Continued from “Iran: Belarus’s Biggest Friend”
Belarus has shown its willingness to cooperate with Iran, Iraq, Syria, Sudan, and Venezuela, just to name a few. Not surprisingly, Belarus has been mentioned by U.S. officials as a country with flagrant human rights violations, a lack of democratic institutions, and suspicious business transactions.
In the mid-1990s, UN inspection teams reported that machine tools sold by Belarus to Iraq were capable of turning out components for missiles. Another UN inspection found machinery believed to be used to make lenses for artillery shells. In July 2001, the Ministry of Foreign Affairs of Belarus released a statement denying allegations that Belarus sold radars and modernized air defense and communications systems to Iraq. In the same year, arms experts called Belarus “the most secretive country in the business of arms sales,” while the Russian NTV channel publicly reported that President Lukashenka re-sells or serves as an intermediary between Russian arms exporters and countries suspected of sponsoring terrorism.

Recently, there was another article on this subject published by “Novaya Gazetta.”

In 2002, Jane’s Intelligence Digest reported Belarus secretly supplied arms to Chechen rebels through Georgia and Turkey. In November 2003, the U.S. ambassador in Belarus, Michael Kozak, stated that Belarus not only supplied arms to Iraq but also trained Iraqi military personnel to use air-defense systems. In June 2003, Lebanese customs officials stopped a military cargo shipment that was thought to have been shipped from Belarus with a destination of Iraq.
It is important to note that unlike Ukraine, which acknowledged sale of arms to China and Iran, Belarus has not admitted participation in illegal arms transfers.

Not surprising since Alexander Lukashenka is trying to balance his position between Russia and Western Europe.

However, an analysis of diplomatic contacts, business transactions and media reports indicates a very strong possibility that Belarus uses its contacts with African and Middle Eastern countries to secretly sell or transport arms.
First, as a Soviet republic, Belarus was known for its industrial plants and technical capabilities. It is a well-known fact that the Minsk Factory of Wheeled Tractors is more than capable of making military machines and tools. Notable is the fact that this factory was mentioned as a possible supplier of tractors to Iraq, Iran, and Sudan.

Dragunov rifle

Sure, it could be that Venezuela needs thousands of what was described only as “optical products.” It is just the numbers look extremely high compared to similar exports to other countries (not to mention that there are not many exports of that kind.)

Vanuatu

Private banks in the country with what is basically centrally planned economy?

Third, Belarus was mentioned by media and industry experts as a middleman between Russia and potential arms buyers. In 2007, Ivan Safronov, a journalist working for the Russian newspaper Kommersant, visited Abu Dhabi to provide news coverage of IDEX 2007, the largest arms exhibitions in the Middle East. Upon his return, he told his colleagues that he obtained information about possible sales of jet fighters and anti-aircraft systems by Russia to Iran and Syria. According to Safronov, Russia intended to use Belarus to cover up its own involvement in the potential deal. A couple days later, Ivan Safronov committed suicide.

Recently, charter97.org published an article where these allegations are brought up again.

Combined, these factors might indicate that Belarus is an active and willing exporter of arms. Belarus has technical capabilities and financial incentives to participate in arms transfer with countries implicated in sponsoring terrorism. Most importantly, President Lukashenka has clearly demonstrated his willingness to deal with Iran, Syria and Sudan. His political record shows that he is unlikely to fully adopt democratic reforms and follow Western legal norms. At the same time, he expressed his desire to work with Western countries in exchange for certain concessions such as bank credits. Thus, it is possible that in order to balance between the Western and Eastern interests, Belarus’ business transactions with the anti-democratic regimes will get even more secretive in the future.

The Islamic Republic of Iran became the next big friend of Belarus after Saddam Hussein’s regime fell in 2003. Iranian and Belarusian officials had met before the second Iraq war: In June 2002, while meeting with the chair of the Iranian Parliament, Mehdi Karroubi, the chair of the Belarus National Assembly, Alexander Voitovich, said, “Belarus shares and understands foreign policy initiatives advocated by the Islamic Republic of Iran.” However, following the fall of Saddam’s Iraq, Belarusian-Iranian relations in economic, diplomatic, and military areas rapidly took off.

ahmadinejad

What caused an uptick in business relations between these countries?

From that point on, both countries started exchanging multiple official visits and making promising statements. Belarus visited Iranian Minister of Foreign Affairs Kamal Kharrazi (2004), Iranian President Mohammad Khatami (2004), Deputy Minister of Foreign Affairs Mekhdi Safari (2005), Minister of Trade Massoud Mir Kazemi (2006), Minister of Industry and Mines Alireza Tahmasebi (2006) and Iranian President Mahmoud Ahmadinejad (2007), just to name the few.

In addition, Belarusian officials quite actively visited Iran, where they met with various Iranian officials: Belarusian Ambassador in Iran Leonid Rachkov met with the Deputy Minister of Science, Research and Technology of Iran Jaffar Ali Monfared (2004), Minister of Foreign Affairs Sergei Martynov visited Iran in 2006, President Lukashenka visited Iran in 2006, and Minister of Defense Leonid Maltcev met with high-level Iranian military officials in 2007.

At the same time, there was a noticeable uptick in economic and business relations. Just as with Saddam’s government, Iranian officials expressed an intention to build an assembly line of Belarus tractors in Iran. In December 2005, both countries agreed to build an assembly plant for “Samand” Iranian passenger cars near Minsk. Iranian company “Keyson” and the Administration of Free Economic Zone Minsk came to an agreement to build a transport-service complex Prilesje on its territory (2006), the Belarus Auto Plant, and agreed to supply Iran with heavy-duty trucks (2006). Iran announced its intention to open banks with Iranian capital (2007), while Belarus signed an agreement with Iran to develop a Juffair oil field.

Here we come again: Iran is talking about the tractors …Sure, Belarusian tractors have a good reputation, but they are often mentioned in one breath with countries such as Iraq, Iran, Sudan…The countries known for human rights violations and links with terrorist groups.

To be continued

Continued from “Belarus: Befriending the Axis of Terror”

When the Belarusian president met with the Zambian ambassador in March 2001, he stressed that both countries needed to increase trade levels. Belarus, located in the heart of Europe, was becoming increasingly interested in economic and diplomatic cooperation with various African states. A few months after meeting the Zambian officials, President Lukashenka signed a decree establishing diplomatic relations with the Republic of Congo that, according to Amnesty International, was “the place of widespread violations of human rights is the Great Lakes region.”

In December 2001, Belarusian officials from the Ministry of Foreign Affairs stated, “Belarus was to further enhance the Belarusian-African dialogue.” Thereafter, in 2002, while meeting with ambassadors from Angola, Zambia, Zimbabwe, Mozambique, Namibia, and the Republic of South Africa, President Lukashenka confirmed that Belarus was extremely interested in cooperation with the Southern African Development Community.

Why would be Belarus be SO interested in cooperation with theses countries? Could not they find closer trading partners?

In 2003, Minister of Foreign Affairs Sergey Martynov met with Gambia’s Secretary of State for Foreign Affairs Baboucarr-Blaise Jagne. According to Martynov, Belarus was interested in developing trade relations with Gambia because it would help to ease Belarus’s entrance to the markets of other countries in West Africa. Belarusian officials also visited the Republic of South Africa in October 2003.
Later that year, Belarus signed a contract to deliver 20,000 motorcycles to seven African countries through a single African dealer. During the same year, Sudanese officials and Belarusian automakers signed a contract to deliver 100 cars to Sudan. In addition, it was reported that Sudan bought nearly 1,000 tractors manufactured in Minsk, the capital of Belarus.

Interesting enough, Saddam’s Iraq was also interested in the very same tractors. Dual-use machinery?

However, the obsessive interest in Africa and frequent visits of officials poses an interesting question: Could Belarus not find closer trade partners? Even if one truly believes in global markets and trade movements between continents, Belarus’s choice of partners was puzzling. For example, Zimbabwe’s GDP per capita is paltry $54.6 (2008 update), and its GDP as a share of world total is not even listed in the 2009−2010 Global Competiveness Report. Following the trend is Mozambique with a GDP per capita of around $462.3, Zambia with $1150.5, and Namibia with $1150.5.

Further, according to the Global Competitiveness Report, these African countries suffer from poor access to financing, an inadequately educated workforce, and a poor work ethic. It is hard to believe that such business characteristics would be beneficial for economic and trade programs between Belarus and above-mentioned African countries—some of which, such as Sudan, were designated as states that sponsor terrorism and are accused of human rights violations. And indeed, only Sudan and South Africa were listed as the major trade partners in the statistical book of the foreign trade of the Republic of Belarus, which shows trade numbers for the fiscal years 2006 through 2009.

What went largely unreported by media and official statements was the fact that many of the above mentioned potential trade partners had lax anti-money laundering laws (as of 2004). For example, Angola, Botswana, Mozambique, Namibia, South Africa, Zambia and Zimbabwe did not have client-profiling guidelines for financial services intermediaries. Nor most of these countries, except Namibia, were required to report suspicious transactions. Moreover, the use of shell companies and trust funds associated with suspicious economic activities was reported in Namibia, Zambia and Zimbabwe.

It would be very convenient to conduct secretive business deals in countries with lax financial regulations. It could benefit the so-called Special Presidential Fund of President Lukashenka. No traces…

To be continued…

Since early 1990s, the Belarusian government actively has been establishing diplomatic, military, and economic relationships with foreign countries. Interestingly, although Belarus is located in the heart of Europe, it has shown special attention to African and Middle Eastern countries. Specifically, the Belarusian government has focused development of its diplomatic, military, and economic efforts on Iraq, until Saadam Husseins’ regime fell in 2003, Iran, Syria, and Sudan – the countries designated by the US State Department as the “State sponsors of terrorism.”

In April 2002, a Belarusian delegation, headed by the deputy head of the Presidential Administration Leonid Kozik, made a visit to Iraq. It planned to discuss the state of bilateral relations, the participation of Belarusian enterprises, and companies in the UN Oil-for-Food Program as well as a delivery of agricultural machinery. In the same year, President Alexander Lukashenka also met with an Iraqi delegation, led by the Deputy Prime Minister and Minister of Defense Industry Mullah Abdul Tavvabom Hueyshem. The Belarusian president assured the Iraq delegation that Belarus would provide necessary assistance to help Iraq maintain its health system and address the needs of Iraqi children. Later on, the vice-minister of the Belarusian government, Vladimir Drazhin, stated that Belarus was “the most reliable partner in all areas of joint activity with Iraq.”

I wonder what other former Soviet republics considered themselves as “a reliable partner” with Iraq. Have any ideas? Links?

In September 2001, President Lukashenka met with the chairman of Libya’s Supreme Defense Council, Abu Bakr Younis Jaber, and stated that Belarusian-Libyan relations should be given serious a push. He also noted that neither country should reduce the rate of bilateral cooperation in trade, economic, and scientific areas. A year later, Belarusian Foreign Minister Mikhail Khvostov went to Libya, where he held the first meeting of the Belarusian-Libyan Joint Commission on Economic, Trade, Scientific and Technical cooperation. It should be noted that despite frequent visits, in 2000 official exports to Libya totaled $2.6 million, and in 2001, there were no exports at all. It should also be mentioned that, according to ONT television, in August 2003, the Libyan Arab Foreign Bank considered a credit of 120 million Euros for Belarus.

So why bother with all these visits? A PR campaign? For whom?

In December 2002, Minister of Foreign Affairs Mikhail Khvostov arrived in the Middle East, where he held a meeting with Syrian’s President Bashar Assad and Jordan’s King Abdullah II. The Syrian president assured the Belarusian minister that Syria was committed to continue joint projects in the industrial and agricultural sectors. President Lukashenka personally paid the second visit to Syria, where he was scheduled to meet with the president of Syria, Bashar Assad.

It would not be fair to say that Belarus has dealt only with countries suspected of sponsoring terrorism. Among other Middle Eastern countries, the Belarusian president and his officials paid visits to or invited foreign delegations from Qatar, Bahrain, Pakistan, Algeria, and Lebanon. The Algerian meetings paid off for Belarus, as it exported arms to Algeria in 2001, 2002, and 2004 for a sum of approximately $84 million.

In Pakistan, Belarus supplied tractors, tracks, spare parts, and chemical products. It is interesting to note that, in many cases, the most popular exports are Belarus tractors manufactured by the Minsk Factory of Wheeled Tractors (MZKT). While these tractors are indeed popular, this factory was (and still is) known for manufacturing military machines and supplies: In 2000, the MZKT won a contract to supply Turkish Army with tank transporters and mechanical parts for fuel servicing trucks.

Interesting how some “State sponsors of terrorism” love MZKT tractors. Developing the agricultural sector?

(To be continued…)

The Model I, II, and III are different in type of questions they pose, perspectives, approaches and possible outcomes. However different though, together they provide a fuller picture because upon a closer look they could be logically linked together.
Model I shows that Belarus is strategically positioned to take advantage of its status as a transit intermediary between Russia and the West. Belarus has all prerequisites to be a successful country with well-organized and running economy. Despite the fact that it lacks resources and has big industrial sector and thus needs to import most of its energy and raw material needs, Belarus is not confined to Russia as sole provider of them. It has unique geographical position that allows it to trade and address its needs with multiple European partners. The European Union has significantly expanded and can offer Belarus a large network of energy suppliers and buyers of Belarusian goods.
However, the results of second and third models preclude Belarus from making a step toward closer integration with the West.
Mr. Lukashenka built his system on rigid political and economic values common in the Soviet Union. He centralized the economy and consolidated a decision making in his own hands. It does not seem that there is a person in his administration who could convince him to lessen his grip on power. He might show off his erratic behavior once in a while, however it does not diminish his ability to control and understand the situation. He understands that Belarus’ reliance on cheap Russian energy helped to propel its otherwise ineffective industry and economy. He knows that Russia subsidies his economy and boosts it with cash flows from oil and gas business. But he also realizes that his personal and state managing style might no longer satisfy Russia and its political leadership who could conceivably benefit from change in Belarusian leadership. Russia needs to promote an image of a reliable energy exporter in its dealings with Western European customers and Mr. Lukashenka showed on couple occasions his unwillingness to support it.
At the same time, a decisive move towards the West might also result in loss of power for him. Any serious dealings with Western partners would require not only economic liberalization but also political transparency and adoption of various democratic principles, something that his system and personal preferences are not prepared for.
Thus, considering results and analysis of three models, possible scenarios and outcomes, it might be concluded that Belarus would remain close to Russia. Despite obvious deficiencies in its energy policies and need for reforming largely inefficient and incompatible with contemporary systems economy, reasons of political safety and unwillingness to burn political capital seem to prevail. And while Belarus might continue obtain economic and political support from Russia in exchange of energy transit services; it seems unlikely that Belarus will be able to do it as an independent state.

Model III questions:
Model III looks and analyzes individuals and attempts to predict outcomes or possible course of action based on this analysis.
a) Whose opinion and views really count in making a particular economic or political decision?
Considering that incumbent Belarusian President remains in power for 14 years (as of 2008), it should be clear that Mr. Lukashenka is the most influential person when it comes to decision making in Belarus. Undoubtedly, he relies on “Siloviki” (Russian for strongmen, often with past or current connections to law enforcement or state security organizations). After all, they helped him to decimate local democratic opposition often using methods such as kidnapping and murders. However ultimately, president Lukashenka is a sole and undisputed decision-maker as evidenced by his willingness to remove his high-ranked and powerful lieutenants.

b) What factors influence a decision maker’s steps towards solving or addressing a particular problem?
Alexander Lukashenka and his government run directed state, somewhat centralized and guided by 5-year plans economy. A number of factors, including energy and barter deals with Russia, helped Belarus’ economy not only stay afloat but also bring additional revenues to the budget.
Considering such success, receiving general public support for sustained social services provided by the state and restoring its reputation as the soviet styled republic, encourages president Lukashenka to continue his largely unreformed, socially focused economic course and close integration with Russia.
Moreover, despite showing somewhat erratic behavior and playing games with West and generally accepted democratic principles, president Lukashenka understands that closer integration partners might hurt him. By moving closer to the West, he would need to accept various Western requirements involving economic liberalization, political openness and freedom of choice. These factors helped him to stay in power and have full control over Belarusian strategic decision-making.
He will play diplomatic games and allow some form of reforms to obtain financial and political concessions from the West, however, as history shows he is as quick to dismantle them as he is quick to adopt them.
questions:
Model III looks and analyzes individuals and attempts to predict outcomes or possible course of action based on this analysis.
a) Whose opinion and views really count in making a particular economic or political decision?
Considering that incumbent Belarusian President remains in power for 14 years (as of 2008), it should be clear that Mr. Lukashenka is the most influential person when it comes to decision making in Belarus. Undoubtedly, he relies on “Siloviki” (Russian for strongmen, often with past or current connections to law enforcement or state security organizations). After all, they helped him to decimate local democratic opposition often using methods such as kidnapping and murders. However ultimately, president Lukashenka is a sole and undisputed decision-maker as evidenced by his willingness to remove his high-ranked and powerful lieutenants.

b) What factors influence a decision maker’s steps towards solving or addressing a particular problem?
Alexander Lukashenka and his government run directed state, somewhat centralized and guided by 5-year plans economy. A number of factors, including energy and barter deals with Russia, helped Belarus’ economy not only stay afloat but also bring additional revenues to the budget.
Considering such success, receiving general public support for sustained social services provided by the state and restoring its reputation as the soviet styled republic, encourages president Lukashenka to continue his largely unreformed, socially focused economic course and close integration with Russia.
Moreover, despite showing somewhat erratic behavior and playing games with West and generally accepted democratic principles, president Lukashenka understands that closer integration partners might hurt him. By moving closer to the West, he would need to accept various Western requirements involving economic liberalization, political openness and freedom of choice. These factors helped him to stay in power and have full control over Belarusian strategic decision-making.
He will play diplomatic games and allow some form of reforms to obtain financial and political concessions from the West, however, as history shows he is as quick to dismantle them as he is quick to adopt them.

Model II questions:
While Model I focuses more on a broader picture, Model II attempts to look at organizational traits that shape and produce opinions, perceptions and courses of action.

a) What organization/factor plays the biggest role in Belarus?
It appears to be the Soviet Union. Certainly Soviet Union does not exist, yet its legacy weighs heavily on all aspects of the political, economic and social structure of Belarus. It is seen on Belarus’ national symbols, followed by the executive branch, reinforced by the legislative branch, defended by judicial branch and supported by ordinary masses.

b) What are the capabilities and limits of the given organization?
It helped Belarus to preserve an old lifestyle, made sweeping changes of the early 1990′s less painful and to some extent shielded public from modern day problems associated with post-Soviet political and economic transformations. In a midst of chaos caused by the collapse of the Soviet Union, it presented itself to Belarus as the defender of old good values and factors that made this republic so successful. It helped to preserve familiar economic model, spared many Belarusians from unemployment, assisted in paying their bills, and maintained relatively acceptable living standards.
The limits of this organization are quiet clear. Just like its physical predecessor it can only drag an image of success that far. It limits choices and freedom of decision because its ideological values are too rigid, uncompetitive and incompatible with contemporary systems adopted west of its border.
Considering current energy situation in Belarus, the country should seek multiple partners and suppliers of energy and raw materials. However, in order for it to happen, Belarus needs to distance itself from current organizational dogmas, become transparent and liberalize its institutions.

c) How influential the organization is?
It has enormous influence on Belarus as evidenced by the lack of real progress at this point. Furthermore, in 2006 Presidential elections, Lukashenka, an incumbent President of Belarus won 82.6% of popular vote (OSCE, 2006). While there is no doubt among monitoring groups that these elections were rigged, even the most staunchest Lukashenka’s opponents agree that he would have won elections even without falsifying them.

In an attempt to create a complete picture with circumstances, factors and motives that underline Belarus’ energy policies and create grounds for future developments, this discussion will adopt and follow three conceptual models and corresponding questions presented and developed by Graham Allison and Philip Zelikow (1999) in their book “Essence of Decision. Explaining the Cuban Missile Crisis.”

Although authors provide and focus on a specific case in explaining their models, their analytical tools are nevertheless applicable in much broader context of foreign affairs and strategic decision-making. Thus, an analysis of Belarus’ energy policy, its dependency on Russia and potential political problems stemming from it will be applied through their conceptual models.

Model I:

Analysis in Model I assumes that decisions made by states or actors are rational in their nature. It also attempts to explain a conflict or issue from a “why” perspective and by trying to identify goals, objectives, options and choices available or responsible for a particular problem. It stresses that “strategic market conditions-creates incentives and pressures for a government to choose a particular course of action” (Allison, Zelikow, 1999).

a) What are the circumstances that form Belarus’ perception of threats or opportunities?

Belarus has a limited amount of oil, gas reserves; however, those resources can only cover about 7% of its total energy needs (World Bank, 2006). Belarusian economy and particularly its heavy industry sector took off rapidly in the years following the Second World War. As a result, on the eve of independence Belarus found itself having 125 industrial plants and factories (Tiurina, 1994) producing durable goods for the most part.

Such heavy industrialized economy requires significant human capital along with all necessary machinery and electricity to power it. In case of Belarus, 95.4% of its electricity was produced from gas that makes up 60% of country’s energy balance and comes primarily from one source-Russia (Balmaceda, 2004).

And since durable goods along with non-durable goods and service constitute the consumption in economy, then Belarus can only consume that many tractors, appliances and electronic defense systems. The rest, often of uncompetitive quality, is being absorbed by Russian markets.

Therefore, in a current economic and political state, Belarus has Russia as the primary supplier of energy and consumer of its goods. It makes Belarus highly dependable on Russia’s energy supplies and vulnerable to energy price increases.

b) What are the options available to address the issue of energy security as well as rising energy prices?

Belarusian government headed by President Lukashenka does understand that having Russia as the only energy supplier threatens Belarus in variety of ways including freedom of political decision-making. In attempt to improve this situation, the government proposed the following solutions:

(i) To develop domestic natural resources and make larger use of renewable energy sources (Ozerets).

(ii) To build a nuclear reactor on a territory of Belarus. President Lukashenka’s plan calls for construction of 2000 megawatt nuclear plant, consisting of two water-cooled and water moderated reactors (Loukianova, 2008).

(iii) Continued well-structured gas transit business could be a major source of revenue for future state expenditures as well as political leverage (World Bank, 2006).

c) What are the costs and benefits of given options?

(i) Representatives of Belarusian government (Ozerets) made it clear that it views renewable energy sources as a viable option for Belarus. Although current technologies have some limitation, for example, it is not conceivable today to support country on solar, wind and bio-energy alone, they nevertheless help to reduce state’s dependency on conventional sources such as oil and gas.

As evidenced in the example of some European countries, the use of renewable energy is possible, encouraged and committed to by developed countries. However, it requires patient approach and long-term vision, something that seems to be missing in case of Belarus despite strong official rhetoric.

(ii) On one hand, nuclear power is a solution to many problems including an ecological one, although it is disputed by some scientists. It faces two major problems: one is moral as 20% percent of Belarusian territory is uselessly rendered by the explosion in Chernobyl. Another one is familiar to many: where can Belarus find financing for projects with costs estimated to be between 5 to 8 billion USD?

Among potential bidders for the construction contract are Russia, France and USA. It is widely believed that Russia is a likely winner as it has significant experience in building nuclear reactors. However, if this is the case, then the idea of energy security and diversification becomes obsolete. If Russia receives a tender, all technologies, raw materials and supplies necessary for day-to-day station operations would belong to Russia, essentially increasing Belarus’ dependence on it.

(iii) Oil and gas transit remains not only the source of significant cash inflows for Belarus, but also gives it political advantage in its dealings with Russia. Belarus is the second largest exporter of Russian gas after Ukraine. Although Russia attempted to diversify its exports through various networks and proposed couple of alternative routes such as Nord Stream that bypass Belarus, it nevertheless remains tied to Belarusian networks for not only they provide more or less reliable transit but they are also cheaper when compared with competitors such as Ukraine. Belarus also offers oil refinery business for Russia and makes it attractive from strategic as well as financial aspects.

While Belarus certainly derives numerous advantages from its status as a transit state, it slowly gives up its energy infrastructure ownership. Being unable to meet financial obligations, face increased energy costs and unwilling to redirect its economy towards marked based model, Belarus needs significant cash infusion to support various state owned enterprises as well as social obligations to its population. Such situation leaves Belarus with no choice but to give up certain state-owned assets. Although reluctant, in 2007 it promised Russian Gazprom an ownership stake in “Yamal I”, its major gas pipeline, thus significantly reducing points of political advantage.

Being Anchored by the Image of Soviet Success

In the atmosphere of general chaos that followed the collapse of the Soviet Union and suffering from distorted trade links and unsecured currency, the image of Belarus as one of the most stable and successful republic saw a blowing crash. Unable to get public support for painful market reforms and under strong pressure from industrial groups for continuation of the state subsidies for large and for the most part ineffective enterprises, (Savchenko, 2002) Belarus was facing an economic collapse.

Above mentioned factors and skyrocketing inflation put Belarus in a position where by 1993 it owed 112 billion rubles to Russia, was only able to export 4 percent of its production to the countries outside of the former Soviet Union (Tiurina, 1994). A country knowns an “assembly line” of the Soviet Union (Tiurina, 1994), Belarus was no longer able to import cheap energy and export overpriced “soft goods”, a scheme that worked well in the Soviet Union (Bakanova, 2003). In other words, all these aspects as well as high cost of raw materials and energy needed by its factories and plants to produce or assemble finished goods put Belarus at a great disadvantage (Tarr, 1994).

Indeed, while its huge industrial sector along with enormous subsidies and cheap energy helped Belarus to advance in the Soviet period, it eventually contributed to its demise in the post Soviet era. By 1993, approximately 125 Belarusian industrial companies were producing durable goods, primarily for military purposes. They employed 250 thousand people who assembled automated control, communication systems, TV sets, refrigerators and radios for the Soviet markets. Belarusian industry was facing Russian monopoly on raw materials, increased oil prices by as many as 30 times (compared to artificial 1991 price level) and a minimum salary of 4 dollars a month (Tiurina, 1994). Therefore, it should not be surprising that everything was perfectly lined up for a populist Alexander Lukashenka to exploit the very same issues and use them to become the first Belarusian president in 1994 (Balmaceda, 2006).

Back in 1991, Mr. Lukashenka was the only representative in the Belarusian Supreme Soviet who voted against the creation of Commonwealth of Independent States (CIS) because he did not see it as a valid substitution for the Soviet Union (The Economist, 1994). During the Presidential campaign in 1994 and in the midst of economic crisis, he promised to fight corruption, pledged the state support for industrial and agricultural enterprises, promised to freeze prices and end inflation. Mr. Lukashenka was also seen favorably by many because he wasn’t affiliated with the old-Soviet guard and he wasn’t seen as a nationalist (The Economist, 1994).These factors and highly effective public relations campaign further helped his presidential candidacy and ultimately led to his victory.

1990′s: Where Do You Go From Here?

In 1991 Russia, Ukraine and Belarus signed a document that effectively dissolved the Soviet Union and paved the way for its former members towards full independence. On the eve of such grandiose historical event Belarus was rather a successful republic with very high living standards compared to most other republics (Brunat, 2005). While some researchers (Bakanova, 2003) argued that by 1991 Belarus almost exhausted its economic potential due to constrains and flaws of the planned economy, most analysts agree that Belarus was well positioned geographically and strategically to take advantage of future trade between Russia and Western Europe. Its strategic geographical position was further reinforced by developed oil and gas pipeline, refining capabilities (World Bank, 2006) as well as extensive transport networks that included railroads, roads and pipelines (Bakanova, 2003).

gorbachev

Despite a well-developed infrastructure inherited from the Soviet period, couple of serious questions aroused immediately following the dissolution of the Soviet Union. For one, the decision whether Belarus should keep closer to Russia or West had to be made (Balmaceda, 2006). Another question was whether the new Belarusian government had skills and mentality for market-oriented economic reforms as opposed to familiar centrally planned system.

For example, some authors doubted that newly created government composed of the old communist guards would be able to fully embrace various reforms (Brzezinski, 1996). In Belarus, the same logic was applicable because Premier Vyacheslav Kebich, who headed the Belarusian government in the early 1990’s, had been affiliated with the Soviet Communist party in the past and never made serious attempts to separate himself from it. And finally, many wondered how would Belarus go about maintaining a social and economic stability considering the fact that transition to market economy would most certainly be painful for many sectors of Belarusian economy (Tiurina, 1994)?