Mikalai Statkevich: Economic collapse in Belarus is like avalanche

Citizens do not trust the authorities, so the national currency crash could be even lower than the economically justified indicators.

The Belarusian ruble continues its record-breaking fall in the exchange rate, and the queues of people who want to buy Euros and dollars, like in 2011, could be found in many banks now.

The economic situation in Belarus has been commented to charter97.org website by a presidential candidate in the election of 2010, the former political prisoner Mikalai Statkevich, who stated on the day of release that this move was connected with the financial difficulties of the regime.

- Your words about the difficult situation for the Belarusian dictator are substantiated by the exchange rate of the ruble, and the panic buying of foreign currency. To your mind, what are the reasons for this situation, and what citizens of Belarus should do in order to save their savings?

- First of all, I want to say that Alyaksandr Lukashenka has created a highly ineffective economy, as a matter of fact, a big collective farm, a kolkhoz. It’s impossible to direct more than 8,000 Belarusian enterprises from one chair.

An economic system based upon competing economic entities with high motivation should have been created. And they have constructed a collective farm, and something is manufactured by this kolkhoz, and they are waiting for Lukashenka to sell it.

Our economic system is not self-sustaining. External donations make about 20% of the GDP. It is comparable to the size of our state budget. Lukashenka exploited Russian political phobias and complexes, and pumped out money from them.

But this coin had a different side as well: a loss-making branch of the Russian economy was created. But the Russian economy proper is predominantly a commodity-based economy. And when Russia rushed into a conflict against the entire world, just a few sanctions steps, not the most powerful ones, were enough for the Russian economy to start economic turn. And when the central-officer company collapses, branches are forgotten. After all, a loss-making branch of a company could be “closed.”

Now that the Russian ruble is falling, Belarusian authorities have to lower the exchange rate of their currency as well. The reason is, Russia is the only place where we can export our goods, other than potassium fertilizers or oil products. When ruble is falling there, our export stops, that’s why Belarusian authorities are to continue devaluating our national currency.

By pinning the economy to one country, which depends on commodities exports of itself, Lukashenka has driven our economy into a deadlock. He has turned diligent, enterprising, intelligent Belarusians into beggars. He is begging for something from others all the time himself, and he has driven us into the same corner as well.

The situation could be changed by shift in power only, as the authorities would never agree to “liberalization”. Higher-ups have only one model in their heads – to direct all and control everything. And it is impossible to direct 8,000 enterprises without high motivation of their personnel.

We need not just financial investments, we need investments in management techniques. The system of management is a complete failure. I deeply apologize, but general managers have grown bellies and are producing to stock, as they are used to, and waiting for the state to sell all of their goods. It couldn’t last long, and now it becomes obvious.

That is why economic prospects are very gloomy, as I expect. Belarusians know very well how to maintain their savings in this situation, even without my advice. Certainly, it means converting them in a really reliable currency. I cannot recommend anything else.

- Any forecasts are a thankless occupation, but still: how serious the drop of the Belarusian ruble could be, to what level?

- It’s hard to predict, as even now psychology comes into play: people lost their trust in promises of the authorities. They have been deceived for so many times… I remember the end of 2008, when the leader was swearing by all that is holy that there would be no devaluation, and in a few days it happened. Or take the situation of 2011, when instead of telling the truth to people, they were deceived, deceived, deceived – and finally the exchange rate of the ruble was marked down abruptly.

People do not trust the state, and the process is already turning into an avalanche. The situation is crossing the limits of objective economic factors, and the prospects seem worse than they are. So if the economically justified devaluation could be within the limits of Br20,000 per dollar, now it can go beyond this number.

Buying up dollars by people is a normal, economically sound behaviour in the conditions of mistrust to the government. It is hard to predict what is to happen next, as the authorities have not been able to keep the exchange rate even during their “electoral” campaign, and the currency crash started.