The new composition of the Belarusian cabinet does not have a single person who could be called a convinced market advocate. If the financial situation of the country's enterprises gets worse and if it gets harder to fill public coffers, ministers and heads of key state production groups will immediately complain about private businesses and accuse them of taking bread from state enterprises.
Lukashenka is still unable to utter one of key words in a market economy: bankruptcy. For the economy, it means that investment and management mistakes are again going to be financed by public budget and banks. The country's general manager has repeatedly threatened that he would stop providing financial assistance to loss-making enterprises but his threats have not yet come true even once.
The Lukashenka-chaired first meeting of the new Council of Ministers has shown what kind of relations they are going to have in the future. Tasks for the cabinet are set by the president in such a way that by the end of the year he will have reasons to say that the ministers let him down, fail to fulfill orders and cheat on people.
In particular, Prime Minister Sidorski and his first deputy Syamashka are told to come to terms with Russia on gas supply, so that the neighboring country raises its prices by no more than 10-15 percent. The task has to be fulfilled without giving to Gazprom assets of key Belarusian gas-related companies, such as Beltranshaz and Beltophaz. It is hard to believe that Moscow would be ready to accept such conditions. In short, the president will surely need a scapegoat in a few months to be held responsible for failures of economic policy.
Lukashenka complains that the prime minister displays little initiative and he is not able to take effective measures to prevent negative trends. At the same time, the head of state emphasizes that "attempts to modify presidential orders" are not acceptable. In the end, it is difficult to understand what he actually wants: if ministers use more initiative, they can be accused of taking unauthorized steps, but if they don't use initiative, they can become saboteurs.
Mikalay Korbut, who has long been dreaming about a quiet diplomatic job, has been again appointed finance minister. He has been successful so far in keeping public budget's revenues in excess of expenditures, paying wages and salaries in time and securing a lot of government investment. However, he can also find fulfilling new tasks very difficult. He is told stop revising budget upward and downward many times and "take effective measures to prevent non-targeted and illegal use of budgetary resources," as well as develop insurance market.
Korbut is certainly too shy to ask the president why all the other ministries are taking decision to revise the budget during the year and he has only to sign the necessary papers. No one asks Lukashenka how insurance market can be developed while the state retains its monopoly. If somebody thought that it is an attempt to create a market institution, he was wrong. It looks like the president considers monetary resources of insurance companies to become resources of state banks which "could invest in the most significant projects for the state."
That approach makes clear the future of two important sectors of the domestic economy: banks and insurance companies. Both of them are going to remain under tough control and, most likely, owned by the state. Anna Dzeika, the tax minister, has a similarly ungrateful mission: "The simplification of the tax system in Belarus should be aimed at reducing the number and rate of taxes and duties, as well as optimizing the procedure of their calculation and payment." The objective is good, of course. The problem is that it has to be achieved without reducing budgetary revenues. In other words, state expenditures have to be kept at the level of half of GDP at the same time.
Minister of Industry Anatol Rusetski faces a serious challenge of modernizing industry and "introducing innovative principles." The president admits that in terms of integrating research and production "we are still working in the traditions of Soviet time, when enterprises and research institutes were working by themselves. The former produced the same products for years, while the latter piled up theses in their archives." Lukashenka understands the problem but there are no signs in the structure of the government that it can be solved.
The Belarusian leader also warns the ministers that they should not worsen the situation of entrepreneurs. But the style of work practiced by some people in the new cabinet causes doubts that sole proprietors, as well as small and medium businesses, will have easy times. More difficulties for them may come as a result of the president's order that "starting June 1, 2006 there is an effective system of guarantees of quality and safety for goods taken to Belarus from abroad." That formulation is a perfect cover for profound protectionist measures. And none of the participants in the first meeting of the cabinet even mentioned the need for privatization and decentralization of economic governance.