Lev Margolin: Curious Phenomena Are about to Come

The present moment is considered a Belarusian establishment for share-out of property.

Lev Marholin writes on Belorusskiye Novosti website. Here is the entire text:

- Over the past few months Lukashenka constantly repeats: there will be no reforms in the economy. First it was said at the meeting with Prime Minister Kabiakau in early August, the last one during the inauguration. The main bureaucrat used to turn to this issue earlier, but it has become a certain mantra recently. It is followed by some conclusions.

First of all, there's a question: what reforms will not be introduced? Denomination could be considered a reform as well. It is something more specific that could damage the regime. According to Lukashenka, it is about privatization of state property. It is his nightmare.

It seems that it would be enough to say it one time. But its frequency conveys suggestions. It seems like pressure on the privatization topic within the ruling establishment is constantly rising. It is possible to assume who is an idea man. These are bureaucrats, regional and industrial ones, who consider the privatization as the last chance to participate in property division.

Every year, even every month the number of property that could be sold or shared decreases. Those assets, which have recently been considered blue chips are gradually becoming interesting to nobody. As putting pressure on Lukashenka's regime is not so simple, it is possible to assume that pressure comes from his inner circle.

The current period is considered by the Belarusian establishment particularly suitable for property division, because shortage of cash in the economy is getting higher. The problem used to be solved through external borrowings, as well as inflationary financing.

The first one is clear, for two decades inflation was used to increase revenue to the budget and the financing of pensions, salaries, support of inefficient state enterprises, security and defence structures.

The technology is simple: price increase on domestic and foreign markets while preserving the physical volume of production increases the income of enterprises and, respectively, tax revenues, while pensions and salaries are lagging behind. Current borrowings play the same role.

Now loans are not visible, and even if they are, then in the long run, by small parts, and even then, if they succeed in throwing dust into creditors' eyes once again. Inflation is generally declared enemy number one. Therefore, the pressure on the leader of the country "to make quick money" will intensify, and only God knows when this pressure reaches a critical mass.

Anyway, the so-called "cash gap" or shortage of money will increase. Reduction in manpower results in reduced revenue to the Social Protection Fund and increased burden on the budget. Then increase of wages for bureaucrats. Soon doctors and teachers start expressing their dissatisfaction. Since January 1 living wage budget is going to increase, as well as social pensions and benefits.

Sure, external borrowings may alleviate the problem for a while. Lukashenka has reliance upon them, as well as the Germans hoped for unbeatable weapons at the end of the war. Anyway, in the next month or two we will observe a curious phenomenon.

Are there other options? -Yes, he has read it. At the end of the day reforms may be introduced without privatization. Here's something that is vital - creation of a normal market environment in the economy, a favourable investment climate, loyal attitude towards small businesses. It implies political reforms and it scares Lukashenka even more than privatization.