One reason why Lukashenko was able to claim a 79% re-election victory and ignore the EU's demands for a free and fair election, even though he was offered $3bn by Polish and German ministers if he did not tamper with election results, is said to have been the deal he made with Russia,
Europe's Mugabe only dared to act in this way because, 10 days before the election, he unexpectedly secured a deal with Russia. This once again gives him subsidised oil, which he can sell on at a profit. For his part, he agreed the terms of a "single economic space" with Russia and Kazakhstan.
Before that, the boot had been on the other foot. Russia seemed to have had enough of Lukashenko: a Russian TV channel owned by Gazprom even aired a four-part series attacking him as a corrupt godfather.
Yet an interesting perspective was offered today by the
Financial Times which claims that economic liberalisation will happen in Belarus in 2011, one reason perhaps why despite condemnations there is not much more from the West and why Lukashenko has been able to clamp down on what he calls "senseless democracy".
Alesia Sidliarevich writes (Belarus’ Lukashenko re-election roils but economic liberalisation key to future )
According to preliminary results announced by Belarusian authorities, Lukashenko gained 79.68% of votes at the presidential elections on Sunday. Thousands-strong protests gathered in Minsk that evening to contest the ballot result, prompting a brutal police response and detention of seven presidential candidates from opposition, according to international media reports.
Few doubt however that Lukashenko will retain the presidency and in doing so extend his 16-year rule until 2015. His major challenge then will be to liberalise the Belarusian economy and draw in foreign investment by kick-starting a stalled privatisation programme.
Welcoming foreigners
Economic conditions in the landlocked Eastern European country bordering Russia have slowly improved following the government’s decision to fully draw down a USD 3.6bn standby loan from the IMF last year. The country is projected to shrink its current account deficit from 13% in 2009 to 9.7% this year. Nevertheless, it has needed to venture into the international capital markets to bolster reserves.
On the subject of national debts the FT reported a fairly rosy economic picture in some ways compared to the notion that Belarus is some version of Zimbabwe or North Korea.
Belarus does not have any major short-term debt repayments to make, with its first major redemption of USD 2.5bn due in 2013, according to Siargey Chaly, a Minsk-based economist. The country’s foreign debt, which consists mainly of inter-governmental agreements, is quite cheap and pays an average of 300bps over Libor, he said.
Privatizing state enterprises through competitive tenders should bring more benefits to the government than direct sale negotiations, said Giovanni Salvetti, Rothschild‘s managing director overseeing Central and Eastern Europe. “If privatisation is handled in a ‘Western’ way [via competitive tenders] I would expect significant interest from foreign investors in certain sectors,” he added.
High stakes
But privatisation will be a painful process without measures to create additional jobs and a more liberal economic climate, said Ramanchuk. “The Belarusian economic situation mirrors the Soviet Union in the year 1985,” he added, noting that one of the chief points of his election programme was support for small and medium-sized businesses.
Lukashenko has held back from unpopular moves to privatize state enterprises until after the election, but a source close to the Belarusian government said the president will have to re-start plans next year. “Belarusian enterprises are 30%-40% over-employed. Politically speaking, privatisation is a very bad move, but the government does not have a choice. It needs to do it to get foreign funding,” the source said.
Belarus may decide to privatise companies within the financial, construction materials, consumer goods, pharmaceutical and energy sectors, among others, according to Salvetti at Rothschild.
Belgosstrakh, Belinvestbank and Belagroprombank could be up for sale, along with pharmaceutical company Borimed, refinery Naftan Novopolotsk and various cement plants, said the source close to the government. The state would consider full sales, or the disposal of majority or 25% stakes, he added. Belarus also negotiated to sell fertiliser producer Belaruskali to a Chinese buyer at the start of the year but could not agree the price.
This goes some way to explaining why Lukashenko has been able to retain power. He has played off all the global investors against one another. It also proves that there is no necessary correlation between economic liberalisation and democracy as China has proved and why he seems to be aiming at creating a European version of the "Chinese" or "Singaporean" model.
There would be nothing out of character here given that Kazakhstan is allowed to be Chairman of the OSCE despite the fact that it actually criticises the elections there as flawed as well and has a one party state run by Nursultan Nazarbayev one which is far more repressive and more obviously authoritarian than even Belarus. Then again it has copious supplies of oil and gas.
There has been no widespread criticism of Kazakhstan's human rights violations and repression and it has not been publicly referred to in mainstream papers such as The Guardian as being a brutal dictatorship in quite the same way, probably because it lies on the Asian side of Russia.
In fact, in 2009, former UK cabinet minister Jonathan Aitken released a biography of the Kazakhstani leader entitled Nazarbayev and the Making of Kazakhstan. The book takes a generally pro-Nazarbayev stance, asserting in the introduction that he is mostly responsible for the success of modern Kazakhstan.
Lukashenko has learnt the lesson that it is possible to use force to deal with protesters as there is nothing even the EU will be prepared to do if he can stave off political challenges, as weak as they are, long enough for him to get the economy booming and investment from privatisations pouring in.
Alesia Sidliarevich writes (Belarus’ Lukashenko re-election roils but economic liberalisation key to future )
On the subject of national debts the FT reported a fairly rosy economic picture in some ways compared to the notion that Belarus is some version of Zimbabwe or North Korea.
This goes some way to explaining why Lukashenko has been able to retain power. He has played off all the global investors against one another. It also proves that there is no necessary correlation between economic liberalisation and democracy as China has proved and why he seems to be aiming at creating a European version of the "Chinese" or "Singaporean" model.
There would be nothing out of character here given that Kazakhstan is allowed to be Chairman of the OSCE despite the fact that it actually criticises the elections there as flawed as well and has a one party state run by Nursultan Nazarbayev one which is far more repressive and more obviously authoritarian than even Belarus. Then again it has copious supplies of oil and gas.
There has been no widespread criticism of Kazakhstan's human rights violations and repression and it has not been publicly referred to in mainstream papers such as The Guardian as being a brutal dictatorship in quite the same way, probably because it lies on the Asian side of Russia.
In fact, in 2009, former UK cabinet minister Jonathan Aitken released a biography of the Kazakhstani leader entitled Nazarbayev and the Making of Kazakhstan. The book takes a generally pro-Nazarbayev stance, asserting in the introduction that he is mostly responsible for the success of modern Kazakhstan.
Lukashenko has learnt the lesson that it is possible to use force to deal with protesters as there is nothing even the EU will be prepared to do if he can stave off political challenges, as weak as they are, long enough for him to get the economy booming and investment from privatisations pouring in.