By Paul Goble
Belarus will be hurt far more than Russia by the imposition of a new iron curtain not only because of the size of its domestic market and the composition of its exports but also because the Belarusian government has a long tradition of responding to crises by expanding the role of the state and thus making the crises worse, Katerina Bornukova says.
The academic director of Minsk’s BEROC Center for Economic Research says that the imposition of Western sanctions over the last two months strongly suggests that “an iron curtain could become the new reality” for both Russian and Belarus, that Minsk will restrict people from going abroad, and that it will impose increased government control over the economy (belmarket.by/news/news-50632.html).
If a new iron curtain does go up, Russia will be hurt but some of its oil and gas exports will continue; but Belarus will face a far tougher road because its main exports are not in the raw materials area and it has already lost more than a third of its total exports because of sanctions from the EU and Ukraine.
The current Belarusian regime can be counted on to make things worse because history suggests that it will respond to the current crisis with greater state control rather than any liberalization, Bornukova continues. Moreover, she suggests Minsk will not recognize until too late that the current crisis is both different and worse than earlier ones.
“Past crises,” the Belarusian economist says, “were characterized by devaluation and high inflation. But today, “the situation is completely different.” Besides these twin challenges which remain, “the real sector has encountered the collapse of export markets and problems with financial settlements.”
“Therefore,” she argues, the current crisis is “unprecedented” for independent Belarus. “This was no the case earlier.” And the Belarusian authorities cannot count on the Russians to bail them out given the size of the problems that Moscow itself faces.” Consequently, the depth of the crisis will depend less on the state than on the length of the crisis itself.