Uladzimir Matskevich: The fight of the individual entrepreneurs is already lost

Aliaksei Yurych, EuroBelarus Information Service

Quite strong socio-political forces are opposing individual entrepreneurs: the state, large business, and consumers.

The Decree No. 222 has basically paralyzed Belarusan markets. Individual entrepreneurs are unable to fulfill the requirements of the Decree on certification of goods, so they merely stopped working.

The latest Forum of Entrepreneurs, which was organized by the Republican Public Association Perspective in Minsk, decided to organize negotiations with the authorities — until January 25 at the least, when the next Forum is to take place; the majority of entrepreneurs refuse to work. However, Lukashenko has already announced that “starting from January 1 their (entrepreneurs’. — EuroBelarus IS) honey years have been over; they have to start working in equal conditions in compliance with the corresponding documents.” A lot of entrepreneurs have perceived it attack as a personal insult.

Why has such crazy situation emerged around individual entrepreneurs? Are there any civilized ways to resolve the problem at this stage?

Philosopher and methodologist Uladzimir Matskevich answers these questions in the interview with the EuroBelarus Information Service.

— The Decree No. 222 has put individual entrepreneurs on the verge of survival. Who is guilty in the situation: individual entrepreneurs themselves or the state that hurries up to implement the ideas of the EEU even despite the national interests?

— There is a conflict of two parties in mass consciousness: that of individual entrepreneurs and the authorities. In this sense both the parties are cunning and don’t voice the problem, hiding a number of circumstances and conditions of the conflict.

The market in Belarus is saturated: there is no commodity deficiency, the market is full with all sort of goods in all price niches. It seems that such saturation leads to price competition and competition of quality. If is price vs. quality correlation that segments commodity markets into different levels, where every consumer can find goods that are suitable personally for him/her: the lower the price the lower the quality, but it’s possible to acquire goods of high quality for a large sum of money.

However, as it turns out, Belarusan consumer market still experiences certain difficulties related to disproportion. Let’s consider several aspects: withdrawal of money, cross-border trade, consumption abroad, when Belarusan money that is little as it is come to the pockets of the “near abroad” vendors. A number of enterprises in Bialystok, Vilnius, and other adjoining countries exist mainly at the expense of Belarusan consumers. It is only a minor symptom of the disproportion that emerged at the Belarusan consumer market.

Accordingly, competition for consumers shifts from the number of goods to their quality. It turns out that dependence of Belarusan retail trade on logistic centers and wholesale delivery from other countries leads to consumers’ discontent with with the quality of goods. Why does Belarusan middle class chooses to sell goods in the “near abroad”, not in Belarus? VAT return, price swings don’t play the major role as the road and infrastructural expenses related to purchases abroad sometimes override the alleged saving. Certainty of the good quality of goods purchased in Poland and Lithuania plays the main role in it. The goods sold by the individual entrepreneurs at Belarusan markets don’t guarantee such quality.

On the one hand, for a long time individual entrepreneurs didn’t have to provide quality assurances, whereas after the liability to present certificates on goods individual entrepreneurs have started depending on logistic centers and wholesale delivery from Russia. Being aware of the innovation, a number of individual entrepreneurs tried to get documents at Moscow markets only to find out that they were fake.

In this meaning we are infrastructurally trapped. In one’s time Belarusan authorities were preventing the formation of large logistic centers, large business in Belarus, and formation of infrastructure that could have provided retail trade with deliveries. The major part of retail trade reoriented itself to Moscow wholesalers because shuttle trade became obsolete in the 90s. Centralized delivery of goods to the retail market depend on Russia, Moscow, which creates huge problems both for consumers, who cannot be sure in the quality of goods; as well as for the large trade centers, which carry on trade at retail markets. Supermarkets and large trade centers have price competition with individual entrepreneurs because their goods are certificated, which presupposes a higher price on goods. In situation of such competition large trade centers are trying to influence the situation, even lobby the Decree No. 222.

Situation that has emerged around individual entrepreneurs touches upon not only individual entrepreneurs but also a huge number of consumers, large players, and large business that works in the same sphere. Thus, individual entrepreneurs come to be in losing situation, and consumers are more inclined to admit the pressure exerted on individual entrepreneurs as protection of their own interests.

— But this is only one aspect of the problem. Entrepreneurial structures claim that the Decree No. 222 will throw out about 500 thousand individual entrepreneurs, wage earners, and their families. Aren’t the authorities scared of such developments?

— Since individual entrepreneurship provides a huge number of people with work, putting forward unrealizable for Belarus conditions brings a vast number of people to unemployment and lack of money. If these events had been happening in the situation of economic upsurge, the problem would have been solved easily. But now, in the situation of economic recession, such actions only cause new problems, which means that the government is absolutely unable to solve complex problems. In situation of busy commodity market the authorities’ demand to certify goods looks quite rational and sensible; however, the fact that these actions lead to bigger unemployment and loss of money for a lot of households only worsens the problem.

There is a political component in this problem, too. Being merely economic and requiring the consideration of a number of aspects, such problems are usually solved at a political level with the participation of political forces, whereas in Belarus no social groups and no target groups have their political representation. There is interesting situation between the Republican Public Association “Perspective” headed by Shumchanka and uncoordinated radical representatives of entrepreneurial communities. While “Perspective” aims for negotiations, a number of hotheads demand decisive actions: street protests and coercion. Since “Perspective” is at least somewhat organized, though far from politics just as all civil society communities in Belarus, it can speak on behalf of the majority of entrepreneurs. At the same time, uncoordinated hotheads among entrepreneurs have neither organizational structures for realization of their intentions not authority among entrepreneurs, nor contacts with other political forces. That’s why an attempt of some politicians to take part in the protection of entrepreneurs looks like a wish to fish in troubled waters: even though lacking direct contact with entrepreneurial community, they are trying to use the situation for their own benefit and promotion. All that irritates both the “Perspective” as well as the whole entrepreneurial community.

Meanwhile, the authorities are trying to simulate a political process, summoning the Public Advisory Council at the Ministry of Economy that mostly represents large business. There is no way that this Council can present the interests of entrepreneurs.

Thus, no-win situation emerges. If we analyze the correlation of forces we can be sure: the fight of the individual entrepreneurs is already lost; quite strong socio-political forces are opposing individual entrepreneurs: the state, large business, and consumers. Of course, consumers are in opposition on default cause they are even less organized in Belarus than vendors or employers are; but the moods in the society are, generally, not on the side of the entrepreneurs.

— Entrepreneurs have been preparing for negotiations with the authorities — before Lukashenko’s statement about the “honey years”. After such insults there is little chance that individual entrepreneurs would like to sit down to negotiating table. Are there any civilized ways to solve the situation left?

— Individual entrepreneurs don’t want to sit down to negotiating table not only because Lukashenko insulted them.

The problem rather lies in the vulnerability of their position: they don’t argue the need for certification of goods; they only argue about the order of administration of the procedure, which means that they don’t have any other way to solve the problem but for negotiations. Lukashenko’s emotional reaction means nothing different but the weakness of this community. And for now the authorities can insist on what they want and continue exerting pressure on the entrepreneurs.

The other thing is that the power of the authorities and their ability to pressure the entrepreneurs till the desired innovation is made is limited by the economic crisis and the threat of unemployment. I think that despite seemingly categorical intransigence the authorities will make certain concussions. Yet again, in Lukashenko’s manner, these concussions will be presented not as such, but as a good will of the authorities.