Belarus’ Unexampled Liberalisation

Producing the annual address to the parliament on April 23, Alexander Lukashenka said that he had ordered to proceed to drafting of the Directive #4 aimed at liberalising the economy. On Tuesday the independent resource ucpb.org unveiled a draft of this document. However, the editors emphasise that this is only one of the versions of the future directive.

"Economic freedom, property rights protection, open competition, and robust market institutions are key factors of sustainable growth of the country’s welfare, modernisation of the economy, and improvement of quality of life of citizens," the draft reads. "The global and domestic crisis accentuated the need to intensify structural reforms. The resource of old schemes and mechanisms of public investment, production, and distribution of means are depleted. Overcoming the crisis requires flexibility of institutions and quick decision-making."

Meanwhile, the government "failed to carry out a detailed analysis of the economic ties and relations that had formed in the past decade".

In order to "modernize the economy, to emancipate the potential of national entrepreneurship, and improve business climate", the Directive suggests liberalising prices and tariffs, abolishing the Committee for Prices under the Ministry of Economy, and abolishing price regulation of imported goods and services.

State control will remain only over rates for public utilities, electricity, gas, public transport, telephone services (excluding mobile), as well as services provided by public organisations in the spheres of health and education.

Another paragraph of the draft concerns liberalisation of licensing, certification, and issuance of permits.

According to the document, only the following activities are subject to licensing: banking, veterinary, medical, insurance, pharmaceutical, and designing. The list also includes activities in the sphere of aviation and industrial safety, in the gambling business, in insuring safety of individuals and entities, in insuring fire safety, and activities related to drug or military products marketing.

The draft decree provides for a number of measures aimed at "absolute property rights protection and development of free competition". For this purpose it is planned to delete from all laws and regulations the rules that provide for confiscation of property from business entities that are not owners of the property and eliminate the practice of extrajudicial detention of money.

Another innovation is introduction of an amendment to the law on privatisation that will accelerate transformations of ownership. "By 2013 at least 75% of all assets of the country should be private property", it is stated in the draft.

It is also planned to establish the Antimonopoly Committee "with wide powers of control over the work of profit-making organisations with dominant position in the market, over auctions, and over government contracts".

The draft decree also provides for holding liberalisation of domestic and foreign trade, of labour market and labour relations.

Comment of the head of the Research Centre Mises, the economist Yaraslau Ramanchuk:

There was never such a tough lobby fight in Belarus as concerning the Directive #4. Supporters of the new and old, "pigeons" and "hawks" met in the battle. The first are ready to start wide-ranging reforms, to launch full-fledged liberalisation, and to establish solid institutions of the private market. Others insist on maintaining a rigid chain of command, mechanisms of state plan and state supply.

No one knows how the struggle between socialists and liberals will end. There were times when drafts of the documents were blocked at the very last stage.

The draft Directive addresses many wishes of the business community and independent experts. If it is adopted in the current form, Belarus will finally modernise not only the economy but also all major institutions of a sovereign state.