Some Call It Belarus – Belarusian Economics

[In todays’ episode of Some call it Belarus, we take an introductory look at the Economics of Belarus, briefly touch on issues of labour rights and highlight some inherent challenges and opportunities of the Belarusian economy.]

Season I Episode IV – The economic situation in Belarus

Given its geographical position, the Belarusian economy has borders with both Russia and the European Union as potentially profitable trading partners and has long profited from its close ties with Russia, especially in regard to energy prices. These have been set near the domestic Russian price levels for extended periods of time and only gradually risen throughout and after the financial straits of 2008. The countries’ predominant economic trading partners in exports are Russia, the Netherlands, Germany, Ukraine, Great Britain, Poland and Latvia, focussing on machinery and equipment, mineral products, chemicals, metals, textiles, foodstuffs. Similarly, Russia, Germany and Ukraine are the countries’ main partners in terms of imports, focussing on mineral products, machinery and equipment, chemicals, foodstuffs, metals. The country is ranked 150th in terms of economic freedoms globally and 42^nd out of 43 in the Europe region by the Index of Economic Freedoms with a GDP of 146.7 billion, a per capita income of 15,634$ and an inflation (GPI) of 59.2%. In regard to unemloyment, there are highly differing accounts to be taken into consideration between the government’s estimations of less than 1% in 2011 and estimations of around 24% by independent sources, making an overall evaluation prone to political bias (see here and here).

With government steered companies making up for a majority of economic activities in Belarus – and a public opinion in favour rather more than less government interventions in the economy, a Belarusian economy that is moderated rather than dominated by state doctrine is a concept only shared by the Belarusian independent sphere.

One area in which Belarusian companies that are not necessarily state dominated play a slightly larger role though is that of information technologies. Several companies that were founded in the last days of the Soviet Union and in the nascent democracy of the early 1990s, such as Effective Programming for America (EPAM) and ASBIS have each risen over the years and by now employ several thousand (EPAM: 9300, ASBIS: 1700) employees in their respective markets while being internationally active companies led by entrepreneurs. Success stories like these non-withstanding however, the Belarusian state-centric approach to the affairs of the economy considerably limits the amount of areas in which they are possible, especially for those up and coming today.

In terms of possibilities for employees to partake in and influence their employers’ endeavours through unions, the course of Belarusian authorities has been less than forthcoming especially to those seeking participation through independent, not state-organized unions. These have been described by authors like Tatsiana Vadalazhkaya and reports like VIASNA as an elongated arm of the government’s labour policies, independent labour unions often face discrimination and their leaders consequences such as loss of their workplace or legal persecution. As Vadalazhkaya points out, this restriction of independently active members of the Belarusian society can be traced back to the soviet understanding of states as workers’ states and thus the punishing of unwanted personnel through restrictions and repercussions in the labour marked be traced back to the soviet heritage still prevailing in the Belarusian society and – state.

Internationally, the various sanctions enacted upon Belarus and its political and economic leadership due to transgressions against Human Rights, impede the countries’ attractiveness to foreign investors, especially from Western countries. Most recently, Belarus has been struggling with rising prices across the board and the economic fallout of the crisis in Ukraine.  While the weakening of the Russian economy due to Western sanctions have negatively impacted the Belarusian economy, the lack of access of Russian companies to European goods may very well benefit Belarus in the short to middle term. Similarily the overall economic consequences of the crisis on the trade relationship between Belarus and the Ukraine remain to be seen.

Next week: Episode V – The Belarusian Independent Sphere

Quoted literature:

Vadalazhskaya, Tatsiana (2012). The struggle against dissent in the labour and employment sphere. The employment ban: a new phenomenon on the old foundations, in: Matskevich Uladzimir (Ed.). Desovietization in the context of Belarusan society’s transformation, Vilnius

Recent reports:

Belarus Digest: Digest of Belarusian Economy: http://belarusdigest.com/story/output-grows-inflation-hurting-macroeconomic-stability-digest-belarusian-economy-18433

BISS, Belarusian Institute for Strategic Studies

What Belarusian society thinks on reforms:  http://belinstitute.eu/sites/biss.newmediahost.info/files/attached-files/BISS_SA10_2014en.pdf

What Belarusian civil society thinks on reforms, Retrieved from: http://belinstitute.eu/sites/biss.newmediahost.info/files/attached-files/BISS_SA11_2014en.pdf

Index of Economic Freedoms: Belarus Economy: Population, GDP, Inflation, Business, Trade, FDI, Corruption: http://www.heritage.org/index/pdf/2014/countries/belarus.pdf

VIASNA, human rights center: Forced Labour and the Pervasive Violations of Workers’ Rights in Belarus: http://www.fidh.org/IMG/pdf/rapportbelarusuk623-bassdef.pdf

Picture by: Dennis Jarvis