In situation of low GDP Belarus can’t afford mass protest of entrepreneurs

photo by svaboda.org

The dispute between the state and small business might lead to broader protests, so a wise government would consider a compromise solution, David R. Marples writes.

On 1 January 2016, a new edict came into force in Belarus demanding that small traders who sell imported goods must provide details of their origin.

The edict was based on laws for small traders introduced by the Eurasian Customs Union that came into effect in January 2013. As a result, most outlets selling light industrial goods have closed.

The traders held an “anti-crisis forum” at the Hotel Belarus’ on January 11, but to date the government has refused to rectify the situation. Moreover, the impasse seems likely to continue at least until the convocation of the next Business Forum on January 25.

While the difficulties for such forms of business in Belarus date back more than a decade, the current conflict represents the most serious dilemma to date for both the authorities and small traders.

Traders' response to decree 222

The bill requests that traders selling imported goods — mostly from Russia — must provide certificates indicating their origin. Traditionally, Russian exporters have either declined to provide such information or fabricated it. The government’s stated goal to procure transparency in trade masks a larger concern that cheap imported goods undermine the sale of Belarusian products. In turn, the traders insist that the quality of local manufacturing is both inferior to and more expensive than imports.

The mass desertion of their market stalls clearly surprised the authorities, and the Ministry of Trade acknowledged that 68% of outlets had remained closed, which it attributed in official parlance to the holiday season. Yet according to the head of the business association Perspektyva, Anatoly Shumchanka, 90% of traders nationwide abandoned their businesses during the holiday season, which is normally their peak period for sales.

The president of Belarus, Aliaksandr Lukashenka, made reference to the stoppage of sales on January 14 at a meeting related to the protection of the state border. He noted that advance warning of the decree was given last year to self-employed small traders and commented that he was puzzled by recent events.

Decree 222, he added, constitutes the first step in trade transparency, thus implying that more measures would follow. For the president, the struggles of the state sector in the current dire economic climate remain the priority and thus traders must sell homemade products.

The anti-crisis forum

An estimated 1,500 small traders attended the anti-crisis forum held at the Hotel Belarus, with a further 800 gathering outside in the foyer. Shumchanka addressed the assembled and complained about the lack of prior consultation of the new decree. He stressed that traders do not oppose the certification of goods, but the authorities introduced the laws without consultation.

Shumchanka cited a former judge of the Constitutional Court, Mihail Pastuhou, who analysed Edict 222 and reached the conclusion that the document illegally restricted the rights of citizens. Shumchanka​ proposed the gathering of 50,000 signatures to introduce a new law into Parliament on behalf of the traders to create more favourable conditions for small businesses.

Anatoly Shumchanka speaking at anti-crisis forum. Photo: nn.by

Perhaps unsurprisingly some participants wanted more direct action and in the foyer Minsk trader Aliaksandr Makaeu called for a mass protest at October Square on January 16.

Notably also, former presidential candidate Tatsiana Karatkevich attended the forum, as did two (invited) officials from the government, Andrej Miashkou (Ministry of Trade) and Valery Homchanka (Ministry of Economy).

Shumchanka​, however, who highlighted the campaign on his Facebook page (Anatoly Shumchanka), responded angrily to what he perceived as the attempt to politicise the protests and commented that radical actions would not bring the desired results. At the same time, Miashkou​ provided an overt warning that traders would be held responsible for “violating established working hours” should they fail to report to work the next day. The vast majority ignored the threat.

Could the protest widen?

Shumchanka referred to political activists as “scum” and “provocateurs” who should hold their own events, but some political activists perceived the dispute as a potential for more coordinated anti-government actions, perhaps based on Shumchanka’s own estimate that the new decree encompasses potentially not merely 37,000 individual traders, but also over 120,000 businesses operating in shopping centres and as private companies.

The gathering at the Hotel Belarus also comprised delegates from all parts of the country, indicating the breadth of the protests. The leader of Perspektyva believes that the government logically must come to an agreement with traders who have no alternative but to oppose a law that undermines their very livelihood.

Opposition leader Mikalai Statkevich provided an interview to Belsat TV on the same day as the Anti-Crisis Forum. He made it clear that if the authorities failed to respond to demands of ‘democrats’ for electoral reform, they should be prepared to gather “in the Square” in order to “maintain dignity” and demonstrate their willingness to fight for their rights.

Street actions, in his view, remain the sole mechanism to influence the authorities. He revealed that he is preparing a group of 150-200 committed and “courageous” people who are prepared to lead street rallies. The call for confrontation contrasted with the milder approach of Shumchanka​, who although equally dismissive of the government’s responses to date, still holds out the hope of reaching agreement.

A time for compromise?

The dispute between the government and small traders carries potential for broader protests, especially given the dilemmas of large companies who are cutting the workforce and dealing with high costs of imported materials.

Moreover, an immediate solution appears unlikely as the suppliers of the imported goods refuse to provide documentation of their origin. Such trade originated in Soviet times and constitutes an essential mechanism for supply of consumer products in a command economy. And while the majority of small traders in Minsk on January 11 seek economic rather than political solutions — such as a change of government — their frustration is evident.

Belarus can ill afford a sustained mass protest given the forecasted sluggish GDP growth of 0.3% in 2016 — a prediction itself based on a highly implausible oil price of US$50 per barrel. A wise government would consider a compromise solution.

Originally published at BelarusDigest