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A peculiar model of post-communist political economy has evolved in Belarus under President Aliaksandr Lukashenka. It features prioritisation of non-entrepreneurial social groups, a strong role for the state, and extensive social security provision. The model appears to be grounded on Lukashenka's understanding of his political powerbase; having no external backing for his policies, he wants to command as wide grass-roots support as possible to remain in office. By doing so, he rejects the principles of pluralist democracy and market economy, making Belarus's political economy model quite different from that envisaged in the mainstream post-communist theories of neo-liberalism and gradualism.
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Political Economy of Modern Belarus:
Going Against Mainstream?
Viachaslau Yarashevicha
a Belarusian State University
Published online: 11 Nov 2014.
To cite this article: Viachaslau Yarashevich (2014) Political Economy of Modern Belarus: Going
Against Mainstream?, Europe-Asia Studies, 66:10, 1703-1734, DOI: 10.1080/09668136.2014.967571
To link to this article: http://dx.doi.org/10.1080/09668136.2014.967571
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Political Economy of Modern Belarus: Going
Against Mainstream?
VIACHASLAU YARASHEVICH
Abstract
A peculiar model of post-communist political economy has evolved in Belarus under President Aliaksandr
Lukashenka. It features prioritisation of non-entrepreneurial social groups, a strong role for the state, and
extensive social security provision. The model appears to be grounded on Lukashenka’s understanding of his
political powerbase; having no external backing for his policies, he wants to command as wide grass-roots
support as possible to remain in office. By doing so, he rejects the principles of pluralist democracy and
market economy, making Belarus’s political economy model quite different from that envisaged in the
mainstream post-communist theories of neo-liberalism and gradualism.
BELARUS,A COUNTRY OF 9.5 MILLION PEOPLE LOCATED BETWEEN the enlarged European
Union and Russia, has often been considered an odd case in the Western literature on post-
communism. It has been criticised for its lack of both economic reforms and
democratisation (IMF 2011; Marples 2009). Eventually dissatisfaction with the political
and economic processes in the country grew to such an extent that it was called ‘the last
dictatorship’ in Europe (Walsh 2006). Much of the criticism regarding Belarus has focused
on the country’s president, Aliaksandr Lukashenka, who was initially elected in 1994 and
has remained in office ever since.
1
He has been blamed for preventing Belarus from
undergoing a transition to a market economy and democracy like those experienced by most
other post-communist nations. Instead, it is often argued, he relied on subsidised energy
imports from Russia to keep the unreformed Belarus economy from collapsing while
keeping an iron grip on the country’s politics (Wilson 2009).
Some recent economic developments in the country, namely the foreign currency crisis of
2011, may well be used to vindicate negative views about Belarus. However, a more long-
term investigation of its social and economic performance since gaining independence in
1991 reveals that in purely statistical terms Belarus fared no worse and often much better
than many other post-communist states, particularly neighbouring Russia and Ukraine.
For example, from 1996 to 2010 Belarus experienced 15 years of uninterrupted economic
1
‘Nations in Transit 2002’, pp. 9596, available at: www.freedomhouse.org/research/nattransit.htm,
accessed 16 December 2002.
EUROPE-ASIA STUDIES
Vol. 66, No. 10, December 2014, 1703–1734
ISSN 0966-8136 print; ISSN 1465-3427 online/14/1001703–32 q2014 University of Glasgow
http://dx.doi.org/10.1080/09668136.2014.967571
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growth at an average annual rate of almost 7%, having avoided a fall in GDP even in the
critical year of 2009, when global output as a whole experienced its first contraction in
decades.
2
It is also acknowledged that Belarus has the lowest levels of poverty,
unemployment, and inequality among former USSR republics, and has managed to preserve
high levels of social security for its citizens (World Bank 2004,2009, p. 4).
While in the economic literature the ostensibly high levels of Belarus’s socio-economic
development are typically explained by the country’s favourable terms of trade with Russia
(IMF 2010, p. 16; World Bank 2005), it seems that there are more fundamental forces at
work. Both statistics and the author’s own experience of living in the country suggest that
modern Belarus’s development might have been determined foremost by a distinctive model
of political economy that evolved in the course of the nation’s post-communist
transformation.
In the case of Belarus, its model of political economy gives priority to the practical
implementation of principles guiding social and economic policy. This understanding
presumes that socio-economic policies in Belarus are based on certain principles, and that
there are formal frameworks for their practical implementation. Indeed, to those who are
familiar with the country it may seem that there is not enough coherence in Belarus’s socio-
economic policies to call them a model, and that they are simply a series of short or medium-
term moves by President Lukashenka to remain in power.
3
However, a careful investigation
of Belarus’s socio-economic development under Lukashenka reveals at least three important
features: nearly full employment, no large-scale privatisation, and high levels of social
security provision. It is argued that these reflect political economy principles concerning the
ruling attitude to social groups, the role of state in the economy, and modes of welfare
provision. In turn, five-year socio-economic plans, adopted since 1996 at All-Belarusian
congresses, as well as long-term strategic plans, elaborated by the Belarusian government
and central bank, can be considered as a formal framework for ensuring the aforementioned
principles. Of course, the existence of a peculiar political economy model in Belarus does
not mean that it is sufficiently coherent in either theory or practice, but it is there and worth
studying to understand the specifics of the country’s post-communist transformation.
One can argue that the Belarusian political economy model amounts to a kind of welfare
state, based on a mixture of inherited Soviet and new market principles in both economic
and social spheres. On their part, official sources describe Belarus’s political economy
model as follows:
... the major goal of socio-economic transformation in the republic has been improving living
standards of the Belarusian people and gradually increasing welfare to the level of highly-
developed European states. In order to realise this goal, and taking into consideration the prevalent
traditions and historical experience of Belarus, a model of socially-oriented market economy was
developed, which is based on market economic principles but provides for a high degree of social
security and an active state role in regulating socio-economic processes. (National Bank of the
Republic of Belarus 2001, pp. 9 10)
2
‘World Economic Outlook Update: Mild Slowdown of the Global Expansion, and Increasing Risks’,
17 June 2011, available at: http://www.imf.org/external/pubs/ft/weo/2011/update/02/index.htm, accessed
16 September 2011.
3
These considerations were raised by Dr Andrew Konitzer, Associate Director of the Center for Russian
and East European Studies, University of Pittsburgh, when discussing the present paper.
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The foundations of this model differ from those of established Western welfare states in
Scandinavia or continental Europe: while the latter originated from untamed capitalism and
have undergone several centuries of uneven development, a welfare state in Belarus started
off as a centrally-planned economy that was incompatible with private property and
enterprise. As such, it did not fit with the established patterns in the West, and owed its
existence to the abundant resources of the Soviet Union, and to distinctive Soviet policies
according to which concerns for welfare went hand in hand with economic development
(Aslund 1994, p. 6; Kornai 1997, p. 1183).
One of the main features of Belarus’s welfare model concerns the state role in the
economy: whereas Western welfare states are all based on private-based economies, the
state de facto dominates the Belarusian economy in both ownership and management.
According to the European Bank for Reconstruction and Development, which has
monitored post-communist reforms from their onset, as much as 70% of the Belarusian
economy is still state-owned, whereas in most other post-communist countries the opposite
is true, and most of them are now privatised.
4
It is the lack of large-scale privatisation which
has arguably made Belarus so different from other countries in the post-communist world.
Despite the fact that a privatisation law was adopted in the country as early as in 1993, its
implementation has been extremely sluggish. Largely unreformed property relations
enabled Belarusian authorities to control the economy on both the macro and micro levels,
through a network of ministries, departments, and state corporations kept largely intact from
the Soviet period.
A dominant role of the state in Belarus’s political economy model has probably come
from Lukashenka’s conviction that such principles as ‘collectivism, patriotism and social
justice’, as well as ‘the high prestige of education and socially useful work that is carried out
without material award considerations’, all based on ‘somewhat adjusted’ Marxist Leninist
communist ideology, should form an ‘organic’ basis of the modern Belarusian society; by
contrast, his attitude to neo-liberalism, the mainstream reform discourse in the 1990s, was
more than simply critical:
The ideology of liberalism is dominant and exceptionally aggressive nowadays. Liberalism
(or more precisely neo-liberalism) can be succinctly defined as an ideology of social injustice,
profiteering, and individualism ... if contemporary neo-liberalism is taken in pure form, it is of
course least applicable, or, to put it more precisely, not applicable at all to us, to our people, with our
tolerance and mentality. (Lukashenka 2003)
A number of neo-liberal economic principles, notably competition and self-responsibility,
have nevertheless been welcomed by the authorities, which might explain a continuous
albeit slow liberalisation of Belarus’s economy, as well as the official toleration of the new
private sector. However, the rejection of ‘shock therapy’ and constant positive references
to the communist past suggested that the Belarusian authorities did not aim at a radical
re-design of political economy similar to the one which occurred in other post-communist
countries (Lukashenka 2002). Instead, they opted for selected gradual adjustments to the
essentially Soviet economy, with an appropriate political system to match. One of the critics
of Lukashenka’s policies has summarised it as follows:
4
‘Structural Change Indicators’, available at: http://www.ebrd.com/pages/research/economics/data.shtml,
accessed 16 September 2011.
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From the very beginning of his state management Aliaksandr Lukashenka pursued economic
policies which greatly differed from those in the neighbouring countries. A specific economic
model was created over a period of ten years. This fact is agreed upon by all politicians and experts:
both the supporters and opponents of the government, as well as foreign observers. ...
Its peculiarity lies in the combination of the elements of late socialism and early capitalism.
Socialism reveals itself in centralised economic management, the creation of the power vertical
which runs through the economy from top to bottom. Meanwhile, primitive capitalism exists at the
level of enterprises and households, in relations between them. (Karbalevich 2004)
The choice of a welfare political economy by Lukashenka might have been political—rather
than undertaking radical economic reforms which could eventually upset his voters, he
decided to focus on things he thought he was elected for—jobs and stability:
Lukashenka stopped voucher privatisation (which had barely begun) and secured subsidised
transport and utilities and free health care and education. By that time (1995), most industrial
workers worked barely 2 3 days a week (as plants ran out of supplies and could not dispose of their
output), but they could perhaps eke out a living for a year or so at the most with the aid of their own
kitchen gardens. In about a year (by 1996) most industrial giants had resumed their full capacity
work schedule, mostly due to the restored ties with Russia. That was what Lukashenka had been
voted for in 1994, and that was what he made good on. (Ioffe 2004, p. 90)
However, this seemingly tactical political choice also had a more strategic underpinning:
instead of nourishing entrepreneurial class along the mainstream neo-liberal doctrine,
Lukashenka opted to prioritise the interests of traditional non-entrepreneurial social groups.
This can be seen through an investigation of these social groups in Belarus which is
presented below.
The entrepreneurial class in Belarus
In Belarus, the entrepreneurial class includes individual entrepreneurs, who are mostly open
market and kiosk vendors; owners of small and medium private enterprises (SME); and
owners of relatively big private companies established after 1991. Extremely slow progress
with the large-scale privatisation in the country precluded the emergence of Russian-style
oligarchs, or billionaire owners of the privatised large enterprises and banks. Similarly, one
cannot include in the entrepreneurial class several millions of privatisation voucher holders,
as they hardly ever used their vouchers for entrepreneurial purposes (due to the lack of both
personal interest and market infrastructure). According to official statistical data, at the end
of 2012 there were 252,600 individual entrepreneurs in the country, or 2.7% of the total
population. In addition, there were 108,300 small and medium businesses registered as of
1 December 2012 (National Statistical Committee of the Republic of Belarus 2012a). If one
assumes one owner for each SME, and adds them to the number of individual entrepreneurs,
the share of the entrepreneurial class in Belarus’s population would still be quite low, at
between 3% and 4%. Even taking into account a certain propensity for error in the estimates
of entrepreneurial class numbers based on business registrations, the available figures
nevertheless imply low prioritisation of entrepreneurs by the authorities, quite congruent
with their political economy preferences. This argument can be tested by data on private
sector development in the country, used as an indicator highlighting the political economy
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orientation of post-communist political systems (Havrylyshyn & McGettigan 1999,p.3;
World Bank 2002, p. 71). Admittedly, other factors can be just as important, particularly
regulatory or tax regimes, but in specific post-communist conditions, marked by the
institutional underdevelopment of private property, such factors appear secondary, at least at
an early stage, and definitely so in a country such as Belarus, where property reforms were
very slow.
The evaluation of private sector development in Belarus is complicated by differences
between official Belarusian and foreign methodologies. Notably, in accordance with
national legislation, official statistics consider as private both originally private enterprises,
and those which were reformed or privatised, regardless of the state’s share in their stock.
By contrast, foreign statistical assessments view as private only entities which are
established so, or have a majority non-state ownership (EBRD 1995, p. 27).
It should be noted that there are no official statistics on the share of the private sector
directly in GDP. However, by some indirect indicators, such as, for instance, data on private
sector share in employment or retail trade, one can assume that it is developed quite
sufficiently. Thus, in 2011, 56.6% of employed in the country were in the private sector.
5
In
the same period the private sector share in retail trade stood at 88.6%.
6
However, the official
estimates for the output contribution of SMEs, the main part of the real private sector in
Belarus, at 15.7% in 2011, suggest that in reality the private sector may not be so well
developed in the Belarusian economy.
7
And this is in line with the available foreign
estimates, notably those by the EBRD. For example, in 2010 the private sector share in
Belarus’s economy was estimated by the bank at 30%, the second lowest in the post-
communist region after Turkmenistan, and markedly different from the regional average of
67%.
8
But it should be noted that private sector growth in Belarus was weak from the very
beginning of transition, and when Lukashenka came to power at the end of 1994, many post-
communist economies already had most of their GDP produced privately, with an average
figure for the whole region standing at 37.4% (see Figure 1).
The low estimates of private sector development in Belarus by the EBRD have been
closely linked to its evaluation of privatisation in the country. As can be seen from Figure 2,
Belarus consistently ranked lowest in the bank’s indices of both small- and large-scale
privatisation, which similarly was set in place in the early 1990s.
Even if one takes the middle ground between the official and the EBRD estimates, the
extent of private sector development in the country at about 40% is still low by post-
communist standards, which implies that Belarus’s political economy has not had the aim of
promoting an entrepreneurial class. Testing this assumption through the prism of the
available qualitative sources has led to controversial conclusions. On the one hand,
a number of foreign commentators have argued that the official attitude to entrepreneurs in
Belarus is hostile and obstructive: ‘In particular, the Belarusian system has stifled the growth
of new [private] enterprises. The multiple exchange rate system and pervasive state controls
5
‘Number of Employed by Ownership Types’, available at: http://belstat.gov.by/homep/en/indicators/
labor.php, accessed 2 January 2012.
6
‘Distribution of Retail Turnover in Trade through All Outlets by Ownership Types’, available at: http://
belstat.gov.by/homep/en/indicators/trade.php, accessed 5 January 2012.
7
‘Share of Small Enterprises of the Republic of Belarus in Main Economic Indicators’, available at: http://
belstat.gov.by/homep/en/indicators/smallannual1.php, accessed 5 January 2012.
8
‘Structural and Institutional Change Indicators’, available at: http://www.ebrd.com/pages/research/
economics/data/macro.shtml#structural, accessed 5 January 2012.
POLITICAL ECONOMY OF MODERN BELARUS 1707
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have shifted private initiative into arbitrage activities and the shadow economy ...’ (World
Bank 2002, pp. 46 47); ‘Since the Lukashenka regime is hostile to private enterprise,
attempts to create private companies are usually thwarted by overregulation and resistance
from civil servants. ... Regulations concerning the private sector are vague, unpredictable,
and ever changing’.
9
11.6 14.0 16.9
21.9
29.5
37.4
44.0
51.4
56.2 56.9 58.1 58.3
65.0 66.7
5.1 5.5 6.8 8.1 10.0
15.0 15.0 15.0
20.0 20.0 20.0 20.0
25.0
30.0
0
10
20
30
40
50
60
70
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2005 2009
Per cent of GDP
All postcommunist countries
Belarus
FIGURE 1. EBRD ESTIMATES OF PRIVATE SECTOR IN BELARUS COMPARED TO POST-
SOCIALIST AVERAGES, 1989 2009.
Source: ‘Structural and Institutional Change Indicators’, available at: http://www.ebrd.com/pages/research/
economics/data/macro.shtmlstructural,accessed 19 September 2011.
0.0
1.0
2.0
3.0
4.0
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2005 2009
All PCC large-scale
Belarus large-scale
All PCC small-scale
Belarus small-scale
FIGURE 2. EBRD INDICES OF PRIVATISATION FOR BELARUS COMPARED TO POST-
SOCIALIST AVERAGES, 1991 2009.
Notes: Index is on scale from 1.0 (lowest) to 4.0 (highest), with 0.3 decimal points added or subtracted for þand –
ratings; PCC—post-communist countries.
Source: ‘Structural and Institutional Change Indicators’, available at: http://www.ebrd.com/pages/research/
economics/data/macro.shtmlstructural,accessed 19 September 2011.
9
‘Belarus. Nations in Transit 2002’, available at: www.freedomhouse.org/research/nattransit.htm,
accessed 16 December 2002.
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Likewise, the negative stance of the authorities towards entrepreneurs has been alleged by
a number of Belarusian analysts. For example, Rovdo claimed that businessmen were the
major losers from the redistributive policies pursued in the country after the mid-1990s
(Rovdo 2004, p. 172). Chernov, another Belarusian commentator, characterised the official
attitude to the private sector as follows:
The state has launched a direct attack on the private sector. Today it is practically under the control
of the authorities. Any economic subject can be closed or nationalised. The President can sack
managers of enterprises of any ownership type. ... As a result of several re-registrations, the
number of economic subjects of an entrepreneurial type has been reduced by more than one-and-a-
half times. (Chernov 1998,p.5)
On the other hand, it would be incorrect to say that all private business was destroyed
indiscriminately—many continued to develop, which is clear from both the official and
EBRD estimates. A range of special legislation on support for SMEs, from the 1996 Edict
No.262 to the most recent Law on State Support of Small Entrepreneurship No.148-Z from
1 July 2010 indicate that Belarusian authorities have not completely dismissed private
enterprise.
10
SME development has been highlighted in all five-year economic plans,
elaborated in special programmes of state support to small entrepreneurship (the latest for
2010 2012), and officially promoted by such practices as annual national competitions for
the title of the best entrepreneur, with 2011 even declared the year of enterprise spirit.
11
This apparent discrepancy between negative foreign and positive official views on the
state of the private sector in Belarus can be explained by politically motivated particularism.
Notably, those entrepreneurs who support, or at least do not defy the official policies, seem
to be less likely to encounter administrative pressure than those who confront the state,
especially if they side with the opposition. In his article about Belarus’s political system
Kimitaka Matsuzato put it clearly: ... Lukashenka’s Belarus would never tolerate
autonomous entrepreneurs who did not need the state’s help and defied the political
authorities’ (Matsuzato 2004, p. 250).
Such a particularistic approach was set in place from the very start of Lukashenka’s
tenure, when at a meeting with business circles on 17 September 1994 he reportedly
declared that ‘entrepreneurship will continue, but I will bind you to myself so that if I will
drown, you will drown with me’ (Cherkasova 2002). However, some entrepreneurs did not
want to tolerate this attitude, and sought support from the opposition political forces,
appropriately dominated by pro-business neo-liberal ideas. In this regard one can view the
campaign of business re-registration in the second half of the 1990s, which saw the number
of firms reduced by about a half, as an attempt to reduce the economic power of such
politically defiant entrepreneurs.
10
‘O gosudarstvennoi podderzhke malogo predprinimatel’stva. Ukaz Prezidenta Respubliki Belarus ot 19
iyulya 1996 goda No. 262’, Sobranie ukazov Prezidenta i postanovlenii Kabineta Ministrov Respubliki
Belarus, no.21, Minsk, 1996; ‘O podderzhke malogo i srednego predprinimatel’stva. Zakon Respubliki
Belarus ot 1 iyulya 2010 goda No. 148-Z’, available at: http://www.pravo.by/main.aspx?guid¼3871&
p0 ¼H11000148&p2 ¼{NRPA}, accessed 3 September 2014.
11
‘2011 god v Belarusi ob’yavlen Godom predpriimchivosti’, 3 February 2011, available at: http://www.
belta.by/ru/all_news/president/2011-god-v-Belarusi-objavlen-Godom-predpriimchivosti_i_541586.html,
accessed 29 September 2011.
POLITICAL ECONOMY OF MODERN BELARUS 1709
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Thus, in the context of their particularistic approach to the private sector in Belarus the
authorities can accept and facilitate entrepreneurship as long as it does not make defiant
political interferences. By contrast, a universalistic approach would be perceived as
politically unsafe, considering that entrepreneurs can organise and draw on their own
financial resources to promote their interests through alternative political channels should
they find state policies unfavourable to their objectives. The following statement by
Lukashenka, made at his address to the Belarusian Parliament in 2004, seems to support this
argument:
I will insist that all strata of the population, except for businessmen, merchants and capitalists, be
represented in the new Parliament. Why? We have a bitter experience of the present Parliament.
Nobody will make money in the Parliament. Nobody will safeguard his structures using the state
authority either. If you do business—do it. But do not interfere with politics. This may have far-
reaching consequences. (Lukashenka 2004)
However controversial the political attitude to entrepreneurs in Belarus has been, their
economic role appears to be increasingly acknowledged by the authorities. For example, in
the 2011 2015 economic programme it is stated that ‘entrepreneurship is important in
raising economic competitiveness, timely reacting to changes in demand for goods and
services, and being an additional source of jobs and the middle class as the foundation of
social stability’.
12
The programme also contains the objectives of raising the share of small
and medium business to 30% of GDP by 2015, and of turning Belarus into a top-30 country
in terms of favourable business climate. In other words, Belarusian authorities seem to agree
that small business can play a positive role in facilitating large-scale economic restructuring
by absorbing labour released during modernisation of big enterprises. Yet it is not clear to
what extent, if at all, this economic recognition can transform the particularistic attitude to
the entrepreneurial class in Belarus.
Non-entrepreneurial social groups in Belarus
The non-entrepreneurial groups in Belarus, mainly workers, pensioners, and students, have
consistently accounted for more than two-thirds of Belarus’s total population, and over four-
fifths of the working-age population since the mid-1990s. As with the analysis of
entrepreneurial class above, the official attitude towards non-entrepreneurial groups can be
assessed by the extent of public property preservation in Belarus. Admittedly, such an
approach is not unproblematic, as claims about long-term advantages of private ownership
for workers, in the form of higher wages, as well as for pensioners, expressed in higher
benefits, are not uncommon in the post-communist literature (Balcerowicz 1993, p. 30;
Rutkowski 1995, p. 1). However, the post-communist experience, particularly in the former
Soviet Union, suggests that such advantages, should they indeed materialise, can be
considerably delayed over time, while the costs of private property expansion, whether
measured in open unemployment, low or unpaid wages or pensions, or loss of social
benefits, can be immediate and quite severe. For example, with regard to unemployment, the
negative effect of privatisation can be seen in a study by the International Labour
12
‘Programma sotsialno-ekonomicheskogo razvitiya Respubliki Belarus na 2011 –2015 gody’, available at:
http://www.pravo.by/webnpa/text.asp?RN¼P31100136#&Chapter ¼620, accessed 20 September 2011.
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Organisation which showed that in Hungary ‘[t]he lighting company Tungsram employed
35,000 people until that figure was halved to 17,640 in preparation for its sale to General
Electric, which soon almost halved the workforce again to 9,500 by 1993’ and in the Russian
Federation, ‘Uralmash, the heavy machinery manufacturer in the Urals, reduced
employment from 70,000 to 20,000’ (Martin 1997, p. 8).
The available statistical data confirm that delays with the large-scale privatisation and
enterprise restructuring in Belarus provided relatively secure, even if only low-paid (in the
medium run) employment for many workers who failed to discover entrepreneurial skills
and take advantage of the market economy. Indeed, during the first decade of reforms
Belarus featured one of the lowest unemployment rates in the post-communist world,
whether measured by the official data or Labour Force Surveys (see Figure 3).
It should be noted that Belarus still has the lowest official unemployment in the region,
if not in the whole world: at the end of 2012 it stood at 0.6% (there are no alternative data,
for example, based on labour force surveys, for the period after 2001).
13
The apparently positive role of continued state ownership for non-entrepreneurial groups
in Belarus can also be discerned from statistics on wages and pensions. Notably, the index of
real wage dynamics in Belarus in the first decade of reforms (more recent comparative data
are unavailable) exceeded that for all other post-communist countries in almost all years
except 1994 (see Figure 4).
As the Belarusian authorities refrained from large-scale privatisation, such wage
dynamics might have reflected their capacity to pursue universal wage policies by the means
of uniform tariff increases, obligatory for all state-owned enterprises. This would be
unfeasible in a privatised economy, but it might have ensured relatively equal income
distribution across the nation, evident in some of the lowest inequality levels in the post-
communist world (see Table 1).
56.9
7.8 8.4 9.2 9.6 9.8 10.5 11.8 12.1 11.8
1.0 0.5 1.3 2.1 2.7
4.0
2.8 2.3 2.0 2.1 2.3
8.1
10.8 10.8 10.7
12.4 12.6 13.1 13 13.1 13.1
8.9 8.7
7.6 7.2 6.5 6.8
0
2
4
6
8
10
12
14
16
18
20
Per cent of labour force
All PCC registered Belarus registered
All PCC LFS-based Belarus LFS-based
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001
FIGURE 3. REGISTERED AND LFS-BASED UNEMPLOYMENT IN BELARUS COMPARED TO
OTHER POST-COMMUNIST COUNTRIES, 1991 2001.
Notes: LFS—Labour Force Survey; PCC—post-communist countries.
Sources: World Bank (1997); ‘TransMONEE’, Database of United Nations Children’s Fund, 2005, available at:
http://www.unicef-icdc.org/resources/transmonee.html, accessed 24 January 2006; ‘TransMONEE’, Database of
United Nations Children’s Fund, 2011, available at: http://www.transmonee.org/, accessed 29 September 2011.
13
‘Zanyatost’ naseleniya i bezrabotitsa’, available at: http://belstat.gov.by/homep/ru/indicators/doclad/
2012_11/14.pdf, accessed 5 January 2012.
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Maintaining control over state enterprises might have also helped the Belarusian
authorities with budget revenues, which in turn facilitated steady pension provision
(see Table 2). Lukashenka’s government has reportedly paid pensions on time, kept the
official retirement age unchanged, and maintained the purchasing power of pension and
other benefits through their regular indexation, despite a growing dependency ratio and
financial burden of pensions on GDP (World Bank 2004, p. 80).
Continued state ownership has probably also been vital in upholding social service
provision in Belarus, both on the micro-level through enterprise social facilities, and on the
macro-level through disciplined tax collection (World Bank 2009, p. 4). While enterprise
social responsibilities, common for the Soviet economic system, came under intense neo-
liberal criticism (World Bank 2002, pp. xxixxxx), their preservation has been
advantageous for non-entrepreneurial social groups. For example, it was reported that in
Russia almost 40% of housing, 50% of water, 60% of kindergartens, and 80% of recreation
facilities were provided by industrial enterprises at the onset of the post-communist
transformation, with a similar situation being true for Belarus and other ex-USSR republics
(Kapstein 1997). According to a special inquiry by the World Bank,
firms in Belarus spend money on many functions classified as ‘social’ in their enterprise accounting.
Examples are housing for employees, summer camps for the children of employees, spas for
employees, health and dental clinics on site and specialised medical and dental facilities off site,
subsidised food, cre
`ches and kindergartens, and vocational schools. (World Bank 1997, p. 165)
Large-scale privatisation in Belarus could lead to outcomes in the micro-level social
provision similar to those in Russia described by Martin below:
Shedding these [social] services [of industrial enterprises] has been a major feature of pre- or post-
privatization restructuring, and many facilities such as kindergartens have closed down. Under the
79.1 66.3
53.5
52.4
54.1 57.3 57.2 59.5 61.9 65.7 71.0 76.9
96.0
76.0 70.5
45.3
56.0 59.0 67.0
79.0 85.0
95.0
123.0
133.0
0
20
40
60
80
100
120
140
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
All post-communist countries Belarus
FIGURE 4. INDEX OF AVERAGE REAL WAGES IN BELARUS AND OTHER POST-COMMUNIST
COUNTRIES, 1990 ¼100.
Sources: National Statistical Committee of the Republic of Belarus (2010); Rutkowski (1995); ‘TransMONEE’,
Database of United Nations Children’s Fund, 2005, available at: http://www.unicef-icdc.org/resources/transmonee.
html, accessed 24 January 2006.
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TABLE 1
INCOME INEQUALITY IN POST-COMMUNIST COUNTRIES MEASURED BY GINI COEFFICIENT, 1989 2008
1989 1991 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Albania – – – – – – –––––––––0.405
Armenia 0.251 – – 0.420 – – – – – 0.359 0.484 0.455 0.434 0.400 0.409 0.384
Azerbaijan 0.308 – – – – – ––––––––––
Belarus 0.229 0.253 0.244 0.249 0.253 0.235 0.247 0.245 0.246 0.249 0.248 0.238 0.279 0.253
Bosnia & Hercegovina – – – – – – –––––0.445 – – – –
Bulgaria 0.233 0.384 0.357 0.366 0.345 0.326 0.332 0.333 0.370 0.351 0.358 0.338 0.310 0.319 0.311
Croatia 0.360 – – – – 0.350 ––––––––––
Czech Republic 0.198 0.216 0.230 0.239 0.212 0.232 0.231 0.237 0.234 0.246 0.235 0.258 0.242 0.227
Estonia 0.280 0.398 0.370 0.361 0.354 0.361 0.389 0.385 0.393 0.402 0.383 0.361 –
Georgia 0.280 – – – – 0.503 – – 0.458 0.454 ––––––
Hungary 0.225 0.209 0.242 0.246 0.254 0.250 0.253 0.259 0.272 0.267 0.268 0.274 0.279 0.262 0.262 –
Kazakhstan 0.281 – – – – – ––––––––––
Kyrgyzstan 0.270 0.470 0.411 0.399 0.414 0.377 0.382 0.342 0.380 0.393 0.397 0.380 0.381
Latvia 0.260 – 0.326 0.330 0.330 0.327 – 0.358 0.379 0.391 –
Lithuania 0.263 0.347 0.309 0.332 0.343 0.355 0.354 0.357 0.318 0.309
Macedonia 0.295 0.311 0.295 0.308 0.308 0.346 0.334 0.332 0.324 0.362 0.391 0.394 0.385 0.373
Moldova 0.251 0.464 – 0.437 0.435 0.436 0.411 0.422 0.430 0.385 0.391 0.329
Montenegro – – – – – – ––––––––––
Poland 0.275 0.265 0.321 0.328 0.334 0.326 0.334 0.345 0.341 0.353 0.356 0.366 0.366 0.343 0.345 0.339
Romania 0.237 0.258 0.306 0.302 0.305 0.298 0.299 0.310 0.353 0.349 0.352 0.359 0.361 0.364 0.375 0.347
Russian Federation – – 0.439 0.501 – 0.446 – 0.432 0.422 ––––––
Serbia ––––––––––0.403 0.393 0.393 0.388 0.365 0.345
Slovakia 0.237 0.249 0.262 0.249 0.264 0.263 0.267 0.299 0.254 0.260 0.242 0.242 0.227
Slovenia 0.265 0.264 0.252 0.240 0.243 0.248 0.246 0.244 0.235 0.243 0.242 –
Tajikistan 0.281 – – – – – 0.470 – – – ––––––
Turkmenistan 0.279 – – – – – ––––––––––
Ukraine 0.228 – 0.470 0.313 0.320 0.363 0.364 0.327 ––––0.297 0.282
Uzbekistan 0.280 – – – – – ––––––––––
Source: ‘TransMONEE’, Database of United Nations Children’s Fund, 2011, available at: http://www.transmonee.org/, accessed 29 September 2011.
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privatization programme in the Russian Federation, firms were given the option of transferring
‘social assets’ to local government, but local government was given the option of refusing them;
without the necessary finance to provide the services, most did just that. Even when local authorities
have taken on responsibility, they have lacked resources to run the services—the crisis of state
finances has been a feature of the post-communist period. Some services have collapsed; others
have been withdrawn or have declined. (Martin 1997, p. 12)
In contrast to Russia and, perhaps, many other post-communist countries, Belarusian
enterprises, particularly industrial ones, have not been stripped of their social services, but
rather pressed to provide even more of them. This is evident from their cost structure data:
while in 1990 social contributions accounted for 2.1% of total industry costs, in 2009 the
corresponding figure was 4.3% (National Statistical Committee of the Republic of Belarus
2010, p. 320). One can assume then that a delay with property reforms in Belarus allowed
the state to use its control levers to reverse the process of social divestiture by enterprises,
which began with the economic crisis of the early 1990s, or at least make them foot the
‘social bill’. In the early independent years this was achieved by using extra-budgetary funds
to finance the maintenance of divested social facilities through earmarked taxes, which were
TABLE 2
MAIN INDICATORS OF BELARUSSPENSION SYSTEM, 1990 2012
Year
Ratio of
average pension
to pensioner’s
consumer
basket, %
Replacement
ratio
(average pension
to average
salary), %
Average monthly
pension
in US$/1
Net
dependency
ratio (number
of pensioners
per worker),
%
Pension
bill
as of
GDP, %
1990 39.6 22.7 0.45 7.0
1991 47.1 10.8 0.50 5.9
1992 78.0 20.0 4.8 0.52 5.4
1993 68.0 35.6 8.5 0.52 5.8
1994 40.0 32.5 8.8 0.55 5.6
1995 50.8 38.2 25.2 0.58 8.6
1996 55.0 40.7 28.5 0.62 8.6
1997 65.0 38.8 24.8 0.61 8.1
1998 44.0 36.9 12.9 0.61 8.4
1999 51.9 35.2 11.6 0.60 8.0
2000 67.4 41.5 30.8 0.60 8.4
2001 73.7 39.1 41.1 0.60 9.2
2002 70.0 41.1 46.7 0.59 9.3
2003 69.0 38.0 52.8
2004 90.5 39.7 79.5 0.60 8.4
2005 97.7 37.5 98.0 0.59 8.6
2006 121.1 41.6 129.7 0.58 9.0
2007 128.4 41.3 152.7 0.57 8.7
2008 128.5 38.9 177.0 0.56 8.1
2009 124.6 39.3 150.0 0.56 8.5
2010 143.0 36.6 194.9 0.56 11.1
2011 131.1 32.7 112.6 0.56 8.0
2012 123.5 39.6 220.5 0.56 10.0
Sources: World Bank (1997); National Statistical Committee of the Republic of Belarus (2012c); Ministry of Labour
and Social Protection of the Republic of Belarus (2013); V Belarusi na finansirovanie pensiy napravlyaetsya 10%
VVP’, BELTA, 3 January 2013, available at: http://www.belta.by/ru/all_news/society/V-Belarusi-na-finansirovanie-
pensij-napravljaetsja-10-VVP_i_620081.html, accessed 5 January 2013.
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launched in May 1992 by Lukashenka’s predecessor Viachaslau Kebich, and phased out
gradually as the economy recovered (World Bank 1997, pp. 177 78). Furthermore,
anecdotal private and media reports suggest that wherever social divestiture did take place,
it was mainly by small and medium enterprises in the regions, especially those that
underwent incorporation and personnel cuts, while large industrial enterprises, particularly
the leading ones, preserved most of their facilities. As stated by the World Bank, ‘industrial
and agriculture companies continue to finance a large share of social assets (housing,
utilities, schools), as inherited from the Soviet period, that should properly be the
responsibility of municipalities’ (World Bank 2003, p. 13).
Continued state ownership in the 1990s was also critical for upholding the macro-level
social services in Belarus, such as education, health care, and social assistance. Notably, it
let the government plan and acquire the appropriate revenue by preventing asset stripping
and tax avoidance at enterprise level that was typical, for example, for Russia (World Bank
2002, p. 76). And one can assume that cuts in social expenditure, even if carried out due to
severe budget problems, do not reflect a political economy model prioritising non-
entrepreneurial social groups, for ordinary workers and pensioners can be expected to be the
main losers here. They are less likely to compensate for deteriorating public services due to
their low incomes, whereas the entrepreneurial class can use its more substantial financial
resources to switch from public to private providers, avoiding negative consequences.
This was highlighted by van Brabant, for example,with regard to health care: ‘Wealthy
individuals can now, of course, openly consult health facilities at their own expense, and
many such providers have indeed privatized themselves in every sense of the term. The
point is that for the average citizen access to all health-care services has deteriorated
substantially’ (van Brabant 1998, p. 336).
The data on education and health care expenditure in Figure 5 show that Lukashenka’s
government has been financing these services in quite a consistent manner. To what extent it
was due to the lack of privatisation is not clear, but compared to most CIS countries where
property reforms were more radical, Belarus featured a substantially better social funding
profile (see Table 3).
Belarus under Lukashenka has also been characterised by relatively high levels of social
assistance, which until 2009 were provided through a category-based, essentially universal
3.7
8.8
18.7
0.1
0.2
6.1
0 5 10 15 20
Poverty headcount ratio at
1.25 USD a day (PPP)
Poverty headcount ratio at 2
USD a day (PPP)
Poverty ratio at national
poverty line
Per cent of population
Belarus (2008)
Europe and Central Asia (2005-09)
FIGURE 5. POVERTY IN EUROPE AND CENTRAL ASIA, 2005 2009.
Source: World Bank (2011).
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TABLE 3
GENERAL GOVERNMENT EXPENDITURE ON EDUCATION AND HEALTH CARE IN CIS COUNTRIES,%OFGDP, 1995 2009
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 1995 2009
EDUCATION
Moldova 7.6 9.0 8.8 6.2 4.2 4.5 5.0 5.7 6.7 6.8 7.2 8.1 8.0 8.2 9.6 7.0
Uzbekistan – – – – – 6.7 6.8 6.7 6.3 – – – – – – 6.6
Belarus 5.5 5.9 6.3 6.2 6.1 6.2 6.5 6.6 6.5 5.2 5.4 5.5 5.2 5.1 4.9 5.8
Ukraine 5.4 4.9 5.4 4.4 3.6 4.2 4.7 5.4 5.6 5.3 6.1 6.2 5.3 5.1
Turkmenistan 3.2 2.1 4.5 6.1 5.3 6.5 5.6 4.7 5.1 5.4 5.3 4.9
Kyrgyzstan 5.8 4.8 4.9 4.3 3.5 3.0 3.4 3.9 3.9 4.0 4.2 4.7 5.0 4.8 5.3 4.4
Russian Federation 3.7 4.0 4.5 3.7 2.9 3.1 3.8 3.7 3.5 3.8 3.9 3.7
Azerbaijan 3.5 3.7 3.6 3.4 4.2 3.9 3.5 3.2 3.3 3.4 3.0 2.6 2.5 2.4 3.3 3.3
Kazakhstan 3.2 4.3 3.9 3.3 3.1 3.0 3.0 2.3 2.3 2.6 2.8 3.1
Tajikistan 2.4 2.2 2.1 2.2 2.3 2.3 2.4 2.6 2.4 2.8 3.5 3.4 3.4 3.5 4.1 2.8
Armenia 2.5 2.0 1.7 1.8 1.9 2.6 2.3 1.9 2.1 2.5 2.7 2.7 3.0 2.9 3.5 2.4
Georgia 0.9 1.8 2.0 2.0 2.1 2.2 2.5 2.2 2.1 2.9 2.5 3.0 2.7 2.9 3.2 2.3
HEALTH CARE
Belarus 4.9 4.9 5.6 4.8 4.9 4.9 5.0 4.7 5.1 5.1 5.2 4.6 4.6 4.0 4.1 4.8
Moldova 5.8 6.7 6.1 4.3 2.9 3.2 3.2 4.1 4.0 4.2 4.2 4.7 4.9 5.4 6.4 4.7
Ukraine 4.1 3.9 3.4 3.6 3.0 2.9 3.1 3.5 4.1 3.9 3.8 3.9 3.9 3.8 3.8 3.6
Russian Federation 3.9 3.9 5.0 4.3 3.6 3.2 3.3 3.5 3.3 3.1 3.2 3.3 3.5 3.1 3.5 3.6
Kyrgyzstan 4.0 3.1 2.8 3.5 2.9 2.1 2.0 2.1 2.0 2.3 2.4 3.0 3.2 2.8 3.5 2.8
Uzbekistan 3.6 3.7 3.3 2.9 2.8 2.5 2.6 2.4 2.4 2.3 2.3 2.4 2.3 2.5 2.5 2.7
Kazakhstan 2.9 2.7 3.0 3.1 2.3 2.1 2.0 1.9 2.0 2.3 2.5 2.3 1.8 2.3 2.7 2.4
Turkmenistan 1.9 2.2 3.4 3.5 2.4 3.2 2.8 2.4 2.7 2.4 2.0 1.6 1.4 1.1 1.2 2.3
Georgia 0.3 0.9 1.3 1.2 1.0 1.2 2.1 2.5 1.9 1.8 1.9 2.3 2.3 2.7 2.8 1.7
Armenia 2.0 1.6 1.4 1.6 1.6 1.1 1.6 1.4 1.5 1.4 1.5 1.6 1.6 1.7 2.0 1.6
Tajikistan 1.3 1.3 1.6 1.2 1.0 0.9 1.0 0.9 0.9 0.9 1.1 1.1 1.2 1.4 1.8 1.2
Azerbaijan 1.4 1.5 1.2 0.9 1.0 0.9 0.9 0.8 0.8 1.0 0.9 0.9 1.0 0.8 1.4 1.0
Source: ‘TransMONEE’, Database of United Nations Children’s Fund, 2005, available at: http://www.unicef-icdc.org/resources/transmonee.html, accessed 24 January 2006;
‘TransMONEE’, Database of United Nations Children’s Fund, 2011, available at: http://www.transmonee.org/, accessed 29 September 2011.
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system carried over from the Soviet period.
14
While the authorities were frequently
criticised for this by many foreign observers (EBRD 1997, p. 156; UNDP 2000, p. 49; World
Bank 1997, pp. 75 78), as well as domestic observers (Daneiko 2001, p. 192), this
continuity with social assistance mechanisms appeared to be advantageous for non-
entrepreneurial groups, also contributing to Belarus having some of the lowest poverty
levels in Europe and Central Asia (see Figure 5).
Overall, empirical data analysis appears to confirm the view that the political economy
model pursued in Belarus under Lukashenka prioritises the interests of non-entrepreneurial
groups rather than those of a new entrepreneurial class. This has been pursued mainly through
preserving predominant state ownership on the means of production, which helped to ensure
low unemployment and rather egalitarian wage policies, as well as ostensibly strong fiscal
discipline to uphold relatively high levels of social provision. On balance, such a view can
also be supported by the available qualitative assessments, both domestic and foreign.
Starting from the primary official sources, it should be noted that they rarely feature direct
statements proclaiming the relative superiority of any social groups, which is
understandable given the democratic provisions of Belarus’s constitution. Nevertheless,
a detailed reading of Lukashenka’s speeches and electoral programmes has identified
a number of declarations that point to the political prioritisation of non-entrepreneurial
social groups. For instance, in his first election programme of 1994 he stated that a ‘man of
labour’ would become a main priority of his social policy, which would include, among
other things, such measures as ‘state regulation of people’s incomes via progressive taxation
to prevent sharp income stratification of society’, and ‘meeting basic needs in housing,
health care and drugs provision on a free basis at the achieved [under socialism] level of
quality’ (Lukashenka 1994). However, it is the following extract from his address to the
second All-Belarusian people’s assembly shortly before the presidential elections of 2001
that arguably highlights the political economy orientation of his administration:
When I first visited ‘Gorizont’ [a TV-making plant in Minsk], I asked a straight question. Yes, we
will help ‘Gorizont’, but one does not need so many people to produce, as it was at that time, 3,000
TV sets a month. What shall we do? We will find an investor, keep 400 people, and the remaining
3,500 people will need to leave work. And I felt those nerves then. You know, we have never been
in a situation, when a man, having worked for two-and-half to three decades, would have found
himself thrown into the street. So I asked the new director general, whom we had given support: do
not sack people, let them ‘bind bath besoms’ (you also remember this phrase), but give people an
opportunity to earn. ... Today the staff has been preserved, the salary is there, the production is
there, and there is a future.
15
14
The main objective of Western social security systems is to smooth the negative impact of fierce labour
competition on those who do not fit in the capitalist system, by providing them with subsistence assistance on
the basis of actual material need. By contrast, Soviet social assistance focused on groups with special needs
rather than individuals who could not work competitively. This was determined by the emphasis on full
employment, which was delivered by the state using different methods. As a result, individuals who would be
eligible for social assistance in the Western system were often considered social problems in the socialist
societies. Cash and in-kind aid was provided to individuals and families with special needs, including
children, the disabled, the elderly, veterans, orphans and certain workers, such as miners (World Bank 2000,
p. 24).
15
‘Doklad Prezidenta Respubliki Belarus A.G. Lukashenko na vtorom Vsebelorusskom narodnom
sobranii’, 18 May 2001, available at: http://www.president.gov.by/rus/president/speech/2001/vsebel_sobr.
html, accessed 6 June 2004.
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The view that Lukashenka has been promoting the interests of non-entrepreneurial social
groups is frequently shared by both foreign and domestic academic analysts. For example, in
1997 Mihalisko wrote that ‘time and again Lukashenka has demonstrated in masterful
fashion how well he grasps the mentality and priorities of the simple narod’ [people]
(Mihalisko 1997, pp. 252 53). Likewise, those who accused Lukashenka of populism
agreed that his government ‘improved the social and economic situation of the masses’ by
means of ‘expansionary economic policies’ which involved ‘pro-labour, pro-“weak”
redistribution’ (Matsuzato 2004, pp. 246, 251). Finally, Ioffe (2007, p. 49) noted that
‘Lukashenka can speak on behalf of roughly two-thirds of Belarusians because he and they
agree on some critical issues defining Belarus as a country and Belarusians as a community’.
He identified these issues as economic security, state dependency, risk aversion, and
disbelief in private business, arguing that ‘Lukashenka supporters dislike entrepreneurs and
the West, prefer state-owned enterprises, and value low but steady over high but unsteady
earnings’ (Ioffe 2007, p. 45).
Domestic writers critical of the incumbent authorities have similarly agreed that
Lukashenka’s powerbase lies with the non-entrepreneurial social groups representing the
majority of Belarusians. For example, Rovdo claimed that the social base of the present
‘social populist regime’ included agricultural workers, ‘least qualified’ urban workers, the
retired, as well as the ‘least developed, least educated regional rural and urban bureaucracy’
(Rovdo 2004, p. 168). Similarly, Chernov contended that the ‘social roots’ of the prevailing
political system extended to the masses of the post-Soviet peasantry and urban workers and
servants, who were themselves peasants by origin featuring ‘patriarchal-traditionalist
mentality’ (Chernov 1998).
However, the official prioritisation of non-entrepreneurial social groups in Belarus has
not always been consistent, particularly in the mid-1990s, when the political mobilisation of
society was higher, and opposition political forces had greater influence on the electorate.
For instance, many still remember the negative response to the strike of Minsk subway
workers in 1995, which was organised by trade unions linked to the opposition as a protest
against wage arrears and falling living standards. The strike was stopped, its organisers were
arrested, and the striking machinists were sacked (Kluchnikova 1995; Lebedev 1995).
A more recent example of the incoherent official attitude towards non-entrepreneurial social
groups in Belarus is the campaign to replace labour agreements of unlimited duration, the
basic form of labour relations in the country, by fixed-period labour contracts. Introduced by
the president in 1999, the measures were first applied to executives and managers of all
state-owned enterprises, then extended to workers on the largest and most profitable
enterprises, and gradually to other public entities (Titov 2004). Officially justified by the
need to strengthen worker discipline in a non-privatised economy (Astreiko 2004), these
labour contracts, often ready-made and imposed on fearful workers, severely constrained
their rights (Yanovskaya 2006). And while the government took certain measures to monitor
labour contract practices and investigate violations, one is still tempted to suppose that the
widespread use of fixed-term contracts has been pursued not just for economic reasons, but
also to provide a mechanism of political control over the labour force. It was not, perhaps,
accidental that the labour contract campaign reached its highest point in the period of strong
economic growth: the authorities might have intended to take advantage of favourable
economic conditions to fix safeguards against possible labour-related risks should such
conditions change in the future.
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Despite this obvious inconsistency in the official attitude to workers, however momentous
it may seem, on balance the available empirical data and qualitative assessments seem to
support the view that Belarus’s political economy model has been directed at the interests of
non-entrepreneurial groups. This viewpoint, though, is not typical of the English-language
literature on the country, which is instead dominated by arguments about the populist and
corrupt nature of Lukashenka’s presidency. To clarify the debate on the Belarusian political
economy model, then, it appears necessary to examine such assertions more carefully.
Populism
Based on the existing literature, one can identify at least two analytical approaches to
populism: the one focusing on its political qualities, namely the problems of political style,
and the other one concentrating on its economic features, particularly with respect to the
Latin American experience (Greskovits 1998, pp. 93 114). According to the former,
populism may imply grass-roots mobilisation or collective action; a reform movement;
a multi-class or non-class support base centred around a leader rather than mediated through
organisations; and a personalised and sometimes charismatic leadership style utilising anti-
theoretical rhetoric and based on emotive and moralistic support rather than economic
pragmatism (Collier 2001, p. 11814).
By most of these characteristics Belarus’s political economy model is hard to classify as
populist. Indeed, it has never featured a grass-root mobilisation beyond the electoral
dimension (Rovdo 2004, p. 165), nor has it ever been associated with a reform movement.
By contrast, Lukashenka and his administration have been accused of Soviet-era
conservatism and hostility to any radical reforms.
16
The established predisposition towards
non-entrepreneurial groups and the seemingly particularistic attitude of the authorities to the
entrepreneurial class do not support the idea of their having a multi-class or non-class
support base. In fact, from a political angle perhaps it is only the political style which may be
recognised as populist.
On economic grounds, populism is associated with economic policies which ‘emphasise
growth and income redistribution and de-emphasise the risks of inflation and deficit finance,
external constraints, and the reaction of economic agents to aggressive non-market policies’
(Dornbusch & Edwards 1989, p. 1). In other words, populism entails persistently high
inflation and unsustainable budget deficits, caused by the ‘willingness to satisfy excessive
and inconsistent demands of all sectors of society’ through wage increases unsubstantiated
by productivity gains, ‘while ignoring savings, fiscal, and foreign-exchange constraints’,
which would in turn result in deteriorating foreign trade and evaporating international
reserves (Pereira et al. 1993, p. 53). In short, populism is marked by a focus on extensive
growth and redistributive measures, and a disregard of macroeconomic fundamentals,
particularly fiscal discipline (Pereira et al. 1993, p. 53).
Using the available empirical data, it is possible to test whether Belarus’s political
economy model can be considered as populist. Three groups of variables can be examined
here, based on the aforementioned characteristics of populist economic policies. The first
concerns the public sector, and more specifically data on budget deficits, external financing,
16
‘Belarus. Nations in Transit 2002’, available at: www.freedomhouse.org/research/nattransit.htm,
accessed 16 December 2002.
POLITICAL ECONOMY OF MODERN BELARUS 1719
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and inflation. Since populism is associated with macroeconomic irresponsibility, it is
presumed that Belarus could be seen as populist if it had consistently excessive budget
deficits, financed largely from external sources, and accompanied by high inflation.
The second group of variables looks into external sector data, namely trade patterns, current
account performance, and international reserves. As populism is linked with disregard of
external constraints, one can assume that deteriorating foreign trade, increasing current
account deficit, and evaporating international reserves should point at the likelihood of
populist policies in Belarus. And finally, the third group of variables is related to the
enterprise sector, correlating wage dynamics with labour productivity, enterprise
profitability, and GDP performance as a general benchmark. Taking into account
populism’s propensity to disregard economic efficiency in pursuing politically motivated
wage increases, it is presumed that significant deviation of wage increases from the
aforementioned indicators would indicate populist features in Belarus’s economy.
Examining selected public sector data from 1995 to 2010 demonstrates that Belarus
featured relatively firm budgetary policies financed largely from internal sources and
accompanied by decreasing inflation. More specifically, from 1995 to 2003 budget deficits
averaged 1.5% of GDP, and in the following six years the budget was balanced with
a surplus, only registering a deficit of 1.5% in 2010, in line with the average for the
previous deficit period. General government debt in Belarus was similar, averaging 12.5%
between 1995 and 2009, and showing a substantial increase only in recent years
(see Figure 6).
By contrast to most post-communist countries, Belarus did not borrow much abroad,
partly due to the unfavourable political image of the country. Up until 2002 the total
external debt stock was relatively low, and only in 2007 did it exceed US$10 billion.
For example, neighbouring Lithuania and Latvia, with several times smaller populations,
–1.5
17.9
9.8
13.0
16.5
13.2
10.4 8.9 8.3 8.8
13.0
22.3
41.0
0.4
1.4
0.4
1.4
0.7
–2.7 –1.5 –0.7 –1.0 –2.0
–0.1
–1.9 –2.1
0.0
–1.7
11.6 11.3 11.0 11.5
–5
0
5
10
15
20
25
30
35
40
45
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Per cent of GDP
General government
balance
General government
debt
Trend for general
government debt
Trend for general
government balance
FIGURE 6. GENERAL GOVERNMENT BALANCE AND DEBT TRENDS IN BELARUS,
1995 2010.
Source: ‘Structural and Institutional Change Indicators’, available at: http://www.ebrd.com/pages/research/
economics/data/macro.shtmlstructural,accessed 19 September 2011.
VIACHASLAU YARASHEVICH1720
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had exceeded 10 billion debt marks already in 2004.
17
Overall, by 2010 Belarus’s share in
the total post-communist debt was 1.2%, or US$2,300 per capita, nearly three times less
than the post-communist average, and a dozen times less than the regional leader, Slovenia
(see Table 4).
As far as inflation is concerned, up until the latest price hike in 2011, Belarus had an
ostensibly positive performance here. Notably, inflation was going down from 1995 to 1998,
and then again from 2001 to 2010. Similarly, in 2012 the consumer price index (CPI) was
reduced fivefold, from 108.7% in 2011 to 21.8%. It should also be noted that both in 1998
2000 and in 2011 2012 inflationary outbreaks were to a large extent caused by external
economic shocks, notably the Russian financial crisis in 1998 and substantial price increases
for Russian energy imports in 2009– 2010, as well as some provisions of the customs union,
related to the import of used cars by private persons. In general, though, inflation dynamics
TABLE 4
EXTERNAL DEBT IN POST-COMMUNIST COUNTRIES, 2009
Country
External debt stock, million
US$ Population, million
External debt per capita,
US$
Slovenia 55,676.3 2.0 27,622
Estonia 25,041.9 1.3 18,640
Latvia 41,908.7 2.3 18,521
Hungary 180,779.3 10.0 17,997
Croatia 64,295.0 4.4 14,517
Slovakia 65,314.1 5.4 12,070
Lithuania 33,196.9 3.3 9,946
Czech Republic 95,500.0 10.3 9,248
Poland 280,264.0 38.1 7,360
Kazakhstan 111,730.0 15.6 7,177
Bulgaria 52,336.5 7.6 6,886
Montenegro 4,011.2 0.7 5,730
Serbia 31,648.9 7.3 4,335
Romania 78,655.7 21.5 3,664
Russian Federation 471,600.0 141.9 3,323
Macedonia 5,505.0 2.1 2,671
Bosnia & Hercegovina 9,066.8 3.8 2,386
Belarus 22,029.9 9.6 2,301
Ukraine 103,973.0 45.5 2,285
Armenia 5,022.9 3.2 1,561
Albania 4,139.6 3.2 1,294
Moldova 4,368.0 3.6 1,213
Georgia 3,751.4 4.4 853
Azerbaijan 6,400.0 8.4 762
Kyrgyz Republic 3,048.0 5.4 568
Tajikistan 2,680.2 6.5 413
Uzbekistan 3,996.3 28.3 141
Turkmenistan (2006) 805.0 6.5 124
TOTAL 1,766,744.5 402.2 AVERAGE: 6,557
Source: ‘Structural and Institutional Change Indicators’, available at: http://www.ebrd.com/pages/research/
economics/data/macro.shtml#structural, accessed 19 September 2011.
17
‘Forecasts, Macro Data, Transition Indicators’, available at: http://www.ebrd.com/pages/research/
economics/data/macro.shtml#ti, accessed 19 September 2011.
POLITICAL ECONOMY OF MODERN BELARUS 1721
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did not point at outright neglect of macroeconomic constraints which could support
assertions of populism with regard to Belarus (see Figure 7).
Turning to the external sector data, it is remarkable that under Lukashenka foreign trade
turnover by 2012 exceeded the 1995 level by nine times, notwithstanding a substantial
decline in 2009 and economic turmoil in 2011 (see Figure 8).
Indeed, Belarus has become one of the major exporters in the post-communist world both
in absolute and per capita terms, and unlike most of its CIS counterparts, it has specialised
244.0
39.3
251.2
46.1 34.8
14.4 8.0 6.6 12.1 13.3 9.9 8.6
21.8
181.7
107.5
25.4
63.1
108.7
0
40
80
120
160
200
240
280
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Consumer price index
FIGURE 7. INFLATION DYNAMICS IN BELARUS, 1995 2012.
Sources: ‘Structural and Institutional Change Indicators’, available at: http://www.ebrd.com/pages/research/
economics/data/macro.shtmlstructural,accessed 19 September 2011; ‘Godovye dannye—tseny’, 2013,
available at: http://belstat.gov.by/homep/ru/indicators/prices.php, accessed 16 February 2013.
10.3 12.7 11.9 15.7 17.1
30.3 32.7
42.1
53.0
72.0
49.9
60.2
92.4
87.2
15.2
21.5
16.0
13.8
0
25
50
75
100
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Merchandise foreign trade turnover, bn USD
FIGURE 8. MERCHANDISE FOREIGN TRADE TURNOVER DYNAMICS IN BELARUS,
1995 2012.
Sources: ‘Structural and Institutional Change Indicators’, available at: http://www.ebrd.com/pages/research/
economics/data/macro.shtmlstructural,accessed 19 September 2011; ‘Operativnye dannye—balans vneshnei
torgovli tovarami Respubliki Belarus’, 2013, available at: http://belstat.gov.by/homep/ru/indicators/trade_
balance.php, accessed 16 February 2013.
VIACHASLAU YARASHEVICH1722
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in exporting finished goods rather than raw materials, which made the quintupling of its
merchandise exports between 2001 and 2011 even more remarkable (see Figure 8 and
Table 5).
However, despite all the positive foreign trade turnover and export dynamics, Belarus has
almost always had its current account in deficit which has been growing in time and
arguably become unsustainable by 2011 (see Table 6). Restrained in access to international
financial markets due to its ongoing disagreements with the IMF and EBRD, Belarus, unlike
most other post-communist countries, was rather slow in building up foreign reserves to
offset negative externalities (see Table 6). In order to balance its current account, therefore,
it repeatedly had to undertake radical currency devaluations—first in 2009, and then twice in
2011. This seemingly improper consideration of external financial constraints to some
extent validates assertions of populism regarding Belarus’s political economy model.
Indeed, having in place a firm stability cushion in the form of sufficient international
reserves stock should have been a major priority for Lukashenka’s administration given a
natural vulnerability to external shocks of an open economy such as Belarus. And though it
TABLE 5
MERCHANDISE EXPORTS IN POST-COMMUNIST COUNTRIES, 2011
Country
Merchandise
exports, million US$
Rank
by merchandise
exports
volume
Per capita
merchandise
exports, US$
Rank by
merchandise
exports per
capita
Russian Federation 516,992.6 1 3,643 12
Poland 188,105.1 2 4,940 9
Czech Republic 162,391.7 3 15,726 1
Hungary 111,216.8 4 11,012 5
Kazakhstan 88,107.9 5 5,648 7
Slovakia 78,487.2 6 14,504 2
Ukraine 68,393.0 7 1,503 19
Romania 62,692.0 8 2,920 15
Belarus 40,294.0 9 4,208 10
Slovenia 28,984.1 10 14,380 3
Bulgaria 28,165.0 11 3,706 11
Lithuania 28,068.6 12 8,255 6
Azerbaijan 26,480.0 13 3,152 13
Estonia 18,132.6 14 13,497 4
Croatia 13,364.0 15 3,017 14
Latvia 11,988.2 16 5,212 8
Serbia 11,775.4 17 1,613 17
Bosnia & Hercegovina 5,850.1 18 1,540 18
Macedonia 4,455.3 19 2,122 16
Moldova 2,216.8 20 616 21
Kyrgyz Republic 1,978.9 21 373 24
Albania 1,948.0 22 609 22
Georgia 1,583.7 23 360 25
Armenia 1,320.0 24 410 23
Montenegro 627.5 25 896 20
Note: Tajikistan, Turkmenistan and Uzbekistan are not represented as the latest available data in Comtrade are for
2000.
Source: ‘UN Comtrade’, United Nations Commodity Trade Statistics Database, 2013, available at: http://comtrade.
un.org/db/, accessed 7 January 2013.
POLITICAL ECONOMY OF MODERN BELARUS 1723
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seems reasonable to account for, at least partially, the country’s macroeconomic problems
by the global financial crisis, it is still more plausible that the latter was the trigger rather
than the cause of the currency crisis which downed Belarus in the spring of 2011.
The final set of variables to test for populism in Belarus relates to the enterprise sector.
Here it is possible to compare wage dynamics with such indicators as profitability and labour
productivity, as well as GDP performance as a general benchmark. Calculating indices for
these indicators reveals whether there are substantial deviations which could point at
populist pressures in Belarus’s economy (see Table 7).
Given due consideration to data limitations with regard to labour productivity, one can
still see that up until 2001, the year of the second presidential elections in Belarus, there
was virtually no deviation between real wage and labour productivity indices, with 1995 as
a starting point. However, despite the relatively high profitability of industrial enterprises,
wages in the country remained low, particularly in US$ terms at parallel market rates.
Starting from 2001, wage dynamics began to diverge considerably from both productivity
and GDP patterns, with most significant deviations coinciding with important political
events, such as elections or referenda, as, for example, in 2004 2006 or 2010. In between
these periods, wage growth was relatively moderate, and in the years preceding political
milestones—2003 and 2009—almost non-existent, which implies strong populist pressures
on the enterprise sector in Belarus. At the same time, the profitability of enterprises
remained seemingly robust, in the range between 10% and 15%. While this may suggest
that Belarusian industrial enterprises managed to cope with ostensibly excessive wage
increases, it can also reflect fairly strong administrative capacity to balance internal shocks
in Belarus’s largely state-owned economy. It should also be noted that despite seemingly
TABLE 6
CURRENT ACCOUNT AND INTERNATIONAL RESERVES DYNAMICS IN BELARUS, 1995 2011
Year
Current account
deficit (-)/surplus,
%ofGDP
Current account
deficit (-)/surplus,
million US$
International reserves excluding
gold at year-end,
million US$
1995 24.3 2458.1 377.0
1996 23.6 2515.9 469.2
1997 26.1 2859.2 393.7
1998 26.7 21,016.5 702.8
1999 21.6 2193.7 294.3
2000 23.2 2338.4 350.5
2001 23.3 2410.6 390.7
2002 22.2 2326.4 417.4
2003 22.4 2434.4 461.5
2004 25.2 21,193.3 690.8
2005 1.4 435.5 1,106.5
2006 23.9 21,431.2 1,067.2
2007 26.7 23,037.6 4,182.0
2008 28.2 24,988.0 3,061.1
2009 212.6 26,178.0 5,652.5
2010 215.0 28,278.0 5,031.0
2011 210.5 25,775.0 7,916.0
Sources: ‘Structural and Institutional Change Indicators’, available at: http://www.ebrd.com/pages/research/
economics/data/macro.shtml#structural, accessed 19 September 2011; IMF (2012).
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TABLE 7
SELECTED INDICATORS OF ENTERPRISE SECTOR PERFORMANCE IN BELARUS, 1995 2011
Category 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Profitability in industry, % 10.1 10.6 13.2 14.5 17.1 15.8 10.9 10.5 12.0 14.1 14.3 14.3 12.4 14.1 8.8 8.9 16.5
Labour productivity in industry, %
change
23.0 – – 8.0 – – – – 10.0 10.0 9.0 11.0 – – –
Average monthly wage in US$
at official exchange rate 66 90 108 68 79 89 90 107 123 162 218 272 323 406 352 409 411
at parallel market exchange rate 70 64 35 33 62 – – – – – – – – –
Real wage dynamics, % change
in national currency 25.0 5.0 14.0 18.0 7.0 12.0 29.6 7.9 3.2 17.4 20.9 17.3 10.0 9.0 0.1 15.0 1.9
in US$ at official rate 36.4 20.0 237.0 16.2 12.7 1.1 18.9 15.0 31.7 34.6 24.8 18.8 25.7 213.3 16.2 0.5
in US$ at parallel market rate 28.6 245.3 25.7 87.9 – – – – – – – – – –
INDICES
Index of real average monthly wage
(in national currency, adjusted to
inflation)
100.0 105.0 119.7 141.2 151.1 169.3 219.4 236.7 244.3 286.8 346.7 406.7 447.4 487.6 488.1 561.3 572.0
Index of labour productivity in
industry
100.0 – – 168.8 – – – – 272.7 300.0 327.3 363.6 – – –
Index of GDP 100.0 102.8 114.5 124.1 128.4 135.8 142.2 149.3 159.7 178.0 191.8 212.0 232.8 259.1 259.6 279.3 294.1
MEMORANDUM
GDP, % change to previous year 210.4 2.8 11.4 8.4 3.4 5.8 4.7 5.0 7.0 11.4 7.8 10.5 9.8 11.3 0.2 7.6 5.3
Sources: National Statistical Committee of the Republic of Belarus (2012b, 2012c).
POLITICAL ECONOMY OF MODERN BELARUS 1725
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disproportionate wage increases their share in total production costs remained largely
stable throughout the whole transformation period—11.2% in 1990, and 11.9% in 2009, 20
years later (National Statistical Committee of the Republic of Belarus 2010, p. 320).
Summing up the economic data, then, it is obvious that populism has been present in
Belarus not only in political style, but in economic policy. Notably, the authorities have
paid insufficient attention to external risks while allowing seemingly unsustainable wage
increases. However, consistently robust fiscal performance, very dynamic foreign trade,
and GDP growth make it hard to call Belarus’s political economy model populist as a
whole.
This view goes against a tendency to charge Lukashenka’s administration with both
economic and political populism in the English-language literature on Belarus. For example,
in his seminal article on Belarus Matsuzato called the country a ‘populist island in an ocean
of clan politics’. The populist nature of Lukashenka’s ‘regime’ was derived from such
features as a ‘specific tolerant Belarusian mentality’, the ‘circumstances in which the regime
appeared’, its policies aimed at ‘reshuffling and containing both regional and economic
elites to prevent regional clans and keep a stronghold on the economy’, and the ‘tactless
opposition providing a convenient image of the enemy’ (Matsuzato 2004, pp. 239 42).
Interestingly, this author concluded that it is Belarusian mentality which might have been
chiefly to blame for the populism of Lukashenka (Matsuzato 2004, pp. 255 56). At the
same time, by suggesting that Belarus is worse off than Ukraine or Russia, where
‘patrimonial capitalism, advantageous not only to domestic enterprises but also to the
population in general, took shape’ (Matsuzato 2004, p. 235), Matsuzato’s argument provides
grounds to suppose that the major reason for allegations of populism against Lukashenka
might have been his dislike of neo-liberalism.
18
According to Greskovits, in post-communist Europe anyone opposing the radical neo-
liberal reforms might be labelled a populist: ‘One has the impression that ... populists
reveal their identity mainly by their attitude to the pace and concrete design of the economic
transformation strategy. “Populist” becomes a synonym for “opponent of neoliberalism”
and vice versa’ (Greskovits 1998, pp. 96 97).
Similarly, by contending that Ukraine’s ‘semi-reformed oligarchic society’ is ‘clearly
preferable to Belarusian state despotism’, Aslund, one of the key advocates of neo-
liberalism in the post-communist world, has underpinned the neo-liberal basis behind his
own and many others’ populist allegations against President Lukashenka (Aslund 2001,
p. 45).
Corruption
Another popular way of misinterpreting Belarus’s political economy model has concerned
the question of corruption. While it would be naı
¨ve to think that the country has been totally
spared of this social phenomenon, a thorough investigation seems necessary to confirm or
18
The aborted ‘colour revolution’ in Moldova in 2006 seems to underpin the neo-liberal bias in evaluating
post-communist political economies. Specifically, in spite of the fact that parliamentary elections there were
won by the previously ‘populist’ Communists, their swift re-orientation to the West and criticism of Russia
might have been central in their acceptance by both Western election observers and media commentators,
who made a U-turn on their original calls for Ukraine-style ‘colour revolution’ in the country (Osborn 2006).
VIACHASLAU YARASHEVICH1726
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deny popular assertions about the corrupt nature of Belarus’s political economy model in the
English-language literature.
There can be at least two kinds of data that can be used in assessing corruption in a given
country: objective and subjective. The former would draw from official information about
corruption trials or investigations, and the latter would use the data from corruption
perception surveys. As argued by Roland, both methods are prone to shortcomings:
objective measures can be uninformative for countries with a high degree of formal
institutional capture, while subjective measures can be distorted by media bias, prejudices,
and ‘all sorts of informational externalities’ (Roland 2000, p. 187). In the case of Belarus,
the use of objective measures is prevented by the deficiency of open official information on
corruption investigations, which makes it necessary to resort solely to subjective measures,
however biased they may be.
A leading agency in the field of comparative corruption research is Transparency
International. It started to include Belarus in its annual Corruption Perceptions Index (CPI)
from 1998, though the index itself was launched in 1995. In the latest 2013 release Belarus
ranked 123 out of 175 countries, with a score of 29 (on the range from 0, highest corruption,
to 100, lowest). While this undoubtedly looks very serious, Belarus ranked higher than
Russia, Ukraine and many other ex-Soviet republics. The country also has a similar standing
in another source of corruption measures for post-communist countries, the Nations in
Transit report by Freedom House (see Table 8).
It should also be noted that in the first five CPI releases Belarus had a much more positive
performance, which was better than average for all post-communist countries, including
some EU candidate countries (see Figure 9).
Based on the available comparative data, one can argue then that Belarus may have a lot
of corruption, but its extent is not great enough to single out the country as the worst in the
post-communist world. This may explain why foreign authors who study Belarus have
generally avoided direct allegations of corruption against Lukashenka’s administration.
Even reports by Freedom House, which have persistently given very negative assessments
of Belarus, were initially cautious, saying that while ‘allegations of high-level corruption
persist, many have a political dimension’, and admitting that the ‘actual degree of high-level
corruption is difficult to discern’.
19
However, such reports became more specific with time,
probably because they were prepared by ethnic Belarusians with more knowledge about the
country. For example, the 2011 report stated that corruption in Belarus is most prevalent in
such sectors as trade, industry, and agriculture, where some officials organise ‘criminal
groupings’ to coordinate bribery and profit from ‘opportunities presented by nontransparent
public procurement procedures’.
20
There are other negative assessments of corruption in Belarus, but many of them are not
substantiated by sufficient evidence.
21
It appears justified to conclude, then, that while corruption does exist in Belarus, perhaps
like in any other country, its extent is not critical enough to justify such assertions as, for
example, the one made by Sosnov, a former minister in the first Lukashenka administration,
19
‘Belarus. Nations in Transit 1999/2003’, available at: www.freedomhouse.org/research/nattransit.htm,
accessed 16 January 2003.
20
‘Belarus. Nations in Transit 2011’, available at: http://www.freedomhouse.org/images/File/nit/2011/
NIT-2011-Belarus.pdf, accessed 28 September 2011.
21
See, for example, Ioffe (2004, p. 101).
POLITICAL ECONOMY OF MODERN BELARUS 1727
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who said that in Belarus ‘leaders have only one objective—to stay as long in power as
possible in order that all relatives make provisions for themselves for many years to come’
(Gulyaeva 2004). Just as with populism, such arguments may often have a political—and
in the case of Belarus—a neo-liberal, dimension.
TABLE 8
CORRUPTION MEASURES FOR NON-BALTIC EX-USSR REPUBLICS, 2012
Transparency International
Corruption Perceptions
Index
Freedom House
Nations in
Transit Corruption
Index
Country Score Global rank Country Score
Georgia 52 51 Georgia 4.5
Moldova 36 94 Armenia 5.25
Armenia 34 105 Ukraine 6
Belarus 31 123 Moldova 6
Kazakhstan 28 133 Belarus 6.25
Russia 28 133 Tajikistan 6.25
Azerbaijan 27 139 Kyrgyzstan 6.25
Ukraine 26 144 Kazakhstan 6.5
Kyrgyzstan 24 154 Azerbaijan 6.5
Tajikistan 22 157 Russia 6.5
Turkmenistan 17 170 Turkmenistan 6.75
Uzbekistan 17 170 Uzbekistan 6.75
AVERAGE 28.5 AVERAGE 6.13
Notes: Transparency International measures corruption on a scale from 0 (highest) to 100 (lowest). Freedom House
measures corruption on a scale from 1 (lowest) to 7 (highest).
Sources: ‘Nations in Transit 2012’, available at: http://www.freedomhouse.org/sites/default/files/2012%20%20NIT
%20Tables.pdf, accessed 10 January 2013; ‘Corruption Perception Index 2012 Results’, available at: http://www.
transparency.org/cpi2012/results, accessed 10 January 2013.
3.8
3.1 3.3 3.6 3.4
3.9
3.4
4.1
4.8
0
1
2
3
4
5
1998 1999 2000 2001 2002
All postcommunist countries Belarus
FIGURE 9. TRANSPARENCY INTERNATIONAL CORRUPTION PERCEPTIONS INDICES FOR
BELARUS COMPARED TO POST-COMMUNIST AVERAGES, 1998 2002.
Notes: No data available for 2001 for Belarus; Transparency International measures corruption on a scale from 0
(highest) to 10 (lowest).
Source: Transparency International (2013).
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The political economy of Belarus in the context of post-socialist transformation
Having analysed the key features of Belarus’s political economy model, it seems necessary
to put it in a wider context—that of the post-communist transformation. The wider debate
about post-communist transformation has been dominated by neo-liberalism and
its particular vision of reforms (often called the ‘Washington consensus’), based on
a combination of short-term neo-classical stabilisation measures with medium-term and
long-term structural reforms aimed at decreasing the role of the state and increasing the role
of the market in economy (Pereira et al. 1993, p. 19). More specifically, neo-liberalism
aimed at establishing a new social order in the post-communist societies, with Western-like
democracy in the political sphere, and capitalism in the economic one (Sachs 1999,
pp. 4 5). This new order had to be brought about quickly enough so as not to miss the
‘historical window of opportunity’—a rare mandate of electorate’s reform enthusiasm
(Blejer & Coricelli 1995, pp. 81 82).
Neo-liberal political economy implied social re-configuration that prioritised property-
endowed groups, and de-emphasised property-deficient groups. Notably, neo-liberalism
emphasised the emergence of entrepreneurs as a social class, because they were hoped to
foster both the economic and political cause of the post-communist transformation.
Economically, this new entrepreneurial class should facilitate better resource allocation and
management, contributing to economic growth (Blanchard et al. 1991, pp. 72 73).
Politically, they would be crucial for sustaining the democratic order, being the prototypes
of the Western-style middle class, the most important social foundation of democracy
according to some classical tenets in Western political science (Lipset 1959; Moore 1966).
Naturally, the neo-liberal focus on the entrepreneurial class as a driving force of the
transformation reduced the importance of the formerly prevalent working class. Workers
and other non-entrepreneurial groups either had to uncover entrepreneurial talent and benefit
from the transformation, or lose from the latter (World Bank 2002, pp. 90 92). Overall,
neo-liberalism presumed encouragement of the new entrepreneurship while constraining the
oligarchs on the one hand and conciliation of non-entrepreneurial groups by political means
on the other hand. This had to be done by dispersing the gains from reforms and improving
social compensation mechanisms so as to prevent public protest against the inevitable social
costs of the transformation (Hellman 1998; World Bank 2002).
As these costs became more apparent in the course of reforms, and led to protest votes in
many post-communist countries in the mid-1990s, neo-liberalism came under intense
academic criticism. It was challenged by at least three theoretical approaches: social
democracy, evolutionary economics, and institutionalism. Given their ostensible
convergence on core principles and methods with regard to the transformation, as well as
their criticism of neo-liberalism, it seems reasonable to bring them together into a single
framework of ‘post-communist gradualism’.
The major difference between these two approaches concerned not the substance, but the
methods of changes to be implemented in the post-communist world (Greskovits 1998, p. 8).
Indeed, both gradualism and neo-liberalism advocated transforming post-communist
societies into Western-style market democracies, i.e. adopting pluralist democracy as
a political system, and competitive capitalism as an economic one (Kolodko 2000,p.1;
Przeworski 1991, p. xix), and converged on the perception of economic foundation as
central in sustaining the new political order in post-communist societies. However, neo-
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liberals argued for a rapid and comprehensive change, whereas gradualists generally
rejected reform radicalism by pointing at social complexities, and instead called for
a measured and sequential change (Offe 1991; Orenstein 2001).
One can also claim that the gradualist approach has inclined to a particular version of
capitalism that assigns a greater role for the state in both economy and social sphere, as
opposed to the neo-liberal vision of a maximum role for the market and a minimum one for
the state (Greskovits 1998, p. 20). Very cautiously, it can be argued that gradualism has
tilted towards the so-called Continental (Rhine) model of capitalism, inspired by the
thinking of Friedrich List, in contrast to the neo-liberal propensity to the Anglo-Saxon
model, based on the ideas of Adam Smith (Albert 1994; List 1991; Smith 2007).
As far as the social group configuration is concerned, the emphasis on social compensation
mechanisms, obvious in social-democratic and ‘political economy of patience’ thinking by
Offe and Greskovits, points at a more careful stance of post-communist gradualism to non-
entrepreneurial groups than has been the case with neo-liberalism. It seems then that
gradualism viewed non-entrepreneurial social groups as critical for reforms, rather than
as passive ‘losers’ who would bear any losses imposed on them. But whereas in the early
1990s these groups were treated with suspicion as endangering both economic and political
reforms (J-curve assumptions by Przeworski (1991, pp. 136 37)), later institutional and
‘patience’-based perceptions found that democratisation had actually fostered economic
reforms through reducing the impact of political protest from the disadvantaged non-
entrepreneurial groups (Bartlett 2000; Greskovits 1998).
How does Belarus’s political economy model fit in the post-communist transformation
debate, if at all? As far as the principles are concerned, it is apparently different from both
neo-liberalism and gradualism. Indeed, the latter two share the principles of the Western
political and economic liberalism, including the allegiance to free market economy and
pluralist democracy, whereas Belarus’s authorities have ostensibly aspired to Soviet-type
socialism, which implies predominance of public property in economy and unfeeling stance
to political pluralism. However, Belarus’s gradual and very cautious approach to reforms
puts it closer to gradualism than to neo-liberalism, which differ from each other exactly on
how reforms should be implemented. Finally, the noticeable focus of Lukashenka’s policies
on non-entrepreneurial groups is again more congruent with the gradualist approach that
regarded these groups crucial for post-communist reforms and argued for proper
compensation mechanisms to offset any social costs. All in all then, Belarus’s political
economy model looks closer to gradualist rather than neo-liberal thinking, but its divergence
from mainstream transformation theories in core principles certainly makes it quite unique
in the post-communist world.
Rather than privatising the economy (either faster as suggested by neo-liberalism, or
slower, as advised by gradualism) and embracing a multi-party political system,
Lukashenka based his economic agenda around the state, and adopted a strong executive-
centred form of government, justifying both choices by popular preferences and objective
constraints. Such a defiance of mainstream post-communist theories has carried significant
disadvantages for Belarus. Notably, it led to very critical information flows from the EBRD,
IMF, and the World Bank, the three most influential institutions in the region, as since the
mid-1990s Belarus refused to follow their economic advice. This has not only created
negative investment perceptions, but also moulded negative academic and media views on
the country in the West, which proved to be quite long-lasting. Such views have also been
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reinforced by Lukashenka’s foreign policy, much more often oriented at Russia rather than
at the West. Namely, Belarus openly criticised NATO bombings of Yugoslavia and US-led
wars in Iraq and Afghanistan, and instead of seeking EU or NATO membership, it has been
forging economic and military integration with Russia, being very critical of NATO’s
eastward expansion.
Political pluralism has obviously been the greatest victim of Belarus’s political economy
model. The West has consistently accused Lukashenka of political intolerance towards his
opponents, human rights violations and infringements to free thinking and expression.
However, these accusations have largely been based on reports from the pro-Western and
neo-liberal opposition, who have rather limited support inside the country (according to
available surveys, such as, for example, by the exiled Independent Institute of Socio-
Economic and Political Studies (IISEPS)), and so failed to spark public opinion in Belarus.
22
It seems, then, that the real problem of democratisation in the country may lie not with
Lukashenka’s political intolerance, but with the lack of alternative political projects which
could be more popular with ordinary Belarusians, who apparently do not want to buy into
the neo-liberal agenda of the existing opposition.
To sum up, Belarus’s political economy model has indeed been very different from the
mainstream post-communist transformation agenda, but to say that it has completely defied
it would be inaccurate. Belarus has moved away from its Soviet past, but in a much slower
and often inconsistent way than would be accepted by either neo-liberalism or gradualism.
Most likely, this inconsistency has been caused by the official refusal to accept the principles
of market economy and pluralist democracy while acknowledging the need to adjust to post-
communist reality. By denying neo-liberal reforms pushed elsewhere in the region,
Lukashenka denied the whole concept of the market-based democratic order. But at the end
of the day he has done so because most Belarusians, represented by workers and other non-
entrepreneurial groups, apparently do not want to bear the social costs of the
transformation—all too obvious in neighbouring Russia, Ukraine, and elsewhere in the
region. And as Lukashenka lacked external sympathy for his politics, he could only rely on
internal grass-roots support to remain in power, which explains both his choice of political
economy model and survival through most difficult times, including the current
macroeconomic distress.
It seems that Belarus’s political economy model has neither been acknowledged or
appreciated in the West precisely because it defied the core principles of the post-communist
transformation—the priority of private property and pluralist politics. The Czech Republic,
Hungary, or Slovenia might have also frequently defied the mainstream transformation
agenda, particularly its neo-liberal tenets, but such deviations have been excused due to
convergence of domestic political forces on pro-Western principles, as well as foreign
policy support. By contrast, the seemingly anti-Western and pro-Russian policies of
Lukashenka’s administration made its political economy totally unacceptable for the West.
On their part, Belarus’s opposition seems to have assumed a provocative role of
undermining the credibility of Lukashenka’s presidency on the international arena, being
22
IISEPS is often considered the leading centre for independent sociological research on Belarus. In March
2012 it asked respondents whether they see themselves in opposition to authorities, and 66% said ‘no’;
similarly, in the same poll only 4.2% of respondents said that it is the Belarusian opposition which ‘should
return the country to the right course’. See ‘Results of the Nation Opinion Poll Conducted on March 212,
2012’, available at: http://www.iiseps.org/edata12-3.html, accessed 2 January 2013.
POLITICAL ECONOMY OF MODERN BELARUS 1731
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unable to enter formal institutions due to an unpopular policy agenda, internal weakness,
and dependence on foreign financing.
23
Perhaps, it would be more beneficial for Belarus
if there was a true political opposition which could come up with alternative policy
proposals, genuinely popular with ordinary Belarusian voters.
Belarusian State University
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Edited by two of the world's leading analysts of postcommunist politics, this 1997 book brings together distinguished specialists on the former communist countries of Russia and the Western Newly Independent States. Chapters on Belarus, Moldova, and Ukraine, plus three chapters on Russia's regional politics, its political parties, and the overall process of democratization, provide an in-depth analysis of the uneven pattern of political change in these four countries. Karen Dawisha and Bruce Parrott contribute theoretical and comparative chapters on postcommunist political development across the region. This book will provide students and scholars with detailed analysis by leading authorities, plus research data on political and economic developments in each country.