Belarus’ path: patriotism, intellect, progress

On May 8th, Alexander Lukashenko, the President of the Republic of Belarus, delivers State of the Nation Address to the Belarusian people and the National Assembly at the House of Representatives

Honourable deputies, members of the Council of the Republic and guests! Dear compatriots!

Last year, we all had the opportunity to see how rapidly the world around us is changing.

The huge Arab Region has broken into chaos — including countries considered to be bulwarks of stability.

Over the last year, the European Union has been on the brink of financial collapse: countries traditionally considered as affluent have suddenly found themselves one step away from failure.

Greece has been succoured by the whole world, with a hundred billion Euros thrown at its rescue. However, this has not been enough. After Greece, this fever attacked Spain, Ireland and Portugal. Even Italy, with one of the largest economies in Europe, found itself on the edge of disaster.

The United Kingdom — the oldest European democracy — was shocked by a chain of unbridled riots which verged on street fighting. The same situation was evident in the United States — another traditional bulwark of stability.

Moreover, villainous acts of terrorism and extreme nationalism occurred in countries which are usually thought of as boasting the ideals of peace (Norway and France). It’s hardly thinkable that almost 80 people are dead at the hands of a man who seemed to be right-minded but was, in fact, a coldblooded murderer.

We are also affected by this kind of disaster. We can avoid neither economic problems nor others similar to those seen in Europe.

This indicates that the world is very narrow place, with countries being interdependent.

Were these events one-offs or do they have objective reasons?

Hardly anyone expected these events but today’s world is changing faster than ever: faster than the twentieth century.
The winners are those who are ahead of their time or, at least, who move with the times. Let this be an example to all of us.
Momentously, Belarus has entered its third decade of independence. I speak of this not to underline its ‘jubilee’, which is of little importance, but to note that the first new generation of Belarusians born and raised in the sovereign state has reached adulthood. Their Homeland is the Republic of Belarus; their future is the future of this country.

This new generation is living in a new age, full of fundamental change and threats, which bring anxiety. Our common task — as representatives of power in modern Belarus — is to do all we can to turn these challenges into opportunities and success for the country.

Wealth is not a goal in itself. Rather, I’m convinced that the driving force of progress is patriotism. The way forward is impossible without a genuine love for our Homeland, the land of our ancestors. Patriotism is not manifested in words and slogans, but in our life philosophy and in our daily labours. It is manifested in the fact that we live not only for ourselves but for our Homeland.

There may be many changes around us but this truth remains eternal. Patriotism was, is and shall remain the eternal principle of our national identity. It is an eternal value which binds generations.

Our central principles and our way remain unchanged.

However, Belarus will not remain the same for ever, as times change and we must adapt. We must not fall behind! We need to see a powerful and rapid breakthrough in all spheres. Above all, the economy is at the foundation of such success.
‘A new economy for a new generation’ should be our key slogan for our time. Last year, with oil and gas prices at an all-time high for our country, our economy endured. We began 2012 well and, in the first quarter, saw a positive balance in foreign trade. The inflow of currency was $1.3bn more than our outflow, while gold and foreign exchange reserves and exports rose and inflation slowed. People’s incomes are gradually increasing, while unemployment stands at almost zero.

Even foreign experts who bear no love for Belarus admit that we have built a successful anti-crisis policy. We can say confidently that we are enduring this difficult period in the history of our country with dignity. Being honest with ourselves, we can say that the past year saw many economic problems. However, we’re eliminating these without delay. We should use the example of those European countries which hid their heads in the sand and postponed making essential decisions as our warning.

The main lesson we should learn is that we need to live within our means. We cannot spend more than we earn. If we have money we can spend it; if not, we must earn it. To print blank money or live in debt is a dead end.

In order to enter a new phase in our economic activity in coming days, we need to focus on several fundamentals.
The first area is modernisation of the economy.

We have reached our limit of production possibilities via traditional means, with business rivals and customers breathing down the neck of our producers.

The well-being of people is growing, leading to more demand for high quality products and diverse services. Yesterday, low prices won the day; now, they are not enough.

The Customs Union and the Single Economic Space have created conditions of powerful competition — including within our own market. With the upcoming accession of Russia, Kazakhstan and Belarus to the World Trade Organisation, we will be obliged to compete not only with our partners in the SES.

Our manufacturers need to become economically competitive, with the highest standards of consumption.
This requires effective economic instruments and incentives, as well as competent administrative action.

The essence of our economic policy comprises the creation of new highly-productive jobs at newly established enterprises and at existing firms, with the promotion of self-employment, entrepreneurship and initiative. This will raise the responsibility of each of us, working for ourselves, our family and our country.

Before we can achieve this, we must:
1) orient business towards local raw materials;
2) promote import substitution;
3) focus on employment in small and medium-sized cities;
4) be export-oriented;
5) ensure high profitability and productivity, in order to raise wages.

In Belarus, we should and must have more such projects. There are plenty of examples for us to follow.
Eco-friendly requirements are playing a more significant role on the international market. Soon, the day will come when goods will only gain admission to self-respecting markets when they have an ‘eco’ certificate of production. Accordingly, we need to implement a ‘green economy’.

Modernising the economy is not only a goal for the public sector. We must involve all national businesses and as many foreign investors as possible.

Government, the entire ‘vertical’ of executive power, and business leaders must radically change their way of thinking. Modernisation does not mean a generous flow of public funding, given for the thoughtless purchase of equipment or construction of factories whose products are useless.

If you have an idea, find an investor for its realisation. Persuade them and create the necessary conditions. Moreover, investments should be direct, rather than a disguised form of credit.

I charge each member of the Government, I emphasise, each member of the Government, and the chairmen of regional executive committees and of Minsk City Executive Committee to take personal responsibility for the implementation of various projects where direct investments are encouraged.

These should be projects which fundamentally change the face of production of our country. When the chief executive of a ministry or of a region leads a specific project, he’ll better sympathise with the problems facing investors.
Yes, financial support of strategically significant projects will continue but there will be no funding given ‘indiscriminately’! There has been no such distribution.

Public-private partnerships are much discussed, as joint and responsible liaisons create a rich and prosperous country.
The current phase of modernisation in the country must ensure the liberation of private initiative and offer a real incentive to private investment: foreign and domestic.

From here, the second area, of attracting direct investment, will result. We talk about this a lot but see no significant results. It seems that investors exist for individual projects but, in the end, it’s a drop in the ocean.

We can blame nobody but ourselves. Our country is a place where investors are keen to come, being attracted by our stability, honesty, reliability and low levels of corruption. However, they face a wall of bureaucracy and indifference at executive committees and ministries, which quashes any desire to invest. Foreign businessmen cannot get an appointment with a manager to discuss their investment proposal. They go from office to office, spending months seeking approvals and permits, and are obliged to seek loop-holes, until they address the President, trying to reach out and implement their investment project.

Even more difficult are cases where our domestic entrepreneurs want to invest. They cannot get anywhere at all. If only we gave them the opportunity to invest in their own country, there would be fewer cases of concealment of income and capital flight.

Members of Government, chairmen of executive committees and all leaders must radically change their style and methods of working with investors: foreign and Belarusian.

Accordingly, I charge the Government and the Administration of the President to consult once again with the private sector: not only with the ‘big sharks of business’ but with medium-sized and small-sized entrepreneurs. They must contact essential investors working in our country to find out what they need, and what is lacking, to discover what we have missed.
Belarus should become an attractive country for investment for all purposes.

The imminent adoption of the Law On Investments is an important step in this direction. I ask all deputies to consider this document carefully. The investment environment in Belarus should be among the best in the world, guaranteeing bona fide investors absolutely. The law should contain rules of direct action, clear and understandable to everyone, so that there will be no need to write instructions or adopt Governmental decisions for every rule of this law.

It is important to create such conditions for investors, so that it will be advantageous for them to keep their profits in our country and not to export them.

Lately, there has been much talk of the practicality of amnesty of funds. If this subject is really of interest and will produce considerable economic effect, we must examine it carefully. In taking this step, we should clearly regulate the conditions, objects and subjects of this amnesty, to ensure full protection of state interests. I look forward to your suggestions.
Reform of ownership relations is a prerequisite of foreign direct investment.

Concerning this subject, our country has unique advantages. We know for sure how not to conduct privatisation, having seen the consequences of voucher experiments and shares-for-loans auctions.

Privatisation is not always to the benefit of an enterprise, as not all investors aim to develop a business or offer the best technology. Public ownership is also not a guarantee of success.

The world has many examples of huge errors being made, by state and private enterprises, in seeking to realise major capital-intensive plans. Unfortunately, we too have such examples.

Enhanced efficiency of state assets, including via the attraction of investors, is to be carried out consistently, following the body of the law. There won’t be any total or large-scale sales!

The world community realises that privatisation should not be conducted en-masse. It should be transparent, understandable and focused.

This is the normal process when any enterprise, including state owned, is bought or sold. In Belarus, we have refused to create a list of sites for definite sale. This is not because we want to sell under-the-counter. That’s not our reason at all! We have refrained from advance publication of lists of enterprises to be privatised to avoid the humiliation of their workers. People are sensitive on this point, as I know. I have spoken of it repeatedly.

I am directly asked: ‘So, Mr. President don’t you need us anymore? Have you decided to sell us?’ We need people! We’ve said that any enterprise may become privatised; it’s simply a question of price and the implementation of conditions by investors. If you’re not satisfied with these terms, may the Lord bless you and follow you on your way.

Recently, I read in the media that a potential investor in Russia, negotiating on the corporatisation of Minsk Automobile Works, said that Belarus was being greedy. If you are not satisfied with the price, go away! We’ll continue as we are, engaging in competition. Today, MAZ is a successful enterprise selling its products perfectly well, so we’re in no hurry to privatise it.

We are ready, as I repeat again, to privatise even Belaruskali — where profitability is 70 to 100 percent. It’s just a question of price. We have designated the price at not $30bn but $32bn. If someone wishes to buy, they are welcome. There is no buyer as yet, so there’s nothing to argue about. The enterprise is working and people are being paid. We sell potash fertilisers better than any other company in the world.

That’s why we gave up on lists — certainly not to perform any underhand sales, dividing an enterprise for shady privatisation. Lord bless you. I’ve been reproached for this for decades: for shady deals. Belarus has never had such privatisation: none exists and never will! Even if I leave my post as President, the people of Belarus will never accept this and will never allow those in state office to conduct such privatisation. Any President or Government trying to do so would be swept away in a single day. Be calm and collected. Everybody must know and understand such sales!

In our country, as I’ve already said, any enterprise can be privatised — under certain well-known conditions. Anyone who wishes to buy something from the state should pay a fair price. Moreover, all employees of a privatised enterprise will be protected. Privatisation should bring greater success for the enterprise. If you’re satisfied with these conditions, you’re welcome. Those who hope to line their pockets from Belarusian privatisation are wasting their time. The decision will be taken under calm conditions, not under pressure of economic factors or international organisations. Moreover, the principal factor in making such decisions will be the ensuring of ordinary workers’ interests: jobs, salaries and wage supplements must be retained.

I don’t want to be deliberately obscure but will give you a certain example of one successful enterprise. I’ve been told that, the ‘current management’ of Keramin was trying to seize this company through relatives and other nominees. The problem was resolved within a single day: now, the managers who were involved in these activities, and their relatives, are no longer employed there. Every enterprise will face the same action! You can criticise me for this if you wish but such matters will be suppressed in the blink of an eye! Privatisation must be transparent!

The Government is to sell 25 percent of shares in the Sparkling Wines Plant but I’m hearing discontented remarks from those who are wealthy, saying: ‘They’re only selling each person 999 shares… Why bother?’ I say: don’t bother. We aren’t organising this for you but for those individuals who want to buy shares. If you wish to buy then do, if you don’t wish to buy, then don’t.

I don’t think that there is landslide demand for these shares, which is no problem, as we don’t need that. Don’t worry. The factory is operating; it’s a good factory, with demand for its products domestically. We’ll always be able to find an honest investor and, while we wait, we’ll provide support ourselves. We won’t abandon this enterprise.

It is not the worst company that we’ve launched via IPO — a popular auction. We chose a good enterprise in order to see how it would work and gain experience. There were ten businessmen queuing to buy so why didn’t we sell? They only offered a trifling sum, so we refused. No! It will not be like this! We’ll sell at the price defined by the market. If we do… We decided to leave 75 percent for ourselves, which I don’t know whether was the right or wrong decision — but is transparent and honest.

Everybody sees the information transmitted via the media, so Heaven forbid someone in this process takes the wrong path and behaves dishonestly: you know what will happen next. This is my response to everyone abroad and within the country criticising me for privatisation. They don’t understand the Belarusian method of privatisation. It is honest and candid without lobbying: at a certain price and under certain terms. If you’re happy, then come and discuss matters.

If you’d like me to, I can outline the process: in order to privatise an enterprise, firstly, employees should be in agreement. The management can then apply to the local authorities. They must be in agreement, since they are responsible for local employment and economic success. They’ll take the decision one way or the other. After that, the matter goes to the corresponding governmental department or, if it is of departmental affiliation, a minister. Only then will the Government, having deliberated all the pros and cons, submit the proposal to the President for signature. Anything concerning community property will be decided by regional executive boards.

Is there anything odd? You might say that there is a lot of bureaucracy in privatisation and I’d agree. I’ve already spoken about this but the matter is very serious: we are trying to privatise enterprises which we didn’t create. They are the property of the people, so we must be thorough and careful in our privatisation. The example of our neighbours is illustrative. If we are dishonest in some aspect regarding something created by the nation, there will be a suitable response towards the authorities, and we’ll have to forget about stability and peace in the country.

This is why the matter of property is like that of land ownership after 1917 (remember, when they started to seize land, civil war broke out and people began to slaughter each other for the smallest piece of land). In this case, the cost is immeasurably higher.

The third area in our plan to update the economy concerns raising individual people’s income. The most important task today is to restrain the growth of prices and restore the pre-depression level of the population’s income.

We cannot give everything to the market. Reasonable control over prices must be in place in Belarus. The answer to the second question constantly asked is that there will be no price chaos.

We’re steadily heading towards more free market pricing. However, we need a happy medium. Totally rigorous regulation leads to a deficit and the export of goods from the country. A ‘free market’ leads to speculation, which affects the common man greatly.

We’ll keep the growth of consumer prices to within 20 percent this year. No country in the world abandons price adjustment completely.

You might have noticed that, in thriving Germany, with its highly advanced market economy, the Government took the decision to create ‘petrol’ police — as they called them. They were tasked with controlling petrol prices, with owners of service stations having to report each instance of increasing or decreasing their prices (plus from where and at what price they had purchased fuel). Here you have the market! As they thought it was necessary, the democratic Government of Germany, with its highly advanced market economy, took these steps without consulting Russia, the USA or us. Yet we fear! We are still trembling, saying: ‘What will they think of us?’ I repeat once again that we should ‘tremble’ only at what people will think about us.

World practice shows that actual competition ends price chaos immediately. We won’t tolerate monopolisation of the domestic consumer market by large trade networks or price collusion in any form. Small private and state shops should develop alongside hyper- and supermarkets.

Furthermore, large trade networks should bear a social burden, offering discount cards for pensioners, large families and the disabled. It should be an obligatory condition of their presence in our domestic market.
I charge the governors to take all these matters under their personal control, especially the Chairman of Minsk City Executive Committee.

Now, about wages…

Our approach is set: the task of the state is to create conditions for those who can work and provide assistance to the weak. Everything else will be done by people themselves.

We took an important decision, which was sought by businessmen and the majority of citizens: we allowed freedom of wages and allowed a voluntary unified wage rate scale for enterprises of all ownership patterns.
However, it’s vital to know how to use this freedom.

The main economic principle is that the growth rate of wages must be linked to labour efficiency. This law was not abrogated! It is not me who invented it!

More simply, wages must be earned.

However, some managers, I will repeat, understood the new situation in a very simple way: they thought they could do nothing and were relieved of any responsibility for raising salaries.

Those who think so, delude themselves. The task of a manager remains the same: secure raised labour efficiency, which should lead to growth of staff wages.

At the Fourth All-Belarusian People’s Assembly, we promised people that we’d see an approximate mid-European level of wages by the end of the 5-year period, taking into consideration our social package, public utilities and so on. All needs to be calculated, so that we can come closer to the European level. It’s the key task of the Government, and of every manager and of the executive chain of command! To begin with, we need to wait until the year’s end, to see who is earning $500 and who is not. We’ll see what labour efficiency is evident and why some people may not be earning appropriate wages.

Yes, we’ll still provide assistance to pensioners, public sector workers, large families and the disabled by means of a steady increase in pensions and allowances.

As for those in the production sector, everyone will be paid according to their labour: you’ll receive as much as you earn. Moreover, nobody will blame me for the fact that civil servants are excessively ‘spoiled’; they shouldn’t be paid more than somebody else.

The fourth area is the effectiveness of the management of the economy.

We are tasked with the establishment of holdings and large production associations in industry, to initiate the growth of capitalisation of public assets. These are, in substance, state corporations. The same processes occur in agriculture. This year we’ll finish enlarging agricultural enterprises and forming effective agricultural enterprises and holdings where possible.

We should see real results from organisational reform this year. We need to drastically reduce non-manufacturing costs and overheads and at least halve administrative staff in holdings and industry.

I charge the Government with elaborating a strategy of development and incorporation into the global economy, alongside co-operation with the principal partners of each state corporation.

First and foremost, those associations lacking enough internal resources for development, and those with highly competitive end markets need attention.

Our plans should be co-ordinated with the development strategies of Russia and Kazakhstan — and surpass them.
This year, we’ve been working on equal terms with our partners in the Customs Union, roughly speaking; the term does not mean what it used to one or two years ago.

The political authorities of the country have resolved their main task: the halving of the price of our principal energy source, which is imported: natural gas. We have also settled matters of co-operation with the Russian Federation in the oil sector.
Negotiated agreements for energy prices are not ‘charity’ or subsidies as some try to present. They are basic terms of functioning of the Single Economic Space.

Where differences in prices occur, as happened recently, there is no free competition. Our price was five times higher than that in Kazakhstan and Russia. Different standards and requirements for production quality cannot lead to a common market. This is the plain truth!

This is why we do not ask for low prices for our enterprises in the Single Economic Space of Belarus, Kazakhstan and Russia.

A common price level is essential, with the same principles of formation for everyone: Belarusian, Russian and Kazakh companies.

The fifth crucial area is the stability of the Belarusian Rouble.

The rate of our currency is reinforcing steadily and softly. As I’m told, this year, the public sold $1.5bn through exchange offices (half a billion more than the amount bought). Daily growth of deposits is noted in all currencies.

These examples are evidence of stabilisation on the currency market, as well as trust in the national currency and banking system. This trust has grounds.

Each Rouble in circulation countrywide is 150 percent covered by foreign exchange reserves, at the current market exchange rate.

The National Bank even has to fight sharp reinforcement of the exchange rate in order to prevent aggravation of foreign trade conditions. We fully realise the risks of fast reinforcement of the Rouble, and speculative attacks and dishonest playing with the exchange rate could happen again. Accordingly, we’re acting carefully. Our main goal is to provide peace, stability and reliability.

We should prevent a sudden fluctuation of the exchange rate. We still firmly adhere to the following principle: the freedom of formation of the exchange rate as a result of transparent exchange trading.

The sixth area concerns exports, as these are directly connected with the stability of the exchange rate. This is what brings currency into the country.

The task of the Government and local authorities for the current year is to secure a positive foreign trade balance in goods and services of more than one billion Dollars. Furthermore, no less than 65 percent of manufactured products should be exported. All the conditions are created for this with the emergence of the Single Economic Space. However, it is impossible to limit ourselves to trade within the SES. We need worldwide sales.

One should approach new markets not separately, but as a single unit. First comes research into the business environment under the aegis of the Ministry for Foreign Affairs and Ministry of Trade. Then, a delegation of industrial manufacturers and businessmen needs to be sent, with the assistance of the Government. This leads to the organisation of stable work via trading houses and our own distribution system.

Manufacturers should not go alone; everything should be co-ordinated centrally. In 2012, the use of such a scheme will see us approach the vast markets of Australia, New Zealand, Brazil, South Africa, Indonesia, Vietnam and other countries of South-East Asia.

It is important to go where we are needed, where people are ready to work with us on principles of friendship and mutual respect. Our country has something to offer partners.

The seventh area is import substitution and saving.

We’ve scrutinised the strategy of import substitution at an educational seminar for executive staff. Following six months of study, the Government will report on how plans are being implemented.

However, we cannot forget that 3/4 of our imports are intermediate products: raw materials, fabrics and energy.
In this case, I will highlight three key points:
1) efficient use of materials and energy;
2) set standards;
3) technological discipline.

In 2012 we should reduce:
consumption of materials used in production by at least 2 percent; and
energy intensity of GDP by 3 percent, to save almost 1.5m tonnes of oil equivalent.

The cost is a billion Dollars!

We should understand that it is impossible to achieve goals only via administrative pressure. Modern incentive mechanisms for the saving of resources are necessary.

In world practice, there is a well-established principle of decreasing taxation by the amount of resources saved as a result energy and resource saving. Consequently, the economic effect of saving is fully retained by the manufacturer.
The Government should look at world practice and submit solid proposals.
The eighth area of development regards science and innovations.

Much has been spoken on this topic — especially urgent for Belarus, which is focusing on a knowledge-based economy.
The world’s leading countries rely not on the sale of raw materials or their volume of territory, but on science and high technology.

The main value of leading world corporations is not their large factories or production teams, but their expertise and technology of production: knowledge.

New knowledge accounts for up to 85 percent of GDP growth in developed countries. We won’t see a true economic upturn without intellectual and innovation components but must remember that inventing something is only half the job. It’s just as important to introduce an invention to the market and sell it. This takes the same talent — or even more — as to invent something.

If a private entrepreneur generates a profit, while the state has achieved nothing for years, it’s clearly the right move. There is only one condition: production should remain here in Belarus, as should the profit.

At the same time, we need to reform legislation regarding intellectual property, bringing it into compliance with the highest international standards — including copyright laws. Furthermore, mechanisms are needed to encourage scientists and businessmen to take risks, implementing bold new ideas.

The focus should be on the younger generation.

Our leading youth organisation — the Belarusian Republican Youth Union — has launched a wonderful programme: 100 Ideas for Belarus. It allows them to find new ideas and talents and to help these come to fruition. It’s an important area, so I’ve charged the Government, the National Academy of Sciences and the State Committee on Science and Technology to provide assistance to make the 100 Ideas for Belarus programme permanent, rather than a one-off event. I’ll soon meet those taking part, as I promised at a meeting of the Belarusian Republican Youth Union.

In the near future, we’ll consider the development of science in general and its contribution to the economy, as well as suggestions to improve the organisation of the scientific sphere. I‘ll point out again that I’m very dissatisfied with progress in the scientific sphere — primarily, with the Academy of Science! I’ve already spoken about this.

When I think more about these issues, I realise that we may be looking at the problem from the wrong direction. Our manufacturers are sitting and waiting for scientists from the Academy of Sciences to bring them new ideas for a technological breakthrough. However, new ideas and technologies are based not on the fantasy of scientists, but on the logic of production development.

This is why manufacturers should be the main driving force of innovation. It is they who should set the tasks for scientists from the Academy, and branch ministers should be in charge of these processes. I stress again that the Academy of Science shouldn’t be dozing, as it has been. The whole system of science and innovation management countrywide needs revision. The Government and the Academy of Science have been charged with corresponding assignments and I await real suggestions from them in the near future.

The ninth area is the agro-industrial complex.

This is the most important priority for us, with a great amount of money invested in rural areas over recent years. Now, we must wait to see agrarians’ results.

In 2012, the country should crop 10m tonnes of corn, God willing! Decisions have been taken, with the necessary means invested. We should see a return in the form of economic improvement of the agro-industrial complex and increased exports, alongside a rise in the salaries of farmworkers.

Some time ago, we launched the construction of agro-towns countrywide. Time has proven the wisdom of the decision. They were built across every district without exception, changing the face of our villages. There are more than 1,500 agro-towns in all, with dozens of thousands of families now living in comfortable houses. Social infrastructure has improved the quality of life of farmworkers, while young people have begun working on the land. Our villages look different now.

You probably know about my trips and flights all over the country over the past year. If you saw our country from the air, you’d see a new Belarus. The implementation of my strict targets for the improvement of farming — imposing order in villages, on farms and on every plot of land — are finally beginning to be realised.

In many places in the Grodno, Brest and Gomel regions, you might think, mistakenly, that you were in Western Europe, where land is privately owned. These are our fields and our villages. Melioration has changed our land as unseen in years of independence and in the times of the USSR. We should do so by as much again. This aim is unchangeable on my side.
We have set an ambitious task, as I explained not long ago. Why shouldn’t we see dairy processing at every farm, funded locally? This isn’t just a whim. We’re seeing a chasm in development. Agro-towns are now built but production is lagging behind, as we can see. I always push farm managers on my trips around the country to work faster, especially opening new dairy farms and reconstructing old ones. Production should keep pace with the growth of agro-towns and villages outside of agro-towns shouldn’t be forgotten.

Speaking of agriculture, you should understand, you should see, what is going on in the world. Hunger remains a global problem for mankind. According to official data, more than one billion people lack enough food. But who has counted them?
The situation worsens each year. According to estimates by the Food and Agriculture Organisation of the United Nations, the shortage of food will increase five-fold by 2030. It’s not far off!

World markets are responsive to this situation, with food prices rising fast. The recent food price boom wasn’t someone’s ‘evil will’ but a strict requirement of the world market. No country can shut itself off behind an ‘iron curtain’.

On the other hand, high food prices worldwide offer our farmers and our state an opportunity. Our agricultural complex should show brilliant results in the near future; the external market environment is favourable and a lot of money has been invested in our villages. Many people say that our food prices are growing; my response is that, if you want to feed the whole world with free Belarusian food, which is the tastiest and of the highest quality, we can keep prices at the same level. You see what has been happening. Our prices are half that of our neighbours.

We can’t close our borders, as the Single Economic Space exists now. We can’t even close the border with Ukraine as, if we do so, others will close their borders to us. There is free movement of goods, which is where our cheap products go. They’re sold for high prices elsewhere but it is not just our Belarusians who are making money from this. Unfortunately, we must follow world trends, and the balance of prices .Our prices will never be higher than those in Russia or Ukraine. Never!

However, they should be close to those prices, to make it unprofitable for certain people to buy up goods from our shops for export. Our cheap and high-quality Belarusian food can be sold at a profit abroad, so we should be making this profit.
The truth is that food and non-food goods should be priced affordably to Belarusians. This means that our $500 salary is a problem: a serious problem which should be solved. Salaries need to be raised. It’s very important. Then, people will cease to worry, knowing that, if prices rise, salaries will rise also.

One more important area of development for the new economy is housing construction.

In 2012, the efficiency of the state housing policy should be raised cardinally. Almost 1.5 times more accommodation has been built in Belarus over five years then was constructed in five years in Soviet times (on average). A million people have improved their living conditions over the last five years. Our country is an absolute leader among CIS states regarding volumes of housing construction per thousand residents.

However, the queue is ever growing, with the highest increase observed in Minsk. The building of a flat with state support has become a good way of gaining a good return on capital — at other people’s cost. Hundreds of families have two or, even, three flats built on privileged terms in Minsk. The Mayor of Minsk tells me the same thing.

Accordingly, it has been decided that only definite categories of citizens will gain ‘direct Rouble’ support. The state will fulfil its obligations regarding all existing privileged loans (the decree has been already signed) but those applying in future ‘should be given not a fish but fishing tackle’ — as people say.

The principle is simple — everyone should have the chance to improve their housing conditions. However, only those who especially need subsidised housing will receive it (free in many cases). Large families will qualify so, if you want a free flat, give birth to three, four or five children. If you have one or two, you’ll need to look after yourself. We’ll help those who are objectively limited in their incomes, and those who bear enhanced responsibility before society — those serving in the army. Our soldiers put their lives at risk where necessary, without thinking of themselves or their families… it’s our destiny.

Accordingly, we should supply them with housing, so that they can serve without worrying where their children and family will live. We need to do more in this direction. The Government is taking definite measures gradually, according to my instructions. We should have taken such measures to raise the honour of the military — those who wear shoulder boards — at least a little by the end of the year.

Wider possibilities for housing will be created for those who have money and are able to earn it: mortgages, residential construction savings and other instruments.

I’d like to touch on a serious problem, which is our poor attitude towards cultivable soil. We need farms but why build them 10km from a settlement on the most fertile soil? Ten or even twenty hectares have been cut down in the Grodno, Brest and Gomel regions for farms. They then laid asphalt roads to these farms, alongside pipes for water, electricity and natural gas. Of course, this makes each farm twice as expensive and spoils ten hectares of fertile soil.

Industrial construction in villages has doubled in cost and our good leaders have acted with the same ‘daylight robbery’ regarding investments around Minsk. I had to return rights over agricultural lands to the President, taking away the function from governors, as they couldn’t cope. They were starting to harm the country with their work. Today, it’s not possible to take even one hectare of agricultural soil for other purposes without the President’s permission. I warn everyone that this is the most serious crime if it happens without my knowledge. We have prohibited the use of agricultural lands for industrial construction — whether for agricultural purposes or the building of factories or similar. I’m not afraid of this decision hampering our development as we have so much land not in use. There will be enough for all American and European investors.

The state won’t ignore problems of housing construction and will grant privileges such as tax deductions, attractive conditions for commercial lending and free land for individual construction — for those who need them.

Local authorities should create the right conditions for this, with terms for free land lots of no more than three months. We should create a civilised market of lease housing countrywide, with all employment contracts transparent and clear.
I entrust the Government, together with Minsk City Executive Committee and regional executive committees to provide a state lease housing fund, while protecting the rights of long-term leasers via contract.

Dear citizens!

If we can solve problems in these directions, we’ll be able to forget the shortcomings of the last year within 12 months. Our economic strategy is clear. We need only to introduce it enthusiastically, creatively and wisely.
Now, about democracy, freedom and state responsibility.

Belarus is often criticised from abroad for ‘improper’ democracy. Such charges became commonplace long ago. We are blamed for not living democratically and are told that we live badly — that everything is awful in general. Speaking of the conflict with the European Union ambassadors, we observed carefully what happened and chatted to embassy staff. When I read the report, I was surprised and pleased to see that none of the foreign diplomats who left our country had wanted to do so. The main feeling was that this is a wonderful and civilised European country with good people and peaceful streets. You can relax here as you would in Germany and elsewhere.

What am I telling you this? In order to persuade you that, although they criticise us publically, they actually love our country. They appreciate it and say that the level of democracy here in Belarus is the equal of that elsewhere. We know this ourselves from seeing them use tear gas and water cannons to disperse crowds (including women and children). Have we ever done such things in the history of our ‘non-democratic’ Belarus — even though we are still learning democracy from them? No, we haven’t. So, what do they accuse us of? That we lead elections according to the law — to the Constitution? We do not accuse others of this. After the elections in France, I immediately congratulated the President of France, as the French people had made their decision. Why should we interfere? Others should behave in a similar fashion.

Very few people realise the historical way of our Belarusian people; they don’t know our mentality or traditions. Radical liberalisation was declined in the 1990s — not due to Lukashenko’s will but in accordance with clamorous public demand. The Belarusian people preferred a calm entrance into the hard world of market competition, which was new to them.
We decided that state policy should remain steady and calm. Of course, we are for privatisation (I’ve detailed the principles). Of course, we are not against free pricing. However, we wish to retain state control until we are fully ready to address competition. Not only myself but the Belarusian people were not ready for the ‘shock’ of privatisation. We worked on a new policy and laws in this hall together, building a new path of development for our Belarus. Did we make a mistake? No, we didn’t.

We’ve already travelled some way on this path, today boasting a mixed economy. Private firms occupy leading positions in many branches (from trade to programming) and are commercially viable.

The role and functions of the state are ever changing. We don’t need central direct control of everything today. Rather, the main function of the state is to stimulate progress in all spheres, while providing social guarantees to citizens and creating legislation for society. We have been developing our civil society for several years, maintaining social dialogue and providing transparent and open conditions for elections, with full freedom for candidates.

How have these opportunities been used? The last elections, in 2010, showed that they were not used to public benefit. There have been abuses of the country and Government on TV, with violence in the streets, and agitation to terror and outrage. Every Belarusian has been able to see the real face of the opposition and its candidates. It’s difficult to think of better agitation for the benefit of the ruling power.

After the elections of 2010, we intended to extend dialogue with Europe and the USA, developing civil society and dialogue relating to domestic policy, to improve the political system.

However, the West and our ‘fifth column’ made another decision. They not only refused to discuss matters but began to attack our country via pressure and sanctions.

I hope that everybody has now realised that such a path leads nowhere. We’ve lost much time due to this strange European policy but our position remains constant: we’re ready for dialogue.

Of course, we can’t sacrifice our basic principles. Social and state stability is our most vital value. Many countries envy Belarus for its lack of discord, conflict and political instability. We don’t want this and we will not let it happen — by any means.

National stability and unity are our real treasures, which we must preserve to ensure successful economic development and a normal, calm life for our people.

Stability doesn’t mean stagnation. We intend to continue consistently and calmly improving the public and political life of Belarus. We understand clearly that a new generation has appeared: the ‘Internet generation’. It announces itself loudly in many spheres: sports, business and the high-tech field. It differs from that seen previously, being more accustomed to self-reliance than relying upon the state. This generation is more inclined to take risks to master modern innovations rapidly. This new young generation should surely find a place in determining the future face of the country — their Belarus.

In this regard, I’d like to say some words about the role of Parliament. The country needs strong legislative power and a strong Parliament. So, the development of Parliament is vital to the establishment of a democratic Belarus.

The current convocation of Parliament has played an important role in strengthening the state. The wisdom of our deputies and members of the Council of the Republic promotes social stability. Your knowledge and professional competence help create progressive legislation, without which we could not move ahead.

I’d like to take this opportunity to thank you all, dear parliamentarians, for your sincere and fruitful service to your country. We’ll undertake regular parliamentary elections this autumn.

Of course, continuity is important to the country. If some of you return as members of the new Parliament, we’ll create conditions to continue our hard work to improve state legislation.

I guarantee that the forthcoming election campaign will be organised at the highest level and in strict compliance with the law and Constitution of our country.

No step to the left, no step to the right. I say this for ambassadors of foreign states and for that part of society which demands an answer from me today on how the parliamentary elections will be held. All those who are literate, take a copy of the Constitution of our country and of our laws regarding the development of Constitutional electoral norms and read. No step to the left, no step to the right. We won’t change anything on the eve of the forthcoming parliamentary elections!

If you ask me whether I support proportional representation, I will tell you a thousand times no. People should elect deputies using the majority voting system. A deputy should be close to their district. People should know them by face and vote for them in a particular territory. Then, they won’t ‘turn away’ from their duty. If one candidate fails, the next might take their place but who has elected them, when their name wasn’t even on the ballot paper? For example, everyone has seen the 200 candidates listed but none has seen the 201st. What is this system? What are the elections? This contradicts the mentality of the Belarusian nation. I speak against it but nothing can be done. The world is developing in a way that deputies are elected from parties.

Of course, it is desirable to have a choice of parties but show me a single other party which exists in Belarus. Show me. When we began to check the list of candidates, I asked for silence since some might say that Belarus is underdeveloped, as it has no parties. More than half of the people on the list are deadheads. Then they travel Europe and the USA, with an inflated sense of their own importance. Who do they represent? They represent their own interests; they don’t even struggle for power, as they don’t need it. They are thrown a suitcase of money each time through Lithuania and Poland and other states. They divide it up between themselves and throw a meagre $1 to those under them — that’s all. This is their way of doing business.

Do you want to place such people in Parliament? I wouldn’t like to do so. However, no one bans anyone from anything in Belarus. Come forward in a definite district, fight, win and act.

Naturally, this is not my business. Tell me, please, does the system which currently exists in Belarus create problems in society? No. Is it rejected by our society? No. Does our system create any problems for our neighbours? No. Everyone says that we’re peaceful, good and kind, trying to live via our own minds and hands.

If our system hasn’t outlived its usefulness and doesn’t create any problems, why do we need to change it? Let’s improve it calmly and precisely. We should listen to the minority, which does exist in Belarus. It isn’t true that the President blatantly ignores them. I hear every ‘peep’ in every corner of our country, through my heart. However, this doesn’t mean that I should go on TV each time to shout. We hear and analyse but are guided by the needs of the dominating majority of our society. It will always be so! This is my answer to electoral legislation and the forthcoming parliamentary elections. We’re ready to listen to voices from the EU, the USA and Russia but we’ll be guided by our own minds, to the benefit of our residents. We’ll be pleased to take from the EU that which is profitable economically and politically for us but everything should be quiet, calm and noble — in favour of the Belarusian nation.

The new Parliament should become a centre of encouraged law making. There shouldn’t be any automatism during the adoption of laws. Moreover, if necessary, it’s important to overcome outdated approaches, constructively discussing issues with the Government. The quality of legislation should be so high that it can ensure real, long-term stability. We currently have problems with this, and you won’t deny this.

Deputies should be down to Earth, able to relate each aspect of the law to real life and the day to day needs of the people. As already mentioned, change is inevitable in every sphere of state and society, evolving with life.

In this respect, the country needs to further develop its political system. The role of political parties needs to be strengthened to create a civilised party system. We must take this path.

Probably, as party structures gain power, we’ll become mature enough to shift to a mixed electoral system, including that which envisages party-list elections. I hope this will appear in our country. Maybe, fewer people will then point their finger at me, saying that the President is to blame for everything and is responsible for everything. If something catches on fire or explodes or the Belarusian currency fails to satisfy everyone, the President is to blame. In this case, maybe, parties will be responsible for something; they should exist. Not the President, the Government nor Parliament will be able to artificially throw away responsibility.

Belarus doesn’t need revolutions and upheavals, which lead to chaos, breakdown and blood.

We should remember that a true civil society can’t exist without a citizen. Meanwhile, a citizen is a person who is well aware of their rights and obligations. This is a person who feels their own responsibility for themselves and the whole country, for the present and the future.

I think that those who advocate freedom in Belarus most loudly aren’t ready for this freedom themselves.

True democracy is the power of right-minded citizens, who respect laws — rather than those who attack buildings, sympathise with terrorists and call on riot. The problems of society should be discussed within the walls of Parliament rather than on squares and at public meetings. Where meetings are organised, they should be planned properly, as in many western states — which are a stronghold of democracy.

The state can and should give maximum freedom.

Even the great Dostoevsky wrote that freedom is the most unbearable thing for us. This sincere writer was right. In receiving freedom, we suddenly understand that we have shouldered the heaviest burden, as freedom brings responsibility. We should make decisions ourselves and take responsibility for these decisions.

Maybe, the time has come to alter our attitude towards life, ourselves and the state.

Our partners in the West should understand that civil society and democracy aren’t born with the stroke of a pen by presidential decree. These notions grow and are born from the minds of millions of responsible people.
It can’t happen overnight — it takes years. However, Belarus is firmly approaching this goal. It’s senseless to try to urge us on too quickly.

Now, a few words on our information society.

For thousands of years, the Earth was the major wealth of humanity. As soon as the era of capitalism arrived, preference was given to money. However, in the final 25 years of the last century, humanity entered a new age — that of the information society.

The Internet has brought a revolution to various spheres of life — from financial and trade to mass media and entertainments.

For Belarus, the rapid development of the Internet and information and communication technologies opens up brilliant prospects. The intellect of our people — especially the younger generation — has already begun to bring tangible revenue into the country. In future, this branch may and should become one of the key areas in our economy.

Several years ago, we discovered a gap, which we dealt with seriously; over the last two years, we’ve managed to advance significantly in this area.

According to UN data, Belarus has made a true breakthrough in the development of telecommunication infrastructure — shifting from 84th to 48th place in world rankings. Strangely, Belarus is constantly registered as an enemy of the Internet but, in truth, all our restrictive measures are almost ‘copied’ from the American and European approach. We haven’t invented anything new; we simply took from the Europeans and Americans.

Our concerns regarding the Internet are similar to those in the West: hacker attacks, electronic fraud and violation of authors’ rights. Yes, we’ve already seen how ‘they’ tried to explode our country via the Internet.

This succeeded in Arab countries and, partially, in Russia and Kazakhstan. However, all these ‘revolutions through social networks’ were damned to complete failure in Belarus — as we recently witnessed. Moreover, we didn’t block anything. We’ve given a worthy answer to this ‘blasting’ work on the Internet, including using new IT. We’ll continue to act in this way, believing that the Internet should be used for peaceful purposes!

In fact, we view the Internet as an ideal venue for communication: of power and citizens. A system governing public applications to state authorities has been launched via the Internet, allowing prompt response; work in this direction will continue. I won’t mention virtual government and receptions, as you’ve already heard about this and are well aware.

Belarus should occupy first place in terms of access to electronic services and their diversity.

Breathing new life into High-Tech Park.

Undoubtedly, its activity has given real impetus to the development of IT, counteracting the brain-drain and ensuring employment for young programmers.

The Park is now registering companies wishing to receive privileges, which is good but is not enough. New tasks should be set for the Park: primarily, the attraction of venture investors and the latest technologies — as needed by our economy.
I charge the Government and the Presidential Administration to prepare and submit a draft for a corresponding decree.
Today, the time has come to take a new step: we need to move from the usual offshore programming to true high technologies, and not only in the IT sphere. This relates to the High-Tech Park and to all other players on this market.

Competition should exist.

Now, about law enforcement and judicial systems.

We’ve launched serious improvements to the work of our law enforcement system and to our security overall.
Security agencies should act within strictly legal limits regarding ordinary citizens, entrepreneurs and state officials. There shouldn’t be any outrageous situations, any ‘raids’, any ‘executions’, or settling of personal scores; there won’t be any of these things. All these distorted phenomena will be rooted out mercilessly.

There’s no need to hide behind the struggle against corruption. Under this veil, bold and independent managers could be ‘punished’ for failing to bow to others. We could see the settling of personal scores and ‘protection rackets’. We might witness the paid ‘execution’ of one businessman by another.

One of the most vital tasks of the recently established Investigative Committee is to counteract all these elements. If a manager is being deliberately persecuted at someone’s order, you shouldn’t remain uninvolved! Take such people under protection! I say this to the heads of the Investigative Committee and to investigators.

We’ve already assured ourselves that its establishment is the best way forward. It is the first but not the last decision regarding the gradual and consecutive reform of our law enforcement system.

It’s no secret that the Interior Ministry is next in line. Over the next year — or even earlier — we’ll completely reform our Interior Ministry, carefully and with consideration, without offending anyone.

We need to humanise criminal legislation and the law governing economic crimes.
Imprisonment isn’t always the adequate measure of punishment and re-education.

The General Prosecutor’s Office and the Investigative Committee need to thoroughly analyse the effectiveness of custodial placement, which is the dominant punishment at present. Why should we separate energetic and capable people from the world for breaking the law when they haven’t endangered or injured citizens? Give them bail or place them under parole but don’t throw them onto a plank bed. Only the courts deliver a verdict but we should make sure that people can’t run away, requiring us to spend a great deal of money searching for them — as often happens.

I charge the Government to promptly prepare a draft law on amnesty — to coincide with our major state holiday of Independence Day. I’ve already spoken about this: dignified people suffer in prison while we release scoundrels (under pressure or otherwise)…

It’s necessary to overcome the accusatory emphasis of our law enforcement officers.

A positive trend has been recently observed in the judicial system, so we should reinforce and develop this further. We shouldn’t forget that independence and adherence to the principles of the judicial system directly influence the economy. The court shouldn’t stand aside but be always guided solely by the law and deliver a fair decision.

We should move towards models already being used elsewhere in the world: trial jury and administrative courts. The latter are especially important for citizens, since they can deliver a quick verdict, saving years of searching for the truth in state bodies. Such courts are designed to solve disputes between citizens and state officials. As world experience shows, they help break the notion of ‘one hand washing the other’ where state officials are concerned, protecting the rights of ordinary people.

We have failed to yet achieve a decision regarding control activity. The number of checks is too great and they remain of a punitive rather than of a warning character. The most offensive thing is that we often fail to check those whom we should and do go not go where we should.
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