BELARUS NEWS AND ANALYSIS

DATE:

09.11.2005 - 17:41 CET

Russian WTO entry can do more for Belarus than EU

By Andrew Rettman

EUOBSERVER / BRUSSELS - Russian World Trade Organisation (WTO) ambitions might do more to create a free Belarus than EU political pressure, finance experts say.

The logic goes that cheap Russian oil and preferential access to Russian industrial markets gives president Alexander Lukashenko the cash to buy support at home and in Russia.

But if Moscow gets into the WTO in the next six months as planned, oil costs will begin to spike and Belarusian tractors will start competing for roubles with European and Ukrainian firms.

Experts predict the first signs will come from liquidity problems in Belarusian banks in late 2006 or early 2007.

The cash crunch would make it hard for Minsk to keep paying its political elite lavish $450 a month wages and sending regular welfare cheques to the country's 2.6 million retirees.

Russian "oil rent" and export income also build the "beautiful" Minsk infrastructure and ice hockey palaces that make some Belarusians feel better off than post-revolutionary Poland or Ukraine.

"The collapse could come sooner, it all depends on the behaviour of Russia," economist Jaroslav Romanchuk of Minsk-based NGO Scientific Research Mises Centre told EUobserver.

"Russia is the absolute key to what happens in Belarus," a western diplomat working in Minsk indicated.

Lukashenko set to win elections

NGOs forecast Mr Lukashenko will win the July 2006 elections however, with ordinary people, such as the two 26-year old Grodno car mechanics who started a hunger strike in Brussels on Tuesday (8 November), scared to take to the streets of Minsk.

Planned EU radio station broadcasts are unlikely to reach the 3 million or so core Lukashenko supporters who live in rural areas with scant access to state media, let alone foreign channels.

And grand European statements like the EU foreign ministers' call on Monday for fair elections are spun by Minsk into an EU-US conspiracy to destroy the old Soviet glory.

The two men on strike outside the European Commission want an EU investigation into suspicious deaths such as that of Belarusian reporter Vasil Grodnikov.

But their wry smiles betray suspicions that Brussels can do little to help.

Friends in low places

While Mr Lukashenko has poor relations with president Vladimir Putin, he does have friends among Russia's oligarchs and military commanders.

"The oil rent is distributed according to agreements between Russian oil firms and [Lukashenko] government circles," Mr Romanchuk explained. "The Russian army sells to Belarus and sees Belarus' participation in military programmes."

Analysts say big politics is also part of the picture, with Russia fearing a Ukraine-style westernisation of its last European ally, which is situated on a strategic fault line between Moscow, Warsaw and Berlin.

"The Russian military-industrial complex together with nationalistic and pro-communist forces remain influential elements of the pro-Lukashenko lobby in Russia," a new study by the Bratislava-based NGO, Pontis, says.

Minsk defiant

Belarusian diplomats defend the Russian oil deal as a "barter system" that allows Russian oil firms to pay for the use of Belarusian petrol refineries with oil instead of cash.

"Mr Romanchuk is always predicting that our economy will collapse in the next year, but it grew by 11 percent last year and will grow by 8-9 percent this year," a Minsk official said.

"When Russian oil prices go up, this will also affect Moldova, Ukraine, Poland and the Baltic states," he added.

Source:

http://euobserver.com/9/20287