Belarus: One way forward
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Belarus: One way forward

The economic statistics may look promising and the industrial potential attractive, but foreign investors will steer clear of Belarus until the government starts keeping its promises on market reform and adopts a less authoritarian style. Philip Eade reports.

Credibility gap

At first glance, Belarus, once the most prosperous region in the former Soviet Union, appears to be in better shape than ever.

The dual carriageway from the airport into the capital Minsk is flanked by new construction. The facades in the city centre (entirely rebuilt after World War II with the help of German prisoners of war) show signs of a recent coat of paint and the streets are brightly lit, despite supposed power shortages.

Growing numbers of Mercedes now compete with the ubiquitous Ladas, trams and trolley buses. The young people milling about outside McDonald's each evening flaunt examples of retro chic that would not look out of place in London or Amsterdam.

According to official statistics, moreover, the beleaguered Belarus economy is showing signs of improvement. In the seven months to August, the budget deficit was an impressive 1% of GDP. Admittedly much expenditure is off budget, but the government says that Belarus is the only former Soviet republic where revenues are above projection.

"We've made the system far stricter and more systematic, and reduced the number of exemptions," says Nickolai Rumas, first deputy finance minister.

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