How to Solve the Debt Servicing Problem: Proposals of the Nomenklatura and Lukashenka
In August, speaking at a meeting of the Government, Vice Prime Minister Siarhiej Rumas expressed the need to work out a strategy of repayment of the growing external debt of Belarus. According to Rumas, by the end of 2011 the ratio of the external debt to the GDP will reach 69% to 73%. Taking into account such a large amount of the external debt, the payments will also increase. Only for the existing external debt, the payments will amount to over 3 billion dollars in 2013 and 2014. This is a very significant sum for Belarus.
The IMF report on the results of monitoring the development of Belarus' economy in 2010 and 2011 contains an even more dismal prognosis on the ability of Belarus to service its external obligations. According to the Fund's experts, the need for external financing in Belarus will amount to 15,3 billion dollars in 2011, 13,4 billion in 2012, and 14,1 billion in 2013. In order to serve the external debt, Belarus will need 5,3 billion dollars in 2011, 4,9 billion in 2012, and 4,8 billion in the period from 2013 to 2016.
The IMF report states: "The large funding gap has to be filled either by foreign loans or sale of assets. Or by a combination of the sale of assets and bilateral and multilateral financial support, potentially with the IMF's participation".
It follows from the statements of members of the government at the meeting on August 2 that the authorities understand the seriousness of situation. Minister of Economy Mikalaj Snapkou said that the way out of the difficult situation could be "reducing the state control over property and active sale of insolvent companies to the private business". "Only those legal entities should be in the state ownership which have strategic importance and ensure the national safety of the country". According to Snapkou, the private sector's share should reach at least 40% of the GDP by the end of 2012.
Snapkou did not touch upon an important question: whose private business does he propose to sell a significant share of the state property to? The intransigence of the authorities' representatives during talks with their Russian colleagues on this issue means that the policy of containing Russia will be carried further. The authorities intend to keep Russian oligarchs from coming to Belarus.
State mass media also talked about the need to privatize those enterprises which the authorities are unable to manage efficiently for various reasons. At the same time, they also talked about a threat coming from Russia. On July 11, Lukashenka's mouthpiece, TV propagandist Aliaksandr Kryvashejeu said in the evening news bulletin: "It is hardly coincidental that the Kremlin's ignoring of the most important union anniversaries and events coincided with an ultimatum: Belarus is required to surrender its assets, and according to the Russian scenario, i.e. fast, cheap, and to oligarchs".*
Ultimately, the proposals to start privatization and statements about the inadmissibility of the Russian scenario mean that the nomenklatura is more and more insistent in its proposals to Lukashenka to start privatization among their own. It is telling that economist Jaraslau Ramanchuk, who has long advocated the sale of Belarusian enterprises to Russian companies, said in an article on August 31 that the authorities were preparing a division of state property among Belarusian clans.*
Lukashenka wants to postpone the split-up of a significant part of the state property. In July and August, he said repeatedly that to get out of the current difficult situation would be possible through a set of measures which were not related to a large-scale privatization. He expects that it will be possible to increase exports and reduce imports, as well as to reach an agreement with Russia on lowering prices on energy resources. He also expressed confidence that by the end of 2011 Belarus would get loans for a total of 5 billion dollars on very favorable terms.
During the visit of Prime Minister Mikhail Miasnikovich to Azerbaijan on July 7 and 8, 2011 an agreement was signed on the allocation of a loan by Azerbaijan in the amount of 300 million dollars. Lukashenka was balked in his desires to get significant support from China, Iran, Venezuela and the hydrocarbon-rich Kazakhstan and Turkmenistan in this difficult period.
The allocation of significant loans, that Lukashenka counts upon very much, remains dependent on the position of the West and Russia.
Andrei Liakhovich is a contributing author. He directs the Center for Political Education in Minsk.
The End of Pretence: Minsk Forum 2011 Cancelled
This year for the first time since its kick-off in 1997, there will be no Minsk Forum conference. The international conference, bringing together representatives of Belarusian and international political and economic organisations once a year in Minsk, has been the biggest international conference of its kind for many years.
Having started on a small scale 14 years ago, the conference has grown and has been a significant fixed point for everybody working with Belarus. Every year in late autumn, state and non-state actors involved with Belarus would meet in Minsk to discuss projects, take part in panels and network.
For several years, it has been a mirror of the changing relations between the EU and its neighbours. In recent years, the Head of the Presidential Administration of Belarus, Vladimir Makej, was the keynote speaker of the conference. Last year, the German and Polish Ministers of foreign affairs even came to Minsk and met with Aliaksandr Lukashenka right before the Minsk Forum. This was symbolic for the Minsk Forum: it aimed to serve as a platform for dialogue between state and non-state actors and to bring together those who would rarely meet in Belarus under the current circumstances.
The fact that the German-Belarusian Society and its partners have now decided not to organise a Minsk Forum this year shows that EU-Belarus relations are at an all-time low this year. In the past, German political foundations served as sponsors of the forum. After the events of the 2010 presidential elections, political repressions and broken political relations between the EU and Belarus on a high-scale level, coming together in Minsk for the conference is no longer an option.
“Organising a conference which will involve the meeting of politicians from Germany and other EU countries with their counterparts from Belarus is not possible at the given point of time”, the President of the German-Belarusian Society, Prof. Rainer Lindner, states in the press release.
According to the organisation, dialogue will only be possible after all political prisoners in Belarus have been released. However, the partners of Minsk Forum committed to do their best to keep up the partnership with Belarusian civil society. Cancellation of the conference this year shows that the time of pretence is over. A clear message had been sent – not by the EU or the German government itself – but by those organising the conference, those who drive German-Belarusian relations. It is no longer possible — and there is no longer a wish — to overlook the violations of human rights in Belarus for the sake of taking a common picture with Uladzimir Makej, the chief of Lukashenka's administration, and Roland Pofalla the Chief of Staff of the German Chancellery, as it has been the case during the last years.
While it is of course regrettable that the conference is not going to take place this year because of the political situation, it could also be seen as a chance for those involved in its organisation. In recent years, although the number of participants was still growing, a sense of saturation could be felt among the participants.
A shift towards economic topics and a growing number of economic representatives tended to prevent the conference from being what it was so highly valued for: a forum for those who want to move things in Belarus, who have a chance to meet once a year and come up with projects, discuss in a free atmosphere and to be heard by those people they would not reach under normal circumstances.
Hopefully, the German and the Belarusian side will take one year to think about how cooperation could look in the future and to adjust their priorities.