At the beginning of the current financial crisis in Greece, the European authorities found that Greek official statistics were inaccurate and falsified. The Greeks been reluctant to show the real figures to fog their non-fulfillment of the ”Maastricht Criteria”, which imposes a limit on the level of public debt.  It turned out that the real ratio of the Greece debt to its GDP was four times higher than allowed. Instead of starting structural reforms, strengthening the private sector, improving fiscal discipline and abandoning the practice of buying political loyalty through subsidies – the Greek government chose an easier way: heavy borrowing. When the debt overload was inevitable, the EC sent Eurostat officials to Athens to find out the real dimension of the disaster. The consequences of what was covered by misleading statistics is still shaking Europe and may undermine the whole Euro project.  A closer look at the situation in Belarus reveals very close analogies.

Reading Belarusian news these days feels like opening a German newspaper on April fool’s Day. Some of the news just cannot be true - they must be jokes.  But, up to now, not a single of that news has proved to be a hoax. An observer from the West is used to economic decisions being taken with a cold, sweat and tears. In any case, decisions are made after consultations with economists and discussions in parliaments and television shows. This is why it is difficult for a Westerner to understand declarations of the Belarusian president. In fact, he will be utterly alarmed by them, even if he is not an economist.  We discuss the most striking recent decisions and declarations aimed at resolving economic crisis in Belarus.

Belarus Digest starts to publish regular summaries of the most notable political and civil society news in Belarus. The new digests will attempt to give a richer picture of the recent events in Belarus, and will often go beyond the hot stories already available in other English-language media. Over the last  weeks the news about mass protests and subsequent repressions dominated the headlines. Other notable events include the ongoing eviction of one the largest Belarusian opposition party from its headquarters (picture on the left) and trials against journalists and bloggers. The most interesting civil society news include creation of the online civil society archive and a public procurement seminar conducted with the Minsitry of Labour.

Two weeks ago, some people came out into the Minsk city centre on a peaceful protest. A week ago, over a hundred turned up. Yesterday, there were a thousand protesters in Minsk, and also across cities and towns of Belarus. Up to 450 people were reportedly arrested, including journalists.  Observers and participants on both sides hold breath to see what the next week will bring. “Revolution through social networks” is a provocative name for a new kind of popular mobilisation in Belarus. For a country where every political protest was doomed or failed for the last 17 years, it appears over optimistic to either endeavour or support one. Yet both the eroding legitimacy of the Belarusian government and the clever tactics by the organisers make the “revolution” notable.

The Council of the EU decision on Belarus of 20 June 2011 introduced a new development into EU-Belarus relations. Apart from designating additional persons to an already impressive list of those subject to travel restrictions and assets freeze, it provided for an arms and repression tools embargo and targeted three companies, which European officials think are linked to the Belarusian regime. Politicians and academics are struggling to understand how to deal with Belarus. In this regard, Professor Peter Van Elsuwege of Ghent University in Belgium made an interesting overview of history of the EU-Belarus relations. On the one hand, his article contributes to raising the awareness about Belarus in academic circles. On the other hand, he makes interesting observations about the history of Belarus-EU relations in the search of a viable approach towards Belarus.

This week the European Union introduced economic sanctions against three Belarusian companies supposedly linked to Alyaksandr Lukashenka. The European Union also imposed an embargo on Belarus on arms and on materials that might be used for internal repression. It is the first time ever that Europe imposed an arms embargo against Belarus and economic sanctions against individual Belarusian companies. Many questioned whether Europe could ever agree on it. The eventual introduction of sanctions shows how alienated from Europe the Belarusian regime is. According to British press, the United Kingdom Government and in particular British Foreign Secretary William Hague lobbied hard for economic sanctions. Apparently Poland was another country particularly unhappy with Lukashenka. On Monday, Polish Foreign Minister Radoslaw Sikorski announced that Lukashenko should choose between democracy or the Hague tribunal. Other countries, led by Italy and Latvia, had opposed the introduction of economic sanctions. But these countries remain a minority. It appears that Europe plans to gradually increase its sanctions in response to the ongoing human rights violations in Belarus. However, the effect of these sanctions is unlikely to have any major impact. 

The reaction of Belarus' President resembles the Soviet Union’s approach to the Chernobyl accident. At his press conference last Friday he repeated the old mantra: “No crash happened, we have everything under control, do not listen to foreign propaganda, no reason to worry…”  In fact, there is a lot to worry about: an economic meltdown is in full progress. A large number of trading companies, whose business was based on imported goods, are suspending their operations. Factories, which rely on imported components for their production, are running out of material to continue their production. The result is an exploding unemployment rate. Even Belstat, otherwise overoptimistic and very questionable in their data, admitted one month ago that due to the crises about 600 000 people already lost their jobs. 

  Two months ago Alyaksandr Lukashenka ordered to find more oil deposits in Belarus. He was visibly upset that his country did not have enough of its own oil and had to depend on Russia. After all, oil revenues help many authoritarian regimes to stay afloat for decades. So far Belarusian geologists failed to discover new oil deposits in Belarus.  Oil imports from Russia become increasingly expensive. For over a decade, refining cheap Russian oil and selling oil products to the West has been a cornerstone of the Belarusian economy. Now Belarus has to share a large part of its oil profits with Russia. Still, exporting oil products remains a lucrative business. With budget revenues dwindling the authorities are trying to seal Belarus Western borders to impose a state monopoly on reselling oil products to the West. These export restrictions and increased gasoline prices make many Belarusians angry.   

Belarus' economy needs external financing more then ever before. The government resists privatization but it will have to surrender soon, even if the International Monetary Fund decides to extend another loan.  Recently the Belarusian weekly Belorusski Rynok discussed the chances of getting an IMF loan. At least three factors play against it. First, Belarus failed to fulfill a number of conditions for the loan extended two years ago. For instance, it failed to establish an agency of financing for state programs, and while the agency on privatization was established, it stopped short of privatizing anything. Moreover, just before the 2010 presidential elections, the government has dramatically raised salaries to woo the electorate.

Yesterday, several hundred car drivers participated in a mass protest action called “Stop Gasoline” against the rising fuel prices in the Belarusian cities of Minsk, Homel, Brest and Mogilev. Following the call of the automobilist organization “Za-Avto”, drivers blocked the central avenues in the country, pretending that their cars have broken down. For hours, traffic jams and the blowing of horns made circulation on Independence Avenue in Minsk impossible. Gasoline prices were to rise about 30% on June 8th and they had risen by 25% just two weeks ago. In the aftermath of the protests, four activists have been arrested and sentenced to pay fines. The organizers of the rally have started collecting money to pay the fines.

Russia, through the Eurasian Economic Community, has agreed to grant Belarus a USD 3bn loan, of which Belarus will only see USD 800m this month. The Belarusian government will only get the remaining amount, in two portions over the following two years, if it goes ahead with the privatisation of state companies. Analysts say that this loan is far from sufficient to really save Belarus from its current economic crisis. What Belarus requires is at least USD 8bn. It can get it from either the IMF or Russia, but only under the condition of privatising certain state companies.

Can the Internet facilitate political mobilization? The so-called Twitter and Facebook revolutions in Moldova, Iran, Tunisia, and Egypt suggest that it can.  Whatever its limits, technology enables people to express their discontent safer and louder, to gather larger protests, and to better inform the outside world of the injustice perpetrated in authoritarian states. Given Belarus’ comparable Internet penetration rate of 27 percent (24 percent in Egypt and 34 percent in Egypt) one would think the democratic transition in Belarus is just a click away. But the Belarusian government and security agencies are mastering the new technologies with no less enthusiasm than the dissidents. 

The weekend brought a pleasant surprise for the Belarusian leadership. It managed to get a big loan from the Eurasian Economic Community – a post-Soviet integration bloc dominated by Russia. This week, Lukashenka will be given 800 million USD, and another 2.2 billion will follow over the next 3 years at a 4.1% interest rate.   The most important requirement of the loan is the privatization of state-owned assets in Belarus which are worth 7.5 billion USD.

Although the motivations of the Western and Belarusian leadership are different, they both want Belarus to remain an independent country. This is in large part driven by the fear of Russian political and economic expansion. However, the truth is that authoritarian regimes do not surrender their independence to foreign countries. The very reason why they are authoritarian is because they want to retain all power in a country. Since his election in 1994, Alyaksandr Likashenka's main goal has been to accumulate as much power as possible. To this end, he initiated a series of referenda which destroyed the separation of power and media freedom in Belarus. Today, Belarus has the worst human rights record in Europe and its economy is dominated by large inefficient enterprises inherited from Soviet times.