All-round conversation with journalists in open format
The press conference lasted for around five hours, with the President answering over 60 questions on Belarus’ social and economic development, its foreign policy and relations with Russia, the West and other countries and regions of the world. The media were also keen to learn about integration within the post-Soviet space and Belarus’ participation. As is traditional, some personal questions were also asked
Hosted by the National Library, the event gathered over 350 journalists from 285 media sources. Of these, about 200 journalists were from 184 regional media outlets. Foreign journalists from seven countries were in attendance.
Interest in such events is always high, with journalists appreciating Mr. Lukashenko’s sincere and open manner. Their expectations were met once again, with the President encouraging discussion rather than formal questions and answers.
“Let’s discuss problems together. Yes, I’d really like to influence you with my words and my conviction. However, don’t think that I can’t be influenced by your questions; believe me, I’m open minded and take our modern issues seriously,” noted the Head of State.
The conversation covered almost every sphere. Conversation began with Mr. Lukashenko answering questions posed online by the public, despite some being rather uncomplimentary. He told those present that, in answer to those who expect him to repent for problems facing the economy and regarding foreign political isolation that he indeed does. “For those listening, I repent, I truly do repent. I’ll say so a third time if it helps. I repent for those problems which currently exist in our country. Even if I didn’t repent, I’m the national figurehead, the Head of State, in line with the Constitution. Whether I wish it or not, I bear responsibility for problems in our country,” admitted the Belarusian leader.
Real life is complex and multi-faceted and, even, sometimes, boring: milk yields, GDP and modernisation, profitability and labour efficiency, rural development and work on external markets, kindergartens, schools, hospitals, universities, the raising of the coming generation and care of the elderly. It’s impossible to list everything but each aspect is part of daily life.
Gomel journalists were interested in the construction of a 100km railway line through Polesie, which would impact on its development, being rich in mineral resources. Those from Grodno were concerned for the fate of Grodno Azot, while those from Vitebsk were keen to learn about the future of the Slavianski Bazaar. Needless to say, everyone wanted to hear about integration, the optimisation of state apparatus, housing construction, servicing of foreign debt and land ownership, among other issues guiding Belarus’ path into the future. Some issues may be dull but they are important. In particular, the President of Belarus detailed the following:
The results of 2012
Just over a year ago, in this hall, and in approximately the same format, I answered your questions, including those which had a sharp edge.
The most vital issue was the future of our country. I detailed the conditions under which socio-economic stability could be ensured for Belarus, while preserving the independence of our state. If you remember, I didn’t promise an easy life; however, I didn’t scare you with gloomy prospects either.
2012 is now past, so we can draw some conclusions and see what has come true and what has failed to materialise. Back then, I was convinced that we’d cope with new threats. Now, I can say that we certainly have. We’ve achieved small but steady economic growth while raising people’s real incomes. We’re often criticised for low rates of GDP growth but it’s a very vague concept. When I ask the Government for explanations, they give me reports which show that certain areas of agriculture and industry have increased over and above our targets: agriculture has grown by 6.5 percent (instead of 5 percent) while industry is up around 8 percent (instead of the planned 6.5 percent). Most vitally, real incomes are up 20 percent.
We have not achieved every goal and opportunities have, no doubt, been missed but, over the past year (which brought complex situations) we’ve settled financial problems hanging over from 2011. In honesty, in dealing with these problems, we met the major task for our economy; without financial stability, it would be impossible to speak about further development or modernisation of production, let alone raising real incomes.
Of course, people always want more. The only way for us, Belarusians, to achieve this is through hard work. There’s no other way, as I’ve said before.
I’d like to give a simple but effective example. 2012 saw improvements over 2011, with measurable results. Vitally, we managed to expand exports and achieved a positive foreign trade balance (almost for the first time in our history). More currency came into the country than ever before, despite the unfavourable world market. Many, including journalists, criticised me, saying that the economy wouldn’t be able to cope with such a task. However, it has.
Some forecast gloomy pictures of the future but I advise you to stay away from such ‘oracles’, as their agenda is not to inform the population but to cause panic in an underhand manner. We saw this recently when some tried to destabilise the exchange rate of the national currency in early 2013. Thank God, we managed to see what was happening and foil any plot.
I’ve always asked journalists to remain objective. You’ve seen and heard, so analyse, draw conclusions and criticise as is deserved. I’ll listen to your opinions but please speak from the heart, with personal conviction.
Don’t confuse freedom of speech with irresponsibility and be careful not to encourage ignorance or disrespect your audience.
I’m ready, as ever, to answer all your questions sincerely and honestly in as much detail as you require.
Issues addressed to the President online
On arriving here, I received the latest media review so, while you’re thinking of your questions, I’d like to answer some addressed to the President from various other directions.
Grinyuk, from the Satio Centre of System Business Technologies, wishes to know my assessment of public-private partnership in Belarus.
I view this positively. However, if the only thing you do is demanding something from the state, like give us liberalisation, no control, we will do what we want — this is not going to happen. Private businessmen’s work brings benefits and enriches the wealth of the nation but anyone with sense knows that their own profit is their primary incentive. They will not dip into their pockets and give anything to anyone, neither the state, nor people. We need to realise that it is not businessmen alone who generate assets; there are thousands of people working there and they have the right for a decent salary and decent living.
Let’s take the simple example of housing construction, which I was discussing with the PM yesterday; it’s on the agenda for this year. In Soviet times, each enterprise — even a poor kolkhoz — provided accommodation for staff. Tell me, please, what have businessmen built today for those who work for them? With few exceptions, they simply pay wages. However, what can be bought with these salaries? Only the state is addressing this issue with real focus.
All businessmen who want to honestly work in Belarus and earn enough money to live well, are able to do so. If businessmen do not understand that they should give something to people so that people live decently, we will help them understand that. If someone wants to dip into someone else’s pocket, we’ll deal strictly with those who don’t. This is my policy towards public-private partnership.
My friend Stanislav Bogdankevich [formerly the Chairman of the National Bank of Belarus] advocates autonomy for the National Bank, making it independent even from the President. In fact, the National Bank is already independent, although the President can request a report from it at any time and can monitor any situation, demanding that different measures be taken in the interests of the state and our people.
During the world financial crisis, the EU (the most advanced organisation) and the USA saw financial organisations and banks collapse; they then immediately tightened controls. However, they tell us that everything should be independent. I believe that, when everything becomes independent and no one is held responsible, quarrels begin.
No state has absolute autonomy. No one, not even Stanislav Bogdankevich, can say that the President places excessive pressure on the National Bank. I’ve told the Chair of the National Bank and the PM that decent salaries are necessary but that, if we don’t upgrade enterprises, we’ll have nothing to promote in the Single Customs Space, let alone within the WTO. It’s a matter of survival. I’m concerned about access to loans and how the Government and the National Bank will approach this. My only requirement is that the country grows and that the economy develops. That’s my task, so some control is necessary, as this is a huge organisation, and no organisation can exist without control.
Economist Chaly asks whether the resignation of the Government is being prepared and whether I should set more feasible tasks before the Government. I believe he is aware of the how the decisions are made in our country, especially those which relate to the tasks for the Government. The main task is outlined in the country’s development guidelines for the coming year. Plans take almost a year to draft, so after the first quarter we’ll being working on major areas for 2014.
Until the Government agrees them with governors, they will not send them to me. Everything has to be agreed upon, as governors and the Government will be responsible for meeting these targets. After the financial turmoil, I believe, if in 2012 we have the GDP growth of 5-6 percent and the growth across related indicators, we’ll thank the Government but we failed to achieve this, despite various heads of enterprises assuring me that they’d be able to provide 8 percent growth. They emphasised: ‘Yes, we’re convinced. We have calculations. We have everything’. I didn’t decide a target of 8 percent while sitting in my office; others made promises. Of course, I could have done so, as is my right, but I’d never be so exacting, as I’m an economist. I understand that figures can only be forecast when accompanied by corresponding calculations.
To those who say that my expectations are unrealistic, I’d like to note that I formalize them, approve them. I demand, of course, a certain balance to the economy. I want people’s incomes to increase, I want people to live a normal life, to have decent salaries so that they could provide for their families.
As far as I understand, BATE forward Rodionov, whom I respect, would like to ask me about the rational use of funds. It’s an issue close to my heart. BATE should feel grateful for having been tax exempt in recent years, allowing players to receive greater salaries. Even this money wouldn’t be enough to build a stadium in Borisov but the state is helping fund the construction, contributing more funds than the clubs I believe.
I wouldn’t say that we’ve spent money irrationally in building sports facilities for athletes but Rodionov should understand that I do have serious questions for our sportsmen. We need to see results, as BATE has given us in the past. Saying this, BATE’s recent play has left much to be desired. I was watching its return matches against the Spaniards, Germans and French — after brilliant first matches — and had to switch off the TV as I felt embarrassed. It was really frustrating to see our sportsmen allow four goals into their net. I always keep a close eye on athletes, since their performance means so much to our country and influences how others view our state.
Naturally, athletes need to be paid, so we’ll regulate the situation, making sure they receive salaries with which to care for their families and to train. If they show results, they’ll receive more.
A musician called Kullinkovich asks whether I am aware of ‘black lists’ for some Belarusian performers but, frankly, I know nothing about this. I’ve asked the Head of the Presidential Administration and his Deputy for Ideology to tell me if these ‘black lists’ exist as, believe me, I haven’t given such instructions to anyone. If ‘black lists’ do exist, I’m really unaware of them and would like to know more.
The Press Service gave me these questions and I’m sure you weren’t expecting them, so I apologise if I’ve distracted your attention. I decided to answer them so that no one can reproach me for answering only ‘suitable’ questions by a select few. I’ve also answered ‘unfavourable’ questions.
We can ensure that our country enjoys the essential requirements of stability and peace, so that citizens can lead normal lives. I’ve been concerned by the potential for financial confusion on joining the Single Economic Space — and by related issues. You may remember that we introduced duties on vehicles, leading to our citizens’ spending $3bn on importing them.
We’ve almost spent our gold-and-currency reserves. I felt that it was important to stabilise our financial situation and we’ve done so. Moreover, our gold-and-currency reserves have achieved $8.2bn. We have a deficit-free budget and, even, a small net surplus. We’ve financed all the measures we’d planned. No apocalypse occurred and the national currency didn’t crash on January 1st — despite SMS-messages designed to inspire panic. Economic stability has been the main priority. We’ve achieved this while remaining within our target figures, including for inflation. We’ve also created a reserve for this year.
I should tell you that what our ill-wishers and enemies predict won’t come true. This won’t happen. We’ll continue to exist as a stable and independent state!
Currency exchange rate
In honesty, there have been times, as you know, when we tried to restrain the Belarusian Rouble exchange rate. You know what this led to, so the National Bank and the Government have been strictly instructed to never artificially restrain it again! The National Bank has been trying to keep the exchange rate steady for the last 18 months to 2 years. It was ready to step in if drastic falls or surges were evident but there was no such necessity last year.
I’ve always said that we’re using a real market exchange rate for the Belarusian Rouble, so there’s no need to rush to currency exchange offices and stand in queues.
Speculation regarding devaluation is ridiculous. Those who did so last year have seen us generate about $5bn more in foreign currency from exports than in 2011, despite an adverse world market. We won’t artificially restrain the exchange rate, ensuring that it only reflects the true cost of US Dollars or Euros. Drastic falls or surges may affect the exchange rate, as is common practice worldwide.
Latin American, Asian and African markets
There was a time when we didn’t sell anything to Latin America; now, our trade turnover is worth $3.5bn, with our exports accounting for around $2bn: very much in our favour. This is my answer to those who were cynical about us entering this market. We should go anywhere we’re welcome! Looking at Venezuela, Brazil and other countries, it’s clear that we have many commodities which are in demand there. Venezuela is our stepping off point for sales to Ecuador, Cuba and the Central American countries — such as Nicaragua and, especially, Brazil. We’d like to gain a foothold there soon, aiming for at least $5bn of trade turnover on this continent. This will contribute greatly to our need for diverse export revenue.
As far as Central Asian states are concerned, we’re focusing on those formerly within the USSR, since we’ve always taken an interest in them, maintaining trade relations and working together to ensure production modernisation. In Kazakhstan, we’re taking part in about 20-30 projects, while building mining and refining facilities in Turkmenistan, where we also sell lots of our goods.
China and India came on our radar a decade ago. You probably remember my first trips. Jiāng Zйmнn and I (the third president after him is currently in power) set the task of reaching at least $500m in trade turnover. We’ve already at least tripled this figure. We enjoy effective collaboration with this empire. It’s the second most powerful country in the world so, thank God, we enjoy good relations. They’ve helped greatly, having given us a credit line of around $16bn for specific projects. Svetlogorsk may serve as an example in this respect, where a bleached pulp plant is being built with Chinese loans of about $1bn.
The same is true of India, which is keen to share experience in the sci-tech field. We enjoy good relations with India, although perhaps not as developed as those with China.
Vietnam is also becoming a close ally. This rapidly developing state boasts a population of around 80m. They’re almost like brothers, welcoming us as friends and being forthright in letting us know what they’d like to buy from us. They’ve also helped us interact with Laos, Cambodia and Myanmar.
You’re aware of a visit by our governmental delegation to Bangladesh and India, with a successful trip previously to Myanmar. Now, a major visit is being planned to Indonesia and Singapore, at top level. We continue to see success on these markets and are also establishing relations with Mongolia, which is keen to buy our agricultural and mining machinery. They’ve already purchased some from BelAZ.
We’ve seen less success with Africa but our new Foreign Minister has been tasked with finding 3-4 states there which can rival Venezuela as trade partners. We need to start small and gradually gain a foothold, moving on to work with their neighbouring states.
I think that we’ll make gradual progress. Of course, it’s a pity that we’ve lost Libya and Syria, because of internal conflict. It’s difficult to work with them now from an economic point of view. However, I believe this is only temporary; sooner or later, we’ll restore our relationship with these states.
Role of neighbouring countries in relations with EU
Lithuania may chair the European Union but this doesn’t give it the power to control affairs. I don’t cherish any hope in this regard.
We can’t choose our neighbours: they are given by the Lord, so we should live in peace with them. In fact, 30 percent of Lithuanian state revenue comes from Belarusians. In 2015, the EU’s subsidies to Lithuania will be reduced (it currently gives 2-3bn) which may bring some problems. They can’t afford to lose their partnership with Belarus; only small minded people in Lithuania would disagree. We ship up to 10m tonnes of cargo via their ports, which they rely upon. We’ve told them honestly that we’re looking at alternatives in the Leningrad Region and in Ukraine, to find the best rates, but we won’t put ‘all our eggs in one basket’.
As long as our partners in Lithuania and Latvia treat us as we deserve, we’ll be happy to continue ‘giving them money’, shipping our goods from there and providing work for people. If they behave with gratitude towards Belarus, we’ll co-operate with them.
We’ll be guided by Lithuanian and Latvian domestic and foreign policy towards us, treating them in a similar fashion. We’ll develop co-operation accordingly.
Prospects for the Union State
Regarding the Union State, we’ve made progress with human rights and the co-operation of our foreign ministries and military forces, creating integrated systems — as in a single state. The Union State will be! We function quietly within it, without any cutting-edge innovation but perhaps we are yet to reach that point of radical solutions.
I’m without worries regarding our relationship with Russia within the Union State. We just need to gain a foothold on the heights already reached.
Differentiation of payment for housing and public utilities
I don’t think the Government should be criticised for suggesting differentiation of payment for electricity. I’ve already said that the payment within the housing maintenance service system is 20 percent. Even with differentiated payment for electricity, the public won’t be paying the full cost, as current rates are so greatly behind the real cost.
If you use a certain amount of electricity, you should pay for it. If you want to use more, you should pay more. Why should people pay the same when one has a small refrigerator and another has a three huge fridges and a separate deep freeze?
We don’t yet provide ourselves with 100 percent cheap electricity and rely on importing fuel for our power stations, which is far from inexpensive. People aren’t paying the full cost of their electricity, since it’s subsidised from the budget. Last year alone, we paid 11 or, even, 17 trillion Belarusian Roubles from the budget to subsidise housing and public utilities: a huge sum! Of course, we need to reduce this gradually, as salaries grow.
Hundreds of buildings are currently privately owned. After Yakubovich [Editor-in-Chief of Sovetskaya Belorussiya newspaper] did some checking on structures created by a handful of officials (5 to 7), where residents are charged three times as much for services, I noted that local authorities should form such structures with care. Everything should be transparent, with people able to vote for who’s in charge of a building. If people don’t want then the building will be served by the state housing maintenance service. We’ll keep a close eye on this, ensuring that private owners keep tariffs for housing and public utility services within reasonable limits.
We’ll continue to make people work and face their responsibilities, including supporting children taken into care. However, we shouldn’t delay the decision-making at the legislative level. There’s no need to spend time for them... 12,000 people is not a huge number (thank God, there are so few) but we’ll strengthen their duty of care, obliging them to work. Of course, the requirements will be stiffened for them.
I admit that maybe I was tough with the woodworking industry, signing a decree which effectively prohibits firing any of the workers, professionals or executives of related companies — at least until November of next year, when modernisation should be complete. The budget and banks have provided huge funding, and we’ve guaranteed foreign credit lines for hundreds of millions of Dollars to buy equipment. Meanwhile, enterprises failed to use money effectively but who should take the blame? The Government and its ministers? Those who took payment bear responsibility to provide an enterprise! By all means leave afterwards. In fact, no one has mentioned leaving. We want to retain our workers but we must pay them properly. Salaries are rising well, as they should do.
Everyone needs to pull their weight. It’s a problem that’s been around since Soviet times. I’ve admitted openly that I’m to blame for not entering the whirlpool of the free market early on. We didn’t need to as we were content, but nor should we pander excessively and be over-protective. People become complacent, thinking they’ll be paid regardless of performance. Rather, we need to encourage independence, with the state playing a supporting role.
I see nothing wrong in Russia gathering other states around it in a civilised way. Speaking as a participant, we are building our relationship based on our own interests. I know that all the states involved are taking the same position. Recently, Tajikistan decided not to join the Customs Union, choosing the WTO instead. With Kazakhstan, part of the Single Economic Space, we are negotiating to join the WTO, in Russia’s wake. We haven’t joined yet but our time will come. We are already following WTO guidelines, since our main partner within the Single Economic Space is doing so.
Holiday charity work
I gave a Presidential Administration order that businessmen and government officials should visit children, to which everyone responded. I always do so, as nothing is more holy to me than children. It’s my personal feeling, which drives me to always visit them at Christmas. A little later, I see the elderly. The whole Government of ministers has visited orphanages and old people’s homes, without any PR. I simply wanted them to remember children and the elderly, since their care is a duty of the Government and state.
Preparations for IIHF World Championship in 2014
The event will shake up the capital and create a spirit of excitement, while promoting sport. We may not win; in fact, we probably won’t. We may not even receive a prize but we’ll benefit in other ways. A great many people will arrive for the event, so we’ll improve infrastructure and ensure that we have another site for hosting games. Besides Minsk Arena, we’re building a new rink at Chizhovka. It will be ready in time, I’m sure.
We need to increase the number of hotels but need to pace ourselves. We can adapt sanatoriums and we’ll control prices. We don’t want to be criticised, as the Poles and Ukrainians were over the Football World Cup, when prices rose through the roof. Everything should be decent, pleasant and comfortable for players and tourists.
The Prime Minister has reported eleven spheres of work in preparation for the World Cup 2014, which seem to be being solved more or less successfully. I’ll return to these in September for serious analysis and Presidential input.
Subsidised housing loans
Money is needed of course for those who lack sufficient funds of their own but everyone wants their own home, asking that the Government provide money at a hugely subsidised rate. If you pay just 3 percent interest and inflation stands at 20 percent, your loan will have disappeared within five years. It’s just not feasible. Where we can, we invest in building housing. We stopped giving loans for a while but still managed to finance everything as we’d planned — and more. This year, we’re planning more in this direction but will only give subsidised loans to the most vulnerable groups of society.
Payment of foreign debt and modernisation
This year, we need to pay just over three billion. The Chair of the National Bank has told me that we have this money and need another billion for this year. As our GDP (which I always calculate using the buying power capacity) stands at around $75bn, it won’t be a problem. We can even delay repayments if we need to but we won’t fail to pay our external debt. It’s easy to pay a couple of billion Dollars each year. 2013 is really the peak of our commitments but it won’t affect modernisation.
The Government has considered what needs to be upgraded, at a cost of trillions of Roubles. However, I’ve told the Prime Minister that each enterprise must have its own plan, with the accent on finding funding independently rather than relying on state subsidy. The situation in the wood processing industry has taught me that allocating lots of money indiscriminately is not the answer, since they failed to do what was needed. It’s good that we woke up in time. The PM is studying 12-15 significant modernisation projects, which should reap obvious benefits.
Innovation funds have been allocated for 15 projects, with a manager fully responsible for a period of two years at each enterprise. I’ve rejected the idea of mass modernisation paid for by the state, as it’s not necessary. Enterprises have their own funds — up from 3bn profit last year to 8bn now. These funds should be spent on modernisation.
Payment of external debt is related to state funding for development and modernisation, since both come from the budget. I don’t think that we’ll manage to modernise the number of enterprises envisaged by the Government.
Regarding the sale of the property, my policy is to ensure that we don’t eat our assets! If we sell property for $2-3bn, it will be invested into gold and foreign currency reserves, as this money does not belong to us; it belongs to our children. Such reserves are needed to maintain stability and independence for our country. Profits from such sales won’t be spent on modernisation.
Naturally, we welcome foreigners investing their money with us, either buying an enterprise or a part share. Some are interested in the Worsted Integrated Works and are negotiating with us now. There’s nothing untoward. Under certain conditions, they’re committing to selling half of all manufactures on their own market.
Agriculture received attention a while back and has been improved accordingly. It should be able to look after itself for a couple of years. We’re now concentrating on industry! There are very serious projects, with BelAZ building a new plant at a cost of 650 million. Its 450 tonne dump truck is crucial for the modern market, as no one wants 40-tonne or, even, 250-tonne machines these days. Five hundred tonne capacities are needed, so we’re building the plant to give BelAZ a new lease of life.
Another plant we’re building is to make complex fertilisers, earning vital foreign currency through export; such products are in great demand worldwide.
If someone wants to invest $100m into our economy, they can meet the President and sign a contract but terms will differ depending on the sector, the purpose of the investments and the creation of jobs. We used to make employment a mainstay of investment terms but it’s less important now, as there are barely enough job seekers to occupy the places on offer. Most important is modernisation, even if this means employing fewer people.
There have been occasions when we’ve been offered a decent sum to buy an enterprise — such as $13bn. However, investors might be seeking one of our key companies. We have to look at the advantages of each investment. If you want to buy our Belarusian Potash Company, it costs $30-32bn; don’t bother offering less. Some have complained of my refusal to accept less but I won’t sell our nation’s assets for a song. We should ensure that investments are performed honestly and transparently, so that people trust us!
In a fit of anger, I once refused to raise salaries for civil servants, although they are unacceptably low in relation to those paid to managers of industrial enterprises. Of course, hard work should be rewarded. I have to sometimes ‘tighten the screws’ but, of course, I want people to receive decent salaries. If we reduce the number of officials, we could pay them more, saving perhaps $100m annually by reducing the number of staff. We’ve already cut the number of civil servants by 25 percent but I don’t think we can lose any more, or the ministries won’t be able to function properly. What ministry can run with 20 employees? We’d be better off closing the ministry!
The PM has shown me comparative tables of government spending. Austria spends ten times as much as we do, although it has a market economy, which requires less control. Slovenia and Bulgaria spend 2-3 times more, despite being smaller. Nevertheless, we will reduce our number of civil servants so that we can raise their salaries.
We started modernising the air defence system a long time ago, before the plans to deploy a missile defence system. If we had the money and if the Russians could make more of these weapons, we would have bought them earlier, but we had to do it slowly because we lacked money. We’re discarding the old weaponry, which are still in good shape, the demand for it is high, we sell it, and buy new weapons, add something. However, the decisions dealing with the modernisation have been made even before this scandalous European missile defence system which they try to place close to our borders.
The Slavianski Bazaar
We’ve worked hard on the Slavianski Bazaar and I’d now like to see something new. On BT, ONT, we keep hearing the same artists with the same piped backing tracks. I think we can do better, working with Russia and Ukraine but taking most of the responsibility on ourselves. I’ll ask the new Minister of Culture to work on this, to give us something new.
Ukraine and Russia have some great music which we don’t show, so we need to act. This year, we should try to shake up the Slavianski Bazaar, to provide some novelty. We shouldn’t let it stagnate. There was some talk of allowing various cities to host the Slavianski Bazaar but I was against this, and certainly didn’t want the festival to leave the country. It’s my duty to protect and nurture it, which I’ll continue to do while I’m President!