Red Line: Belarus financial crisis, Russia mediates in Libya and Ratko Mladic

Protests in support of Mladic in Kalinovik, 30 miles southeast of Sarajevo, May 29, 2011. Photo: Reute.rs

Protests in support of Mladic in Kalinovik, 30 miles southeast of Sarajevo, May 29, 2011. Photo: Reute.rs

Each week, Voice of Russia hosts Red Line, a discussion about the events of the week, as seen from Moscow. This week, the financial crisis in Belarus, Russia mediates in Libya and Ratko Mladic is arrested.

Red Line: Belarus financial crisis, Russia mediates in Libya and Ratko Mladic

 

Participants: Ekaterina Kudashkina, Sergei Strokan, Mira Salganik, Cyril Koktysh, Vladimir Ahmedov, Borislav Corcodelovich: 

Ekaterina Kudashkina: This week we will start with the Belarusian financial crisis, which may turn into a full-scale economic and social disaster triggered by growing distrust in the Lukashenko government. We will then look at Libya, analyzing whether Russia’s much-discussed engagement in the conflict resolution could help in negotiating a long-awaited settlement. Finally we will talk about Serbian General Ratko Mladic, head of the Serbian Armed Forces during the Balkan war, who has finally been captured.

Now, Beyond the Headlines – this is our first heading in which we will examine the events in Belarus. The reports from Minsk, some of them quite dramatic, indicate that Belarus – a country with a population of 10 million squeezed between Russia and Poland – has probably entered the most difficult period since it proclaimed independence.

Sergei Strokan: Well, there is a risk, a temptation to overdramatize the Belarus story.

Ekaterina Kudashkina: I would say that there is very little information, well-balanced information, coming from Belarus. Let’s look at what Western media is saying: “Belarusian President Aleksandr Lukashenko, labeled as ‘the last dictator of Europe,’ has ordered a shutdown of a number of foreign media outlets, with a specific reference to Russian media as the main source of hysteria.”

Mira Salganik: This Lukashenko jab was immediately rebuffed by the Kremlin, with a high-placed source telling the Interfax news agency that the move, “if implemented, would inevitably make Russia to reconsider its position on granting Belarus a loan.”

Ekaterina Kudashkina: Days before the scandal over Russian and other foreign media, Russia's Deputy Prime Minister and Finance Minister Alexei Kudrin said that Belarus could get a total of $3 billion in loans from an economic alliance of several former Soviet nations (of which Russia is the largest donor) over the next three years, including $800 million that could be delivered next month. What we are seeing now to me actually looks like a media war with some use of financial instruments.

Sergei Strokan: It reminds me of a typical autocratic approach to domestic problems. Who is responsible for the misery? Media. Who is responsible for inflation? Media.  Ironically the ban on Russian media came shortly after Belarus' National Bank sharply devalued the national currency against the dollar, so that was quite a dramatic move for Belarus.

Ekaterina Kudashkina: Well, the circle of the interested has been growing. President Barack Obama felt he needed to react, so he gave the Belarus story a global dimension. While in Warsaw, he said: “President Lukashenko has shown a total disregard for democratic values, the rule of law, and the human rights of his own people.”

Sergei Strokan: I think that by saying this, Obama indicated that President Lukashenko would no longer have a chance to capitalize on differences between Russia and the West, a practice he has commonly exploited in recent years.

 

I think that the present crisis shows that the existing model, with an inefficient state-run economy and authoritarian leadership, has already exhausted or almost exhausted its potential. Everywhere in the world people value stability, but in Belarus, people doubly value this stability. Until recently, Lukashenko was for them the embodiment of this stability. He was a person who was a guarantee of this stability. It seems that this is no more the case.

Mira Salganik: The new generation does not have this feeling that Lukashenko and stability are one and the same thing. Secondly - they perhaps care less for stability than for their opinions

Ekaterina Kudashkina: Also, as he was building up his Soviet-style economic model, Lukashenko regarded Moscow as a source of cheap loans and gas that kept the Belarusian economy afloat.

Sergei Strokan: Now the Kremlin has finally made it clear that there would be no more free lunches, and I believe this is what really infuriated Lukashenko. 

Ekaterina Kudashkina: Let’s look at what we’ve got now. A neighboring country seems to be sliding into a deep economic crisis. That, as often happens, might bring on social instability that in its turn actually lowers expectations of reforms. So what needs to be done to prevent the scenario? We discussed the issue with Cyril Koktysh, an expert in the Belarusian economy and an assistant professor at the Moscow State Institute of Foreign Relations (MGIMO). Mr. Koktysh, What would you say is the key causes of the present crisis in Belarus?

Cyril Koktysh: The main problem is the lack of trust in Belarusian society. The people have several reasons to mistrust the economic situation. First of all, there is a lack in good relations with its neighbors. The Belarusian economy is export-orientated, and it is the rule that export-orientated economies should maintain good relations with their neighbors, because good relations mean good trade. But now relations are almost ruined with Russia and they are ruined with the west. The second reason is the populist policy of the government, because the salaries are raised before the election, from an average of $300 per month to $500 and this was possible because of the foreign credit. And the third reason is that the Belarusian economy with the start of the global economic crisis lost up to half of its market value. So for two years already, the Belarusian economy has been supported with credits that should be used only to maintain the status quo, not restructure the economy. The Belarusian debt is now estimated at 60-70 percent of GDP.

Ekaterina Kudashkina: Who are the international lending bodies lending credits to Belarus now?

Cyril Koktysh: There are two main lenders. The first one is Russia. Russia so far has supported Belarus with $5 billion per year. But in September, Russia will finish construction on an oil pipeline which will route oil around Belarus, so that means there is no guarantee of this annual $5 billion payment starting from next year. The second lender is foreign funds, first of all the International Monetary Fund. Substantial money has been lent for the past two or three years in hopes that the Belarusian regime would become more democratic.

Ekaterina Kudashkina: What are the conditions under which the IMF has already granted money to Belarus?

Cyril Koktysh: There were almost no conditions at all, because the IMF credit was given to support the Belarusian economy and to support the European policy of democratization of Belarus. So there were political hopes and there was lack of economic demand.

Ekaterina Kudashkina: So are the Belarusian authorities trying to reform, restructure their national economy in a way, do you see any indications of that?

Cyril Koktysh: No, and another side of the problem is that there are no simple decisions. Four enterprises make up 80 percent of Belarusian economy. There are two refineries; Belarus Kalij, which exports potassium; and 20 percent belongs to the Belarusian automobile industry. There are few enterprises that could be privatized effectively. Of course the IMF and Russia will demand privatization, but the whole structure of the Belarusian economy should be changed. If Belarus wants to keep the income, it should decide what it can be present on the European market and on the Russian market. This is sort of discussion that should be started, but there is no indication that they are ready to move this way. Up to now the Belarusian authorities have been exploiting Soviet resources but not introducing anything new.

The problem is that Belarus cannot get enough money because it cannot produce enough goods for the foreign market. This is a problem. Belarus has a qualified workforce that could be combined with Russian inventions and western industry quality, but first of all, there has to be trust.

Ekaterina Kudashkina: Do you think that perhaps Lukashenko could attract foreign investors to Belarus with some guarantees?

Cyril Koktysh: Lukashenko can guarantee, but I am not sure that his guarantees will be trusted anymore. Putting myself in the place of an investor I would question investing in a country with an unstable currency system, because you never know whether you will gain or whether you will lose. But this is actually a secondary problem. The first problem is that currently it is not possible to make money in the Belarusian economy.

Ekaterina Kudashkina: Let’s compare two economic models the Belarusian model and the Chinese model (because as far as we know China is still a communist country). So, what attracts investors to China and why are they attracted to that communist country and they mistrust Belarus, which is smaller and perhaps a little bit easier to understand?

Cyril Koktysh: Well, it is a very simple comparison. The Chinese economy has a very cheap workforce, it is mostly poorly qualified, but it is extremely cheap, and as long as it continues to be extremely cheap, China will be attractive to foreign capital. As for Belarus, the Belarusian workforce is better qualified and more expensive. In China you can pay an average salary of $40-$50 a month and get a more-or-less competitive product. In Belarus, you have to pay at least $300 a month.

 

Ekaterina Kudashkina: So what do you suggest the Belarusian authorities do?

Cyril Koktysh: They should find other products, there should be innovations, for example. Belarus could have technoparks. Russia has them, but it has no desire to test them because Russia prefers to remain tied to the oil economy. But the Belarusian economy can collect these inventions and provide the way from the invention to the prototype of the product. Other combinations could be found as well. But first of all, Belarus should sit down at the table with its neighbors and discuss what the neighbors might be willing to buy from it. I am not sure that the Belarusian authorities are ready to start such negotiations, but this is a solution for Belarus.

Ekaterina Kudashkina: And now we are moving to our next section – Between the Lines – in which we usually look at one of the most interesting publications on one of the past week’s most pressing political issues.  This time it’s going to be a story in Time magazine entitled “What Mediating in Libya Could Cost Medvedev,” written by Simon Shuster. If you ask me – it really looks like a major challenge both for Russia and the whole of the international community. 

Sergei Strokan: To me it is quite significant that after all this time, the international community has ultimately turned to Russia to work out a peaceful solution.

Mira Salganik: I think there’s a good explanation for that. Just let me remind you of what Mikhail Margelov, Russia’s special envoy to the Middle East and Africa, said on the issue: “Russia is in a unique position to negotiate because Russian soldiers have never fought against African countries and against the African people.”  And besides - “We have preserved our embassy in Tripoli, and have preserved contacts with people in Gaddafi’s circle. And we are developing our contacts with the Libyan rebels.”

But from the onset, Russia has not supported the west’s intervention in Libya. You might also remember that Vladimir Putin described it as a “crusade.” Is there any good reason why Russia should meddle now?

Ekaterina Kudashkina: It’s quite obvious that our Western partners are not capable of resolving the crisis on their own, so Russia has agreed to help. Sort of. We’ve agreed to help sort out the mess created by someone else. The position is noble. Is it pragmatic? I’d say it’s a gamble. And it’s certainly a gamble for Medvedev. Just how it goes and how much time it takes no one can tell.

Sergei Strokan: Tripoli certainly needs time, but it’s running out, although NATO has extended its mandate till September. This news has to force them to enter into the negotiation process. There is something else really important. While most of the international community was rather puzzled about Russia’s stance on the Libyan issue, Deputy Foreign Minister Sergei Ryabkov stated loud and clear during the G8 meetings in Deauvill that the Gaddafi regime must give up power. "Colonel Gaddafi has deprived himself of legitimacy with his actions. We should help him leave."

Mira Salganik: And still, the ‘small’ question remains. Who could convince Gaddafi to do it?

Sergei Strokan: So, here we are coming to the question of a mediator, the situation needs a mediator.

Ekaterina Kudashkina: Yes. But let’s turn to our expert, Dr. Vladimir Ahmedov, one of the leading Russian experts in the Middle East and North Africa security issues. Dr. Ahmedov, there are some very different views on Russia’s emerging role in the resolution of the Libyan crisis. How effective could Russia’s participation in this process be, both for Russia and for the global community?

Vladimir Ahmedov: The fact that the global community, first and foremost the coalition countries involved in the operation in Libya, has approached Russia for help indicates that the west has reconsidered a military resolution to the Libyan crisis. Recall that a number of Western countries quite simply ignored Russia’s initial proposal, which was tabled at the outset of the operation and had some very positive ideas and proposals. Undeniably, the coalition has sufficient potential to crush Gaddafi, deliver a decisive blow and destroy all of the colonel’s armed forces, but this is fraught with a great number of victims and will create a very unpleasant precedent for the west and its politics. This is especially relevant for the politics of the United States, because whichever way you look at it, they are at the forefront of these efforts, notwithstanding their attempts to shift the focus to NATO. It will also impact on their image in the new Middle East.

Bear in mind that at the G8 summit, the member countries articulated their positions on the revolutionary events unfolding in the Arab East. They are allocating funds and striving to bring these tumultuous processes into a normal order of things, towards the establishment of new political models of government in the Middle East. And this does not accord with the application of force.

So their approaching us and returning to our initial ideas points to the fact that the Russian proposals were very sensible and sound. The task now is to bring the two feuding sides to the negotiating table. I would like to believe that Margelov will be successful in channeling the crisis into the political sphere and settling the conflict through diplomatic means, rather than through military action.

In any case, the mission of our special envoy is a positive one, even if it doesn’t bring the desired outcome. After all, this wouldn’t be the first, and sadly not the last time, that similar missions on such conflict resolution in this region do not culminate in success.

What is paramount is that Russia is now defining its participation in the Libyan issue and thus establishing a foundation for its future relationship with the new Libya. Certainly, Libya will not remain the same, it will become something new. Libya’s new incarnation is important to us, because Libya is a very significant player in North Africa and we have substantial economic, political and strategic interests there, which affect our business, our politicians and our military. So this mission, even if it isn’t productive as far as bringing the warring sides to the negotiating table and achieving positive and substantive results on that front goes, is already positive for us because of our involvement in this matter. This in turn gives us the moral right to discuss this problem with our partners, including our Libyan partners and the new government.

Ekaterina Kudashkina: So is the major difficulty of such talks the very tough stance of the anti-government forces? There isn’t really a united front in the anti-government camp and there is no real clarity as to who to talk to there. Is that fair, or are there other complicating factors?

Vladimir Ahmedov: Russia’s mission is by no means simple, because, as I said, not everyone is ready to lay down arms and stop fighting. So there is a great difficulty there, some really difficult work in finding key figures on both sides who command sufficient authority and respect with the people, and who are ready to sit down and talk

Ekaterina Kudashkina: As far as I recall, South African President Jacob Zuma went to Libya on several occasions and met with Gaddafi, and Gaddafi said that he would be ready to step down if he was provided with certain guarantees for him and his family. Yet Benghazi responded with a very firm “no.” So the rebels are not at all considering an option that would allow Gaddafi to hand over power but save face nonetheless. Why is that?

Vladimir Ahmedov: My understanding is that there are diverse positions, and these positions are changing. If you think back to the beginning of the conflict, before the military operation began, there were proposals from Hugo Chavez on resolving the conflict through peaceful diplomatic means by offering certain guarantees to Gaddafi. But this was practically ignored – by the Arab community and by the West, as well as in Libya itself. Although I got the impression that Gaddafi was ready to discuss such options. I agree with you that at that stage the revolutionaries, encouraged by the examples of Egypt and Tunisia, expected the events to develop very quickly, and they underestimated the power of the colonel. That position is changing now. And Gaddafi stepping down with certain guarantees might suit a large part of the opposition.

Ekaterina Kudashkina: Now we are moving on to Red Line’s third section, Man in the News. This week it is Ratco Mladic – one of the key figures in post-communist Balkan history. General Mladic, 67, was arrested last week after 16 years of hiding in a village north of Belgrade.  The International Criminal Tribunal for the Former Yugoslavia at the Hague has indicted Mladic on an impressive list of charges, including a whole range of war crimes, like the 1992 campaign of ethnic cleansing in eastern Bosnia, the establishment of concentration camps in northwest Bosnia, the three-year siege of Sarajevo, the taking of U.N. hostages in 1995 during NATO air strikes and the 1995 Srebrenica massacre of several thousand Muslim men and boys.

Sergei Strokan: The news of Ratko Mladic’s arrest and the Serbian government’s decision to extradite him virtually split Serbia. While it is hailed by a section of Serbs who call Mladic the “butcher of Srebrenica,” it has been violently opposed by radical Serb nationalists, who also demand resignation of President Boris Tadic and his government.

Ekaterina Kudashkina: Belgrade saw massive demonstrations. It was reported that a 3,000-man-strong police force was brought in to contain the huge crowd of protesters who threw rocks, bottles and sticks at policemen. It was reported that dozens of demonstrators were injured, while 100 protestors were detained. It is believed that 10,000 demonstrators participated in the Belgrade protests.

Mira Salganik: They say that Lazarevo – the village where Mladic was found and arrested – has been nicknamed  the Serbian Abbotabad after Osama bin Laden’s hideout in Pakistan. In fact, it is equally hard to believe that Mladic was able to hide for 16 years without some kind of covert protection, or at least, laissez-faire from the authorities.

Ekaterina Kudashkina: Is it sheer coincidence that Mladic gets arrested – actually surrenders without resistance, while Serbia is pushing so hard for EU membership?  

Mira Salganik: The details of Mladic’s arrest are still confusing. Was it an arrest or a surrender? 

Ekaterina Kudashkina: We have first-hand information from well-known Serbian journalist Borislav Corcodelovich.

Sergei Strokan: According to some reports in the western media, Mladic's arrest was an entirely staged event. There is a belief that it was the result not of police work but of negotiations by diplomats, who spent a whole year hammering out a deal to get him to surrender. A Western diplomat disclosed that negotiations about Mladic’s surrender lasted slightly more than a year. It appears that Mladic finally made up his mind to surrender after he got assurances that all his family would be looked after properly if he gave himself up.

Ekaterina Kudashkina: The former general is facing the tribunal in the Hague. Meanwhile his son has been insisting that his father was a “freedom fighter,” who “defended his own nation, defended his people, in an honorable, fair and professional manner." Masses of people support that view. And they are suspicious about the Hague justice. 

Sergei Strokan: Serbs are known for their distrust of the International Criminal Tribunal for the Former Yugoslavia which they accuse of being biased. They say that the purpose of the Tribunal is just to make Serbs major perpetrators of war crimes. It is not that I share this view, but I don’t think that all is well with this hand of “justice without borders.”

Ekaterina Kudashkina: Well, at one point it looked like there would be international trials for those who committed crimes against the humanity all over the world, but this idea it has somehow lost its steam. Have there been any Muslim leaders brought to the Hague for crimes in the Bosnian war? Wars are full of crimes against humanity, and both parties commit those crimes.

Sergei Strokan: It’s just a question of how you interpret the results.

Ekaterina Kudashkina: As it has turned out with the International Criminal Tribunal for the former Yugoslavia, the questions of crime and punishment have become a subject of behind-the-scenes wheeling and dealing in the worst spirit of politics. The court essentially has turned into a political instrument of some in the western community, with universal legal principles applied highly selectively.

Borislav Corcodelovich: Ratko Mladic, the former commander of the Bosnian Serb Army has been accused twice by the tribunal in Hague mainly for the war crimes, crimes against humanity and genocide. The genocide is linked to the massacre of about – there are various figures, but they are ranking from 2 000 to 8 000 of Muslim or Bosnian men and boys. So, this is the official charge.

Ekaterina Kudashkina: And what are the various versions around that?

Borislav Corcodelovich: I think that the real truth will be known during the trial of Mr. Mladic, because definitely it seems there were massacres of some of the captured members of the Bosnian Muslim army, but also some of them were killed while resisting, some of them were killed while they were trying to run away, some of them were killed while Serbs were defending themselves. So, still, as you rightly said, there are various versions, there are even all these stories of complicity of some foreign intelligence services, particularly France, because Mladic was dealing with some of the French generals, commanders of Srebrenica which was designated as a safe zone by the United Nations. It is rather a debatable story, a very emotional one for Muslims in Bosnia, Muslims in Serbia, and also a lot of Serbs. Maybe the best thing will be to wait and see what will be the truth according to Mr. Mladic.

Ekaterina Kudashkina: But if we remember the case of Slobodan Milosevic, do you think that Mr. Mladic has a chance to be heard and to be treated differently at the ICC in Hague?

Borislav Corcodelovich: No, I think that more or less it will be the same pattern. You know that Milosevic died before he could be sentenced. Certainly it is important for legal history that there is no sentence in the Milosevic case. Maybe Mladic will survive up to the end of his trial and maybe he will be able to say all of what he knows. But he is in rather poor health; he had some serious problems with his veins, he has high blood pressure, so he is not very well.

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