Belarus: paralysis and reinvention

Belarus is gripped by economic crisis, its people discontented, its government trapped by inertia. The depth of the problem requires no less in response - a degree of imagination and self-confidence sufficient to remodel the nation, says Natalia Leshchenko.
Natalia Leshchenko
27 July 2011

Belarus combines surface order with underlying ferment. The opposition leaders are in jail, the black uniforms of the riot police are more than ever ubiquitous on the streets. The signs of everyday economic duress are visible, and there is palpable tension. The waters that have stood still for a generation under the rule of a single president, Alexander Lukashenka, are moving. Yet the government is locked in a reactive stance, and unable or reluctant to act. Why?

The economic crisis, which some analysts (allowing for Belarus’s very different conditions) regard as comparable to Greece’s, is taking a heavy toll on both the Belarusian population and the regime’s legitimacy. The national currency was in May 2011 devalued by almost 50%, and foreign currency is barely available for purchase. The result was that food and fuel prices (among others) have skyrocketed, with but a meagre public salary and pension rise of 12% in compensation. In a country where up to 70% of the population depend on the state for their income, this is no consolation. Amid plunging living standards, many people are limiting their expenditure to basic foodstuffs.

The ensuing pressures are triggering open protest. For five consecutive weeks, thousands of people took to the central squares of Belarusian towns in silent civic protests. The police responded by throwing hundreds of protesters into riot-trucks, holding them overnight and charging them a hefty fine of $150 for their release (or in some cases imposing fifteen days of punitive detention). The crackdown succeeded in dissipating the energy behind the protests, but the sources of discontent remain.

The government’s response to the economic troubles lacks imagination. As usual it turned to its nominal Russian friend for help, only to be pointedly scolded by the Russian finance minister Alexei Kudrin. Russia did eventually agree a $3 billion loan via a Eurasia emergency fund, but this will be delivered over three years and is clearly insufficient to douse the fires. The Belarusian authorities have also appealed to the IMF for a $8 billion emergency loan. But the chances of receiving it are slim, after the conditionality attached to an IMF first-aid package in 2008 were almost ignored.

In the absence of giveaways, the next option is to sell. Belarus’s prime minister Mikhail Miasnikovitch chose July 2011 to put several erstwhile public assets on offer to Russia. But even if there are interested buyers, the privatisation and sale process will take time. Moreover, even Minsk must be aware that this is a palliative rather than a real remedy. An economy still unreformed guarantees that the same problems will reoccur - and there will be nothing left to sell.

Yet the persistent calls for structural reform by both Belarusian and foreign economists are also ignored. Even allowing for the usual defects of a bureaucratic state, there is a puzzle here. After all, the economic restructuring in Russia and other post-Soviet states (notwithstanding its many problems) made winners and beneficiaries of many bureaucrats; and unofficial reports have long mapped senior Belarusian officials’ economic interests in the country’s state sector.  The current crisis seems an apt opportunity to proceed with reform, and for these officials to get a head start in the privatisation and restructuring process. Yet this is not happening.

A time to think

The answer to this puzzle appears to be political. A key factor is the rigid power hierarchy and the genuinely central role of the president, who would need to sign off any economic u-turn. In turn this makes the thinking of the president himself, and his unwillingness to heed advice on reform, pivotal. Even so, a president renowned for his survival instinct might be expected to adapt - especially as he has had few qualms about doing so (and reneging on promises made to foreign partners) if his power-needs demand it.

Now, however, Alexander Lukashenka seems to have lost touch with Belarusians’ changing attitudes and expectations. The disconnect is significant. Throughout his rule, Lukashenka’s anti-reform stance has been designed to shield his electorate from profound economic change.

For the president and his supporters, economic reform must mean pain, and is thus to be avoided at all cost. Hence the economic strategy has been to capitalise on the country’s transit status and yield economic aid and export preferences from Russia. When this creates tension, as when Russia demands the promised paybacks, the president assumes the role of a champion of Belarusian statehood. This clever move won him the loyalty, if not exactly the support, of the more independently-minded sections of the electorate and widened his power-base.

This economic model has proven futile, as the centralised economy turns from a backbone of social stability into a source of economic distress. The population appears to have acquired an appetite for economic reform that was not there when they first elected Lukashenka in 1994. He is either unaware of this shift or unable to act on it and offer Belarusians a new path of development.

This is where economics and politics, in Belarus as elsewhere in Europe, are now colliding and demanding to be recomposed. For the profound economic reforms that Belarus needs require more than changes in the ownership and rules of economic behaviour; they also must be aligned to a particular vision of the desired community that the society undertaking the reforms is seeking to achieve.

The post-communist societies in eastern Europe, for example, survived often difficult market reforms in order to qualify for European Union membership and to prove themselves on this new stage; Poland, now at the start of its first post-accession EU presidency, is a classic example (see Krzysztof Bobinski, “Poland’s European infusion”, 14 July 2011).

But Lukashenka is incapable of seeing the European Union, with its democratic and political conditionality, as an option. The alternative he has constructed - a singular Belarusian mode of transition - is rooted in the collective ownership of  economic assets. He seems unable, personally and politically, to depart from it.

So the president sits tight, rubbing his old power-tools in a vain attempt to give them new life. But as the economy and his own voters suffer, he is ever less able to offer help and even consolation. After all, it takes courage, faith and vision to take a new step.

Yet the creation of a new vision of development for Belarusians may not be such a leap as as it may appear. After all, there are variations in market economies, some of which avoid excessive profit accumulation by a few and preserve the social equalities which Belarusians seem to value. A move in this direction could begin by defining and outlining the strengths and weaknesses of this nation, its preferences and priorities for economic development, its desired vision and offering of its place in the world. Belarus needs a realistic and credible direction. The president and the government had better start thinking.

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