Page 62 - BNE_magazine_07_2020

62 Opinion bne July 2020
Minsk has been rocked by unprecedented protests ahead of the August presidential elections. But incumbent President Alexander Lukashenko is likely to win those elections, despite his dwindling popularity. Then what?
COMMENT:
Lukashenko’s penultimate elections
Tadeusz Giczan PhD Researcher at the University of London School of Slavonic & East European Studies
Lukashenko’s Belarus has long been a success story in the post-Soviet world. In the 2000s it had some of the fastest GDP growth in the world. Belarus had the lowest unemployment rate among all the countries of the former Eastern Bloc, the lowest level of poverty in the region, one of the best public health services, the best road infrastructure, and no foreign debt.
In 2003 it became the third country in the region whose GDP returned to its 1990 level (after Uzbekistan and Estonia). Over the next five years, its economy had grown by another 60%. During the financial crisis of 2009, Belarus remained the only post-Soviet country whose economy didn’t shrink.
These outstanding results made scholars talk about Lukashenko’s Belarus as the post-Soviet economic miracle. But what were the foundations of that miracle?
After Aleksandr Lukashenko was elected President of Belarus in 1994, he immediately rolled back market reforms and privatisation and reintroduced a Soviet-style planned economy. His reforms implied, among other things, the
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preservation of state ownership of over-scaled and inefficient industry and agriculture. This helped to maintain a low unemployment rate but at the same time required constant state subsidies to keep these sectors afloat.
Lukashenko’s enormous popularity over the years can be largely explained by the fact that he managed to find the source of these subsidies – Russia. Starting from the mid-90s, Lukashenko has been constantly offering his friendship to the Kremlin in exchange for tangible economic benefits.
That policy became popularly known as “oil and gas in return for kisses”.
Thanks to this policy, Belarus enjoyed heavily discounted Russian energy, as well as unlimited access to the unlimited Russian market. One of the main sources of Belarus’ prosperity was Russia’s cheap oil, which Belarus processed at its refineries and then resold at market prices to Europe, keeping the margin. This simple trick brought tens of billions of dollars to the Belarusian economy. In the 2000s, petrochemicals amounted to over 30% of the country’s exports despite the fact that Belarus barely has any oil deposits.