increase in the gold and foreign exchange reserves, and a reduction in the debt burden, whereas experts kept insisting that the government should have been looking for ways out of the sociopolitical crisis, rather than engage in hopelessly optimistic planning, for which there is no prerequisite.15

Judging by what the prime minister said at the session of the Council of Ministers Presidium held in early October, neither the pandemic, nor the socio-political crisis affected the government’s position on the medium-term national development. Making a presentation of the fleshed out socioeconomic development program for the period to 2025, Golovchenko made an appeal to develop the regions, substitute imports and services, and ordered to work out “concrete tools to enhance the quality of public administration.” Furthermore, the program provides for setting up new industries in the near future in addition to those, which, according to the prime minister, had been showing a steady advancement in the past five years, i.e. the IT sector, nuclear power engineering and the space industry.16

According to the prime minister, Belarus’ “new economy” will be driven by innovation and investment in the next five-year period, and will be based on intellectual products and services, which Belarus was successfully exporting.

Those large-scale projects, as it follows from Golovchenko’s speech, should comprise successes in the promotion of electric transport, innovative health care and production of pharmaceuticals, and introduction of smart cities and precision farming. Commenting on Golovchenko’s statements, experts pointed out the necessity to develop line institutions, first of all, to attract investments and a skilled workforce, which seems doubtful, to say the least, amid the legal default, the massive relocation of professionals from Belarus, and a sharp decline of the country’s investment attractiveness.17

Conclusion

The Sergei Rumas government worked well in 2019, ensuring income growth and relatively low inflation (by Belarusian standards), although it did not accelerate economic growth to the desired figures. Experts agreed that it was impossible to step up economic growth to 5% a year without fundamental reforms, and this underperformance should not be laid at the door of the government alone, since it had no mandate for reforms.

The coronavirus epidemic was the threshold the government stumbled over at the very beginning of 2020. While the political authorities kept denying the very existence of the problem, the Rumas Cabinet was unable to fill the administrative vacuum and use its strengths to coordinate government policy during this period. In fairness it must be said that the leaders of the economic bloc managed to begin a dialogue with the business community and make an anti-crisis plan to support the economy, most of the provisions of which were subsequently rejected, and state support was limited to keeping state-owned enterprises afloat.

The situation went from bad to worse during the pre-election period and reached a low with the post-election crisis. The appointment of the new prime minister, according to experts, marked a new stage of personnel policy in relation to the government: from now on, loyalty was the priority as opposed to professionalism. The government was gradually losing even its minor role of opposition to the political decision-making center, which it had so far been able to retain to a certain extent. As the preparation and elaboration of decisions was becoming the sole prerogative of the Presidential Administration and the security bloc, the Golovchenko Cabinet concentrated its efforts on making optimistic medium-term national development plans.

Up until the end of 2020, the government had been increasingly successful in ignoring the reality of growing economic, financial, industrial, health care, education, infrastructure and other problems, thus focusing on making plans totally divorced from reality. The planners completely disregarded the trends that will be observed during the current five-year period, its last year in particular. Consultations with the business community and international and independent experts virtually stopped, and will hardly resume in the foreseeable future.