Belarusian business associations and lawmakers are actively discussing a new governmental bill "on the support of small- and medium-sized enterprises." The government offers a format of support that would be beneficial for itself rather than for businesses. It actually seeks to create a structural and regulatory cage for small and medium-sized business owners.

In fact, there is no need for such a law in the current economic situation in Belarus. It can make the life of Belarusian businesses even more complicated instead of making it easier.

In addition, if enacted, this law can deliver yet another blow against the prestige of the state. It looks like the government hammers out such regulations just to put a tick in the box on a list of business-related laws. This list is indeed long, and many laws on it would lose their force, if the proposed bill is adopted. Back in 1991 Belarus enacted the Law "On Enterprise in the Republic of Belarus," and in 1996 - Law "On State Support of Small Enterprises in the Republic of Belarus. Those acts have been amended many times but failed to become really working regulations.

Taxes got higher since that time. Bureaucracy got much stronger with numerous procedures. Courts never managed to become defenders of the rights of businesses. Crediting conditions did not get easier. The businesses sponsored by the state became main competitors for small and medium-sized enterprises. The government imposed more difficult conditions on sole proprietors working in the field of wholesale and retail trade.

Now the intention to pass yet one more law on support for business would create new bureaucratic structures instead of trying to solve actual issues of the private business sector. Instead of enhancing the degree of economic freedom, the bill reinforces bureaucratic approaches. In particular, Article 13 envisages the establishment of a Council for the Development of Enterprise. Regulations that would govern the operation of this council would have to be approved by the president of the country. Similar bodies are proposed to be set up under local authorities. So, Belarus would get one more vertical system of power - this time for developing enterprise.

Article 14 calls for establishing commissions for the support and development of small and medium-sized enterprises. They would help the Council of Ministers, national government agencies and local authorities to work out and implement guidelines of "the state policy in the field of the state support of small and medium-sized enterprises."

Councils of sole proprietors would become yet another element in this bureaucratic vertical system. The government would surely have enough leverage to get approval from these councils for its economic policy - and for efforts to suppress any discontent on the part of business community. A series of strikes this spring showed how the authorities could proceed in such cases. The bill's conditions for these councils only take them further from being truly independent business organizations.

The same vertical system would have as its integral part agencies responsible for providing support to small and medium-sized businesses. Among such agencies the bill specifies centers, incubators and mutual crediting societies. They can be established by "national and local authorities, as well as by private persons and legal entities in accordance with the Belarusian legislation." But even if a private person or a company decides to set up such as an agency without involving the state, it can hardly expect equal treatment. It is likely to be even more so, since the operation of those agencies is expected to be supervised by a national center in Minsk and centers in regional capitals. The regulations for these centers are to be produced by the Council of Ministers. The so-called incubators would be one more way to keep in check small and medium-sized enterprises. It is expected that these companies would enjoy privileged conditions in leasing premises to most active entrepreneurs and provide information, marketing and consultative services to them. It would not be easy to get the status of a business incubator, because it would have obvious economic privileges. Most likely, it would be given to large industrial companies with vacant premises and local authorities owing outdoor markets and indoor shopping centers. If the bill is enforced, Belarus may see fast growth of such incubators.

The government's program of business support would become a very convenient cover for bureaucratic control over dividing public budget resources. Article 7 of the bill provides for developing such a program on the part of the government. And officials would be vested with power to decide which projects can be supported and which not.

Predictably, the government would support projects that can be used for achieving state economic targets. An average business owner would find it difficult to break through with its commercial, innovative or service project.

In summary, there is no doubt that the bill is designed to put private business under the government's control. In particular, Article 4 says that government agencies do not have the right to interfere with the operation of small- and medium-sized businesses, "except for the cases when such interference is based on legislation for the interests of national security, public order, moral and physical health of population, and protection of rights and freedoms of other persons." No business in Belarus can feel free from bureaucratic arbitrariness with that kind of formulations.

Background information: As of the first quarter of 2005, there are 32,700 small businesses in Belarus, including 13,300, or 40.6 percent, in retail trade and food catering, and 7,500, or 22.8 percent, in the industrial sector. The total number of their employees amounts to 317,800, including 125,900 in the industrial sector, 85,600 in trade and food catering and 49,900 in construction. Small businesses produced goods and services for 4.3 trillion Belarusian rubels, excluding taxes, in the first six months of 2005. Their proceeds from selling goods and services amounted to 13.7 trillion rubels, including 7.3 trillion in trade and food catering, and 2.4 trillion in the industrial sector.