Belarus diversifies out of crisis, will stay afloat

MINSK - The global economic crisis has forced Belarus to find new export markets, but strong state control is keeping the economy on track and preventing mass unemployment, President Alexander Lukashenko told Reuters.

"It is our exports that have been hit hard," Lukashenko said in an interview at the presidential offices. "The way out of this is to diversify our foreign trade".

Before the crisis, Belarus was selling around 45 percent of its production to Europe and a similar amount to former Soviet master Russia, with only 10 percent going to other markets.

Now, Lukashenko said Belarus was seeking markets in Latin America-especially Brazil and Venezuela-North America and Asia. Its main exports are potash, oil products and heavy machinery.

The Belarussian president said the European Union's forthcoming Eastern Partnership-an initiative to bind Brussels closer to six former Soviet republics including Belarus-was of interest because it could boost trade and investment.

"We find attractive the pragmatic, practical side of the Eastern Partnership," Lukashenko said.

"Half our trade is with the EU, investment, technology. Europe has long turned to us in economic terms. It is the economic element that is important to us. Everything starts with the economy."

Belarus has one of the biggest state sectors of any former Soviet republic, but the world economic crisis has cut growth from 10 percent last year to almost nothing this year.

Lukashenko, in power since 1994, gave no forecast for economic growth this year, but said "the fact that the state has remained in every sector of the economy" had helped his country.

"You (in the West) started to liberalise excessively, turned the economy into a casino and believed it would go on like that for a long time," he said. "We have maintained the economic levers of the state".

Lukashenko said there had been some reductions in working hours and that "wages are not rising as much as we would like".

But he insisted there would not be mass unemployment, even with an increase in the number of qualified Belarussians coming home after losing their jobs abroad.

"The number of job openings and job seekers is about equal," Lukashenko said. "But in as much as internal demand is picking up and we are expanding our construction capacity-we are building more housing-I don't think there will be a problem with unemployment."

Prices rose in Belarus rose in the first quarter of the year by 6.1 percent, one of the highest rates of inflation of any former Soviet republic, and the Belarussian rouble has lost 27 of its value so far this year.

But Lukashenko remained optimistic.

"This is our third crisis (in 15 years), but I believe we can overcome it as matters depend on us," he said.



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