The Arguments&Facts: There will be no Lukashenka in 2015

The Belarusian ruler has brought the country to the verge of economic collapse, the Russian media reports.

The arrest of Russian Uralkali corporation’s director general Vladislav Baumgartner has again put Belarus on the verge of economic collapse (already third in the last 4 years after the collapses of 2009 and 2011), and the president’s rating – under the threat of falling to the historical low, after which he will not be able to get elected in 2015, the president of a Russian research center Political Analytics writes in The Arguments&Facts newspaper.

Lukashenka’s supporters often speak of some “economic miracle” and “innovation miracle” that “Lukashenka’s model” showed. In reality it is not Lukashenka’s economy, but his false statistics and aggressive propaganda that show miracles.

Although, these “indicators” fall into pieces once compared to the production figures in actual values, which are constant at any prices. Thus, Lukashenka’s statistics says that the GDP allegedly reached 193% in 2012 as compared to the level of 1990, but any economy’s main indicator – energy production – dropped from 39.5 billion kw-hr in 1990 to 30.8 billion kw-hr in 2012, i.e. only comprises 78% of the 1990 level.

Lukashenka’s tightrope walking statistics draw the industrial output numbers for 2012 at the level of 258% against 1990. There is nothing even close to that in natural values: the main article of Belarusian exports – oil processing – dropped from 39.422 million tons in 1990 to 21.667 in 2012, i.e. only comprises 55% of the 1990 level.

Belarusian number 2 exports good – mineral fertilizers (almost exclusively potassium) – was produced in the amount of 6.7 million tons in 1988, and in 2013 the output is only expected to be at the level of 5.3 million tons or 79% of the top Soviet levels.

The same situation is there in the construction and investment sphere: Lukashenka’s statistics speaks of alleged 224% against the level of 1990, the natural values though show a completely different situation: 5.650 square meters of accommodation were built in 1989 and 4.487 – in 2012 or 79% against the 1989 level.

If in 2009 Aliaksandr Lukashenka managed to not let his electoral rating drop, then in 2010-2011 he did exactly the opposite: Lukashenka provoked an unexpectedly strong response reaction of Russian authorities, which replaced too preferential 50% discount on gas, oil and oil products prices with higher prices closer to the market ones (which grew in early 2011 in addition to that).

As the result Belarus’ trade balance deficiency in goods grew in the 1st quarter of 2011 from 1.2 to 3 billion USD (90% of which accounted for the trade with Russia), serious foreign currency deficiency emerged in Belarus, which went even stronger after Russian TV’s critical reports.

The consequence of that was a landsliding exchange rate of Belarusian rouble against United States dollar, which dropped by 3 times. The prices grew at almost the same rate and Belarusian population became respectively poorer.

As the result, Lukashenka’s rating dropped to 20.5% in September 2011, according to the IICEPS, having become the lowest in the whole 17-year history of Lukashenka rating’s measurements. Lukashenka, of course, panicked after that and agreed to sell Beltransgaz to “evil Russian oligarchs” even cheaper than the price he used to call too low and extortionate before the economic collapse.

Having obtained Beltransgaz, Russian first decreased the oil price for Belarus in early 2012 by 10% and the gas price by 28%. The actual discount was even higher, because the market oil and prices grew again by 10-20%.

In general, Russia started again selling oil roughly 45% cheaper to Belarus, and gas – 50% cheaper than the world market prices. At the same time in late 2012 - early 2013 Russia decreased the oil and gas prices for Belarus by 3-5% again. As the result the trade balance stopped showing a loss and started showing profit instead. The situation in the economy started improving, salaries and pensions started reaching the pre-collapse level.

Now Lukashenka’s economy started going out of order again: whereas in the first half year of 2012 Belarus had a positive trade balance (exports were higher than imports) of 1.9 billion USD, then in the first half year of 2013 it was replaced by a negative trade balance of 1.7 billion of an increasing character: in the first quarter imports exceeded exports by 0.6 billion and in the second quarter – already by 1.1 billion. The exports of Belarusian goods dropped from 25.3 in the first half a year in 2012 to 19.2 billion in the first half of year of 2013 or by 24%. Even Lukashenka’s artful statistics is compelled to show the industrial output decrease by 6-10% in May-July and the GDP decrease by 0.5% in the second quarter (against the same periods in 2012) – the real decrease is, of course, higher.

This time, it seems, the 2011 scenario will repeat, when the “harmless war game” led to serious economic sanctions on the part of Russia, the result of which was the collapse of Belarusian rouble’s exchange rate and Lukashenka’s rating by 3 times alike.

At first the flabby conflict of Lukashenka and Uralkali also led to a noticeable drop in potassium fertilizers prices, which are the second most significant article of Belarusian exports after oil products (7%), and in Belarusian budget incomes (10%): if last year Belarusian manufacturers used to sell it for 742 USD for a ton, than this year – for 638, while the Chinese have a big discount – down to 593 dollars.

After Lukashenka’s conflict with Uralkali analysts started speaking of the price dropping down to 270-300 dollars! Rospotrebnadzor started speaking of a ban on the imports of Belarusian dairy products (6% of all Belarusian exports, 75-80% of which goes to Russia), Rosselkhoznadzor mentioned a ban on Belarusian meat (3% of Belarusian exports, 96-97% foes to Russia). Finally, Transneft claimed that oil shipments to Belarus would be decreased by 25%, whereas oil products exports account for 34% of whole Belarusian exports! It seems this is only the beginning: statements demanding the release of Uralkali’s head were made by Russian MFA, Ministry of Economic Development, Administration of the President of the Russian Federation.

One may only guess what a huge loss the Belarusian economy will suffer, when the Kremlin turns on all the possible “punishment measures” in response to Lukashenka’s actions against Uralkali. For example the Ministry of Finance of the Russian Federation does not yet refuse from providing Belarus with another loan of 440 million dollars, but it could: Belarus’ current debt has reached 16 billion dollars, and the country is hardly capable of paying it back…

After all the “influence measures” on the part of Russia Belarus’ growing negative trade balance will only grow harder. This will inevitably lead to the collapse of the national currency and, as a consequence, another impoverishment of Belarus’ population, which will lead to Lukashenka’s rating falling down to a new historical low of 10-15%, after which it will be impossible to be restored to anything above 25% by 2015 presidential elections. And this will mean an inevitable defeat.