BELARUS: THE CIS ECONOMIC TIGER?

According to figures released by First Deputy Prime Minister Piotr Prokopovich at a recent press conference in Minsk, Belarus’s economic recovery is accelerating into a full-fledged boom. Belarusan GDP at the end of the first quarter was described as 9 percent above the level recorded at the end of the first quarter of 1996, reflecting a 9.8 percent increase in industrial production and a 13 percent increase in fixed investment. (Interfax, April 18) This would be on top of the 3 percent growth in GDP and industrial production said to have been recorded in 1996.

President Aleksander Lukashenko’s neo-Soviet propaganda of economic success and his persecution of Belarusan entrepreneurs make these figures difficult to interpret, of course. Such growth would also be difficult to reconcile with the fact that economic activity in Russia and Ukraine (Belarus’s two largest trading partners) has at best been flat during 1996-1997. Moreover, signs of trouble continue to abound in many parts of the Belarusan economy: one third of Belarusan enterprises (almost all of which are state-owned) were running in the red in the first quarter; foreign investment continues to slump; foreign exchange is in chronically short supply; and neither the IMF nor the World Bank has provided fresh loans for more than a year. Still, despite the Lukashenko government’s deteriorating relations with the Bank and the Fund, Belarus’s 1996 growth figures have not been challenged by these institutions. Nor have the Bank and the Fund objected publicly to the official first-quarter results.

These numbers suggest that, for all of its problems, Belarus is not the economic basket case often portrayed by the Western press and by liberal opponents of the Russian-Belarusan merger in Moscow. The 39 percent cumulative decline in Belarusan GDP recorded during 1991-1996 is the second smallest in the CIS (officially, Uzbekistan’s is the smallest), and is smaller than Russia’s 42 percent drop — not to mention Ukraine’s catastrophic 60 percent collapse. Also, Russian press reports indicate that the arrears plaguing millions of Russian and Ukrainian workers and pensioners are a much less serious problem in Belarus. Finally, Belarus’s $1 billion foreign debt is much smaller (on a per-capita basis) than Russia’s or Ukraine’s, with smaller debt-servicing payments.

For whatever reason, Belarus may have managed to avoid the worst of the economic disasters that have been experienced by Russia and Ukraine. This suggests that the economic costs for Russia of closer integration with Belarus could be quickly outweighed by gains, particularly in terms of the tighter control that Moscow would then exercise over Belarus’s energy and military infrastructures.

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