Are There Any Oligarchs in Belarus? Siarhei Bohdan

On Monday, Switzerland joined the EU sanctions against Belarusian citizens and firms believed to support dictatorship. Most of these firms belong to Vladimir Peftiev. Belarusian and international media often portray him as having a significant role in the regime. That prompted the EU to punish him and some other businessmen for their support of Lukashenka. However, the significance and influence of the so called Belarusian "oligarchs" should not be exaggerated.

While in Russia and Ukraine oligarchs form a clique of business moguls which could seriously influence the government, Belarusian "oligarchs" are much poorer and have hardly any clout in national politics. In reality they are just replaceable managers rather than stakeholders of the Belarusian regime.

The Belarusian ruler brings them to the top, then puts in prisons, forgives them and uses them again as he deems proper. Their function is to run profitable firms and take care of whatever the regime permits them to do.

“Oligarchs”: Real or Fake?

Three of the "oligarchs" became prominent as being the most important for the regime – Uladzimir Peftiev, Yury Czyzh and Alexander Shakucin. Andrzej Poczobut of Polish Gazeta Wyborcza called Peftiev “doubtless No.1”. Independent Belarusian media estimated his property at about $1bn. Although the basis for such estimate is unclear they nicknamed him “Lukashenka's purse”.

Media can easily assign Peftiev the role of the main villain because he worked in arms trade. Lukashenka inherited Peftiev with his lucrative military export business from previous Belarusian leader Vyachaslau Kebich. Peftiev is also doing business with both sons of the current ruler. In addition to arms trade, he has interests in alcohol production, the lottery and various branches in construction.

He has probably the most international interests among all Belarusian “oligarchs” as his firms own property and operate abroad, in Malta, Austria, the UAE and India, according to Internet daily Ezhednevnik. Peftiev himself prefers to spend most of his time on Malta rather then residing in Belarus. When in July 2011 the EU put on a travel ban list, Lukashenka publicly swore that he had seen Peftiev “not more than three times” and had not taken money from him.

Other “oligarchs” are by far much poorer. The 48-years old Yury Chyzh frequently appears along Lukashenka at public events. Chyzh owns the Triple Corporation which is famous in Belarus for its soft drinks. He also has extensive business interests in construction as well as Russian oil imports, reprocessing and exports. Thus, Slovenia vetoed putting a travel ban on Czyzh as a Slovenian firm is now building together with Chyzh a Kempinski Hotel in Minsk. The other international interests of Czyzh also include biofuel production in Lithuania and Latvia.

The wealth and the role of third “key oligarch” 52-years old Alexander Shakutin is very questionable. He chairs the board of directors for Amkodor – a corporation which works in road construction, cleaning and forestry machinery. He is also one of Amkador's shareholders.

But his role in Amkodor probably is probably just a formal position because the firm effectively belongs to a Nepalese businessman. Trained as a physician, Shakutin worked in health system and had his own medical equipment business. Then, his old Nepalese fellow student from the Minsk Medical Institute brought Shakutin into the management of Amkodor in early 2000s to consolidate his control over the firm. The logic of Shakutin's companion is clear: even today the Belarusian state does not like too many foreign faces in directorial positions.

Shakutin has the prestigious yet completely unimportant regalia of being a member of the higher chamber of the Parliament.  That chamber is even weaker than the lower one which has no power whatsoever. He also has a position on the board of one of the pro-Lukashenka movements called Belaya Rus. This movement has absolutely no function in current Belarusian politics.

Being a Businessman in Belarus is a Dangerous Job

Other “oligarchs” own relatively big businesses by Belarusian standards but can hardly be called accomplices of the dictator. None of them has guarantees of their personal security or security of their businesses. Last autumn, the KGB arrested Viktar Shaucou, a big businessman with interests in banking and construction.

Shaucou was charged with committing financial offences in construction projects undertaken by his firm in Venezuela. Since 1990s, he actively supported Belarusian foreign policy aimed at establishing links with developing countries which involved sometimes rather sensitive deals. His Trustbank – back then called Infobank - worked with Saddam's Iraq and has been on a list of the United States' sanctions because of these dealings.

Imprisonment is an occupational hazard of all Belarusian big businessmen, officials and directors of huge state factories under Lukashenka. In 2007, the KGB arrested Alyaksandar Barouski, director of the state conglomerate Belnaftakhim, for financial irregularities in oil industry – reprocessing imported Russian oil for Western markets. In 2008, Barouski was found guilty and got 5 years of imprisonment. Lukashenka pardoned him nine month later and in 2009 appointed him as general director of one of the largest Belarusian state owned enterprises – Minsk Automobile Works (MAZ).

Shareholders of the Regime

The director of the Belarusian Institute of Strategic Studies Alaksiej Pikulik once described Belarusian regime as a kind of joint-stock company. Its shareholders support Lukashenka and get their dividends for it. But, “there is no tradition of promising shareholders freedom and independence instead of dividends.” And “oligarchs” are just bigger but are far from being controlling shareholders of the regime.

Of course, they run some business enterprises both for their own profits and on behalf of the regime. That is the model of state capitalism. It emerges with the fusion of the political regime and business, though the state remains the dominant party and allows the oligarchs to take only so much. At the same time, the state redirects some of the profits gained to economic development of the country as a whole. 

Belarusian officials like to refer to authoritarian regimes of South-East Asia like Singapore or Malaysia which have had such models for decades. But they could also look at Putin's Russia and Nazarbayev's Kazakhstan where this kind of relationship between government and business has been successfully implemented quite recently.

Under such circumstances, the role of even the biggest businessman is insignificant. Former Russian economy minister Evgenii Yasin recently expressed it eloquently, “Belarus you have one oligarch – Lukashenka. And he runs everything. Well, some people [“oligarchs"] emerge to whom he can give an order: hear, invest there and there. That is it!”

All Belarusian "oligarchs" are just managers which can be replaced and stripped of their property at any moment

Actually, it could not be otherwise. There is no real private property in the country.  There are no functioning legal norms or courts which would allow you to protect private property of any significance without approval of the regime.  Both rich and poor are equal in this regard. All Belarusian "oligarchs" are just managers which can be replaced and stripped of their property at any moment.

That means that sanctions against “oligarchs” are a nice gesture but their implications are doubtful. They do not threaten the foundations of the regime. Rather, they support and cement the current situation when big businessmen are just servants of the regime with no escape. Moreover, as example of Shakutin shows the list of biggest the “oligarchs” may contain significant mistakes. The sanctions against oligarchs only pay lip service to democracy or human rights without actually promoting them.

Belarus Digest