Main results of 2012: Belarusians anxiously await the end of the period of ‘unstable stability’

Regional Summary. Results of 2012

In 2012, the government managed to normalize the social strain in the regions. Compared to 2011, outbursts of mass social unrest were local and short-term last year. In the meantime, at 2012 year-end some regions did not comply with the forecast for GDP growth. Generally, the economic situation in the regions remains rather unstable.

The trends of the expiring year are younger age of nomenclature executive staff, especially in Minsk Region; a growing number of unprofitable enterprises; the last political campaign for election to the House of Representatives showed intensification of politicization in the society – increasing non-confidence both in the current government and the opposition; a public demand for a “third power/neither the government nor the opposition” on the part of the society is still quite high.

Major regional events in 2012 that had an impact on the nationwide agenda:

1. Mass walkout of workers (more than two hundred people) at the company “Granit” (Brest Region) from the official trade union organization. This event was the last mass discontentment campaign of workers and finished a series of spontaneous strikes that began in the country in 2011. The authorities managed to reduce the social unrest in the regions, partly with the help of local concessions, partly by punitive measures (dismissal of rebellion leaders).

2. Construction of a Belarusian-Chinese industrial park in Smolevichi district of Minsk Region. A framework agreement on financing the first phase of the industrial park includes investments of about $ 1.5 billion. The total investment amounts to $ 5.6 billion. The construction of the industrial park will last for 30 years. The political decision to build the park was taken by the President. Regardless of the Belarusian-Chinese project’s success, it has had and will have an impact on the political and economic situation in the country, as an indicator of the effectiveness of investments by agreement with the “chief executive”, as an example of civic solidarity, as a marker of increased opportunities for foreign policy political moves for the Belarusian authorities.

3. Beginning of the active construction phase of the Belarusian Nuclear Power Plant in Ostrovets, Grodno Region. Currently, an excavation pit for Power Unit No. 1 is being developed at the site. Despite the fact that the work is carried out without any project documentation, it is assumed that the Belarusian Nuclear Power Plant will be completed by 2017-2018.

4. Vitebsk Region with “Naftan” in Novopolotsk becomes an economic region number one. This fact suggests there is no strategy for economic development of the regions. The trade balance is built up by the re-export of Russian oil products produced at two oil refinery plants.

5. The most serious regional corruption scandal – the arrest of Victor Pilipets, the Chairman of Gomel Municipal Executive Committee and Igor Prokopenko, the Presidential Advisor, the Chief Inspector for Gomel Region. The arrests took place during the active phase of the election campaign to the Parliament and were aimed to increase the dependence of local state executives in the regions. Igor Prokopenko was arrested even regardless the status of a parliamentary candidate.

We also have to note the poor organization of Dozhinki-2012 Festival, landmark for the official authorities, in Mogilev Region. On the one hand, it shows a lack of available funds, both at the regional level and at Minsk level. On the other hand, a low level of interest on the part of governing establishment was demonstrated in holding the event with the participation of the President. The increase of inactivity and avoiding the responsibility of decision-making among the governing establishment will only grow. Frequent Lukashenko’s trips to the regions, which he has begun recently, reflect the tendency to return to full manual control of the country as it was in the mid 90’s.

Minsk Region

There were a number of personnel reshuffles in the executive branch of Minsk Region in 2012. These changes less affected “vertical” executives of the district level, only two out of 23 chairmen of executive committees were replaced: Ilya Shatko was appointed as the chairman of Myadel District Executive Committee and Gennady Solovey was appointed as the chairman of Kletsk District Executive Committee. At the same time two (out of five) deputy chairmen of the Regional Executive Committee were replaced. Alexander Yushkevich and Alexander Turchin are new deputy chairmen of the “governor”.

It should be noted that all the four officials are representatives of the generation of forty- year-olds, and started their rise on a career ladder when Alexander Lukashenko was already the President. Alexander Yushkevich, for example, was a prominent organization man of the Belarusian Republican Youth Union; he was elected the First Secretary of the Mogilev Regional Committee of this public association.

New deputy chairmen of the Regional Executive Committee replaced the older Victor Shchetko (elected to the House of Representatives) and Alexander Yermak, who became the Head of Administration of Belarusian-Chinese Industrial Park. This suggests a certain tendency towards appointing public officials in Minsk Region, although it’s not really significant.

Security officials were affected by the changes, too. Instead of Major General Ivan Savchits sent to manage the Department of Internal Affairs of Brest Regional Executive Committee, Colonel Viktor Senko, the former Deputy Chief of the Department for Combating Economic Crimes of the Criminal Police of the Ministry of Internal Affairs, was appointed as the Chief of the Department of Internal Affairs of Minsk Regional Executive Committee. Oleg Lavrukhin replaced Alexander Arkhipov, who became the Deputy Prosecutor General, at the post of Minsk Region Prosecutor.

The government’s decision to build the Belarusian-Chinese Industrial Park in Smolevichy district is worth noting as one of the most last year significant events in the region. A framework agreement on financing of the first phase of the industrial park in the amount of $ 1.5 billion was entered by the China Development Bank and ZAO “Industrial Park Development Company”. The total investment is $ 5.6 billion. The park is going to be built within 30 years.

At the end of the year BelJeev, a Belarusian-Chinese company, started pilot assembly of Chinese cars “Geely” from large-sized components at the reconstructed production facilities of OAO “Borisov plant “Autogydrousilitel” in Borisov. The line production capacity is 10,000 cars a year. In 2013, construction of a new plant with the production capacity of 120,000 vehicles per year is expected at the site of 73 hectares between Borisov and Zhodino, the estimated number of employees is about three thousand people.

The construction of block № 3 of production facilities began at BelAZ in Zhodino for development of new production capacity of 320-450 ton dumpers with the localization of large parts machining, welding and blanking operations, assembly and painting of products.

At the end of the year the willingness for IPO of OAO “BelaAZ” in the international exchange market was announced once again.

Gomel Region

The results of Gomel Region development in 2012 are characterized by the uncertain state of the economy. During the year, only half of the 19 estimated figures were complied with. It was not possible to achieve the planned figures for the main parameter that reflects the state of affairs in the economic sphere of the region – Gross Regional Product. GRP for 9 months compared to the same period last year increased by only 2.1% when the target value was 5.2 – 5.7%. Also, the plan for investments in the fixed capital and housing construction was not implemented. The rate of increase in labor productivity fell behind the wage growth for the entire year.

Creation of small enterprises in the industrial sector is still an issue. By the end of the year there should have appeared 10 new organizations employing at least 50 people in each district of the region. However, no district is close to perform this task so far. In total, there are 330 new enterprises established in the production industry, but only two of them (in Gomel) employ more than 50 people. And there is no single enterprise engaged in production created in Bragin district.

The number of loss-making enterprises has decreased. However, despite the reduction of their number, inefficient work has resulted in the increase of losses. Compared to last year, they have more than doubled. Gomel Meat and Dairy Company and Svetlogorsk Pulp and Paper Mill are in the most difficult situation.

The performance in agriculture has improved, especially in the livestock industry. In particular, there is an increased return on sales.
In 2012, SOAO “Spartacus”, a large Gomel confectionery company, was basically nationalized. The percentage of shares owned by the state increased from 13% to 60%. A sale of Gomel largest hypermarket “Line” of Evrotorg Company which manages the retail chain “Euroopt” by Russian corporation “Green” should be mentioned as one of significant enterprise purchase – sale transactions.

In 2012, three public executives were removed from their positions. They are the Chairman of Gomel Municipal Executive Committee Viktor Pilipets, whose arrest followed a corruption scandal, and the Deputy Chairman of the Executive Committee Alexander Baranov as well as the former Advisor to President Lukashenko, the Chief Inspector for Gomel Region Igor Prokopenko, according to the investigation, involved in the same scandal.
Peter A. Kirichenko was appointed a new “mayor” of Gomel, who had previously worked as a deputy chairman of the regional executive committee. Instead of him, Vladimir Vladimirovich Gorbachev was appointed the Deputy Chairman of the Gomel Regional Executive Committee, who had previously held the position of General Director of OAO “Gomel Integrated House-Building Factory”.

The end of 2012 was marked by serious problems caused by the nature. There was the most extensive power outage in the past few years. During the period from December 8 to 12 power networks of 12 districts in region suffered from snowfalls. There was a power cutoff in almost 400 settlements, including regional centers, the largest of which was Mozyr with population of 120 thousand people.

The results of 2012 did not bring any confidence in future to the residents of Gomel Region, who, like all other citizens of Belarus, are anxiously waiting for the end of relatively stable period.

Grodno Region

In 2012, there were no major personnel changes in Grodno Region, except the change of the head of the regional Ministry of Internal Affairs. In October, Major General Vladimir Sychevsky was appointed the head of the Department of Internal Affairs of Grodno Regional Executive Committee, who had been previously in charge of the Department of Internal Affairs of the Brest Regional Executive Committee.

There were some staff changes at Grodno Municipal Executive Committee. In March 2012, Yuri Shuleyko was appointed as the first deputy chairman of the Grodno Municipal Executive Committee. He had been the Head of the Technical Department of Grodno Meat-Packing Plant for more than 10 years, and later for two years he had been the Director of Lida Meat-Packing Plant. In 2007 – 2012 he worked as General Director of GO “Grodnomyasomolprom.” In May 2012, Elena Agey and Svetlana Beksha became Vice Chairwomen of Grodno Municipal Executive Committee. Prior to this appointment Agey had worked as the head of the department of transport and communications of Grodno Regional Executive Committee, and Beksha had been the head of the design group “Grodnograzhdanproekt”.

Despite public protests, implementation of the project on construction of the Belarusian nuclear power plant continues in Ostrovets District. Currently, the site is being developed for the excavation pit of power unit № 1. The works are going at 62 sites, 14 of which are planned to be commissioned this year. Over 800 workers and 200 units of construction equipment are working at the site. In 2013 it is planned to expand the work at other 35 sites.

The works of the main period of construction of the Belarusian nuclear power plant is scheduled to begin on June 15, 2013.

The construction of the nuclear power plant increased investment attractiveness of the region. Land plots in Ostrovets and Ostrovets District are fast sold at auctions. There is no any land for sale left in the micro-district № 1 of the power industry town. Both domestic and foreign companies show their interest, especially Lithuanian and Turkish businesses. Moreover, the largest investment project is implemented in the neighboring to Ostrovets town of Smorgon, who is the second place in terms of investment attractiveness after the city of Minsk. The Austrian company “Kronospan” in accordance with the investment contract concluded with the Government of Belarus has taken a responsibility to invest $ 150 million in the construction of a plant in Smorgon by 2016.

One of the major events in the region is the commissioning of the country’s largest Grodno Hydroelectric Plant on the Neman in September last year, the construction of which was started in May 2008.

Mogilev Region

In 2012, there were no significant personnel changes in the region. There was a small rotation of chairmen of district executive committees at the district level. Dmitry Kaleyeva was appointed the chairman of the district executive committee in Bykhov, Vladimir Kiselyov was appointed the chairman of the district executive committee in Kostyukovichi.

Among high-profile criminal cases involving regional public officials we can note sentencing of the former Deputy Chairman of Mogilev Municipal Executive Committee Vladimir Titok. The Leninsky District Court of Mogilev sentenced him for imprisonment for a term of 3 years with confiscation of property and deprivation of the right to hold office.

The main negative economic event for the region was the transformation of OAO “Mogilevkhimvolokno” into a loss-making enterprise. “Belneftehim” Group made a proposal to provide “Mogilevkhimvolokno” with reduced tariffs for electricity, stressing that otherwise the enterprise would be loss-making at the end of the year, even in case of free supply of the basic raw material – paraxylene.

The creation of several new private enterprises in Mogilev Free Economic Zone is among positive economic events. OOO “MaViTrans” – creation of a transport and logistics center, which will provide services for transportation of export goods. The company will create 20 jobs. The volume of investment in the project is EUR 2.3 million. Belarusian-Russian IOOO “Omsk Carbon Mogilev” intends to produce carbon for the manufacture of tires, which will be supplied to “Belshina” and for export. It is assumed that more than EUR 130 million will be invested into the company. Belarusian-Israeli SOOO “KlinEnerdzhiGrupBel” will put into operation a co-generating gas powered electrical generator with the capacity of 13MVt for OAO “Belshina”. The cost of the project, the implementation of which will reduce the tire manufactures’ power costs, is about USD 20 million.

One of the most significant social events was preparation and celebration of the festival “Dozhinki 2012”. Perhaps no region which had held this landmark event before faced such a low and explicitly formal level of preparations. The new cultural and entertainment complex built in Gorky specifically for “Dozhinki” failed just two months after the event; the amphitheater started to fill with water. As a result, the building was closed for renovation at the beginning of November. The Department of Architecture and Construction of Gorky district executive committee explain the situation by the fact that the amphitheater was built three times faster than it should have been – within 9 months while the normative period is 27.5 months. Also we have to note that part of the social promises made by the authorities on the eve of the festival was not fulfilled. In particular, a panoramic X-ray machine for the district dentistry was not purchased (the approximate cost is from EUR 30 to 50 thousand). None of the regional officials was dismissed for the low level of the festival preparation.

According to the preliminary estimates the forecast figures for the gross regional product growth will be fulfilled (105.1-105.6%). For the first half of the year the growth of GRP in Mogilev Region was 102.7%.

Brest Region

The year of 2012 was characterized by a number of personnel reshuffles in Brest. The dismissal of General Director of OAO “Ivatsevichidrev” B. Mikhnyuk for unsanitary and violations of occupational safety and health requirements which was discovered personally by President Alexander Lukashenko when visiting the company, received the greatest public response.

In addition, in the first half of 2012 the 60-year-old General Director of RUPP “Granite” C. Turovets was dismissed by the decree of Alexander Lukashenko for actually admitted at the end of 2011 the mass walkout (over two hundred workers) from the company official trade union organization. 35-year-old E. Gavrilkovich, who worked as a chief engineer, was appointed as a new director. It should be noted that over the past decade E. Gavrilkovich was the fifth General Director of RUPP “Granite” (one of Europe’s largest gravel mining and processing enterprise), all the former ones were dismissed with a scandal: two former directors (Telkov, Batura) are serving a prison term for financial crime and corruption, the other two (Autko, Turovets) were fired because of allowed protests of workers.

Long-awaited personnel reshuffles of executive officers of law enforcement agencies took place

– the Head of the Department of Internal Affairs, Major General V. Sychevsky (who is a relative of the former Interior Minister A. Kuleshov, due to which he had been appointed the head of Internal Affairs, and received the rank of a General) was transferred to a similar position in Grodno Region, from where he came from the post of the Deputy Chief of the Department of Internal Affairs three years ago. He was replaced by Major General I. Savchits, who had been the Head of the Department of Internal Affairs of the Minsk City Executive Committee for the previous four years, and had previously served at various (including management) positions in Brest Region. In connection with the change of senior executive officers at the Department of Internal Affairs the employees have some hopes: V. Sychevsky’s priority in the work of the police was the formation of a positive image by forcing subordinates to participate in various activities (actions, concerts, television and radio broadcasts, and especially sporting events, even a hockey team was organized for this purpose), and I. Savchits is notorious for his insistence to work to discover crimes;

– the Procurator of Brest Region S. Khmaruk (a native of Vitebsk Region) and his deputy O. Lavrukhin are appointed as procurators of Minsk and Minsk Region (respectively) and prosecutors from Polesie, I. Noskevich from Pinsk and V. Savich from Luninets were quite unexpectedly appointed to the vacated positions. It is assumed that S. Khmaruk, although transferred to the capital, was not quite satisfied, as he was initially intended to be appointed as the Deputy Procurator General.

Rumored dismissals in the local authorities were also quite remarkable: 63-year-old Head of Brest Municipal Executive Committee A. Palyshenkov managed to keep his position after the scandal on allocation of land plots in Brest for the construction of apartment buildings under the criminal case involving defrauded real estate investors of OOO “Oblik”, when its arrested director began to give evidence. “Having been sick” for over 3 months A. Palyshenkov came back to work, but since then he has only attended official events where the “governor” K. Sumar participates.

The ending year of 2012 was difficult for the region: none of socio-economic indicators set for the region (gross regional product, the balance of foreign trade, investment in the fixed and foreign capital, etc.) are not achieved.

Vitebsk Region

The majority of the estimated figures of socio-economic development for the region are achieved at the year-end. Following the evaluation of the activities of chairmen of municipal and district executive committees on the implementation of the socio-economic development set figures, the first place is taken by Novopolotsk, the second – by Orsha, the third – by Polotsk. The leader of the executive committees is the committee of Beshenkovichi.

The highest GDP in Belarus was achieved by the region at the end of 9-month period; it increased by 14% at constant prices compared to last year. In January-November 2012, the roundup characteristic of the economic activities in the region – the gross regional product was already 107.7%. At the end of 2012 this figure is expected to reach 112% compared to last year.

The number of non-payers for housing and utility services in the region is not reduced. During the year, ten families lost their apartments for utility services debts. The outstanding debt for utilities by October 1 was Br 3.5 billion, there are 26.2 thousand families among non-payers.

Due to delayed payment of wages, in June about 100 workers of large enterprise (RUP DSK) of the regional center refused to start work. A similar situation occurred in a transportation company in Orsha. The workers of ICHUAP «Vitavia» have not get paid since May, the rent in the Vitebsk airport is not paid either. The Governor of the region and the Minister of Transport and Communications signed a dubious agreement on establishing an air transport enterprise on the basis of the airport “Vitebsk” with a Czech company that promised to invest about EUR 50 million in the budget of Vitebsk Region. The registered capital of the company is EUR 200 thousand.

On April 14, 2012, the former presidential candidate, A. Sannikov, spent his first day after the release from prison № 3 “Vitba” in Vitebsk. On February 24, S. Kovalenko, the active member of BNF party was sentenced to 2 years and 1 month allegedly for violating the “home arrest”. In September, he was released from prison in Mogilev. In November, a homemade device exploded outside the KGB and the active member in Novopolotsk was arrested on suspicion of spying.

Before the visit of the President to Vitebsk woodworking plant, the public officials burned down the village of Pavlovichi, the home village of the Hero of the Soviet Union P.L. Dolbeshkin. The village was situated almost at the border of Vitebsk and to hide it from the President during the President’s procession, the officials decided to burn it.

There were no serious personnel changes during the year. In June, I. Evseev was appointed as the head of the regional Department of Internal Affairs who previously had held the post of the Head of Public Security Police of the Chief Directorate of Internal Affairs at Minsk City Executive Committee.