Fight locally, promote globally

Eternal fight

They move and shake the world. They conquer hearts and minds. They shape politics and economies. They shift the world to prosperity or to destruction. They are ideas. Simple concepts that a human mind generates. They are born in the mind of an individual and then their fate can be absolutely unpredictable. Ideas are like people: some are extremely successful while others pass unnoticed and unrecognized. It is not that noble, benevolent and virtuous ideas are guaranteed worldwide recognition and acceptance though the epochs and countries where they dominated flourished and prospered. People invented tools and mechanisms that increased their productivity and made their lives easier and longer. The human mind got enough inspiration to create masterpieces of art. People had more time for leisure and education. Had noble and virtuous ideas always had an upper hand the world would not have experienced bloody wars, terrorism and severe financial and social conflicts and crises.

Jaroslav Romanchuk, President of Scientific Research Mises Center                                                                April 2007

Boom is over, bust is looming

 Belarusian Soviet system - sequel

The state of the Belarusian economy predetermines many social and political factors as well as reactions of voters. In autumn 2006 only 16%[1] of the population and about 20% of businesses predicted difficulties with new Russian prices for gas and oil. Over 60% of both businesses and population were pleased with the social economic situation. Almost the same number of people considered themselves to be middle class though their income and expenditure patterns were far from the standards of this social category. In such social economic situation it was difficult to expect mass actions of protests against the policies of the government. The situation in Belarus in the period of 2002 – 2006 was considerably different from the situation in Poland in the second half of 1980-ies and Ukraine on the eve of its orange revolution or in Georgia before its pink revolution. That is why it would be wrong to compare the situation in Belarus with these countries. Both the tendencies and the standards of living in Belarus were in the upward position and had a major impact on political preferences of Belarusians.

Jaroslav Romanchuk

President of Scientific research

Mises Center (Belarus)

International organizations, unions, blocks and associations are important political, security, economic and ideological institutions of the XXI-st century. The United Nations, International Monetary Fund, World Bank, NATO, European Union, the Council of Europe, the Organization for Security and Cooperation in Europe (OSCE), OECD, WTO, NAFTA, World Economic Forum (Davos) and many other regional and global NGOs are not just dialogue platforms to facilitate the exchange of opinions for politicians, experts, economists and ideologues. They have become major institutions designed to shape international and domestic policies. Though they were thought to represent just interests of their individual members they grew considerably beyond their mandates.

In late September, the World Economic Forum published its Global Competitiveness Report in 2006-2007. For the first time within many years, Switzerland became the most competitive world economy, having gone up from the fourth position in 2005. The Mises Center estimates that according to the Global Competitiveness Index compiled by a new method, Belarus, not mentioned in the report, should have be placed 87th among 125 countries. This is the level of Moldova, Venezuela and Serbia. Those below are Tajikistan, Kyrgyzstan, poor countries of Africa and Asia.

Gazprom's equity capital totaled about $250 billion in late September 2006. Despite the fact that Belarus and Russia are allies, Belarus does not hold an interest in the Russian gas giant and Gazprom does not have stakes in Belarusian companies. Belarus buys natural gas from Gazprom and charges the company for gas transit. So far the sides have failed to agree on strategic partnership. They are currently in tough talks on gas prices for 2007 that may drag on until the end of the year.

Nurtured by the government in greenhouse-like conditions for more than 10 years, Horizont and Vitsyaz face a tough competition from TV makers in the neighboring countries. The new Value-Added Tax (VAT) payment mechanism introduced last year disrupted the companies' traditional distribution arrangements in trade with Russia. Vitsyaz was placed 42nd among the country's top taxpayers in 2004 accounting for 0.2 percent of the total budget revenues. It went down to 50th spot in 2006 with 0.12 percent. Horizont plunged from the 41st spot (0.22 percent) to 122nd (0.03 percent).

It is common knowledge that Belarus' economy is strongly dependant on trade with Russia. Although Russia's share shrunk in the first six months from 48.1 to 47.7 percent, the dependency is unlikely to reduce in the foreseeable future. The government has failed in its declared bid to diversify external markets.

The widening trade gap may be a sign of crisis in the real sector and on the internal market. The government's import substitution programs are ineffective. The Belarusians still prefer to buy imported goods. All short-term benefits have been derived from the new Value-Added Tax (VAT) payment mechanism in trade with Russia. There are shortages of competitive Belarusian goods on regional markets. Programs to support large industrial and agricultural exporters have not produced the desired effect as the ratio of processed goods on exports has been shrinking.

The Ministry of Trade uses funds accumulating in its innovation fund to meet unrelated expenses. The example is indicative of how government agencies manage their finances. Money from targeted funds is often channeled to companies with links to officials.

The Belarusian authorities introduce identification marks for footwear and some other goods in an effort to protect market from cheap poor-quality imports. The introduction of identification marks on December 7 can result in the disappearance of cheap goods of good quality from shopping centers and outdoor markets. The number of "individual entrepreneurs" can decrease because the sale of goods without identification marks is punishable by a fine of 20 times the Base Rate (31,000 rubels at present) and the confiscation of goods and proceeds from their sale.