FREE GEOPOLITICAL NEWSLETTER

 

For current reports go to EASY FINDER

BELARUS


  

REPUBLICAN REFERENCE

Area (sq.km)
207,595

Population
10,350,194

Principal ethnic groups
Belarusians 77.9%
Russians 13.2%
Poles 4%

Capital
Minsk

Currency
Rubel 
(Belarusian Rouble)

President
Alexander Lukashenka

  

Background:
After seven decades as a constituent republic of the USSR, Belarus attained its independence in 1991. It has retained closer political and economic ties to Russia than any of the other former Soviet republics. Belarus and Russia signed a treaty on a two-state union on 8 December 1999 envisioning greater political and economic integration but, to date, neither side has actively sought to implement the accord. 

Update No: 270 - (26/06/03)

The shade of Chernobyl
In March 1986, seventeen years ago the Chernobyl nuclear reactor had its famous meltdown. An ill wind was blowing for Belarus as the contamination headed northwards. Indeed, the Belarus government claims that 70% of the radioactive fall-out descended on Belarus, particularly severely in the south-east of the republic. Chernobyl is almost on the border and some 130kms from Gomel, which is a more attractive place than the capital, Minsk.
The incidence of abnormalities among infants is still rising in the south-east and the population is diminishing. The director of Gomel Hospital, Viachedav Ljakaoski, indicates the ongoing problem: "the quantity of maladies among children is constantly growing. The number of malformations among infants is very important: 800 in the Gomel region for 14,000 births in 2000, against 280 for 28,000 births in 1995." The link to radioactivity would seem to be established.
Gomel and Maguilev regions have a higher rate of decrease of population than the average, - 4.4 per 4,000 and 5.4 respectively against - 4.1 for the whole country. The economy is tottering, new enterprises fail to open and agriculture cannot develop, products being always suspected of being radioactive. Potatoes, all root vegetables indeed, and especially mushrooms, are particularly dangerous, while beef and milk are infected.
For a republic that was once a main supplier of food for the entire Soviet Union, providing 25% of its meat, for instance, the accident was an unmitigated disaster. Once with the best standard of living in the USSR, it is now one of the poorest. The catastrophe has lost the economy at least US$295m, a huge sum on conversion into local currency. The management of its consequences account for 8% of the budget. In the contaminated regions regular check-ups and controls on foodstuffs and medicines are made. Children are sent to sanitaria.

Lack of democracy worsens the situation
The Gorbachev government admitted the situation, but only tardily. In the 1991-94 period more information was provided, but since 1994 the Lukashenka regime has not disclosed the full dangers. "The principal problem is that people do not think they are living in a radioactive environment for lack of information," said Svetlama Goldade, former mayor of Gomel. The government downplays the issue in hopes of dispelling fears and reducing expenditure in the contaminated provinces, the opposite of what it should be doing.
The whole problem is a time-bomb for the regime, as is the growing disaffection of the young, especially students. People are wanting to leave. The country is in a bad and worsening way. One dissident scientist, Yuri Bordafevski, tried to alert people about the perils of contaminated milk. He has been imprisoned since 2001.
Help is not coming from outside, as violations of human rights have put Belarus in the freezer as regards the West. The last dictatorship in Europe is under pressure. Lukashenka likes to dominate whenever he can, along with his 150,000 KGB operatives (still called such). But one cannot dominate nature and if one tries to, can take its revenge. This may yet bring the Lukashenka regime down.

« Top

ENERGY

Belarus owes US$224m to Russian gas giant


As of 1st May, the Belarusian state-run gas transport company, Beltranshaz, owed US$224m to Russian Gazprom, Belapan News Agency reported on 2nd June, quoting Belarusian Deputy Economy Minister, Leanid Dzyamidaw. 
In addition, Belarus owed US$46.3m to foreign electricity suppliers, the agency said.

« Top

FINANCIAL NEWS

Foreign trade boom unsustainable - business weekly

In the first quarter [of this year], the volume of foreign trade in Belarus reached US$4.7bn, with exports accounting for US$2.25bn and imports - US$2.45bn. Exports grew by 30.4 per cent in value terms and by 13.6 per cent - by volume. Average export prices rose by 15.4 per cent, whereas prices of imports increased by 17.3 per cent. Those tasked with the development of projections were put to shame. Real growth rates were far above the projected target of 5.5 to 6.2 per cent as foreign trade shot up by 29 per cent in the first quarter alone, Belorusskaya Gazeta has reported. With dynamics like that, who needs the WTO, the European free trade zone or the EU? If the inefficiency of economic unions set up by former Soviet republics is taken into account, these results could have been regarded as phenomenal, but for one aspect.
The upturn in Belarusian foreign trade has not been driven by either increased productivity of modernized Belarusian enterprises, or efficient cost management or a sudden surge in demand for stylish Belarusian brands. The foreign trade miracle in the first quarter of 2003 can be put down to two reasons, namely rising oil prices and the firming Belarusian rouble. If raw materials were stripped out, Belarusian foreign trade turnover in the third quarter of 2003 would fall by 31.4 per cent. Raw materials accounted for 22.1 per cent in the same period of 2002, and for 25.2 per cent in 2001. Trade in raw materials is extremely exposed to price fluctuations. In March 2002, the average price of a tonne of imported oil stood at US$64, whereas in March this year it skyrocketed to US$150. Thus, foreign trade shot up in value terms but remained the same by volume.
Consequently, Belarusian foreign trade is becoming increasingly dependent on oil. It would be naive to assume that this trend is sustainable. The Russian government is not blind to this danger, but all attempts to change economic policy are mired in a bureaucratic morass. The Belarusian authorities are doing even less to tackle this problem.
The second factor is equally important. Since 2000, the Belarusian rouble has appreciated by 30 per cent against the US dollar and by 40 per cent against the Russian rouble. This has naturally affected the structure of exports and imports. Incomes in the Belarusian rouble have become more "weighty," a development which importers have used to their advantage. Belarusians opt for imported goods if their cost does not exceed that of their locally manufactured counterparts. The share of oil and its derivatives in Belarusian exports keeps rising, crowding out other goods. Changes in the structure of imports are even more pronounced. The imports of raw materials and foodstuffs have been up by 66 and 66.7 per cent respectively on the first quarter of 2002.
The declining share of machines and equipment, ferrous and non-ferrous metals and petrochemical products is a cause for concern. The working capital crunch, stalled privatisation and restructuring, as well as an uncertain future make it impossible for Belarusian companies to refurbish fixed assets and roll out new products. Belarusian exports continue to be powered by fertilizers, oil derivatives and metal goods. The trend for exports of machinery and equipment will be downwards as long as the government keeps dragging its feet on market reforms.
A decline in the volume of barter deals, which in other circumstances would have been a positive development, has made this threat more severe. In the first quarter of 2003, barter transactions fell by 38.1 per cent in exports and by 24.2 per cent in imports. Presently, such transactions account for 5.1 per cent of export deals and 6.6 per cent of import deals.
However, such a trend can be ascribed to administrative meddling rather than the increased attractiveness of cash settlements. It is an open secret that barter deals allow Belarusian companies to reduce their tax burden. The inability to carry out such transactions has had a negative effect on the financial standing of Belarusian companies.
To date, Belarus has been unable to manufacture goods that will be in demand both in the West and in the east. In less than a year, the oil boom will fizzle out and foreign trade will collapse.

Belarus posts rise in GDP, fall in foreign investment

In January-March, Belarusian GDP increased by 5 per cent on the first quarter of 2002, Belarusian TV reported on 1st June, quoting the Belarusian deputy economics minister, Leanid Dzyamidaw.
The average inflation rate in the first quarter was 2.5 per cent per month, while real wages increased by 2 per cent. Meanwhile, the amount of foreign investments decreased by almost 30 per cent, the TV said.

Belarusian opposition party decries proposed monetary union with Russia

The opposition Belarusian People's Front (BPF) has urged the Belarusians to come out against the planned introduction of the Russian rouble in Belarus in 2005. The statement follows the meeting between the Belarusian and Russian central bankers, at which they finalized a draft accord that would give the Russian Central Bank a dominant role in a [Belarusian-Russian] monetary union, Belapan News Agency has reported. 
The BPF said that the planned monetary union is a threat to Belarusian economic independence and would dash hopes for raising the living standards in Belarus.
"After losing the right to print money, the Belarusians will lose the ability to manage their economy. The economy would be managed from Moscow, and, no doubt, in a way to benefit Moscow." The BPF stressed that the national currency abolition would be unconstitutional. 
The party urged economists, public figures and government officials to join a forum in defence of Belarusian economic independence to be held in Minsk this autumn. "Our public should hear and think over well-considered economic and political arguments against the rouble. Belarus should follow the European path and integrate into the European economic community," says the statement.

« Top


CUSTOMISED REPORTS

 

INVESTMENT BACKGROUND REPORTS 

Our analysts and editorial staff have many years experience in analysing and reporting events in these nations. This knowledge is available in the form of geopolitical and/or economic country reports on any individual or grouping of countries. Such reports may be bespoke to the specification of clients or by access to one of our existing specialised reports. 
 
For further information email:
reports@newnations.com

Considering an investment or a trip to any newnation? First order our Investment Pack which will give you by e-mail the last three monthly newnation reports and the complete worldaudit democracy check for the low price of US$12. The print-out would be a good companion to take with you. Having read it, you might even decide not to go!
 
To order please click here:
Investment background report

« Top

« Back

 


 
Published by 
International Industrial Information Ltd.
PO Box 12 Monmouth 
United Kingdom NP25 3UW 
Fax: UK +44 (0)1600 890774
enquiries@newnations.com