14.12.2006 / 18:15

The end of oil 13

Belarusians will have to tighten their belts in 2007.

Walking down the main Minsk avenue, one can't help wondering, where all these expensive cars come from. How can this inflexible economy create so much money in such a short time, without any significant reforms? The increase in well-being of many people in the last several years is too much obvious.

The new Belarusian rich do not yet flaunt their money the way their Kyiv or Moscow colleagues do. While letting the chosen to get rich, the pseudo-socialist regime does not favor showing off. For all that, the folk should believe that their society is just and fair. Alternatively, shouldn’t notice too often, that it's not.

Still, a single glimpse at the elite apartment buildings downtown Minsk and above the fences of the luxurious suburban villas is enough to realize, that some Belarusians really profit from the country's "social-market economy". Moreover, if you look at the brand-new ice palaces and soccer arenas, which are being built all over the country, you will probably ask yourself a question:

Where does this money come from?

Of course, there are plenty of factors, which help the Belarusian regime to survive financially. However, the main of them is cheap oil and natural gas coming from Russia. For more than a decade, the regime of Lukashenka paid back in political loyalty to the “Bigger brother”, in cultural discrimination of the Belarusian culture and language in favor of the Russian, and in constant promises to let Russian business privatize Belarusian enterprises.

For a while, Russia seemed to be relatively satisfied. The Belarusian side even more so. The cheap gas was used to keep the state-owned giant plants functioning. The trucks and tractors they produced could be more or less easily sold abroad since the cheap gas allowed keeping the production costs relatively low, thus making the price of the produced goods internationally competitive. The cheap oil was refined and then exported to Western Europe – mostly through Dutch and English firms. While condemning the Belarusian regime politically, the West actually financially supported it.

The gas was used to keep the economy rolling, the oil – to get dollars from abroad.

Yet, now the scheme has finally come to the end. Belarus will most likely have to pay much higher gas process this year. Sick and tired of seeing its western ally getting rich from its generosity, starting 1. January Russia introduces the export duty for oil. The “black gold” will cost Belarus 30-40 % more.

How will Lukashenka react? Will it finally bury the idea of creating a union of Russia and Belarus? Will it retreat and allow Russian business run wild in the divine forest of the Belarus economy? In any case, the quiet prosperity of the Belarusians will most likely see its end in 2007. The poverty, officially believed to be non-existent, will show its face again.

An old woman selling apples in one of the main department stores in the center of Minsk.

Alex Kudrytski

pavel_soltan / Адказаць
15.12.2006 / 17:58
its not "CUM", its "TSUM" for obvious reasons :)
RightRevolution 2 pavel_soltan / Адказаць
17.12.2006 / 16:06
Yeah, I reckon you're right: the author should change it :D
RightRevoluion / Адказаць
17.12.2006 / 16:15
Our English-speaking readers should realise, IMHO, that it won't be easy for Belarus to change, since the whole system was built around one man, who was lipsinging to the Russians for more than 12 years. The time has seen an emerge of the new Belarusian elite, a junta free of moral and ethic barriers. Would they like to sacrifice their power tomorrow? Most likely not. The 'cream' would try to hold until the end, until a hungry mob rips them to bits and pieces.
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