The investment environment in Belarus is already bad, and Alaksandar Łukašenka’s latest threats only make it worse.
He promised to “bringing to senses” those foreign investors who have come “to profit at the expense of our people.”
On January 18, the Belarusian ruler criticized government proposals to facilitate property sales by foreigners from so-called “unfriendly” countries, noting that “it is never possible.”
Measures to prevent capital flight
“To protect our economy from the lawlessness of the West, under the growing pressure of sanctions, we have adopted a number of strategic documents, and today no shareholder or owner with citizenship of an unfriendly country has the right to sell property, without a special permission from the government and a contribution to the budget,” he said.
Concluding the conference, he instructed officials to draw up a list of exceptions to the rule. The government apparently convinced him that he had gone too far discriminating against investors from “unfriendly” countries, including companies in the banking, leasing and construction sectors.
For example, foreign developers can sell newly built apartments only after paying a 25 percent fee to the government. The additional cost falls on the buyers.
Officials reportedly promised to consider specific cases like this one, “but otherwise stringent restrictive measures aimed at preventing attempts to withdraw capital from the country will remain in place,” Łukašenka said, noting that “the money earned by our people is being taken out of Belarus and working there for various scoundrels who are imposing sanctions on us.” He said that “restrictive measures should be activated in a flash and without any hesitation” to prevent it.
Foreign companies have been relocating from Belarus abroad to protect their employees from politically motivated persecution in connection with the postelection protests of 2020. Many businesses announced withdrawal from Belarus in protest against its government’s complicity in the Russian full-scale war against Ukraine.
Give me all your money
Łukašenka, indoctrinated by Marxism-Leninism at Soviet schools, sees businesspeople as capitalists and bloodsuckers. He once notoriously called market traders “lousy fleas” for protesting restrictions on business. In November 2020, he described protests against election fraud an attempt at a “petty-bourgeois revolution.”
Łukašenka claimed on January 18 that investors enjoyed very good conditions in Belarus, including preferential treatment, tax benefits, infrastructure and skilled workers.
His conclusion, however, sounded rather ominous, “Come and work, but not for profit at the expense of our people. And if someone tries to do that, there are mechanisms to counteract and bring them to their senses.”
Businesses are supposed to work for profit. What is the red line between honestly earned profit and profiteering?
There are no clear guarantees for businesses in the country whose leader told officials in 2020 that they could ignore laws “sometimes.” Mauser-wielding commissars dripping with class hatred can come and seize your assets at any moment as it has happened more often than not in Belarus’ history.
Who is to blame for sanctions?
In general, the notion “unfriendly countries” is crazy. Minsk borrowed it from Moscow. The list of unfriendly countries shows that the two autocracies are at odds with most advanced countries, including the European Union and the United States.
The Belarusian ruler denounced sanctions as “a traditional and repeatedly practiced pattern of pressure by the so-called world leaders on the countries they dislike. Unfortunately, if I may say so, it is a fashionable economic trend. This is how both the United States and the European Union have long dealt with their competitors.”
It is hard to see the logic here: is it a long-standing practice or a new trend? Besides, does he seriously consider Belarus a competitor to the United States?
Before 2020, Minsk was trading quite well with the EU, shipping petroleum products and transshipping potash through the Lithuanian port of Klaipeda.
In early 2020, when Moscow suspended deliveries of cheap oil to the Belarusian refineries in retaliation for Łukašenka’s refusal to unite his country with Russia, the United States offered help and sent several tankers to Belarus.
According to Łukašenka, everything turned upside down because Europe and Washington suddenly got carried away by the “fashionable economic trend.”
In fact, sanctions cut both ways. The port of Klaipeda and the Lithuanian railways lost lucrative contracts after Vilnius blocked the transit of Belarusian potash. Businesses in other Western countries were also affected. So, the EU must have had a really valid reason to impose sanctions.
The measures were taken because of reprisals against political opponents, the forced landing of a European plane, a migration crisis engineered by Minsk, and Belarus’ complicity in Russia’s aggression against Ukraine.
Łukašenka’s brutality and thirst for power, as well as his support for the Kremlin’s war were the reasons for the sanctions.
Possible tension with Moscow over integration
The government conference exposed potential tension between Minsk and Moscow over integration. In 2021, Łukašenka signed the so-called 28 “union programs,” repackaged “road maps” which he had proudly rejected in 2019.
On January 18, he told officials to make sure that “interest of the state” are not “violated” in the process of customs rules harmonization.
He said that Moscow proposed establishing “a single ministry or a customs committee,” but “we flatly refused to do it.”
He may have gotten away with it this time, but what if Moscow steps up pressure tomorrow? Late last year, Russian Ambassador Boris Gryzlov said that “a new integration package for 2024-2026 will be approved in the near future.”
Most of Belarus’ exports and almost all of its logistics have already been redirected to Russia. Minsk will find it increasingly difficult to resist when the Kremlin demands closer integration with a view to absorbing Belarus. It does not really bother Moscow much that the local strongman has a limousine with a non-Russian flag and other decorative elements of sovereignty.
“Goodbye” may backfire
Claiming that he can do without the damned bourgeoisie, Łukašenka gave an example of McDonald’s restaurants: “Goodbye! We’ll do it ourselves. As McDonald’s shows, we got it right – people like going there [to the restaurants left after the food chain’s exit]. Although at first, after the Americans left, some doubters complained: ‘We can’t cut a bun in half and put sausage or meat in it, we can’t make French fries. We can’t do anything.”
In his high-handed fashion, Łukašenka said he assigned his spokeswoman, Natalla Ejsmant, and First Deputy Prime Minister Mikałaj Snapkoŭ the task of putting the abandoned restaurants to use. For no reason, just because “they were within reach.”
Illustrative photo
The press secretary and the deputy prime minister may have mastered the skill of cutting the bun, but can Łukašenka’s underlings rise to the challenge of securing the advanced technologies? That may be difficult now that Russia and Belarus have antagonized much of the developed world.
The two countries still manage to buy some technologies from China and obtain some through gray imports, but in principle, the two authoritarian regimes will lag behind and see their economic and human potential degrade.
A vivid example is the exodus of IT companies from Belarus. The “eggheads,” as Łukašenka calls IT professionals, are now paying taxes to Lithuania, Poland and other “unfriendly” states. The IT sector is no longer a driver of growth in Belarus. According to devby.io, the IT and communications contribution to GDP shrank by 1 percent from January to November 2023, while the IT sector’s input fell to 4.4 percent in that period from 6.8 percent in 2022.