“Market Socialism’s” Resource Exhausted :: Charter'97 :: News

The year 2002 became a real test for the Belarusian economic strategists: they had to prove that the economic model, picked by the president, is effective enough. That was the first year since the last presidential ballot, when Alexander Lukashenko’s opponents waited on him to make mistakes and foretold economic collapse. What happened in reality? We posed this question to the president of the public organization “Belarusian Association “Business Initiative” Mikhail Marinich.

- Generally speaking, the noble slogans, put forth by the president, when running for his second term, remain mere decoration. It is his intrinsic fear to embark on reforms, which can be blamed for that. There hasn’t been passed even a single document, which would correspond to the market conditions, while the authorities claimed they would lift restrictions on licensing and provide freedom of privatization. However, in reality the economy turned even more burdensome. Inflation statistics also speaks for itself: it is highest of all CIS states and doesn’t fit in the parameters, planned by the government (by late December its growth constitutes 33,9% with an annual forecast of 20-27%).

Inflation’s leap occurred due to the rise of tariffs on public transport and prices on foodstuffs – in other words, the citizens’ purses are no longer so filled with money. Meantime, the average salary remained frozen on approximately the same level as a year ago. By the time of elections it was established at the level of $100, though it truly reached that mark not until November-December 2001. Then there followed a fall in the average salary, although by May it finally traversed the level of $100. Anyway, the salary all the same failed to keep pace with such price-growth.

I guess, in the current year the situation will not improve, for there’s no progress in legislation, which could help develop those market processes, which must be stimulated. In Belarus export is called on paper one of the key priorities. And what is the basis for promoting the domestic manufacturers’ products to the exterior markets? Quality. Meantime, as we know well, the Belarusian companies have no turnover assets and no upgrading of funds takes place as such – this is even recorded today in the official statistics. The government confirms that the exhaustion of main assets reached the level of 80%, and in certain areas 90%. What quality are they talking about? The quality today is pure declaration. That’s why the growth of export will be slowed down.

— However, it is forecasted that the year 2003 will turn out favorable for the Belarusian export in Russia. It has been noticed long ago: whenever Russia suffers from heavy financial plight, Belarusian commodity sells there way better. Indeed, Belarus earned a lot on its trade with Russia in the years 1997-1998…

- Yes, in the coming year Moscow will need to pay a lot in exterior debts, that’s why there will be tough financial state there. However, I wouldn’t say that Russia can be restrained in her progress. That’s a temporary phenomenon, you know. The government of Belarus must somehow convince the president that he should make legislation more transparent in the sphere of privatization and transition to the new forms of market relations. They must also restructure unprofitable companies. They shouldn’t fear to leave them bankrupt – let there first happen the replacement of ownership. More importantly, our own national Belarusian proprietor will be developing in that way. Let us not seek immediate gains, but rather pass over the companies to the workers and Belarusian manufacturers, who will present decent business plans, make the company private and receive the reward in one or two years, as once done by the Germans at the plants, left after the unification. To put it short, this is one of integral components, enabling us to augment the working places and lead the companies to a higher quality level.

— In 2002 the government expected a real investment breakthrough. They seriously counted on the privatization of petroleum companies, but will only manage to attract investments, worth $400mln.

— I wouldn’t place an emphasis on the privatization of industrial giants, especially the petroleum complex. This sector is lost by us. We had to draw the investments there some 5-7 years ago. Unfortunately, this hasn’t been done due to the strategic policy, which the president has been originally implementing: this is the state property and I will not give it up! Starting from 1993 foreign investors manifested their interest in our oil industry. However, the Belarusian authorities were scared by the possible presence of foreign capital and finally made these companies too obsolete and presenting no real interest.
Nonetheless, these plants can still be privatized, although they aren’t the main resource for attracting investments. Anyway, their privatization must be held in open with decent conditions of tender, so that not only Russian but also world companies could take part in it. As a matter of fact, nobody is solving these issues here. No one is trying to prove to the president that he must cancel the “golden share” principle, for it seriously slows down the process. Our inability to trade in state property was demonstrated during the sale of the Belarus-owned 11% stock of “Slavneft”. The officials were frightened that the Russian government willed to get rid of their shares of this company, thus making our own share lose value. Instead, they could have well bargained on that.
Today we need a special institution, which would be involved in external trade. The Foreign Ministry, regrettably, fails this task. We have no personnel and no specialists, who would be able to solve these issues. We simply need to carry out normal marketing. Ours is a very low investment rating, for we step up no measures to promote our goods to the foreign markets.

- 2002 saw a few investment scandals in Belarus. With Russian “Baltika”, “McDonalds”, Swedish IKEA, which gave up its project in the Vitebsk region. All these conflicts have been provoked in this way or the other by the Belarusian side…

— This is simply amateurish policy, lack of respect for investors and inability to work with them. Instead, we should value and appreciate them, not forgetting about interior investors through encouraging small and medium entrepreneurship. By so doing we will help provide for more working places and avoid the impasse not via shock therapy but rather through normal conditions, that is privatization.

— Last year was also remarkable by the fact that for the very first time since its independence Belarus faced the danger of energy crisis. Russia made it clear that Belarus must clear off the bills. Is there any chance left that we will be solvent enough to do that on our own?

— It was official Minsk, which first initiated this row. Russia, in her turn, simply formulated her requirements in this regard. The same happened concerning the state property privatization in Belarus. Russia explained it by saying that we already exhausted the gas quota and now it is high time we paid under market prices.
I figure, that’s a useful lesson. Both Belarusian companies and country’s economy in general will start normal restructuring. This being the case, we will soon cease being addicted to Russia’s capital. Our manufacturers will realize that they should renew their assets and reach out to the western markets, instead of selling stuff to Russia alone. This will condition the breakthrough, should the government ease the taxation pressure, helping producers to reach these new markets.