August 3, 2016


Lukashenko and the Reformers (Artyom Shraibman, 7/28/16, Carnegie Endowment)

Recently, however, a new trend has begun to sweep through Belarusian politics: the government's economic institutions are filling up with pro-market bureaucrats who oppose Lukashenko's socialist political philosophy. 

The first sign of change came in 2012, when Lukashenko replaced Sergey Tkachev, his Marxist economic advisor, with aging banker Petr Prokopovich. Then, in 2013, Prokopovich was replaced by Kirill Rudy, a thirty-five-year-old professor and former Fulbright scholar who is avowedly pro-market.

Rudy took over at a difficult time. In 2009, Belarus began to experience a series of significant financial and economic crises. In 2014, the Belarusian ruble lost 30 percent of its value in thirty days. During this crisis period, all important economic positions in the Council of Ministers--the seat of executive power--were given to pro-market bureaucrats some with the private sector background. 

Under new leadership, the National Bank was able to stabilize the exchange rate by implementing tight monetary policies and introducing a floating rate for the Belarusian ruble for the first time in years. The National Bank executives had regular meetings with independent experts, while the government raised the retirement age, and increased tariffs on municipal services (so suddenly at first that Lukashenko had to dial them back). Most impressively, it fought off lobbyists who wanted a bureaucratic wage increase. 

Over the last year, members of the Council of Ministers and their colleagues from the presidential administration have been pushing Lukashenko to begin enacting broader governmental reform. They aim to weaken governmental support for ineffective semi-state companies and to begin to move toward privatization. 

Rudy has been particularly forceful in his calls for change: he has published essays and books on reform, and even lightly criticized the Belarusian economic system on national television. [...]

To a certain extent, a failing economy has forced his hand: for the past several years, low gold reserves, growing external bond debt, double-digit inflation, a trade imbalance, overdependence on Russia, and periodic crashes of the Belarusian ruble have plagued the economy. At a certain point, Lukashenko could no longer afford to take advice from Marxist professors at public universities. He needed a team of experienced technocrats, people who would be able to speak the same language as the IMF. 

And it's not just the administration's economists who are increasingly reform-minded. The Belarusian Ministry of Foreign Affairs, headed by Vladimir Makei, holds similarly liberal views. Like Makei, Belarusian diplomats tend to be pragmatic types who argue the country should be a more neutral regional actor, reducing its dependence on Russia and becoming more connected to Europe.

Posted by at August 3, 2016 7:36 PM