Forced Privatisation

By Inna Bukshtynovich, Stockholm

Tatsiana Manionak of the Agency of Policy Expertise discusses privatisation, an inevitable condition for Belarus to be able to borrow externally, and in particular, in meeting the requirements of a loan from Eurasian Economic Community (EurAsEC). The first two tranches of $3 billion loan were delivered in 2011; however, the third will be approved upon the condition of structural transformations, e.g. privatisation.

A preliminary list of 19 strategic assets for sale has been submitted to the Presidential Administration. However Belarus can afford to procrastinate on its efforts to privatise, while it enjoys the benefits of integration associated with the Common Economic Space (CES) ($2.2 billion in gas and $600 million in oil) and the sale of 50% of stocks Beltransgaz ($2.5 billion), which have temporarily addressed the foreign currency deficit.

Another challenge facing Belarus is the increased competition in the CES relating to Russia's accession to the WTO. Minsk’s solution is to create holding companies in order to force the creation of large national entities intended to compete with Russian companies. The Belarusian holding companies in “socially sensitive” sectors, such as milk processing, are expected to be run by the state. Conversely, the holding companies in other sectors are designed to raise the interest of the Kremlin. Primarily, this is a defensive response: not only will it generate good money for these assets but it will earn the loyalty of the Kremlin on a number of other issues, such as providing new loans or other preferences.

The full version of this article in Russian is available on the BISS website.