Belarus: The Last Soviet Republic

Looking through my drafts, I noticed I still have a few student guest posts lying around!  Here is one of them – a student description of  Belarus’ current economic challenges.

Ah, Belarus.  Famously known as Europe’s last dictatorship.


For most post-Soviet states, one can look to a particular industry or export that sustains the economy, or has been a source of growth. For Belarus, this source lies solely in Russia. Belarus has been very economically dependent on Russia since the fall of the USSR, and in 2010, entered into a customs union with Russia, along with Kazakhstan. This union, by opening the international market to free trade and commerce, has brought the three countries into the closest economic codependence since becoming independent states. Putin has stated that “…the single economic space will have unified regulation rules and single economic policy.”

Despite international claims, Belarusian President Aleksandr Lukashenko has made numerous statements indicating his optimism towards the state of the Belarusian economy. According to recent statements, the economy of Belarus has remained stable. While growth has been less than the internally projected 5.5% (instead at a dismal 1.5%), it is still growing, and outperforming international estimates. Belarus is “getting by” independently, and says that it will welcome, but does not need, loan offers from the IMF. Lukashenko has been attempting to reinforce the notion that Belarus is an autonomous, self-sufficient state, despite the fact that in 2009-2010, Belarus received an IMF loan of 3.46 billion USD. He is also skeptical regarding international motivations regarding the loans, and claims that the IMF is simply acting on the interests of its primarily Western sponsors.

Belarusian President Aleksandr Lukashenko © REUTERS Vasily Fedosenko
Available at http://en.rian.ru/world/20121106/177229487.html

A rapidly growing problem facing the Belarusian economy is that of unemployment, despite reports from local new agencies.  Official government reports state that the unemployment rate is less than 0.6%, and prides itself on this statistic. This is especially favorable when compared to the unemployment rates of neighboring formerly Soviet republics, some as high as 15%.

Externally, Lukashenko’s motivations for maintaining this façade of prosperity are fairly transparent, as the Belarusian government is struggling to maintain legitimacy. Upon digging a layer deeper, the truth behind these statistics comes out. They are not being falsified, they are simply misleading; while it is true that 0.6% of the adult population is registered as unemployed, many individuals who are out of work choose not to register, as the benefits of doing so are far from being worthwhile. Welfare payments are small- only about 15% of estimated subsistence level wages- and require navigating several layers of bureaucratic red tape to acquire. In addition, individuals registered as unemployed are required to participate in government service projects, which include construction, street cleaning, and other menial labor. International estimates of actual unemployment in Belarus are as high as 40%.

You can compare your own Post-Soviet economies at http://www.bbc.co.uk/news/world-europe-14489883
You can compare your own Post-Soviet economies at http://www.bbc.co.uk/news/world-europe-14489883

Another factor contributing to the deceptively low unemployment rate in Belarus is the strength of its shadow economy, functioning without representation in national economic figures.  While the development of these shadow economies has been occurring worldwide in the past 50 years, it has been especially strong in the post-Soviet republics. Belarus is no exception. Viktor Prus, the deputy general prosecutor of Belarus, has reported that the shadow economy makes up 17-18% of the total GDP, with some external estimates estimating as much as 53% of the total GDP. If that figure is accurate, less than half of all industry, as it is existing outside of state control, is paying taxes to the ever-weakening Belarusian government.

In response to this growing economic crisis and the weakening economic strength of the state, Lukashenko is steadily downsizing the national government, primarily making cuts to upperlevel administrative, bureaucratic roles. This trend will likely be hurtful towards the economy in the long run, considering the degree to which the markets are state-controlled. Soviet values against the free market run strong in Belarus, a sentiment upheld by President Lukashenko since his election immediately after the fall of the USSR.

References

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