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Belarus: President Lukashenka Apologizes For Poverty

Prague, 12 November 1998 (RFE/RL) -- President Alyaksandr Lukashenka yesterday told Belarusians that he was sorry that they are "becoming poorer and poorer every month."

Speaking to top government officials in a meeting broadcast on national television, Lukashenka said that it was "abnormal" that the government is unable to provide the "people with bare necessities" and that prices in the shops are "beyond the limits" of ordinary Belarusians.

Lukashenka then expressed surprise with these evident problems at a time when "our industry and agriculture show steady improvement."

Indeed, according to official statistics, the Belarusian economy has grown 10 percent in the first nine months of the current year when compared with the corresponding period of 1997. Until recently, the Belarusian government claimed that the economy was "booming" and that this "boom" will continue for years to come.

At the same time, however, the same statistics show that the year-on-year inflation reached 64.5 percent in September and is accelerating. In September alone, the monthly rate jumped to 17.6 percent from 3.8 percent in August.

The independent weekly Belarusskaya Gazeta yesterday published figures showing that since Lukashenka assumed office in mid-1994, prices for consumer goods went up by 590 percent.

Those figures may still be on the low side because they are prepared by the government alone and correspond to officially set prices and production targets.

Critics of the government have consistently argued that claimed economic "growth" owes much to massive subsidies and easy credits from government-controlled banks to inefficient farms and industries.

The official figures show that credits last year to state-owned enterprises, particularly in agriculture and housing, reached nearly $400 million in the $18 billion economy, with about $100 billion going for loans to housing alone.

Critics also have said that the government has been printing large sums of money to cover expenditures. The official rate remains at 58,600 Belarusian rubles to one dollar, but the black market rate more than doubles that amount and the rate at interbank exchange has reached about 300,000 rubles to one dollar.

And there is little chance that the situation will improve any time soon. The Belarusian economic system is rooted in the old-style, Soviet-type command economy, in which production targets are set by central planners, and all economic activity is regulated and directed by the government.

The economy has been hit hard by the Russian crisis, affecting exports to Russia and limiting imports from there, particularly of much needed energy resources, such as oil and gas, which were once bought at lower prices than those prevailing on world markets.

Much of the trade with Russia is now conducted by barter -- recently an agreement was reached to "exchange" some 500,000 tons of Russian steel for tractors from Minsk, for example. But this method of commerce offers little hope for economic development of the country or for an improvement in the standard of living.

In general, trade with neighboring countries has declined. This was quite evident in the case of trade with Poland, when border restrictions introduced at the beginning of the current year severely affected cross-border individual commerce, until then a major factor in the exchanges between the two countries. Minsk has recently also restricted cross-border trade with Russia, particularly in food products. The decline in trade has also been evident with Lithuania, with turnover decreasing by almost 15 percent in the first six month of 1998.

And so, it seems that changes in the way the economy is run may be needed. But can they be accepted by the Lukashenka government?

Until now the government has refused to even contemplate the possibility of reforms. Indeed, it has clamped down on the few nascent forms of economic change, imposing prohibitive taxes on private businesses and tight controls over financial institutions.

Will there be a move away from such policies? Lukashenka's comments yesterday suggested not. He told government officials that "if by December 1 the situation isn't stabilized" he'd have to "reshuffle the government." December 1 is less than three weeks away -- not enough time to implement meaningful reforms, let alone see any positive effects from them.

Lukashenka admitted what he was demanding wouldn't be easy to achieve. Speaking to government officials he said, in his words: "I don't really know what methods you will use to stabilize the situation on the consumer goods market", adding "but it won't be an easy task."