Belarus economy appears to unravel in wake of terror attack, crackdown
A terrorist attack in Belarus last week and dire warnings aimed at the opposition by President Lukashenko prompted many Belarussians to exchange currency and stockpile supplies.
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Russia, which once lavished subsidies upon Lukashenko in return for little more than pro-Moscow speeches, has turned to hard-headed realism in dealings with its former client. On Sunday, Russian Finance Minister Alexei Kudrin said that Moscow might provide an emergency $1 billion loan to Belarus, but only if Lukashenko accepts stringent conditions laid down by the International Monetary Fund, which would include tough austerity measures, deep currency devaluation, and sweeping privatizations that would open the doors for Russian companies to snap up much of Belarus' state-owned assets.Skip to next paragraph
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"Lukashenko understands that Belarus faces a choice. He is very nervous, and he is being insolent," says Vladimir Zharikhin, deputy director of the Kremlin-funded Institute of the Commonwealth of Independent States in Moscow. "The simple fact is that if Lukashenko turns to the West, he will have to reform his economy. If he turns to the East, he will have to reform his economy. I know it's hard for the former chairman of a collective farm [Lukashenko] to learn about this, but he will have to."
On Saturday Lukashenko said that he would slash government spending and lending in order to shrink the budget deficit, moves that might hit hard at social services and the operations of state-owned companies.
In exchange for temporary financial relief from the IMF or Russia, Belarus might have to devalue its beleaguered ruble by about a third, inflicting intense pain in a country where the average monthly income is about $220 and most foodstuffs and manufactured goods are imported.
"Our polling shows that peoples' attitudes toward their economic situation has grown worse, and they are expecting worse still," says Oleg Manayev, director of the Minsk-based Institute of Social, Economic and Political Studies, one of the few independent sociological centers still working in Belarus.
"In short, people are thinking hard and grumbling a lot," he says.
About the motive
Belarussian authorities say five people have been arrested in connection with last week's bombing, though no motive or wider conspiracy has yet been revealed. Instead, the country's KGB security service appears to be continuing its crackdown on a host of unlikely suspects, including opposition politicians, critical websites on the Internet, and independent media.
On Friday Belarus' Information Ministry issued a formal reprimand – which under Belarussian press laws can lead to closure – to two critical newspapers, Nasha Niva and Narodnaya Volya, saying their coverage of the terrorist bombing "brings discredit" to the authorities and hurts public interests. The warning is an apparent reaction to widely reported mutterings, by ordinary Belarussians who voiced suspicions to reporters that authorities may have staged the bombing as a pretext to crack down on any social protests against the coming austerity measures.
Even Lukashenko seemed compelled to address those allegations on TV Friday. "Is the situation in the country so critical that I have to resort to desperate measures? It is not critical."
But some critics argue that Belarus is on the edge of shattering changes, and Lukashenko's options are narrowing by the day.
"Lukashenko's economic system, which is the basis of his power, will collapse if there is real economic reform," says Romanchuk. "But in the absence of reform, inflation is soaring, the population is hoarding goods, and the gap between the ruble's market value and the official exchange rate is widening disastrously. It's high time to choose the road of reform."