Part A. Factual information  

Corruption Perception Index 2003 score: 4.2, 53^rd place out of 133 countries Bribe Payer Index 2002 score: not surveyed

On October 2, 2002 the president passed the decree ¹ 500 “On the state program to intensify fight with corruption for the period of 2002 – 2006”

On May 26, 2003 the law “On ratification of Convention on criminal responsibility for corruption” ¹ 199-Ç was put into force.

On November 5, 2003 the Council of Ministers passed the Resolution ¹ 1471 “On adoption of the plan of activities to counteract corruption in state bodies”.

Decree of the president ¹122 as of March 1, 2004 “On signing by the Republic of Belarus the Convention of the United Nations against corruption”.

Decree of the president ¹ 75 as of February 13, 2004 “On adoption the state program of strengthening fight against corruption in 2004 – 2005”.

Legal and institutional changes 

The legal system of the Republic of Belarus is tailored to suit the interest of nomenclature. Belarusian laws can easily be arbitrarily interpreted to favor a few groups and to discriminate against others. After the period of relative legal liberalism in the beginning of the 1990-ies came the time of tight regulation of every economic activity. Economic and political powers have never been so close as they are at present.

Law of the Republic of Belarus ¹ 204-Ç as of June 14, 2003  “On government service in the Republic of Belarus”. The law leads to outflow of professionals from government bodies of power. It protects bureaucracy and prevents the public from controlling its activities. It establishes the hierarchy of 12 posts in the state body but this list does not contain the post of the president. At the same time, members of the National Assembly (two chambers of the parliament) are granted the status “a state employee” which makes them dependent on the executive branch of power. The president has the right to give this status to any other state structure or an organization (article 3). He also endorses all meaningful moves up the state ladder. Leaders of the parliament will decide on what category a member of the parliament should be granted. Hence the law will favor discrimination of some MPs against others. Government employees will have generous pension benefits. Article 54 states that the pension will be set at 40 per cent of wage for any 5 years in the last 15 years in government structures”.

The law violates rights of citizens who choose a job in a state structure. According to the law members of the parliament are state employees. But state employees can not be members of political parties. Formally, members of political parties who are elected MPs should leave their parties. Clause 1.9 of Article 22 states that a government employee “can not use free services of physical and legal entities to pursue private purposes”. There is no clarification of this clause. Clause 1.12 prohibits accepting awards of foreign states without consent of the president. A state employee can not have a bank account in a foreign bank either even it was opened according to law. The law also makes it much more difficult for government employees to travel abroad. Again, an MP should seek approval of the president every time he visits a conference or a seminar. The law has failed to introduce transparency norms for activities of government employees. Neither the parliament nor the civil society (the third sector) is empowered to control financial and administrative activities of appointed and elected officials.

Hence the president applies “carrot and stick” policy to keep bureaucracy under strict control. Centralization of decision making is obvious. The central authority realizes that it is impossible to monitor activities of every government official. It just creates the legal environment in which not violating the present legislation is an exception rather than a norm. Granting “carrots” the president expects obedience and proper behavior during elections and other political campaigns. This tradeoff is stable provided the parties are pleased with the outcome.   Resolution of the Council of Ministers ¹ 1471 passed on November 5, 2003 “On adoption of the plan of activities to counteract corruption in state bodies”. The government planned to carry out different activities to combat corruption. Here are a few examples:  A normative act to pass shares in authorized capital of commercial organizations to trust management guaranteed by the state should be worked and passed. In fact such legal act was adopted in May 2004/ The form of declaration on income and property of citizens of the Republic of Belarus that is to be filled out at hiring a person by a state body should be worked out. The government plans to enhance cooperation between force structures of Belarus with their counterparts in other countries. It is also envisaged that representatives of structures that deal with organized crime and corruption should take part in sessions of local executive councils when fight with corruption is considered. The government plans to generalize the judicial practice on criminal cases opened according to Articles 424-429, 433 of the Criminal Code of the Republic of Belarus “Unjustified humanization of criminal responsibility for corruption crimes”. The Committee to fight organized crime and corruption of the Ministry of Interior exercises control over execution of the resolution. All the activities planned in the framework of the state program to intensify the fight with corruption for the period of 2002 – 2006 are formal in nature and do not eliminate real causes of corruption, graft and squandering of public resources. Most of them simply miss the point. Corruption arises when the state distributes various privileges and regulates market entry. These measures are futile if entrepreneurs have to apply for licenses, certificates, quotas under very cumbersome procedures. Most of these formal measures are not enforceable and in most cases there is no separation of functions among government bodies. especially on the local level. Informal arrangements among government officials and political entrepreneurs (those who work closely with the authorities) are cemented by existing legislation. It is quite difficult to break these ties without radical revision of legislation.

Even if government officials pass over their shares to the government body it will not prevent him from exercising their arbitrary power in the overregulated market. Holding joint sessions of force structures and local bodies of power does not make much sense either. They reluctantly propose any meaningful measures to make the decision making process transparent and to achieve real separation of powers. Lack of independent comprehensive regional policy effectively blocks any attempts to fight corruption on the local level. A policeman, a prosecutor, a judge and Chairman of the executive local council work hand in hand. They often dine out with people who are gray economy dealers. They can discuss unjustified humanization of criminal responsibility on end. Formally corruption is taken care of. In fact it flourishes.

Part B. Narrative Section Corruption in the city of Minsk. Involvement of the municipality

In October 2003 the member of the Chamber of Representatives of the National Assembly Vladimir Parfenovich and Vice Chairman of the United Civil Party Jaroslav Romanchuk held a press conference on the corruption in the city of Minsk. In August V. Parfenovich addressed the president A. Lukashenko with a formal request to investigate the activities of the company “Gorsnab Mingorispolkoma” (set up by the Minsk Executive City Council). The MP also met General Prosecutor Mr. Sheiman on this matter. However the authorities failed to take up measures to investigate the company’s activities and to punish the guilty. In fact the story with “Gorsnab” reveals how the system of government procurement and distribution of funds works. Each city and district has a similar company. These state structures are used to channel budget and off-budget funds into the hands of the companies which work under direct supervision of government employees

To increase the authorized capital the company “Kommunkhoz” contributed its production worth 390 mln. BYB (book value). As the audit commission stated that these goods are not liquid. Hence “Gorsnab” fudged its financial status to look more appealing to banks and creditor.

The auditing company “AuditIncom” (director A. Nemerovich) wrote the mayor of Minsk M. Pavlov a letter in which it informed him about “serious violations of existing legislation of the Republic of Belarus. These violations had an impact on credibility of accounting (financial) reports of the company ‘Gorsnab Mingorispolkoma” during the period January 2002 – March 2003”[3]. Hence the commercial flagship of Mingorispolkom has faulty reports which is a good evidence of the authorities’ inability to fight corruption in its backyard.   Gorsnab’s choice of partners was quite unfortunate. Most of its clients are the companies close to bankruptcy. For the short period of its activities the company accumulated bad debts in the amount of about 1 bln. BYB (about 500’000 USD). In March 2003 the account payable exceeded 6 bln. BYB. Including 1.3 bln. Debt to the budget. Besides the volume of low liquidity goods in warehouses was 4.3 bln. BYB (the book value). The company also issued bills and did not register them in the proper way. It did not pay taxes on financial operation either.   From January 10 to March 1, 2003 the State Control Committee audited Gorsnab. It found out a lot of violations of legislation. It started with a credit in the form of tractors (worth 15 bln. BYB in 2001) and in the middle of 2003 it had 7 bln. BYB account payable and the worthless goods in stock worth 4.3 bln. BYB. Many agreements conducted by Gorsnab were sanctioned by Mingorispolkom. For example the company sold tractors at such high prices that Minsk Tractor Plant could have delivered 65 tractors more if they had direct agreements. The difference between the producer’s price and Gorsnab price was 804.7 mln. BYB (about $585’000). The state commercial structure that was supposed to make government procurement system efficient increased costs for Minsk enterprises. Moreover Gorsnab made life of Minsk Tractor Plan (MTP) much more difficult as it sold tractors abroad at prices that were much lower than direct prices from MTP. The State Control Committee stated that, Gorsnab “sold tractors at prices that were considerably lower than the prices fixed for residents of the Republic of Belarus”. The company “Gorsnab got 1.16 bln. BYB revenues less for selling 545 tractors than if these tractors had been sold directly by MTP.   Gorsnab made many agreements with fake companies (odnodnyevki) that were used for tax evasion: «Interopt», «Strangest», «Gailtorg”, “Wizardtorg”). As a consequence of such activities of Gorsnab MTP “has lost its own markets and faced decrease of direct export”[4]. Besides it ignored the existing rules for government procurement. Agreements were made with companies that lost tenders. For example Gorsnab held the tender for buying trolleybuses for the city of Minsk. Only one Russian company “Trolleybusnyi park” (Engels, Saratov oblast) took part in the tender (there are two Belarusian companies that manufacture trolleybuses) but Gorsnab bought trolleys from the Russian company “Gruppa Dedal” that did not take part in the tender. The company could have bought a trolley at much lower price from one the Belarusian company “Belkomunmash”. Hence Gorsnab violated the law “On budgetary system and off-budget funds of the Republic of Belarus (adopted on June 4, 1993) and had to pay 1.76 bln. BYB to the budget. Gorsnab bought some spare parts and goods for Minsk Underground at prices that were 30 times higher than market ones.    When the new director of Gorsnab N. Rogozhnik took over the first deputy of Mingorispolkom N. Yerokhov suggested his debt cancellation. Thus one of the senior officials of the Minsk municipality covered up dozens of violations of the law. In spite of very harsh report of the State Control Committee and address of V. Parfenovich directly to A. Lukashenko on corruption in Minsk all major figures of Mingorispolkom kept their positions. Finally Gorsnab was liquidated and Minsk city authorities set up another commercial structure similar to Gorsnab. In the end of May president Lukashenko publicly criticized the mayor of Minsk M. Pavlov after another report of A. Tozik, Chairman of State Control Committee. The latter stated that “Overall overexpenditure of budgetary means in 2003 amounted to about 16% on the construction objects that were audited. Mr. Tozik said that “a powerful clan that divides the budgetary pie was formed in Minsk”. The president who declared at numerous occasions that he would fight corruption everywhere and any time has not fire the mayor. The prosecutor’s office did not start wide scale investigation of such blatant corruption schemes. M. Pavlov was just given three months to correct mistakes.   Hence the existing system of state procurement is the biggest source of corruption and budget money squandering. Executive committees of all levels, government structures and concerns can set up commercial companies. They become key executioners of state programs. As the same people do licensing, fund management and distribution of budget funds the propensity to discriminate against private competitors is too big to resist. Without parliamentary, media and public control the system turns into a mechanism for enrichment of a few individuals at the expense of tax payers. But the ultimate reason for such situation is obviously huge deficit of political competition and violation of the principle of division of powers.

Chernobyl: a sensitive issue to squander budget funds

Government programs to eliminate or neutralize consequences of Chernobyl nuclear power are plenty. The noble cause and lack of objective knowledge made it possible for policy makers to squeeze many resources from budget and off-budget funds. Chernobyl programs grew but the government failed to do any cost-benefit analysis. Efficiency of spending money has not been determined. Poorly administered programs became the source of corruption. Public money was squandered in huge volumes.   In autumn 2003 the State Control Committee (SCC) revealed massive violations of legislation at carrying out Chernobyl programs. Out of 73 construction sites (objects) at 69 of them the SCC “found facts of using budget funds with violation of the legislation. Based on the results of the audit the budget reclaimed 80.6 mln. BYB back. The companies paid fines in the amount of 612.5 mln. BYB”. These are very eloquent numbers. 94.5% of all organizations that were involved in construction under Chernobyl programs violated law. Heavy fines do not scare people who manage state funds[5]. No mater how harsh the State Control Committee is it can not control growth number of financial and resource flows managed by state and semi-state companies. Besides the SCC can demand opening criminal cases but the prosecutor’ office has the final say.

These fines are paid by companies that get financing from various budget sources. At the same time punishment of managers of the companies and government employees is quite mild. For all these violations 35 persons were fined by 1.9 mln. BYB and only two persons were fired.

In 2003 the government spent about 320 bln. BYB to finance Chernobyl programs. In 2004 the budgetary target is 431.5 bln. BYB. Spending so much money without proper control and lack of adequate disciplinary measures against government officials makes the Chernobyl theme a major corruption generator. As the SCC stated, the Committee for Problems of Consequences of Chernobyl Nuclear Power Catastrophe at the Council of Ministers “has failed to ensure effective use of budgetary funds that were spent on Chernobyl programs”[6]. Most of real estate objects in Chernobyl area are being build since 1992 – 1994 and have not been completed yet. At the same time many more objects are added to the construction programs each year (about 20% each year). Normative construction time in many cases is exceeded by 8 times. Only in Gomel and Mogilyov regions  there were 199 and 192 unfinished construction objects. None of this site was protected from erosion and theft. Leisure house for disabled people in the small town Surmino, Gorodokski district, Vitebsk region is a typical example. The construction began in 1994. Construction works were suspended in 1997. When the building was inspected in 2003 brick walls were falling apart and the building was pilfered. “A responsible person for destruction of construction objects and ineffective use of budget funds were not found”, - stated the SCC. At the same time “numerous facts of overevaluation of construction works, bloating costs by including works that were never done were revealed”[7]. Obviously the budget money was “channeled” for private use of the companies that were authorized to manage them. Corruption flourish when the functions of the policy maker, owner, auditor and executioner are combined as is the case with Belarus.  

The scale of corruption and money mismanagement in construction is appalling. As economic advisor to the president of Belarus Sergei Tkachyov wrote that as of August 2003 about 13% of GDP ($2.3 bln.) were frozen in more than 17000 unfinished construction objects[8]. It is the outcome of the government’s decision to crowd out private investment from construction sector. This scheme is good to generate both steady GDP growth and investment mistakes. People who are involved in construction business in Belarus state that at least 20% of cost sheet of each object is kickbacks or bribes or just stolen goods. Hence Belarus is trapped in a typical bureaucratic net woven by policymakers and the companies used to channel budget funds. Neither of them is interested in changing the political situation in the country. The existing authoritarian state ensures their reaping monopolistic rent, privatizing profits and nationalizing losses.

Energy saving as a cover to squander public funds

Another top priority project of Belarusian government is energy saving. A. Lukashenko stated on numerous occasions that the biggest challenge for Belarus is reduction of energy dependence from Russia. The report of the State Control Committee on activities of Committee for Energy Effectiveness (CEE) helps us see how efficient the government is in meeting its objective. The conclusion of SCC is a devastating blow to the energy saving policy of the government, “Committee for Energy Effectiveness has failed to fulfill all its tasks. It did not control properly the use of funds allocated for energy saving programs by territorial bodies of the Committee, regional executive committees and enterprises. The Committee did not analyze the programs aimed at energy saving and broke the procedure of issuing licenses for making analysis of energy efficiency”[9]. It means that both government officials and businesses used the public money at their own discretion. From 1996 to 2002 $545.61 mln. was spent on energy saving measures. “The committee has failed to fulfill its functions properly. Its violations led to misuse of considerable amount of funds from the Republican budget, the innovation fund of Ministry of energy and the Fund for Energy and Resource Saving”. It is a clear recognition of wide scale corruption that exists within the government system of public money distribution. The budget law is the ultimate source of such state of affairs. Setting up of innovation funds was legalized in this document. Each ministry or a concern can set up such a fund and use the resources at its own discretion. Innovations funds amount to about 5% of GDP. This money is spent under a very attractive cover of “modernization of the economy” but in fact threes are just funds to enrich few and discriminate against others.   The effectiveness of Committee for Energy Effectiveness’s investment is illustrated by the following facts. The scientific technical program “Energy Saving” for 1996 – 2000 included more than 100 projects. Only 56 of them were completed and only 21 of them were approved for further investment. In fact only each fifth dollar spent in this way can be estimated as spent efficiently. The remaining $435 mln. was practically wasted as a result of joint efforts of bureaucrats, pseudo-scientists and political entrepreneurs (the companies that were used to “channel” innovation and energy saving funds). Here is a good example to illustrate it. To create the original wind electric energy equipment 307’000 was spent but even the sample of this appliance has not been manufactured. At the same time the CEE continues to finance creation of wind electric energy generators.  

The government keeps talking about using local fuels but the effectiveness of its work in this direction is close to nothing. In 1996 – 2000 “Belenergo” invested $10,5 mln. from its innovation fund to finance different projects aimed at increase of local fuels use. As a result :instead of increase we observe the decrease of consumption of local fuels, for example peat. From 1996 to 2002 its consumption dropped twice”, -stated SCC.

Local executive committees and CEE gave grants to various commercial structures clearly violating the legislation that forbids such practices. For example the profitable company “Grodnoenergo” received 1.6 bln. BYB grant from the CEE. The innovation fund of “Belenergo” used its money top buy “Renaut” 5 mini buses (200 mln. BYB) allegedly for the laboratory. In fact these buses were used by heads of regional departments to monitor rational use of fuel and energy resource. Only in the period of 2001 – 2002 5.5 bln. BYB was spent on the projects that were not adopted by the government. The SCC stated that “in 2002 the Committee did not fulfill a single project in the sphere of energy saving”. The funds were used to benefit managers of the fund. For example top managers of the Fund for Energy and Resource Saving of “Gomelenergo” paid themselves the bonus of 1.2 mln. BYB (about $1000). Note that an average salary in Belarus that time was about $110. The SCC audited 209 enterprises on how they implement energy saving measures. 98 of them violated the existing legislation. They were fiend by 16.5 bln. BYB. 66 persons were fiend administratively for 7.2 mln. BYB. Compare this sum to the amount of money spent on energy saving measures - $545.61 mln. It means that the administrative fines amounted just to 0.0007% of the money spent on energy saving projects. With this kind treatment squandering public money is quite a profitable almost risk free scheme. No wonder so many government employees and the companies that work closely with the government energy monopoly favor the existing policies.

How money is spent on the district level: Nesvizh district, Minsk region

It is clear that the government failed to exercise control over the funds spent by off-budget and budget funds created by numerous structures. Government procurement schemes are another source of wide scale money squandering. The district executive committees manage less resource but the quality of their work remained critically low. District authorities are given free hand in managing financial resources. As the SCC states, the authorities of Nesvizh district “did not take law seriously and in some cases they had serious drawbacks”[10]. It means that the authorities arbitrarily interpreted law and ignored budget guidelines.

Behavior of Nesvizh district officials is typical of other Belarusian districts. By analyzing their work we can clearly see defects of the government administration on the local level and how it begets corruption. Chairman of Nesvizh district committee (raiispolkom) F. Privalov signed the agreement with “Belarusbank” on providing guarantees for the loan to “Nesvizh dairy plant” in the amount of 350 mln. BYB. He mortgaged the building of the hospital worth 633 mln. BYB. The chairman ignored that fact that it is exclusively up to the District Council to make decisions on real estate. Violating the law “ON local self-government in the Republic of Belarus” the Department of food and agriculture of the District Committee set up its own fund. It was formed allegedly by voluntary contributions but neither the District Council of Deputies nor the District Committee made the decision to set up such structure. Both profitable and loss making enterprises were forced to make contributions to this fund which accumulated (when the district was audited by the SCC) 73.8 mln. BYB.

The same procedure was used to set up the “Fund of the director”. Its money was used by heads of the district at their own discretion. The fund accumulated dozens of millions of BYB. The sum is not that big in the scale of the country but the authorities of each district (118 of them in Belarus) can arbitrarily set up such a fund and have their own “pocket money”. Such state of affairs is possible only if local auditors whose job is to control the executive branch of power keep a blind eye on the corruption in the district. As the State Committee stated, the financial department of Nesvizh district committee “did not audit legality, effectiveness and correspondence to budget guidelines of the district authorities’ spending the funds from republican and regional budgets and target budget funds. It failed to check legality of getting loans and their proper documentation by Department of agriculture and food. Financial liabilities were not documented. Most of budget loans were given without filling out necessary documents”[11]. This is quite a revelation. Money from the Republican and regional budgets is given to local authorities without any basic financial documents. It creates very favorable environment for corruption and nepotism. Heads of the district executive committees can distribute financial means at their own discretion.  

Chairman of Nesvizh district F. Privalov agreed with Minsk oblast to pass it a building free of charge. He building was quite new but the chairman ordered to destroy it as he wanted to build a house for himself on the same place. No compensation was paid to the budget. It is a good example showing how local authorities manipulate prices to satisfy their needs. Leaders of the district set an example for directors of state enterprises and farms. A combine harvester SK-5 disappeared in broad daylight in the collective farm ‘Rassvet”. Bureaucrats of the Department of agriculture and food sold the SUV UAZ-31514 and never got the money for it. Local officials even sold tours to children camps at higher prices.

  In 2004 utility bills reached new height in Belarus. Few people realize that local authorities contribute much to considerable cost increase. “Energonadzor” of Nesvizh district charged educational institutions much more for electric energy. The company “Nesvizh housing and utilities” also charged the educational institutions 14.4 mln. BYB more than proper tariff calculation. “Nesvizh raiagroservice” also charged household too much for heating. The audit inspection of the SCC confirmed that local enterprises fudged output statistics to ensure the target GDP growth, “volume of fodder was set too high, number of cattle, volume of milk and meat were overvalued”. The collective farm “Lan” reported 18.5% higher milk output than it was in reality. At the same time the collective farm management wrote off 147.7 mln. BYB that allegedly was used to produce this amount of milk. Thus district authorities as well as managers of local enterprises and farms create opportunities for channeling budget funds into private projects. The audit of the SCC resulted in 35 administrative fines. Enterprises were given fined in the amount of 47.3 mln. BYB. The system has not changed. Such extremely minimal fines (the cost of the “license” for corrupt activities) are eagerly accepted by the government officials on the district level. They are interested in keeping the system that ensures steady generation of their personal wealth at the expense of taxpayers on the one hand (budget grants, subsidies and loans) and consumers on the other hand (high prices and illegal fees).

Summary

Ideally law should protect life, property and human rights of the individual. In spite of growing number of legislative acts the quality of life of ordinary citizens deteriorated. The Belarusian economy is caught by a network of dense net of regulations and restrictions that stifle competition and generates corruption. If pensions and wages of the people grew as fast as the legislative base there would be 30 – 50% les people living below poverty line. Unfortunately the logic of the bureaucratic state prevails in Belarus. That is why each State Control Committee auditing inspection states that 85 – 90% of all companies violate law. Here is nothing in Belarusian culture and folklore that makes Belarusian the nation of corrupt individuals. Obviously it is the Belarusian law that is the root of wide scale corruption in Belarus.

The population and businesses perceive corruption as a burning and growing problem. The Independent Institute of Socio-Economic & Political Studies (IISEPS) conduct opinion polls on issues connected with corruption on a regular basis. The evasive law enhanced by state monopolies in major spheres of the economy and lack of transparency create favorable environment for corruption. Here is some data from the IISEPS’s polls[12]. When asked whether you or people you know during last five years had to give a bribe in order to solve a problem the interviewees responded in the following way: 17.7% of respondents bribed government officials, 30.5% - healthcare system representatives, 15.3% - to police, and 52% in total. 34.6% of respondents agreed that now it is necessary to pay more to solve the problem through bribing than a decade ago (and 61.8% among those who bribed someone). The younger the people the oftener they are inclined to give bribes. People who are employed in private sector, who live in the capital and big cities who prefer to use hard currency are more likely to give bribes. After arrests of the two representatives of A. Lukashenko’s team Ms. Galina Zhuravkova (former head of the Directorate of the presidential administration) and Yegor Rybakov (ex-head of State Belarusian television and radio company) 42.4% thought that people that A. Lukashenko appoint betray him and 35.3% believed that he appoints dishonest people.

Many people would seek personal benefits if given a job in a state structure. 33.3% of respondents stated that they would do. Still the number of those who would not give bribes is higher – 49%[13]. People who believe that the president is the source of corruption estimate the situation with corruption in the country much harsher. Many respondents see more control as the effective solution but thorough analysis of legislative and control activities of the authorities demonstrate that you can hardly control corruption-generating law in the poor country with weak formal and informal institutions. Economically active people who face the reality of Belarusian bureaucracy quickly understand that the Belarusian state is not much different than any typical country with the dominant position of the state, no division of powers and independent judiciary.

The Republic of Belarus is a unique case in the region as it is the only European state that chose to reproduce the Soviet type social economic model. It is difficult to estimate the level of corruption in Belarus by means of traditional tools applied by TI. Deficit of democracy and absence of division of powers, strictly controlled media enhanced by state distribution monopoly, ousting the civil society from the process of decision making and lack of basic political competition make Belarus a special case for analysis. Firstly information is scarce. Information bulletin of Administration of President of the Republic of Belarus is available to a very limited audience. One can not subscribe to it without the approval of the editor. It is the only open source that publishes materials of the State Control Committee. There are many more documents but you can hardly make reference to them as they have not been published anywhere. Information leakage happens but publishing such material in media is putting both authors and papers under threat of administrative or even criminal persecution.

Realistically it is quite difficult to separate simple mismanagement, functional “greasing” of an otherwise fully unworkable mechanism, fraud and merely corruption. The latter is deeply ingrained in the system. Fancy cottages, closed clubs for VIPs, many expensive cars and numerous boutiques in Minsk, which are formally or de facto owned by government officials or political entrepreneurs are indirect evidence of wide scale corruption in the country. Estimating corruption in Belarus is like estimating corruption in the Soviet Union. Some people believe that the communist party apparatchiks were clear acting within their own caste system. Others believe that it was the caste or the class system that made the party elite exploit the others. During the last decade corrupt practices became more ingrained in the strongly centralized system of decision making. It is common for a state body or a structure to establish commercial companies and to channel budget resources through them. As all levels of decision making system are involved in the wide scale redistribution programs we can state that a strong vicious circle has been formed. It was not the case 10 years ago. The stability of the administrative system depends much on the economic condition of the predominantly state economy. It is obvious that investment mistakes are mounting. In spite of many attempts of the president the bureaucracy has been continuously growing. Compliance costs of doing business in Belarus have increased. So did the propensity of the government officials and entrepreneurs to corrupt. This conclusion is supported by numerous opinion polls of entrepreneurs, experts and the common people.