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Belarus: Watching the total collapse of one of the last Communist countries

Saturday, May 21, 2011 · Category Economy · comments 2

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Yes it is true. Belarus is on the ferge of total collapse, much like the last days of the Soviet Union in 1991, Belarus is about to go bankrupt and nobody cares anymore. Belarus has been the Greece of the Slavic countries with one big difference: Nobody is about to step in anymore to help.

Currency devaluation

The Belarus ruble plummeted from some 3.000 ruble to the dollar a few weeks ago to almost 6,500 ruble today. The currency was significantly stronger at 5,300 to the dollar on Thursday 19 of May 2011. Individual retail customers can buy the dollar for 4,000 Belarussian rubles because the central bank has recommended that banks keep those levels for street-level currency exchange windows, local media reported. Until recent weeks, the central bank had required the ruble to be traded at near its official rate, currently 3,120 to the dollar.

Nobody is helping out anymore

The EU recently loaded some EUR 110 billion to keep Greece afloat and are currently debating an extra package of EUR 80 Billion which is meeting strong opposition and parliament clashes in countries like Germany and the Netherlands, but the EU is keeping the country afloat with the help of the IMF.

For Belarus the situation is completely different. Neither the West, nor the IMF nor Russia and any of it's neighbors has any interest in keeping Belarus afloat this time, so we are about to see a total collapse for sure.

Last fall, German foreign Minister Westerwelle met with Lukashenko in Minsk and offered billions of dollars in financial aid, if Belarus held free and fair elections. But with recent political trials, even Germany backed out.

Lukashenko's wishfull thinking

Lukashenko told his Cabinet on Tuesday that Russia is preparing to loan Belarus $6 billion. Yet, just an hour after the annoucement Russia's Interfax ran a story citing Kremlin sources saying that Russia is not going to loan any more money to Belarus. MP Vladimir Putin put it very straight in a recent interview estimating that Russia has subsidized Belarus for many years to an amount of approximately $ 5 billion a year. In 2010 that $ 5 billion was roughly 10% of the countries GDP.

Putin's smart move

By turning off subsidies this year, Moscow is pushing Minsk into the kind of traumatic shift from a state economy that Russia went through after the collapse of communism. Russian PM Vladimir Putin did visit Minsk last Thursday and offered to pay $1 billion to win total control of Belarus' gas pipeline system in an effort to further control not only Russia's Energy resources, but also the transport routes it needs to export it's Gas and Oil to the West.

The West's condemnation of recent political Trials and tightning sanctions

Lukashenko can expect little from the West. He is one of the few leaders in the world today to openly mock democracy. In recent days, Belarus prosecutors have put on trial five former presidential candidates. On Saturday, a Minsk judge imposed a five-year sentence on Andrei Sannikov, the leading opposition candidate in last December's presidential elections.

So far 30 dissidents have been tried and convicted this year, with 22 receiving jail terms. Last week, the United States blasted the trials, calling for the release of all political prisoners. EU foreign ministers also have condemned the trials.

Next week, EU foreign ministers are to meet to debate tightening sanctions against leaders of the repression in Belarus. Even without sanctions, the markets already are isolating Belarus.

Signs of the total collapse of the Belarus Economy

Imported goods are disappearing from store shelves. Shortages of imported parts are stopping assembly lines, forcing factories to lay off hundreds of thousands of workers. And thousands of Belarussians stand in lines outside exchange kiosks trying to unload their local rubles before they become even more worthless. In nominal terms Belarus incomes are going to drop by half this year hitting $ 3,000 average, the same level as Ukraine. GDP in nominal terms might and should shrink by two times.

Rating agency Standard and Poors last week placed Belarus on the same level of creditworthiness as Greece.

Jan Kulczyk, a Polish billionaire, suspended a plan to build a $2-billion coal-fired power plant in Belarus. He said he could not do the project without bank financing, but no bank would offer money for a major project in Belarus today.

Related article: Belarus Presidential elections: Lukashenko to stay in power?

Comments

1. by Drive about 7 years

"The result of this bevioahur is that LiveJournal users are forced to block comments from non-friends, or introduce annoying anti-bot tests before allowing comments. " Capthcas are now "annoying anti-bot tests"? Coming from a blog who (like every other blog online) requires a LOGIN before commenting. Is it really THAT slow of a news day? Sophos is becoming the Fox News of Internet Security.

2. by Anthony Lisanti about 6 years

I am sad to read this.
I travel often to Belarus, and honestly, I love this little country. I do not see this so-called, "Heavy-Hand" on the part of President Lukashenko, ONLY in that he--along with the desires of the majority of Belarusians--don't want to see their small, vulnerable nation become a "ward" of either Europe and their make-believe Socially and Economically engineered pipe-dream, whereby Germany and France must hold up the entire fiasco-and, it's fledgling at best; NOR do they want to be a ward or dependent state of Russia, which they vicariously are.
I see much free enterprise, cottage businesses, a smattering of government controls in some areas, but people are free to purchase automobiles, and sell them at profits, with no interference; their supermarkets have every American, German and Italian Product one can find in the West, and their housing in the Cities are more than adequate and built well. The problem is, as an amateur economist--the Propaganda from the West--and Perhaps President Putin does not object, because that propaganda strengthens his hand in dominating Belarus--that Western Propaganda about "Dictatorship" and "Lukashenko's Heavy Hand from the Old Soviet Union" is harming and discouraging Businesses from USA, Canada, Europe and Asia from doing MORE business with Minsk.
There are US Products being sold there, and also many from Italy. But the Lion's Share come from Venezuela, Russia and China, now.
I truly wish USA would re-think this narrow view that somehow was put in place by the Clinton Administration after the fall of the USSR. And it was truly President Bush who wanted to open up more avenues for the Belarusian People., to relax Visa Requirements for Belarusians to visit USA, etc..
I fly there 4 times per year. My wife resides in Orsha. I love Belarus, and Frankly, I applaud President Lukashenko and the Belarusian people for (trying) to maintain Belarus independent.
And Belarus is NOT a Communist Country. They have many parties, and open market and private ownership of properties- Their Cities are clean, and beautiful old traditional Russian/Polish style cities, with Italian Architecture, also. Vitebsk, Brest, Pinsk, Mogilev, and the Capital, MInsk are true Jewels of old Eastern Europe. It's a safe, clean and kind-natured nation.
Sincerely,
Anthony(Paul) Lisanti,
Hollywood, Florida

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