San José State University
Department of Economics
Thayer Watkins
Silicon Valley
& Tornado Alley

The Economic History and Economy of Belarus

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White Russia

The Russia of the West

The Economic History and Economy of Belarus

Belarus (Byelorussia, White Russia) is the smallest of the three Slavic States of the former Soviet Union with a population of about ten million people. White in Slavic languages has the connotation of west.

Agriculture is important in its economy but it also has some heavy industry as a result of Soviet planning.

Under the Soviet Union there were two hierarchies of government: the Communist Party control structure and the official government. The official government was largely powerless in comparison to the Communist Party. When Boris Yeltsin as the President of Russia met with the presidents of the Ukraine and Belarus and they agreed to officially withdraw from the Soviet Union, the Soviet Union collapsed. But the governments of the constituent states of the Soviet Union were not acustomed to really governing and there was a period of confusion and chaos. Pensioners did not receive their pensions and state employees did not receive their pay for months and months.

In 1994 Alexander Lukashenko was elected President of Belarus, with particular support from the pensioners, government employees and collective farmers who feared the financial chaos of the post-Soviet period. Lukashenko immediately started to bring back the social order of the Soviet period. He replaced the Belarussian flag with the hammer-and-sickle Soviet flag. He made Russian the official language instead of Belarussian, a language similar but not identical to Russian. He renationalized some privatized companies. He instituted control of the media. He arranged a reunification treaty with Russia and when the twenty five legislators refused to ratify it he sent in the state police to establish control. Entrepreneurs were called "criminals and thieves." Price controls were imposed and Lukashenko himself was shown frequently on state-controlled television cracking down on stores which sold items above the official price controls. Lukashenko had the Belarus state take over the private banks that had been created after the collapse of the Soviet Union. He called this action "returning State property to State" and referred to bankers as "leeches."

Lukashenko ultimately called for a new constitution that vastly increased his powers. For example, governors and city mayors previously had been elected by their electorate but the new constitution gave the President the power to appoint such officials. The new constitution was to be ratified by popular referendum and when the legislators protested Lukashenko sent in government troops to take control. It was not quite the lunacy of of North Korea but it prompted comparisons. It did seem like the blockheaded despotism of a past age.

Some of Lukashenko's initial changes have been changed. There is a new Belarusian flag that does not involve the hammer-and-sickle. Belarusian has equal status with Russian as an official language. But the repressive political climate still prevails. Belarus marketed arms to the Saddam Hussein regime in Iraq.

in the past Vladimir Putin said, when he was criticized for having dealings with the leaders of North Korea, Iraq and Belarus, "They are scoundrels but they are our scoundrels."

Lukashenko's Belarus is an interesting experiment to watch. Economic theory suggests that hobbling the economy to protect the pensions of the retired and the government employees will result in the producing members of the society departing leaving Belarus industries crippled. Eventually the it is expected that structure will collapse.

In 2014 Belarus was making ovatures for closer ties with the European Union even though there was no possibility that it could do without its trade relations with the Russian Federation. However Belarus in the United Nations voted in favor of the resolution condemning the Russian takeover of Crimea.

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