Belarus

BELARUS DECLARED ITS independence in August 1991 after 70 years of being a constituent republic of the Soviet Union. Today Belarus, with its 10.1 million population, is the only remaining dictatorship in Europe. Since 1994, its authoritarian leader, Alexander Lukashenka, has imposed various restrictions on economic and political freedoms. He has established closer ties to Russia than any of the other former Soviet republics and in 1999 signed a treaty on a two-state union providing for future political and economic integration of the two countries. Russian troops stationed in Belarus are guarantors of the Lukashenka regime.

Belarus has the least reformed Soviet-type command economy, dubbed by the Lukashenka government as “market socialism.” It continues to be based on inefficient, state-supported industrial and agricultural enterprises and is hampered by heavy-handed government regulation, administrative controls over prices and currency exchange rates, high inflation (114 percent in 2004), corruption, and persistent trade deficits with Russia, Belarus's largest trading partner and energy supplier. Economic growth was strong, however, during the last three years (five to six percent annually), mainly caused by increased Russian demand for otherwise noncompetitive Belarusian goods. Belarus remains self-iso-lated from the West and even from its immediate neighbors—Poland, Lithuania, and Ukraine.

Economic and social statistics in Belarus are unreliable owing to political influences and questionable methodology. According to the World Bank, the Gross National Income of $6,052 per capita in 2004 is one of the lowest in Europe, with 48.1 of the economy being in the “informal” (that is, the black market) sector. According to the Belarus Ministry of Statistics and Analysis, poverty in Belarus is endemic: the population with disposable monthly income per capita below the subsistence level, set by the government at 130,000 Belarus rubles ($60) per person, is 12.3 percent, and that with income of 130,100 to 250,000 Belarus rubles is 43.0 percent, with 28.6 percent of households with children. The share of foodstuffs in the household budget amounts to 50.5 percent. According to Engel's Law, with rising incomes the share of expenditures for food declines. In the United States it is 9.7 percent, and in other developed countries, lower than 18 percent; a 50 percent food expenditure in the budget is characteristic of the lowest-income economies.

The dramatic increase in poverty after independence is due to the overall decline of productivity and income rather than an increase in the inequality of income distribution, which was the case in most other transitional economies of eastern Europe and the Soviet Union. In Belarus, society witnessed an increase in the absolute poverty of the population, with single parents, one-worker families, and large, less educated families with children being the most affected.

Standards of living in agricultural areas have declined relative to cities owing to inefficient and unreformed collective and state farms. Agricultural workers, however, have focused on self-sufficiency rather than working on state farms. Urban populations have also turned to small-scale agriculture and self-employment to survive. While roughly one-third of the Belarusian people have become poor since the mid-1990s, some groups acquired significant wealth. These groups include the new entrepreneurs, corrupt government officials, and those engaged in criminal activities.

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