Belarusian leader Alexander Lukashenko has learned to ward off many threats except objective economic laws. After six months he had realized his defeat and declared that foreign currency would be back on sale in Belarus in the second half of September, albeit with two exchange rates: one for the enterprises and banks, as per MICEX substantive session, and the other for the rest. MICEX would determine the exchange rate for the public foreign currency booths/counters: “The exchange rate of the Belarusian ruble will be determined by demand and supply, just like any commodity. We aren’t planning to artificially maintain this rate.”
In regard to free sales, Lukashenko warned that foreign currency would cost dearly in Belarus; that only individuals in possession of a national passport would be allowed to buy it; that all such buyers would be entered into a single national database. In other words, those buying too much, in the eyes of authorities, should get prepared for answering unpleasant questions and try to explain how much and for what purpose.
Local businesses were also warned. First, the ban on random inspections had been lifting, thus unbinding the hands of the controlling authorities (that had kept active anyway). Second, the president warned that the businesses would have to share with the central budgets their extra revenues obtained from the price increase. Banks also received such warnings in conjunction with their involvement in certain social projects. According to Lukashenko, no distinctions between the government- and private-run banks (even with foreign capital) would be taken into consideration. Georgy Badei, chairman of the Business Union of Entrepreneurs (Belarus), half-heartedly comments on Lukashenko’s initiatives: “Business has to pay for the government’s macroeconomic mistakes,” adding that there are no extra revenues any business can share with the state without suffering losses, considering that the prices are up because each company suffers the increase in the USD exchange rate.
In other words, the regime wants to have the man in the street and local business shoulder the burden of getting out of the financial crisis. No one will work knowing this will earn him no money… It is very easy to guess who will suffer in the end.
All things considered, Belarus has a very long way to go to solve its currency problems. Two or more exchange rates have long been known as a direct way to speculation, shortages, the resultant black market, and the plummeting Belarusian ruble’s exchange rate. In way, the Belarusian in the street, will find it easier to buy hard currency, but this will be a partial solution to the problem. Stanislav Bogdankevich, ex-head of the National Bank of Belarus, says that “all these measures ought to have been taken toward the end, or at the beginning of, this year.” He told Moscow-based Nezavisimaya gazeta earlier, however, that “it’s better late than never.”
In a word, Belarus is starting to experience all the “benefits” of its CIS Customs Union membership, including the difficult situation with food supplies (hard to believe it, but there are practically no sausages on the store counters, compared to a recent generous display). Now there are long lines in front of company stores, formed long before they open. There are more foods to be found at the bazaars, but the prices are considerably higher after being officially allowed to be increased: 40-65 percent more for summer sausages. Naturally, local customers are buying fewer such products.
Food tourism from Russia has gained in scope, due to the devaluation of the Belarusian ruble and foreign currency shortage. Meat, sausages, and dairy products in Belarus are considerably less expensive than in Russia. Hence the influx of Russian buyers. According to Nezavisimaya gazeta, local bloggers describe an incident that took place in a line for milk. A fistfight started after some buyers from Russia rudely told a local woman she couldn’t buy a liter of milk without standing in line. Naturally, local authorities denied any such interethnic conflicts on a food basis, although Vasily Pavlovsky, Deputy Minister of Agriculture, admits that foodstuffs are exported to the neighboring country, adding that 70 percent of commodities sold in Russia’s border areas are made up of Belarusian dairy and meat products.
Previously, such food exportation could be forbidden administratively, but no longer possible since July 1. Under the Customs Union, all commodities are guaranteed free transfer. The fact remains that business people in Belarus cautioned against this membership, saying there were reefs and undercurrents; that precautionary measures had to be taken. President Lukashenko ignored all of them because he wanted to curry favor with Moscow, to lower the gas prices. In the end, the prices increased and Belarus experienced a food crisis. After making lots of promising accords, now it was time to suffer the consequences (one is reminded of Ukraine’s gas accords with Russia, made in Kharkiv, and the dear price Ukraine has to pay).
Problems with keeping the whole country fed can’t be solved overnight. The same is true of the man in the street being increasingly disappointed in his government failing to provide him with basic goods. In a word, Belarus has a long way to go to achieve domestic peace and quiet. Lukashenko is being pressured on all sides, with Moscow making no secret of wishing to see a different political leadership in Belarus; with the West taking a dim view of the current Belarusian regime, with Lukashenko countering that their demands are excessive. Add here the Belarusian common folk, most of whom are displeased. Under the circumstances, one can’t blame everything on hostile clandestine agencies and their agents in Belarus. No one buys meat and sausages in Belarus to take them to Poland or Lithuania. The CIS Customs Union membership makes it impossible to blame any of the member countries for the critical economic condition of Belarus. No one to blame but oneself — which is unacceptable, of course.
Lukashenko has to play smart under the circumstances. Strange as it may seem, apart from his domestic problems, Moscow is the biggest threat to his regime, considering that it now hosts Belarusian KGB officers fired by Lukashenko and thus has enough manpower to carry out special missions in Belarus.
That was precisely why Lukashenko proposed the usage of forces at the disposal of the Collective Security Treaty Organization (including Belarus, Russia, Kyrgyzstan, Tajikistan, Kazakhstan Uzbekistan, Armenia) to suppress revolutions within these countries, assuring that this idea had been agreed upon with Moscow. During a meeting with CSTO Secretary General Nikolay Bordyuzha, he declared: “This is about the usage of the Collective Rapid Reaction Force, in the event of foreign invasion, as well as in the event of aggression on the part of any CSTO country.”
How exactly does the Belarusian president see this situation? For example, Armenia and Azerbaijan have problems verging on armed conflict. Then what? Send troops there or deploy troops in Minsk to disperse peaceful rallies of protest against the lack foodstuffs?
This idea is stillborn. Uzbekistan blocked such a proposal at one time. Lukashenko responded by proposing to cleanse the CSTO of those who were slowing down its progress, resisting the creation of full-fledged collective security forces. Simply put, he wanted Uzbekistan out.
Lukashenko badly needs such forces. Needless to say, he can get such police support only from Russia. Naively he expects these forces to suppress Belarus’ resistance movement and keep him in office. He ought to learn from the lesson of Afghanistan and what happened to President Hafizullah Amin, General Secretary of the Central Committee of the People’s Democratic Party, even before the first Soviet army units entered his country. After all, why should the Kremlin bother defending an ally who is really a pain in the neck? The worse his status, the better for Moscow. There is this German saying: der Wunsch ist der Vater des Gedankens — wish is the father of thought. In this case, however, the thought is stupid from all points of view.
No one knows about whom Lukashenko met with and agreed on anything in Moscow. The Russian capital keeps dignifiedly silent on the matter. Owing to this and probably other reasons, Lukashenko did not attend the CIS summit in Dushanbe. “He isn’t present because he is busy taking care of urgent matters relating to currency regulations in Belarus,” explained Belarusian Foreign Minister Sergei Martynov. But of course, nothing, not even growing flax, let alone selling hard currency, can be done in Belarus without the head of state paying close fatherly attention. But perhaps Moscow has decided against protecting his presidency? If so, his absence in Dushanbe is easily explained by these “urgent matters.”
Things have started happening in the Western direction. In a letter to Bulgarian Foreign Minister Nikolai Mladenov, Lukashenko promises to release all political prisoners within a month. Moreover, he proposes a roundtable with the opposition. Result: Europe and opposition don’t believe him. In a word, no shining future for the long-standing president of the Republic of Belarus.
