XI Forum of Regions: Lilliputians Breed Ever Smaller Lilliputians

The Belarus-Russia Regions Forum, held on July 27-28 in Vitebsk region, is purely a celebratory event where bad news is traditionally not announced. Therefore, all its participants are full of optimism and eagerly share fantasies about building an innovative economy of the Union State, import substitution policies, and the financial results achieved. However, it would be more appropriate to view these results from a different perspective—interaction productivity is decreasing.

According to the Russian ambassador to Belarus, Boris Gryzlov, the regional forum annually sets a new bar for bilateral cooperation. This year, for instance, the event attracted interest from over 700 Russian representatives, including those from new regions (occupied territories in Ukraine – ed. note). More than 100 contracts were planned to be signed during the forum.

The deal threshold was predictably reached quickly: during a video address, Vladimir Putin announced that the package of agreements reached at the forum comprised about 250 commercial contracts totaling RUB 24 billion.

The Chair of the Council of the Republic of Belarus, Natalya Kachanava, confirmed the number of contracts, slightly increasing their total amount to RUB 30 billion. Additionally, she informed that over the past 10 years, 580 agreements of various levels have been signed at the forums, and commercial contracts totaling more than BYN 20.5 billion (over RUB 550 billion – TASS note) have been concluded.

Alexander Lukashenka, in turn, provided slightly different data: 588 contracts totaling more than RUB 450 billion.

Reviewing these indicators—even if their accuracy is accepted—leads to the following conclusions:

1. The financial effectiveness of this year’s forum is extremely low. This is regardless of whether it’s calculated by the number of contracts or the number of years the forum has been held in relation to its overall financial effect. That is, over a short, nominally annual period, an unimaginably large number of dwarf contracts were signed for insignificant (by Belarusian standards) or minuscule (by Russian standards) amounts. In total, this is approximately USD 465 million. On a per-contract basis, this is less than USD 1.9 million. The mountain keeps producing smaller and smaller mice year after year. Contracts are becoming more and more Lilliputian. Anyone can take a calculator and figure out a simple rule: 338 agreements hinted at a minimum sum of RUB 420 billion. 250 new contracts threaten a maximum sum of RUB 30 billion. This is, at the very least, amusing.

2. The innovative economy of the Union State (which the speakers tirelessly and continuously talked about) is a slightly modernized old dream about communism or developed socialism. But innovation doesn’t like poverty—except in rare cases. Little money means few innovations, and it’s hard to do anything about this problem under the current rules of the game in authoritarian regimes.

3. The results of the regions’ forum can be interpreted as a specific case of fulfilling Pareto’s law (with radicalized indicators), which in the most general form states: “20% of efforts produce 80% of the results, the remaining 80% of efforts yield only 20% of the results.” In our case, 80% (or more than 90%) of the overall kitty for regional cooperation is formed by only 20% (10%) of clients. Typically, these are large state-owned companies or privileged businesses—representatives of a class of people who need mass events the least and prefer private phone calls, meetings on beaches, or in penthouses. This year is particularly expressive in this respect: many contracts—very little money.

4. The mentioned rule presumably also operates in the case of Belarusian-Russian integration as a whole: only 20% of efforts produce some noticeable result, the rest are just white noise, a report for the press.

The XII Belarus-Russia Regions Forum is planned to be held in Nizhny Novgorod. Our forecast for next year: even more contracts will be concluded (say, 300) for an even smaller sum of money (presumably RUB 22 billion).