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Banking

Russian pressure and recession liberalize Belarus

Higher-cost hydrocarbons and falling exports are separating the state from the economy and destroying its Soviet relics, starting with the banks. Dominic O’Neill reports from Minsk.

LIKE OTHER STATE officials in Belarus, Vasily Matyushevsky, deputy chairman of the national bank, is breaking free from his country’s reputation for Stalinist isolationism.

"Unlike other countries of the world we are privatizing banks, not nationalizing them," he says. The global crisis could hardly have extended state intervention in Minsk. The public sector already accounts for more than two-thirds of the Belarusian economy and the banking system is little more than a policy instrument.

Alexander Lukashenko, Belarus’ all-powerful president for the past 15 years, seems to be trying to shore up his influence by playing Russia off against the west, while simultaneously cultivating friendships with such countries as Iran, Venezuela, China and India.

"Belarus has a multi-vectoral foreign policy," is how foreign minister Sergei Martynov explains the approach to Euromoney.

Despite a rapprochement with the EU and Russia’s financial and economic problems, the balance is tipping in favour of Russian buyers in Belarus’s privatization programme. But neither Russia nor the west is prepared to allow Belarus to continue acting like a communist state.

Financial services are at the forefront of privatization in Belarus, partly thanks to Belarusian bankers’ relatively sound understanding of capitalism. Banking is already Belarus’s most liberalized sector; there are 27 privately owned banks.

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