Although Belarus tried to demonstrate its resistance to the global crisis, now the country appeared in the epicenter of crisis: primary commodity prices increased, the standard of living declined and there is apparent lack of foreign currency. Minsk is feverishly looking for creditors and is forced to apply to Moscow and the West for help.

According to Russian Vedomosti, between 75-80 percent of Belarus' economy remains in state hands. Lukashenka is trying to prove that the command economy is capable of coping with crises. So far he managed to control the situation. According to the statistical data, the country’s economy has been growing annually at 7,3 percent in 2000-2010.  Minsk coped with this growth since Belarus profited from importing Russian oil at preferential prices. The oil was processed and oil products exported to Europe at global prices. By doing this Russia subsidized Belarusian economy and these subsidies amounted to 8 percent of GDP.

The times changed and now Moscow is raising energy prices to all countries, including Belarus. This resulted in inflation which has increased by 20 percent in five months; moreover, the average wage has decreased from 500 to 300 USD. At the beginning Belarusian Ministry of Finance announced that inflation in 2011 will make 77 percent, but later it revised the forecasts and informed that this indicator would reach a point of 39 percent. Nevertheless, this is a significant price jump. This led to a roughly 35 percent devaluation of the Belarusian ruble (according to other sources – 56 percent).

Is there any medicine against this “sickness”? According to experts, only privatization can “cure” Belarusian economy. The Eurasian Economic Community’s (EurAsEC) anti-crisis fund agrees to give a loan, but Belarus has to fulfill one requirement  - to privatize state assets (the price of twelve largest Belarusian state companies might amount for 50-80 billion USD). When on 31 May Belarusian Government turned to the IMF with a request to grant a stabilization credit of 3.5-8 billion USD, one of its conditions to Belarus was privatization.

Russia’s credit conditions for Belarus are similar. During the meeting of finance ministers of Eurasian Economic Community (EurAsEC) in Kazakhstan, Russia agreed to extend a loan to Belarus of up to 3 billion USD over ten years. In return, Minsk will have to privatize state assets for 2.5 billion USD for the next three years.

According to the Swiss newspaper Neue Zuercher Zeitung, Lukashenka is not happy about the loss of gas pipelines, oil refineries and the potassium fertilizer plant  Belaruskalij, but he is not going to submit. Upon his return to Minsk, he started denying the fact of negotiations on privatization of state assets for 7,5 billion USD in Kazakhstan.

According to Nikolay Radov, an analyst of the agency Regnum, Belarusian Government made so many mistakes in recent months (including propaganda mistakes), that today nobody can understand where is a way out of crisis. Lukashenka announced that not a single enterprise will be sold without his consent and that he would not allow “bandit privatization” in the country. Batka raised the dilemma: the assets of the country will be either privatized by Russian dealers and Belarus will become part of Russia, or Belarusians will themselves buy up state assets.

Vedomosti reminds that in 2007 Russia tried to impose a 100 percent tax on oil to Belarus, but after a short war of words Minsk negotiated lower oil prices for the coming three years. However, the economic situation in Belarus didn’t improve and after the expiry of the preferential term, Russia imposed a 100 percent tax on major part of the supplied production.  Straight away the Belarusian trade balance deficit reached 15 percent of GDP; moreover, Belarus is running a current account deficit of about 16 percent of gross domestic product. Today Minsk receives duty-free oil from Moscow, but it has to pay customs duty on crude oil deliveries to the Russian budget.

According to Belorusskie novosti, there is no way out for Lukashenka and economy of the country will be swallowed by Russia. By selling the country’s most important enterprises Minsk could settle accounts with foreign creditors, but it will loose independence.

Surely, Lukashenka wants to forget the night of December 19 when at least 600 people were sentenced to short jail terms for participating in the protests, among them five candidates to presidents. Russia and IMF do not relate these repressions to the allocation of credits to Minsk, but the world community should finally find out what Lukashenka needs more: a whip or a candy. The Western policy shouldn’t be confined to two extremes: whipping or feeding Lukashenka with dollar sweets.

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