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On The Verge Of Economic Disaster, Minsk Turns To Moscow

People line up to buy foreign currency outside a bank's exchange office in Minsk on April 6.
People line up to buy foreign currency outside a bank's exchange office in Minsk on April 6.
By RFE/RL
With an economy teetering on the brink of collapse and a nervous population standing in hours-long lines to buy foreign currency or gold, Minsk is going hat in hand to Moscow seeking relief.

The open question is: What price will Russia demand for bailing out Belarus and its authoritarian leader, President Alyaksandr Lukashenka?

Russia has long been pushing Minsk to sell off key state assets including oil refineries, chemical plants, oil and gas pipelines, and machinery plants. In addition, Moscow has been calling for Belarus to open its markets to Russian goods, tearing down barriers that exist despite the fact that the two countries are members of a unified customs zone.

"It is a matter of the privatization of shares, the entrance of Russian capital into Belarus, and the opening of markets to Russian products," notes Yevgeny Minchenko, director of Russia's International Institute of Political Expertise.

Belarus has run through 20 percent of its hard-currency reserves since the beginning of the year and implemented a partial currency devaluation at the end of March. Long lines are forming at exchange booths that are rapidly running out of dollars and euros.

Panicky Belarusians are meanwhile buying up cars, gold, and nonperishable staples like sugar, tea, and coffee as they desperately seek to retain the value of their savings as fears of further devaluations mount.

Moscow's Terms

On March 31, Belarus presented Moscow a plan to stabilize the economy that envisions $2 billion in credits from the Russia-dominated Eurasian Economic Community (Eurasec) and $1 billion from Russia. It also proposes a tightened monetary policy, structural and tax reforms, and reduced state spending.

Russian President Dmitry Medvedev (right) is in a position to dictate terms to his Belarusian counterpart, Alyaksandr Lukashenka.
However, Moscow has been slow to react. Deputy Finance Minister Dmitry Pankin told Interfax on April 5 that Russia had made "no promises" and that Moscow was studying the proposed macroeconomic reforms.

Belarusian economist Syarhey Chaly tells RFE/RL's Belarus Service that no serious restructuring can be carried out so quickly and the talks must really be focused on other matters.

"It's obvious that there are conditions, but they aren't being publicly discussed. Most likely, the conditions are very concrete," Chaly says. "Because we are in a very bad situation and have painted ourselves into a corner, Russia can demand practically anything it wants."

Russia's hand is further strengthened because Lukashenka may have miscalculated in his normally wily geopolitical balancing act, political scientist Minchenko says. "There is no possibility to play the game that Lukashenka loves to play," he says, "weaving between Russia, the West, China, and Latin America."

No Room To Maneuver


Prior to Belarus's December presidential election, the European Union offered Lukashenka a $4.2 billion aid package if the poll was conducted fairly. Not only was the election held in poor esteem by outside monitors, but Lukashenka also launched a brutal crackdown on the political opposition in the wake of the poll. The EU aid offer was withdrawn and the West began imposing fresh sanctions.

Lukashenka's crackdown on the opposition has cost him a proffered EU aid package.
In addition, the bad economic situation was brought to the current crisis by populist measures Lukashenka adopted in the run-up to the vote. In particular, he raised salaries in the country's enormous public sector at a time when Russia was raising the rates it charges Belarus for oil and gas.

The current crisis will likely force Lukashenka to roll back those promises and could prompt a devaluation of the national currency by as much as 40 percent.

After years of oppression and marginalization -- as well as the postelection crackdown -- the political opposition in Belarus is hobbled and in a poor position to capitalize on the growing public discontent. But the panic puts additional pressure on Lukashenka to come to terms with Moscow quickly.

written by Robert Coalson, based on reporting from RFE/RL's Belarus Service
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Comment Sorting
Comments
     
by: Daniel from: Ecuador
April 06, 2011 17:02
Stupid Lukashenko, you had to unite with Russia long time ago, Belarussians would be better living with his russian brothers, you are the same people.
In Response

by: Konstantin from: Los Angeles
April 07, 2011 07:45
Not the same - put together from Zhmut', inslaved by Varyazhkas,
And parts of Poland, Ukraine and Baltics - influxed by Rashkas.
It isn't wrong create, if necessary, closer Common Wealthes,
But Feudal Russia occupy, lying need "unite" by blyashkas,
As the bists hate checks and ballances - it isn't healthy.
In Response

by: Jubus from: Poland
April 07, 2011 10:13
Someone who doesn't know Belarussian history can say such idiotic things.
Belarussians and Russians are not the same people, Belarus was part of Russia only for 200 years (since 1795 - the third partition of Poland-Lithuanian Commonwealth)and it was part of Grand Duchy of Lithuania for about 500 hundred years (between XIII and the end of XVIII century).
Only Lithuania, Poland and Ukraine can help Belarus with its restoration.
In Response

by: Masha from: Minsk
April 12, 2011 12:18
BelaruSians will NEVER live better if we unite with Russian Federation! & definitely, we are not the same people. We are different in our minds & our hearts!

by: Konstantin from: Los Angeles
April 06, 2011 20:01
Most of former Soviet Nomenclatura were Quislings of Russia,
If not all, thought the late leaders are usually mind-controlled,
Not entirely by their free willl. Without assessing Belorussia
And wisdom in dealling with EU and Russia, is it walled?

At list one thing is for sure - if Russian hunger for inhale,
For repopulating, for inserfing nations and breed Varaga
Is used here again (government of Poland, Russia killed
On road to Katyn', to expand Rashka - still remembered),
Another nail in Russia attempt join better half of Humanity.

Is it result of Russia's blockade? If so, beware Rashkas!
In Response

by: Konstantin from: Los Angeles
April 11, 2011 19:16
PS:
Regarding Ivan Gaponov, isn't it an irony?
Is it pro-Russian in memory of "Pop Gapon"?
It simce that Beloruss people can also be humory,
They sentenced him in Moscow district court, for long.

On more serious note - Beloruss is hard on protests,
Democratic approach would help, unless in this case
It is attempt of Russia to colonize again. If hulliganing,
Like in Tallin - such long sentence is understandable.

I hope he got it not as humoring him being Pop Gapon.

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