Updated at 16:11,02-12-2016

Russian president warns Lukashenka against making impolite remarks

Russian President Dmitry Medvedev warned the Belarusian leadership against making impolite remarks about Russian government officials. While speaking at Wednesdays government conference on economic matters, Mr. Medvedev said that "from the viewpoint of diplomatic ethics," it was inadmissible for the "leader of one of the states that are the closest partners of Russia," to make such remarks, reported Russias news agency RIA Novosti.

"We actively work with our immediate neighbors in a partnership manner and help them overcome crisis phenomena, including with money, which is not little," Mr. Medvedev said. "Sometimes this is accompanied by the need to comment on the economic situation of those countries."

However, he stressed, Russian government officials have never allowed and will not allow themselves to resort to personalities, "although we could say something regarding the efficiency of economic measures taken by the leaders of other countries and why they ask us for aid and support."

In a strong-worded speech on May 29, Belarusian leader Alyaksandr Lukashenka accused Russian Finance Minister Aleksei Kudrin of attempting to "sow panic" in Belarus and siding with his political opponents in Belarus, whom he called "our thugs."

"Interesting things happened yesterday," Mr. Lukashenka said. "While the president was sitting with [Russian Prime Minister] Vladimir Vladimirovich Putin and having a friendly discussion ranging from personal and private issues to state affairs, Kudrin gave a news conference before a session of the [Belarusian-Russian Union State's] Council of Ministers in order to sow panic in Belarus."

"He fully sided with our thugs and began to teach us how to work," Mr. Lukashenka said. "If they [Russia] have such a good economy, what has caused GDP to fall by 10 percent? Our economy is different, but our GDP has risen by 1.5 percent year-on-year."

The Belarusian government proved unprepared for criticism, Mr. Kudrin commented on June 1. Mr. Lukashenkas angry reaction throws into further doubt the efficiency of Russias lending to Belarus, he said.
While speaking to reporters in Minsk on May 28, the Russian finance minister noted that Moscow would not give Belarus a loan of $500 million at present because of the neighboring countrys unsound economic policy.

"Disproportions and imbalances are growing stronger in the Belarusian economy," Mr. Kudrin said, noting that the International Monetary Fund also did not rush to lend Belarus more money. Mr. Kudrin said that Belarusian government was trying to use "massive loan support" to compensate for "structural defects" of the country`s industry and export potential, which he said was insufficient to maintain the countrys paying capacity and the exchange rate of the national currency at the necessary levels.

He said that the first steps taken by Belarus to reform its economy in pursuance of agreements with the International Monetary Fund and the Russian government "were in the right direction, though painful." But the steps were later suspended and counter measures were taken, Mr. Kudrin said, mentioning the National Banks restrictions in the foreign exchange market.

The depletion of foreign exchange reserves may leave the Belarusian government and the economy as a whole insolvent by late 2009 or early 2010, Mr. Kudrin noted. "Pumping" the economy full of loans will make Belarus unable to service its state debt within a year or two, Mr. Kudrin said, adding that the amount to be repaid as interest on loans might increase to $1 billion in 2011.

"At present [Belarus] gold and foreign exchange reserves have to be used to service the current balance of trade and payment," Mr. Kudrin said. "And this is impossible even now. What we see is disproportion and a lack of gold and foreign exchange reserves. This will later be exacerbated by additional payments on loans."