Once the long-awaited political reform takes place
Belarus is Strongly Prepared to Enter the "Market Economy"
The streets of Belarus are currently engulfed in massive protests. Y.A.
Lukashenko concentrates around him all the grumblings about corruption and the weak circle around him. A.F.B.
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After the end of the turbulent elections on August 9th, the totalitarian rule of Belarusian President Alexander Lukashenko could come to an end, and the country's streets are currently swept by massive protests, and the workers of many sensitive sectors are announcing their strike, and if Lukashenko’s rule collapses, the future of creating a natural market economy In this country is surprisingly very promising.
Under President Lukashenko’s rule, Belarus maintained the Soviet style of government, with the state controlling the economy, which has been in recession since 2012, and Lukashenko has been in power since 1994, and during this period he did nothing more than stay in the position of the president and empower His family and his inner circle collect wealth at the expense of the people. The public sector makes up about three-quarters of the size of the entire economy, which relies heavily on heavy industries that are controlled by several large state-owned companies. The most important five of these companies, namely the Potash Company bearing the name "Belaruskali", two large oil refineries, the Tractor Factory (MTZ) and the Automobile Facility in Minsk (MZ), need support due to their ineffectiveness, and the economy is proceeding according to a plan. Court.
Relying on Russia
The Belarusian economy remained largely dependent on Russia, and given that the inferior quality of manufactures produced by Belarus, which is not competitive compared to Western products, depends on Russia to buy it, and Western countries sell potash and refined oil. Until recently, Russia used to support Belarus’s economy by providing cheap energy that accounts for 10% of GDP, but with the deterioration of relations between the two countries in recent years, the Kremlin began to gradually cancel support for Belarus, with the aim of putting pressure on the Lukashenko regime.
Lukashenko said that he wanted all Belarusians to earn a monthly salary of $ 500, but given the inability of the economy to secure this salary, the state suffered frequent foreign exchange crises. In the period between 2009 and 2010, Belarus received loans from the International Monetary Fund, but the government violated the conditions of the Fund, and that is why it no longer received any aid from it, and by the end of 2011, inflation rose to 109%, and then Russia intervened to help Lukashenko.
Since that period, Lukashenko tried to request assistance from both Russia and the Western world for financial support, but he failed to do so, and Belarus was a delicate and sensitive issue for the European Union, although the leaders of the European Union wanted to defend democratic principles, which include Punish Lukashenko and his entourage for their repeated violations. They wanted to preserve some influence in this country, and for this they were careful in dealing with Lukashenko so that he would not throw himself into the arms of Russian President Vladimir Putin.
After Lukashenko released all political prisoners in 2016, the European Union lifted personal sanctions on him, as well as the International Monetary Fund, the World Bank and the European Bank for Reconstruction and Development, all of which began to deal with caution with this country, but the United States maintained personal sanctions against Lukashenko. .
Liberalization of the economy
Belarus is in desperate need of liberalization and privatization, and it has the basic elements in order to start this process. The country has many properties, has preserved the best educational systems of the Soviet period, and has excellent education in mathematics and natural sciences. Despite the country being under totalitarian rule, Belarus has become a center for the basic software industry, and many Belarusians living in the diaspora are ready to return in time.
In addition, during the Soviet period, Belarus emerged as one of the top 15 republics that formed the Soviet Union in terms of performance, and this remained a reality as Lukashenko used experts to run all ministries. Accordingly, Belarus is still the best managed country among all the former Soviet Union countries, especially the Central Bank and the Ministry of Finance, which are distinguished by efficiency. And one of the most recent examples of the country's efficiency is while Lukashenko refused to acknowledge the existence of Corona disease in his country, the Ministry of Health was accurately reporting the cases in the country to the World Health Organization. Given that there is political corruption in Belarus, it is, in fact, at the very top of the political system.
Accordingly, it is not surprising that international investors avoid investing in Belarus, even though it raised $ 1.25 billion in European bonds in June, but as a result of Lukashenko’s inability to attract many international investors, the state’s debt now stands at about $ 63.1 billion.
Given that annual inflation is still under control (about 5%), and most international financial institutions have re-engaged in this country; Belarus is now well positioned to move towards a functioning market economy. With new leadership, it will have to be able to attract enough international funding to maintain macroeconomic stability, and its well-educated and organized workforce will ultimately be able to fulfill its potential. Fortunately, raising existing price regimes by about 20% on Belarusian consumer goods and liberalizing domestic trade will be easy. Strong Belarusian economic institutions can manage the pressure of inflation.
Support should also be stopped for state-owned enterprises, and there Belarus will also benefit from the fact that, unlike the former Soviet republics, there are not a few wealthy and well-known (oligarchic) controllers of the state, and all grumbling about corruption centers around the small circle around Lukashenko.
But initiating a change from the current situation towards a market economy could make privatization more difficult, as there are no large private companies to model the rest. And if most of the ineffective government-owned companies were sold into the market, Belarusians would fear that Russian businessmen would quickly grab them and buy them at a low price.
But it is known that Uralkali Potash Company tried for a long time to acquire the “Belaruskali” company, and the two Russian giants working in the petrochemical field, Rosneft and Lukawil, have acquired the two large oil refineries in Belarus. Given this risk, the best option is to sell these companies in the form of individual shares owned by their current employees.
Regardless of the form of decisions taken, the West must be a participant in them. And if the Lukashenko regime collapses, then Belarus will need a program from the International Monetary Fund as soon as a new government is formed, and the World Bank and the policy of reconstruction and development will also be needed to help put in place the new regulations and privatization.
There is a role that the Western world must play, as it must welcome the new government by activating the Eastern European Partnership Program with Belarus, and inviting Belarusian students to participate in the Erasmus program for student exchange between European Union countries. Indeed, the importance of this civilian engagement to ward off or neutralize Russian interference should not be underestimated.
Andres Asland is a senior research fellow at the Atlantic Council in Washington
Belarus is in dire need of liberalization and privatization, and it has the basic elements in order to start this process. The country has many properties, has preserved the best educational systems of the Soviet period, and has excellent education in mathematics and natural sciences.
During the Soviet period, Belarus emerged as one of the top 15 republics that formed the Soviet Union in terms of performance, and this remained a reality as Lukashenko used experts to manage all ministries, and accordingly Belarus is still the best administration country among all the countries of the former Soviet Union. Especially the efficient Central Bank and Ministry of Finance.