After seven decades as a constituent republic of the Soviet Union, Belarus became an independent republic in 1991 and started its economic and political transition process. Since his first election in July 1994 as the country’s president, Aleksandr Lukashenko has ruled Belarus for five consecutive mandates. His last election was in 2015 when Lukashenko won the election with 83,49 per cent of the votes.
The country’s leader has been several times criticised by international media and the West to have consolidated a ‘post-Soviet dictatorship’ and a close friendship with the Russian Federation of Vladimir Putin. Although criticism and doubts on the Belarus political and economic performance are consistent, the country has recently achieved some success such as the GDP growth (72nd position in 2017 according to CIA World Factbook) and the creation of a good environment for business. Indeed, after the financial crisis in 2008/2009 and the Ukrainian Crisis in 2014 followed by the sanctions on Russia the Belarusian government decided to strengthen its macroeconomic policies with the purpose of increasing the flexibility to its exchange rate, allowing price liberalisation, reducing state subsidies and opening the country to foreign direct investments (FDIs).
In August the Director of our OSINT Unit Giuliano Bifolchi met in Rome H.E. the Ambassador of Belarus in Italy Aleksandr Guryanov to discuss the current political and socioeconomic situation of the country, the status of bilateral relations with Italy and investment opportunities. Also, the meeting was an occasion to deepen the knowledge of the country which has all the potentiality to become a logistics hub and a reliable market for Italian investors.
Dear Ambassador, can you tell us what is the status of the bilateral relations between Italy and Belarus and in which fields the two countries cooperate?
“In general, we experienced quite good relations between the two countries which started decades ago when Belarus was still part of the Soviet Union. At that time many economic programs between Italy and USSR were based in our country.
After the dissolution of the Soviet Union Italy was among the first countries to recognise Belarus as an independent state and we established our diplomatic relations. By the way, last year we celebrated the 25th anniversary of the Italian-Belarus diplomatic relations, between the two countries there is a reasonable level of exchange at the political level and also between the two presidents. For instance, last year our president Lukashenko met the Italian president Mattarella confirming the good relations between the two parts.
Of course, Belarus belongs to the Eastern European bloc and we are a close partner of the Russian Federation and part of the Eurasian Economic Union but, at the same time, we have always had good relations with the European Union and so Italy.
There are more than twenty different intergovernmental agreements between Italy and Belarus at the political, economic and humanitarian level. Regarding the humanitarian area after Chernobyl many Belarusian children have received medical treatment in Italy for different years visiting your country and being hosted in Italian families and they became the best ambassadors of our country in Italy.
Talking about the economy, as I said before, our relations started during the Soviet time and had developed until nowadays. Italy is our trade partner number ten and we have 244 Italian companies operating in our country. Although 2014 was the best year regarding the trade between the two parts we experienced some problems and decline for the period 2015-2016 because of geopolitical events but nowadays our commercial exchange with Italy is restoring.
Since 2016 we have started the bilateral commission for economic cooperation in Rome, an institution that joins the good relations between the two foreign ministries and the presence of the respective embassies on the Italian and Belarusian soil. In Minsk, the Italian Embassy operates actively and has shown the full will and the potential to collaborate and work with our authorities. One of the examples of this activity is the organization of the Cultural Year of Italy in Belarus. Moreover, in 2017, it was set up the Italy-Belarus inter-parliamentary friendship groups (respectively in the Italian Parliament and in the National Assembly of Belarus).
After the recent Italian parliamentary elections, we continue to have relations and dialogue with all the major Italian political groups. What we understood is that Italian political life regards domestic affairs and we do not have any interest to interfere in your internal politics. We consider ourselves a reliable partner for Italy and we hope that our diplomatic, political, economic and cultural relations will grow in the next years.”
The economic crisis has also affected Belarus. What is the current Belarus economic performance and how the government managed to overcome the crisis?
“Belarus is part of the international market and our economy is very open and almost 60 per cent of our GDP belongs to exportation. Therefore, it is logical that for our country is necessary to have good relations with all our partners and that economic and financial crisis might affect our economy.
I should say that in the first years of our independence our situation was deplorable as many other post-Soviet countries, but in the last decades our economy has recovered and improved, and our GDP has even increased on 7-10 per cent annually. Of course, the year of the economic crisis was negative for our economy, but we managed to overcome this problem and now we are registering growth in different sectors, especially our export with all the European Union. For Belarus what is fundamental is to balance our import and export.
Our industrial sector is still developing and in the modernisation process, therefore the Italian companies are very active in our country providing the know-how, technologies and equipment. Our government made dramatic changes in the regulation of the Information Technologies sector and, as a result, Belarus became one of the top states in the IT sector having thousands of young engineers and experts working in our territory. After introduced these changes, young computer engineers who were working abroad decided to come back to our country. The promotion of the IT sector has allowed Belarus to become among the leaders in the cryptocurrency or to introduce the Hight-Tech park on our territory which is producing one billion euro of export.
We prefer to play the role of a transit country between the West and the East and for this purpose we invested a considerable amount of money in logistics and transport projects. Due to our hard times at the beginning of our independence, the government now is focused on the socioeconomic development and domestic stability because we do not want to live again the economic crisis we experienced before. During the 90’s some international experts suggested us to close our biggest state companies operating in industrial sectors such as petrochemical or machinery in order to transform our economy and market in a liberal one. Luckily our government decided to support the modernisation of these big companies which nowadays demonstrate all their potential in export activities and at the same time we opened our market to foreign investors.
International organisation and experts criticise our government because the public sector is too much consistent and because public companies still own 70 per cent of the economy. We can accept the critics and suggestions by experts and international organisations, but we decided to manage our economy in the best way for our country: in some neighbouring states, for instance, the transformation from a state economy to the open liberal market has not led to a better economy and in some situation the rate of unemployment is even higher than before. Shock therapies are in some conditions right but not in economics. What we have is a public investment economy where not only the government but also private investors, both citizens and foreign partners can participate in the economic activities.
The economic strategy adopted by the Government, being part of the Eurasian Economic Union and having established good relations in the region and with international partners, have shown some significative benefits: for instance, we are still growing, the inflation is already above 10 per cent and our currency exchange rate is quite stable. This means that not only the reforms but also the monetary policy helps our economy and national stability.”
Belarusian economic performance
Talking about business, what are the investment opportunities for the Italian companies in Belarus and how it is possible to link the country to some of the most important international projects, e.g. the Belt and Road Initiative?
“We have a good history of economic relations with Italy. Frankly speaking, I have some diplomatic complains about the activity of big Italian companies which are a little bit slow in investment activities in our countries. The Italian small and medium enterprises (SMEs) have proved their ability to invest and do business in Belarus and they are very active. Last year the number of Italian companies on our soil grew 45 new companies with Italian capital and most of them are established by Italian SMEs in different sectors. The big Italian companies overthink regarding economic opportunities and political implications allowing other competitors – e.g. the Chinese or the Americans– to penetrate the market.
Even though there were some political misunderstanding and some economic restrictions we cannot stop our economic partnership and cooperation. As I said before, the prominent Italian companies are quite slow in our market, but there is also evidence of good practice in economic collaboration represented by investment project already done with the participation of Italian companies financed by an international organisation such as the European Bank for Reconstruction and Development (EBRD). A good example can be the realisation of the Belarus part of the Paris – Moscow highway supported by the EBRD and realised by the Italian company Todini S.p.A or the creation of the Bielorusskiy Metallurgicheskiy Zavod (Belarussian Steel Works, from now on BMZ) for the production of high-quality steel used recycled material. BMZ is a unique enterprise of metallurgical industry in Belarus, it belongs to the category of modern mini-mills of European level and it is the property of the state registered as a high-tech enterprise of the country. Danieli took part in the realisation of this mills which today export some of its products in Europe and Italy.
Modernisation has been the primary focus of our government and economic strategy in every sector because we want to reach the international standards to make our goods available in every different market. Regarding modernisation, we have reached an outstanding level in the dairy and food processing industry and in the last five years more than 1,000 factories were modernised. In this field, Italian companies can find excellent opportunities or invest in the modernisation of local factories to sell the products in our domestic and international markets.
Our goal is not only to attract investors but to realise joint project or joint companies between Italy and Belarus to produce different goods and sell them on the European and international market. We are able to finance joint business projects thanks to the agreement and cooperation between Belarus and Italian banks.
Ten years ago, during the meeting between our President Lukashenko and the former Italian Prime Minister Silvio Berlusconi, the two sides agreed on providing special conditions for Italian companies in the Brest region of Belarus where there is already an area with infrastructures and special fiscal conditions to attract Italian entrepreneurs and allow them to operate in our country.
During the last years we have dramatically improved our conditions and regulations for doing business and today, according to the Doing Business Report of the World Bank, we are in the 38th ranking position (Italy is in the 46th position). At the same time, our customs and other administrative procedures are easier among the countries of the Eurasian Economic Union.
Regarding our cooperation with China, we are working to create the better environment for Belarusian – Chinese collaboration and joint venture. For instance, Minsk and Beijing created the Industrial Park Great Stone as a special economic zone (SEZ) in the territory of Smolevichsky district, Minsk region, near the Minsk National Airport. The park is planned for high-tech and export-oriented production of electronics, biomedicine, chemistry, engineering and new materials in the Commonwealth of Independent States (CIS) and European markets. The main idea is to open an industrial cluster linked to the Eurasian Economic Union and the Belt and Road Initiative (also known as the New Silk Road) which can provide both markets with its products and services and attract around 120 thousand of workers and foreign investors. Italian companies interested in this SEZs and cluster will have significative benefits in Belarus such as a modern and efficient transport system connected to Asia (especially China), the post-Soviet countries and Europe and we are ready to discuss with the Italian side possible cooperation and business opportunities (see also our report La Bielorussia e la partecipazione alla Via della Seta).
Furthermore, regarding logistics, some people realised that is better to open companies and factories in Belarus because in our country administrative procedures are more relaxed and because thanks to the Eurasian Economic Union our country is connected with the Russian market. So, Italian companies might start their business in Belarus and then export also to the Russian Federation and the other nations of Eurasian Economic Union.”
Since 2014 Belarus has been used as a tool to avoid the economic sanctions on Russia thanks to the creation of specific companies, but on some occasion foreign investors have experienced fraud from local actors (see the article published by our media partner Notizie Geopolitiche “Crediti insoluti: la IC Partners trova la strada per applicare in Russia la legislazione italiana”). What is the strategy of the Government to contrast possible financial fraud? And is it possible that Belarus might be used to overcome the economic sanctions?
“Let’s say that financial frauds are a significant problem but not the most important one and they belong to private business which the government cannot completely control. As I said before, in Belarus you can open a business in one day and decide to close in a short time. This possibility creates a margin of financial and business operations which some companies might use for frauds even if our State is using any method to contrast this problem and guarantee the best business environment for foreign entrepreneurs.
Moreover, you should know that the Belarusians was are often called ‘the Germans of the East’ because of their reliability, efficiency and respect of the agreements. Therefore, if a Belarusian company cannot pay an Italian partner for its services or goods, our Government will cover the debt which will become a domestic problem.
In this case between Belarusian and Italian companies there are no big problems at the moment. Issues can come from foreign activities based in Belarus which our Government cannot wholly control.
In this case between Belarusian and Italian companies there are no problems for our parts. Issues can come from foreign activities based in Belarus which our Government cannot wholly control.
Frankly speaking, I can say that this is a general problem which affects not only Belarus but every country in different proportion. Therefore, we strengthened our regulations and procedures and now if an Italian company want to start a business in Belarus with a partner it can investigate on it asking information at our Embassy or the Chamber of Commerce. I personally invite Italian businessmen and partners to contact us in case of any suspicious or doubt regarding a possible business in Belarus.”
Since the independence Lukashenko has been the leader of the country. He won the last elections in 2015 with 83.49% of the votes and now he is ruling the country for his fifth mandate. How can you answer to the Western claims that labelled Lukashenko’s government as a ‘post-Soviet dictatorship’ and how is democracy protected in your country (there are also allegations on political prisoners jailed because of their view against the government)?
“There are specific priorities among the leadership of Belarus because our historical past is very short, and we have only 26 years of independence. We do not have the same historical background regarding democracy as France, Great Britain and the United States and since the independence we have tried to adapt our concept of policy and freedom to our needs.
Of course, there are many detractors of our leadership and government. Criticisms are always well accepted because it helps to improve our country democratically, but it is also honest to underline the fact that Belarus is a stable and safe country where there is no a ‘post-Soviet dictatorship’. What we have is a strong leader who works to keep Belarus safe and allow the development process, a leader who can face the current security and immigration problems (particularly after the Ukrainian crisis).
For us it is a matter of priority: now we prefer national security and socioeconomic development than a shocking democratic approach imported from abroad which does not respect our culture and necessities.
As the last elections demonstrated most of the population supports Lukashenko and in Belarus there is a small opposition. Sometimes political opponents behave in a strange way organising violent riots and demonstrations or asking for more sanctions from the West which will target the Belarusian population. What is this a constructive opposition or a destruction one? In other cases, some of the opposition members received money from abroad without reporting it and this action is forbidden by the law and punished as a penal crime.
We are honest with our European friends and we know that Belarus is not a perfect and ideal country but, in some situations, we must choose priorities and we need a strong central authority to control the state and avoid any crisis and the situation we experienced during the ‘90s. Also, most of the people talk and judge our nation without having visited it, and when it happens, they change their opinion and perception of Belarus.
There is no single standard of democracy. We call democracy when people are safe and they have jobs and opportunities. Other people call democracy a country where there is freedom of speech or something similar. In our case, and this is the choice we made, we prefer jobs and perspectives for our society. Probably in the future we will prioritise other aspects.
An example to explain better what I said regarding democracy and our national policy can be the case of the death penalty in our country. After the independence, Belarus citizens decided that our Government should adopt the death penalty because it worked as a deterrent and helped to normalise and stabilise the situation. Nowadays it is not possible to abolish it with a governmental decree as suggested by our European friends and international organisations, but we need to interact with our people, consult them. This is for us an aspect of democracy because our Government cannot decide autonomously about a delicate and crucial question as the death penalty.”
What is the purpose of the ‘social parasite’ law which fines around 400 thousand people who have not paid income tax covering at least 183 days of employment per year?
“There was a lot of discussion on this law because for many years we had a lot of social guarantees and services provided by the Government such as free education or health system. At the same time, we have a low level of unemployment (below 10 per cent) and on some occasions there was a lack of specialised workers in specific fields. The idea of the first decision was taken two years ago and the decree was not called ‘Social parasite law” but the decree ‘On preventing social dependency’ because our Government realised that a significant portion people quite wealthy who are officially registered as unemployed had to access to our State and medical services without paying taxes or financially being present in our register. Although formally unemployed, thousands of this people resulted to live in luxurious apartments and drive big cars, for example, because they are working for a foreign company with a high salary without paying any tax.
Therefore, the main idea was generated by the fact that some people are paying taxes for State services also for those who have a good quality of life and we needed to regulate this aspect. Probably the problem of the first version of this law was that it affected people who cannot work for different reasons (for instance, women who stay at home to look after their children). Maybe there were some misunderstanding and mistakes originated by the Government’s will to improve socioeconomic conditions, employment rate and contrast those people who have a non-declared work.
After this first attempt, we adopted another decree called ‘On facilitation of employment’ which tried to fix the first mistakes. Also, the Government accepted to refund almost 23 thousand people who felt unnecessary punished by the first decree. Although we committed some mistakes and there was a misunderstanding, the original idea was completely different. It is important that our citizens and also our European friends understand the decree’s goal and do not look at it as a punishment for unemployed people.”
Interview in media partnership with Notizie Geopolitiche. It is possible to read an extract of the interview in the Italian language at the following link: Bielorussia. Opportunità e prospettive del “paese ponte” tra la Russia e l’UE