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A Tale of Two Bailouts

Get those euros while you can
Greece and Belarus are two largely Orthodox Christian nations in Central Europe. Both have roughly the same populations. And both, according to international bond ratings agencies, are now virtually bankrupt.

Over the last year, European Union officials have labored to persuade Greece to accept a $161 billion aid package under International Monetary Fund (IMF) supervision. Greek politicians have hemmed and hawed. This month, as many as 500,000 Greeks at one time took to the streets to protest IMF conditions. (In Athens, a favorite anti-IMF rallying cry refers to the New York hotel incident: “The maid resisted. What do we do?”)

Contrast that to Belarus.

For almost a year, Belarus President Alyaksandr Lukashenka has asked for $8 billion in aid from Russia, his partner in a customs union.

Last week, the check finally arrived -- for $800 million.

And like any good banker, the Kremlin tied the loan to seizable property. In this case, the aid money is tied to Russian negotiations to take over 100 percent control of Soviet-era pipelines that carry Russian gas to Western Europe.

On June 24 in Minsk, Martin Raiser, the World Bank country director for Ukraine,
Belarus, and Moldova, saw no reason for hand-holding. At the conclusion of a three-day visit to Belarus, he told reporters: "Notwithstanding the social achievements of the past, Belarus's economic model has run out of steam."

The IMF is equally cool to Belarus.

In early June, Belarus asked the IMF for $8 billion in aid. This money would follow $3.5 billion that the fund provided in 2009-10. Many economists say President Lukashenka squandered most of this money on boosting salaries and pensions trying to buy the December 2010 presidential election.

Chris Jarvis, the head of the IMF team in Belarus, recently told reporters in Minsk that any new aid would be contingent upon "a strong program" to restructure Belarus's state-dominated economy. He warned: "We would also have to be sure that all actors-- the president, government, and national bank -- are committed to that program."

This prompted Bloomberg to headline: "Lukashenka Must Choose Between Belarus Control or IMF Aid."

Hoping to prolong his 17-year stay in power, Lukashenka now is preparing to sell what many Belarusians call "the family silver" -- the rent-producing gas lines and Belaruskali, a state-owned potash giant that brings in about $1 billion a year in revenue to the treasury. In a recent rambling 5-hour "press conference," Lukashenka tried to soften up public opinion, saying that Belaruskali, the nation’s largest, should not be made “into a Holy Grail.”

If the Belarusian president meets his goal of selling this fertilizer giant for $30 billion, he could keep the “Belarus miracle” afloat for a few more years.

Given Belarus’s near-total isolation, this is the only route open to Lukashenka.
European taxpayers are prepared to lend Greece $14,250 for each Greek man, woman, and child. In contrast, Russia’s aid to Belarus amounts to $84 per person.
The difference boils down two intangibles that economists like to talk about: goodwill and brand.

Europe loves Greece because they love to go on vacation there. At last count, 16 million tourists visited Greece, the vast majority of them visa-free.

In contrast, a visa to Belarus costs around $200 and is only issued with an invitation from an accredited organization within Belarus. At last count, Belarus ranked in 161st place worldwide for receiving foreign visitors -- 91,000 in 2008.

When I came to Minsk in December, there were no taxis at the airport. I felt I had flown into a Slavic North Korea. Finally, after 45 minutes standing in the snow, I shared a cab into town with a nice young man from Lebanon who was here to meet his Internet bride.

Then there is the brand issue.

Ancient Greece, as everyone knows, was the cradle of democracy. Today, modern Greeks sing a national anthem called "Hymn to Liberty."

Belarus has a very different brand.

In April 2005, then-Secretary of State Condoleezza Rice, on a visit to Moscow and Lithuania, sought to help reporters put neighboring Belarus into perspective. She said that under Lukashenka, Belarus "is really the last dictatorship in the center of Europe."

The Bush administration has come and gone. But "the last dictatorship in Europe" label has stuck to Lukashenka like a wet leaf to his shoe. He just can’t shake it.
Not that he tries very hard. On the evening of June 22, his black-shirted riot police were filmed physically throwing young men and women face down onto the steel floors of prison trucks.

Their crime: walking on sidewalks in downtown Minsk and clapping their hands.

Police also detained 16 journalists, breaking their equipment. The Swedish Foreign Ministry complained that police manhandled and briefly detained their charge d’affaires, who was observing the protest.

Only days earlier, Swedish Foreign Minister Carl Bildt had appealed for European attention to the economic plight of Belarus.

"We are, of course, focusing on the situation in Greece. We are all worried about that," Bildt said. "But Belarus might be even worse in terms of financial collapse."

Don’t hold your breath waiting for Washington, Brussels, or Stockholm to approve an IMF bailout for Lukashenka’s Belarus.

-- James Brooke (Voice of America)