Warsaw, Poland - Belarusian President Alexander Lukashenko is releasing political prisoners in hope of getting loans from the IMF. After the unexpected pardons over recent weeks, only about a dozen political prisoners remain in Belarusian jails. Among them are Lukashenko’s rivals in the December 2010 presidential elections, serving up to six years of hard labour.
Insiders warn that this is not a thaw, just a new step in the regime’s strategy. One of the released dissidents, Alexander Atroshchanko, has said prison authorities were openly calling the inmates "hostages" and "commodities" to be traded for loans.
"Lukashenko hopes to exchange political prisoners for a new credit line from the IMF (International Monetary Fund)," Belarusian economist Yaroslav Romanchuk told IPS. "He urgently needs 6 billion dollars to stabilise the situation. Otherwise he will be forced to sell assets to Russia."
Belarus, a country of 10 million that became free from Soviet rule in 1991, has been ruled with an iron fist by Lukashenko since 1994. The country is now suffering a debt spiral. The trade deficit has crossed 7 billion dollars, and inflation is expected to reach 100 percent by the end of the year. Following devaluation of the Belarusian rouble, the average monthly salary has decreased from 450 to 200 dollars.
CUM, the largest mall in capital Minsk, is in the eye of a shopping storm – people are buying everything, regardless of whether they need it or not. What today costs 10,000 roubles may tomorrow cost 15,000.
"Shops are full, but the constantly rising prices are a serious problem," Nadzeya Viarbouskaya, a student from Minsk, told IPS.
Month after month it gets harder to make ends meet. "Imported goods like cosmetics are going out of the reach. People now grow vegetables in small gardens, then pickle them for the winter," Viarbouskaya said.
She speaks with a smile of the silver linings of the hardship: "More and more people turn vegetarian. Our girls are now slim and beautiful."
In some parts of the country meat is out of stock. Authorities blame the Russians, who come and empty their neighbour's shops, taking advantage of the favourable exchange rate. The Russians were also reported to be buying cheap Belarusian antibiotics and Viagra, until the Health Ministry in Minsk ordered those medicines to be sold on prescription only.
"The truth is that the state meat plants prefer selling their production to Russia, for the Russian currency," Andrzej Poczobut, journalist from Grodno near the Polish border, told IPS. "Or to the middlemen, who sell it on the open market at double or triple the price."
Fearing mass protests, Lukashenko is trying to smoothen the consequences of the crisis, and has promised extra allowances for pensioners and free public transport for students. But only foreign loans can prevent a collapse of the Belarusian economy.
"Last year the IMF granted Minsk 2.3 billion dollars," said Romanchuk. "European politicians expected fair elections in exchange, but instead Lukashenko rigged them and put all his rivals behind bars. The EU slapped sanctions on the regime. Now Lukashenko is seeking credit from Russia, China, Qatar, even Cuba."
Earlier this month China brought in 1 billion dollars into Belarus for joint ventures such as construction of a satellite, a paper factory, and a Hotel Beijing in Minsk. "We are grateful for your support on Taiwan and Tibet, as well as so-called human rights," Wu Bango, Chairman of the Standing Committee of People's Congress of China said on a visit to Minsk. But such support will not be enough.
In June the Eurasian Economic Community, controlled by Moscow, promised Belarus 3 billion dollars over the next three years. For Lukashenko that would be too late.
Russia could help more promptly and more generously, but relations between Belarus and its big brother are tense. Russians are not philanthropists: they want to purchase key Belarusian companies. Lukashenko is reluctant, knowing that giving away his most valuable assets would weaken his position. He believes that after gaining control of the Belarusian economy, the Russians could remove him from power.
But the most likely scenario remains that Russia gradually buys out Belarus. Belarusian deputy prime minister Sergei Rumas announced earlier this month that the government plans to borrow 1 billion dollars from Russia's Sberbank, offering it a controlling stake in its largest oil refinery Naftan as security.
Only the West could prevent or at least postpone a Russian takeover. "I believe Lukashenko will release all political prisoners but two or three before the visit of the IMF delegation in October," Romanchuk told IPS. "He knows well that otherwise he has no chance for loans. After the IMF promises to reopen the credit line, he will pardon the last ones."
Romanchuk says that freeing Belarusian dissidents has become a matter of honour for the EU. But meeting political conditions will not be all. Head of the IMF mission in Belarus Chris Jarvis says loans can be granted only after "serious and persistent" reforms of the state-controlled economy: liberalisation of prices and exchange rates, and a tightening of fiscal policy.
Would the shock therapy do good to the impoverished people of Belarus? Many opposition parties support liberalisation. And Lukashenko may use this against them.
When releasing prisoners, the President said he was willing to sit at a round table with his political rivals. Commentator Valery Karbalevich believes "the government wants to introduce the reforms and then blame the opposition for its effects."
It looks like a lose-lose situation. "Democracy? Maybe in 10 years, but this is the optimistic scenario," Romanchuk said.
"The power of Lukashenko was built on a social deal: the state guarantees a certain standard of living, and the people do not call for freedom," said Poczobut. "Now this deal has collapsed. People are frustrated, support for the regime is nose-diving.
"But this does not translate into action. Decades of authoritarian rule has wreaked such havoc on people’s minds that they don’t believe that the ruler can lose power. Lukashenko will not be gone without an internal split in his regime."