Leanid Zlotnikau: Extension of sanctions against Russia to hit Belarusian economy

The economic situation will deteriorate both in Russia and Belarus.

Economist Leanid Zlotnikau said it in an interview with charter97.org.

– On June 22, the European Union extended economic sanctions against the Russian Federation until January 31, 2016. How do you think it will influence Belarus' economy?

– We already see consequences because sanctions have been in force for a year. The situation in Russia won't improve. Russian experts note that Russia cannot expect economic recovery in 2016. So, Belarus won't see any improvements, especially from Russia. Russia won't have demand for Belarusian products, prices of Belarusian goods will not grow, so our wood-processing and chemical industries cannot expect improvements. The economy in general will not improve.

– Will it lead to a further decline in living standards and the growth of social tension?

– It's easier to answer this question from the economic point of view. I think real wages will continue to fall. It is already happening, but we haven't reached the bottom yet. As for social tension, it's natural that people become angrier as their income declines. It's hard to say whether it will reach the point able to prevent the “re-election” of Aliaksandr Lukashenka.

– What measures can the Belarusian government take, in your view? It needs to fill the state budget...

– It's difficult to say. Anyway, the Belarusian authorities will try to hold negotiations with the IMF and the EU. I think serious inflows from them are unlikely before the “elections”, because the IMF even doesn't have a programme it could approve. Even small money from the Eurasian Development Bank has been pending since last August. I mean the last $440mn tranche of the loan. Belarus does not carry out the market reforms it should. The Eurasian Bank is in fact ruled by Moscow. So, we can speak about weaker support from that side. The only thing that Russia did is that it postponed payments on the 1.5bn loan until next year. But it won't solve problems of the Belarusian economy. I don't see any sources able to support the regime. There are no sources to maintain living standards before or after the elections. There are no cheap loans for Belarus, and we are afraid of taking expensive ones.

– What can you say about the practice of extorting money from people?

– This practice won't give anything to the regime. It's easy to take and divide, but it's very hard to multiply and add. The extortions are a temporary measure to live through hard times. The government perhaps looks for some long-term solutions to economic problems, but we don't see it has proposed something that would really help.