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Belarus: Worsening Economy May Yet Defeat Lukashenka

Minsk, 28 November 1996 (RFE/RL) -- Tears well up in the eyes of Minsk pensioner Valentina Artsomova as she recounts how drastically her living standard has plummeted since Belarusian President Alyaksandr Lukashenka came to power two years ago.

"I graduated from the Pedagogical Institute and I used to work in the Belarus Academy of Art. Now I collect bottles on the street," she said. Her pension after 36 years of work is the equivalent of just $25 a month.

Belarus' economy is plunging into the abyss -- and many say that if anything defeats seemingly invincible Lukashenka, it will be the economy.

"The major problems of Lukashenka are not political, but economical," says Pavel Sheremet, deputy editor of "Belaruskaya Delovaya Gazeta" ("Belorusian Business Newspaper.")

"If Lukashenka loses in the nearest future -- in the next two years -- it will be because the economy collapses totally," he said.

Ironically, as bad as things are in Belarus now, economists say the country's residents are enjoying relative prosperity compared to what is to come in the next few months.

Christopher Willoughby, head of the World Bank mission in Minsk, says Lukashenka has artificially kept wages high and prices low in order to garner support for his constitutional referendum which he won by a stunning margin last Sunday.

Now the president will have to pay the bills for this artificial prosperity, Willoughby says.

"Just beneath the surface things are really very bad," he said. "The crisis is going to sharpen in the coming months."

The average wage is about 1.3 million Belarusian rubles a month, or about $65. The average pension is half that.

Unemployment is officially low at 3.9 percent. But there is much hidden unemployment. Many factories work only two or three days a week. Hundreds of thousands of workers are kept on payrolls only to guarantee their social benefits, and are actually receiving little in the way of salary. When all these factors are taken into account, Willoughby estimates that unemployment is actually 30 percent.

New price controls on vital foods such as milk, butter, bread and eggs have kept inflation artificially low -- in the range of 1.3 percent a month by official estimates. But here again the World Bank estimates that inflation is ready to take off again.

"Inflation is almost certainly going to rise substantially in the coming months," says Willoughby.

Another huge problem will be paying for gas for factories and home heating this winter. Belarus has already chalked up debts of $200 million for Russian fuel deliveries in the last few months, and it is questionable how long Russia and Russian giant Gazprom will prop up poor Belarus.

Sheremet, the economic journalist, says he sees no movement towards economic reform that could cure these ills.

And the fault for that is squarely on Lukashenka's shoulders. The populist president, a former Soviet army ideology instructor, has no experience with market economies. Willoughby speaks in even more damning terms, saying: "I don't think Lukashenka has any real knowledge about economics."

Because of his background, his instinctive solution to every problem is to issue a presidential decree -- long after the Soviet-style command economy collapsed in most Central and East European systems and long after most countries, even Belarus's patron Russia, have moved towards a market economy. Western observers also say that Lukashenka is closely involved in day-to-day decision-making even down to the factory level, but has done little to set overall economic policy.

With the Belarus economy still sinking, the only solution, economists say, is a sharp turn in the direction of a market economy. But Willoughby, at the World Bank, questions whether Lukashenka has "the intelligence, depth and maturity" to take the necessary tough decisions.

Still, in all this gloom there are a few flickers of hope. Private enterprise now accounts for 15 percent of all goods and services produced by the Belarusian economy (gross domestic product). That's a tiny fraction compared to economic reform pioneers like Poland or the Czech Republic, but it's estimated to be a three-fold increase since the collapse of the Soviet Union in 1991.

And among the masses who are losing their jobs, many are finding new jobs in the private sector, or by working at home in cottage industries.

"A market economy is being born," says Willoughby. Unfortunately, he adds, it's happening despite the Lukashenka government, not because of it.