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BELARUS IS TAKING THE ROAD OF LIBERALIZATION
SERGEY NIKOLYUK,
Political analyst, Minsk
Minsk’s probable participation in the EU’s foreign-policy program “Eastern Partnership” is evidence of serious changes in Belarus. Rapprochement between Brussels and Minsk and, in general, of Belarus and the West is connected with the liberalization processes in Belarus, first and foremost, in the economic sphere. The economic slump has speeded up this process rather than caused it.
The Belarusian economy has been liberalized since autumn 2007. Andrey Kabiakow, Deputy Prime Minister of Belarus, was the first to say about that. The commission led by Piotr Prakapovich was created to make Belarus one of 30-40 countries having the best investment climate.
I have anticipated those changes for a long time since now liberalization is a natural phase of the Belarusian economy development. Up to now, Belarus has developed as a resource state: the authorities controlled the resources and distributed them, in the main, at the expense of Russia’s subsidies. Now that is not enough.
Another factor undermining the Belarusian economy is competition for manpower resources. Up to one million Belarusians make their living abroad. As a result, the country is short of hands, which gave rise to “wages race”. At first, it had been decided to make $500 a month the average Belarusian salary by 2011, then the figure was raised to $700. After Federal State Statistics Service mentioned that Russia’s average salary was $760, it was said that Belarus’ average salary should be $1000.
This adversely affected the Belarusian economy with there being too few Russian subsidies. As a result, Minsk seriously intended to turn to the West trying to receive the Western investments, especially as they need not be returned.
So, the West received the leverage over Belarus it has never had. At the request of the International Monetary Fund, the Belarusian government eliminates the budget deficit, which entails decline in the state-paid workers’ earnings and pensions.
One can mention the recent devaluation of the Belarusian ruble. On 18 December 2008, President Aliaksandr Lukashenka of Belarus told the mass media that in 2009 the devaluation would make up 5%. But since the IMF issued the credit to Belarus on 31 December, the Belarusian ruble devaluated by 25% two days later.
In 1996 Aliaksandr Lukashenka turned the IMF representatives out of Belarus calling them “pilferers” and “smart alecks”. He believed that Belarus had scored big economic successes against the IMF’s advice. Currently Minsk not only interacts with the IMF, but also carries out its recommendations.
Lukashenka resembles President of the USSR, Mikheil Gorbachev – he becomes a weak politician in terms of the resources that are at his disposal. After the oil prices had come down in 1980s, Mr Gorbachev had to rely on the Western creditors. The Belarusian President is in the same situation.
That’s why the liberalization will be more and more intense, but the process in Belarus will be far from being stable. When the executive chain of command becomes weaker, the civil society fails to control the situation, there is no independent mass media, the regional resources are stolen. For example, during the break-up of the Soviet Union Estonia was among ten major exporters of non-ferrous metals.
The liberalization bills are approved in the country, but here specific character of the Belarusian system is also highly conducive to catastrophic consequences. For example, the enterprises will be able to write off their losses soon. At one time, the Soviet law on cooperative system let the state enterprises directors create cooperatives writing off the losses to the government assets.
As regards the EU’s activities in Belarus, it is quite a natural process. The West and, in particular, the EU act not only in Belarus. The EU takes advantage of the opportunities appearing in Belarus. At present Belarus cannot live without credits. The National Bank spends $1 billion from its reserves a month alone, in which the West sees opportunities. Quoting Mikhail Gorbachev, one can say: “The process is under way”.
March 6, 2009
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