Financial Times: Behemoths in Belarus Belie Stalling Economy
London’s Financial Times published another piece on Belarus economy. About a year ago the leading European business newspaper released a special supplement devoted to promotion of Belarus as an attractive investment destination. This week, Jan Cienski in Minsk describes how the Belarusian authorities are trying to raise some cash without losing control over the state-owned large enterprizes:
The parking lots of Belarusian heavy truckmaker Belaz offer a hard-to-miss clue to how the ex-Soviet republic is tackling the downturn. They are packed with unsold bright yellow behemoths.
The reason for the enormous inventories is that the government – through the four largest state-controlled banks – has pumped cash into the state-owned enterprises that make up three-quarters of the economy.
The International Monetary Fund foresees no contraction in Belarus this year, in contrast to the deep recessions taking place in neighbouring Ukraine and Russia. Keeping state enterprises afloat has preserved jobs – unemployment is officially only 1 per cent.
However, the policy could be storing up trouble for the banking system. Andrei Kobyakov, the country’s deputy prime minister, says that the banking system’s non-performing loans are only 4 per cent. But Standard & Poor’s, the rating agency, says problem assets in the financial system could rise to as high as 35-50 per cent “in a reasonable worst-case scenario”.
An overwhelmed banking system would have the potential to shake the regime of Alexander Lukashenko, the authoritarian president.
“What is happening now is a question of Lukashenko holding on to power,” says Irina Tochitsky, deputy director of the IPM Research Centre, an economic policy think-tank. “His ratings are closely tied to people’s view of the economy
Lukashenko is trying to reform the economy and attract vital foreign investment without losing political control. Until 2007, Belarus was a very strong performer despite undertaking almost no economic reforms. But that year Russia tired of supporting its smaller neighbour and began to demand higher prices for oil and gas.
Pushed to the wall by Moscow, Mr Lukashenko began a tentative opening to the west, releasing political prisoners in the hope of attracting much-needed investments. He also undertook a series of economic reforms, reducing red tape, ending government price controls for most goods in shops and taking steps to privatise some state assets.
Read the full text in: Financial Times.
The Internet, Free Expression, and Authoritarianism
Tuesday, November 17th 2009, 2pm-5pm
Location: Georgetown University’s Institute for the Study of Diplomacy and the Mortara Center for International Studies (3601 N. St. NW)
Evgeny Morozov, Andrew Carvin, Arvind Ganesan, Shanthi Kalathil, and Marc Lynch will discuss the evolving nature of authoritarianism in the age of social media and digital communications. The speakers will assess the impact of new communication technology on regime stability, free expression and civic engagement, and discuss the changing political environments in Russia, China, and Iran.
Session I: 2:00 PM 3:00 PM
Yahoo! Fellow at Georgetown University
Session II: 3:30 5:00 PM
Senior Strategist, Social Media Desk, National Public Radio
Director of Business and Human Rights, Human Rights Watch
Co-author, Open Networks, Closed Regimes: The Impact of the Internet on Authoritarian Rule
Professor, The George Washington University
This program is sponsored by the Institute for the Study of Diplomacy and the Mortara Center for International Studies at Georgetown University, with the generous support of the Schott Foundation and Yahoo!
This event requires a ticket or RSVP