Russia will serve as dictator’s bank
By Yuras Karmanau
MINSK, Belarus | Belarus is running out of cash, with people waiting in lines all day to exchange rubles as they prepare for another devaluation.
But since the country known as Europe’s last dictatorship alienated the West, Russia now has a free hand to set its own terms in exchange for a lifeline.
As Moscow draws up the papers to give as much as $3 billion to the government of President Alexander Lukashenko, it will be eyeing Belarus‘ most lucrative assets, particularly its oil refineries and chemical plants.
“Lukashenko is beginning to understand that having slammed the door on the West with his foot, he has doomed himself to conditions set by the Kremlin,” said Stanislav Bogdankevich, a former head of Belarus‘ central bank.
There is no doubt Belarus needs help. Reserves of hard currency fell 20 percent in the first two months of the year to just $4 billion. To staunch the flow, the government has made it difficult for people to buy dollars and euros.
“How can we have faith in a government that publicly promised stability and average monthly salaries of $500, while today I am at risk of losing half of that?” asked Yanina Zenkovich, 43, a teacher who makes the equivalent of only $230 and waited in a 10-hour line at an exchange point to trade her 700,000 Belarusian rubles into dollars.
The official exchange rate is fixed, but a significant devaluation seems to be only a matter of time.
During the period of uncertainty, major car dealerships have stopped selling foreign vehicles. Foreign food and alcohol brands have begun to disappear from store shelves as imports are suspended and shoppers stock up.
A big part of the problem is that the Belarusian economy has seen little development under Mr. Lukashenko, who has run a quasi-Soviet state during 17 years in power.
He has stifled private enterprise and kept about 80 percent of industry under state control, but his promises of stability and efforts to maintain the Soviet-era social safety net have kept him popular with the elderly and working class.
He raised public sector salaries ahead of the December presidential election, a landslide win widely seen as rigged. The International Monetary Fund now has urged him to lower wages to adjust demand to a weaker economy.
An alternative would be to devalue the ruble, as most economists recommend, by as much as 40 percent.
The government took a first step last week, when it allowed banks to trade the ruble at 10 percent below the official rate. Any sharper drops would be extremely unpopular, however, even though confidence in the currency already is plummeting.
After violently dispersing election night protests and arresting hundreds of demonstrators, Mr. Lukashenko launched a broad crackdown on the opposition in an apparent effort to prevent further street protests as the economic troubles deepen.
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