Belarusian economy facing two scenarios: further degradation or privatization for Russia's benefit

The Belarusian government decided to cut support of companies from the state budget. Belarusian economist Alexander Alfimov has commented on the move to EADaily.

The crisis makes saving money and cutting budget expenditures. Expenditures are already planned to be cut in the state budget by 8%. It means that it is impossible to save everyone only by our own reserves. The amount of Russia’s financial aid has drastically shrunk; foreign investors are cutting their investments. Recently, Belstat has informed that direct foreign investments in the real sector have sharply reduced.

In such a situation, the government of the post-Soviet republic is showing incredible scrupulousness, containing privatization for political reasons. Belarusian assets are interesting for Russian business now, who wants to restore the production chain of the former USSR, although there are contrary examples when it becomes easier to establish an asset from scratch on one’s own or with other partners, buying readymade everything one needs. At the same time, Belarusian assets which are rather outdated attract little interest from the West. Growing Russian presence in Belarus does frighten Alexander Lukashenko, who nevertheless comprehends that he has not many options to act. To be more precise, there are only two such options: either to pursue previous policy and fix degradation or decide to privatize companies for the benefit of Russian business.

Here are examples of privatization from various sectors. The State Property Committee has been selling for five years a controlling block of shares of MTS, the major mobile network operator acting under the Russian brand with the Russian company having less than half of the shares. “A queue of investors” into MAZ (Minsk Automobile Plant) turned to be false, just like “queues” to other companies.

Falling of the industrial output, exports, shrinking share of Belarusian goods in the Russian market speak without words. All those tricks with compensation of loan interests from the state budget are nothing but masked crutches used to pull the wool over the eyes of potential creditors. Well, it is unclear whom Lukashenko is trying to fool. IMF experts? They know him inside out. Marx’s followers believed that the economic basis is fundamental, and the political superstructure is secondary. The Belarusian “market Socialism” has it the other way out: an ideology unclear to everyone dominates the common sense and economic effectiveness.