‘We should preserve an absolutely independent — as much as possible — sovereign state for our children and grandchildren’
Alexander Lukashenko began his press conference with an hour long speech, explaining his own views on the economic situation in detail. Addressing the journalists present at the National Library he asserted that the difficulties facing Belarusians today are temporary. He assured everyone of his optimism regarding the near future, stressing that the state’s socially oriented economic policy remains unchanged and that the Government knows how to solve the current difficulties. Below are the most important extracts from the press conference.
About the path of development
The social-economic model of the Belarusian state’s development must be preserved. We’ll make no diversions from this path — even minor ones. We have been following our own path and will continue.
I wish to repeat again, asking you and all Belarusians — all those who like or dislike the present situation and those who are trying to make use of it. We need to work for the benefit of our country and our nation. If we fail, then we’ll lose the country; really, we are not facing a critical situation now but if we create evils for ourselves we will definitely see this happen. Already, some are standing at the border, gnashing their teeth, hoping to see us fall. However, I stress again: this will never happen.
About the economy
Many say: ‘It’s necessary to structurally reform and rebuild the economy’. I’d like you to tell me what is meant by the word ‘reform’. Looking at the structure of our economy, we see that industry accounts for 27 percent, agriculture for 7.5 percent, construction for 11 percent, transport and communication for 9.5 percent, trade and public catering for 11.1 percent, services, taxes and so on for 33.9 percent. Tell me, what should we change? We have chemistry and petro-chemistry, forestry and wood processing industries, machine and tool building, and so on. These all form the structure of the economy. We are told to change it. I agree... but who is going to give me a trillion Dollars to change the structure of the economy? Moreover, how many years would this take? This structure is ‘incorrect’, having been established of course not for our country — and not just for several decades but for at least a century. It could be changed. This would be correct if it were us who established it, relying on our own sources of raw materials.
People today are worried that prices are high. Some are feeling the lack of imports. However, isn’t there enough to eat in the shops? Do they lack money? In a few months’ time, we’ll leave this situation in the past. The most important fact is that we can produce our own products! If a catastrophe occurs, we’ll close the borders and buy only those imports which we need. However, we’ll always have enough to eat and to clothe ourselves. Of course, God forbid we’ll ever need to close the borders as we are doing now to some products.
We are told that reforms envisage privatisation and the sale of companies. I’m not against this but, if this were your own property, or if you were me, wouldn’t you decide that assets should only be sold at the best price. Nobody is going to sell things cheaply, especially if they belong to the state. If I sold any company inappropriately, I’d be castigated as corrupt. People would say that I’d put this money into my own pocket; such rumours are already in circulation but nobody has found any evidence of my having taken money belonging to others. Some might assert that we should privatise Belaruskali or MAZ or BelAZ. Do you know who is eyeing assets such as Belaruskali, where profitability stands at 70-100 percent? In its best years, it generated $3.5bn of currency annually. Moreover, it sells potash fertilisers at an extremely low price to our own agricultural enterprises (at about three times less than the market price); this supports our agriculture.
However, some say: ‘Let’s privatise this company, as well as BMZ, MAZ, BelAZ and our oil refineries. I stress again — irrespective of whatever I might be told — I’m against privatisation. Our Belaruskali is among our most valuable companies. However, I’m saying this openly, we are ready to privatise even this enterprise. Terms have been set forth as to its development: there will be no closure, employees will receive higher salaries each year and be socially protected, and, most importantly, it will be modernised. This means that buyers must be ready to invest in its development — as I’m doing now. This is a normal condition, readily accepted. I’ve also named the sum: $30bn. Come to us and we’ll discuss terms.
About the responsibilities of the Government and National Bank
Many are wondering: ‘Who is to blame? Why hasn’t the President sent the heads of some officials rolling?’ I want to respond: ‘I see objective and subjective reasons. I understand who is guilty and who is not’. I then told those people: ‘Yes, there are people who must bear responsibility’. At long last, they have made calculations. However, there’s no need to rain down ashes upon heads. Even if the National Bank carried out an additional emission, throwing money into the economy, I have already outlined what had been done with it: constructing this hall and the development of agriculture, the building of combines, winnowing machines, seeders and turnwrest ploughs, and the modernisation of oil processing and other industries. We have injected huge amounts of money into various spheres, with health protection among them. Nothing of the kind has been observed previously. So, why are we rushing about, sprinkling ashes upon heads and crying: ‘Lukashenko, give punishment!’ I know who is behind such ideas. Do we really want to generate a crisis of authority, in addition to the panic which we face today? If we do, it will be the end. I well understand this and that’s why I ask you not to sway me, dear friends. I say this not only to those who think so today but to those who have asked my representatives: ‘When shall Lukashenko punish?’ If anyone is guilty, I’ll give punishment.
We actually need to calm down, enduring these times without anxiety. We’ll soon be restored. In fact, many of your colleagues in the West assert that Belarus has no real crisis… and what there is will soon pass. I agree; we have no crisis. We’ve had panic and speculative demand, leading to a rush to buy currency from exchange offices. As a result, there has been a spike in prices. We must control pricing, so I made a corresponding order. If I had failed to do so, the situation would have been worse.
About the Rouble rate
I kept silent for a long time but I realised that Br5,000 for one Dollar is a too high a rate for our country. There is still a deferred expectation: some still wish to buy a car by July 1st, and so on. Demand for foreign currency remains too high. Do you really want me to satisfy it? It’s possible but, in doing so, we’d need to throw one to two billion Dollars at the market — from the country’s gold and currency reserves. Are you ready for that — because I’m not? Such currency would be received by those who can wait or who should not receive it at all. Currency should be spent by those who bring it into the country. Those who fail, shouldn’t expect to receive it. We shouldn’t give this currency to ‘shuttle traders’ or other speculators. They’d simply import clothes and footwear into the country; probably, these are also needed if people buy them — but, under the present situation, we need to start getting used to using our own products. We should come out of the crisis by having fewer imports.
Some are talking about currency, saying that we need to fix our exchange rate at Br10,000 per Dollar — as it will fall later. Who says so? People who have currency say so. I won’t speculate on how they have acquired it. These people desire a rate of Br10,000, as they shall then sell currency at this rate. However, nobody thinks that a rate of Br10,000 would bring more price rises, which neither the state nor population could withstand. Chaos would occur. Moreover, there is no such necessity — as everyone realises. At present, even illegitimately, currency isn’t being traded at Br10,000 per Dollar. As far I’m told, the price is around Br5,500 or just over six thousand. I’ve been asked to fix a rate of Br10,000 but time has shown that this isn’t necessary.
About pensions and salaries
We’ve already raised pensions once. I’ve ruled that, in August, another rise will occur, followed by a third rise in September-November. We’ll bring our pensioners, students and state sector to approximately the same level as was observed before recent events overtook us. Don’t purchase anything for the future. As regards enterprises, I’m restraining them; price growth must not be sharp and the same applies to salaries. If we raise them too quickly, a new wave of inflation could occur, raising prices. That’s why this should be done gradually; we are already doing so in the state sector. The private sector is also oriented towards this approach. In just a few months, we’ll calmly, without panic, return to the heights we should rightly occupy, calmly rebuilding.
Thank God, I’ve preserved about 30 percent of wholesale and state trade for the state. Thank God, certain super and hypermarkets have been built at my directive. It hasn’t been easy to construct them but I’ve insisted. These businessmen are, to some extent, in my debt. We addressed them, as the major traders countrywide, noting that times are hard and asking them to be patient and let profits be modest. They have responded positively. What would have happened if they had not? This is why I interfered. Some may dislike this but it was my decision. I had the right to make this decision and it proved just.
I won’t argue that a private owner may calculate better than a state director. If a private owner comes to Belaruskali and its profitability reaches 82 percent (instead of today’s 80 percent), we’ll of course gain something, but not much. We should not make gods of private owners. Be reasonable. So far, the efficiency of our country does not rest on whether a company is private or state run. Efficiency in other branches is understudied. For example, does production efficiency depend on gas prices? Of course, it does. Can a private owner alter gas prices? No. He’ll consume gas at the same price as everyone else.
We need to enhance efficiency if we use 60-70 percent of our natural gas on generating electricity. Is this right? This should be done but this requires purchasing new turbines, which cost billions. Will private owners do this, if they acquire a heat and power station? Our production efficiency relies on differences in prices: high energy prices and so on. It matters little who owns an enterprise: state or a private owner. While a state run company operates well and turns a profit, there is no need to change anything.
This is difficult, as we see from the state of society. This is why we have to help importers, allocating them foreign currency, to ensure that they don’t collapse. Meanwhile, all remains normal for exporters. The main thing for us now is to profit from the situation. Looking at the other side, not everything is bad; it’s even good for enterprises. We should invest in modernising industry and improving product quality. I always tell the heads of MAZ, BelAZ and MTZ that their products enjoy good demand, as do our potash fertilisers and oil products. These bring in good money but not enough.
Meanwhile, competition might be even tougher tomorrow. What if a global crisis emerges and consumption falls? Only high quality products will be bought, so I guide company heads to invest in enhancing quality. This is the key!
Sadly, we’ve twice applied this unpopular measure. However, we have not died! After the previous devaluation, we have lived normally and will continue to do so after this devaluation as well.
We’ve reduced prices across many positions. I’ve requested that we calculate everything very thoroughly and reduce trade margins. We’ll survive. Prices have actually been reduced for some categories of goods. However, this isn’t the best way, as we’re an open economy If we further reduce prices, we’ll be feeding our neighbours; already, those from the EU are among them. I don’t support the reduction of prices in this situation. We’ve chosen another way.
We’re now raising incomes, using various calculations and international methods to help people adjust and live with these prices. This is the correct way. We can’t be constantly kicking people in the head. We shouldn’t increase prices sharply. We can’t be under the thumb of processers, manufacturers, wholesale traders and money grabbers. Prices are far from terrible but it’s awful when people lack money to buy goods at these prices. This is the problem, so everything should be synchronised here.
About incomes of the population
Salaries and studentships shall change depending on how much money we have in our budget. We’ll cease many projects to improve the material condition of people. However, there are some things which must continue. I won’t set them aside just to please consumption and welfare, however unpopular this proves to be. For example, we should continue the modernisation of our healthcare services both this year and next. Should we cure people? Yes.
Education. Do we need to provide food for children in kindergartens and schools? Yes. Children are sacred. I won’t stop this and won’t reduce anything in this respect.
Depending on the amount of funds in our budget, we’ll be supporting the population. At present, the country’s budget has a surplus; we receive more funds than planned. This is earned money, not emitted. We’ll direct this towards public spending, as is our long term practice. Commercial and manufacturing enterprises simply adjust. Meanwhile, they raise their salaries even higher. Frankly, I’m having to sometimes slow down some enterprises in this respect, to avoid inflation rising.
This is the road we’ll follow. If the budget allows, we’ll give to the people. This is a point of honour for me; I don’t want some scribblers taking enjoyment from writing that the Belarusian economy is experiencing a decline. It’s a point of honour for me that we survive and return to our past level. I’m afraid to speak of some issues. If all is well, soon, we’ll receive about 10-12bn of gold and currency reserves. These will be ours, not loans. Don’t worry, we’ll survive. I already see fresh shoots emerging, and you should feel them. You’ll feel it; I must do it.
About relations with Lithuania, Poland and the EU
You know, we have good, normal relations, especially with the Lithuanians. Of course, they are part of the EU and most decisions are made in Brussels, not in Lithuania. They’re linked with the generally accepted position, elaborated for everyone. Therefore, whether we wish it or not, they have to behave in a certain way [criticising Belarus — editor].
The situation in Poland is special. Frankly, Poland claims to be the centre of Europe, as seen from Obama’s visit to Poland. Poland is a stronghold of the United States of America — their foothold. Obama did not arrive there without reason; all neighbours were brought together in Poland to discuss problems. They even invited Ukraine and criticised us. Therefore, the Poles have their own position, different even from that of the EU.
In recent times, we’ve received (not through the mass media) many slight impulses regarding the normalisation of our relations. It isn’t normal for our leadership to have such relations with the Polish leadership. However, this situation is not our fault. We’re not against the Poles saying: ‘We’ll help Belarusians so that everything is well in the EU’. I respond: ‘We’re not against this. If you help us, thank you, but you shouldn’t put ignominious conditions before us, such as freeing political prisoners’. What would you say in my position? I say: ‘Firstly, we don’t have political prisoners; we don’t even have such an article in our Criminal Code. If you doubt something, you’re welcome to see — we’re ready’. They wanted OSCE representatives to attend court examinations, so let it be so. All processes were open. They showed a picture where someone is attacking the House of Government with a mining pick: now the punishment has come for using this pick…
Yes, in line with our Constitution, I have the right, but not the obligation, to pardon anyone, following certain procedures. In my opinion, I believe they should first apply to the President for mercy. If I receive such an application, I’ll consider it. Secondly, we aren’t blood thirsty. We don’t keep anyone in prisons as an additional burden on the state. This refers not only to these ‘political’ prisoners, but to everyone. Excuse me, please, but there are procedures…
Don’t think that Lukashenko is keeping them because they are his rivals. We’ve already passed this ‘competition’. Nobody is criticising me any longer for the presidential elections, doubting their results. Even they admit now, saying: ‘It’s difficult to admit, but this is true’. Silently or otherwise, they no longer doubt the legitimacy of this past campaign. Speaking of legitimacy, I can’t begin to tell you how I was conducting this presidential campaign. Ten people received registration by entering names from a telephone directory into their signature collection lists. However, they became candidates.
They wanted to take part and they did but they violated the law and are reaping the consequences. The time will come — tomorrow, the day after tomorrow or at some other time — when we will release them from prison. You know, it is too costly for us and a great honour for them… If the Foreign Minister feels it necessary to set them free, he’ll make corresponding proposals and the President will view them. Not just the Foreign Minister can do this, but deputies and, even, journalists. However, it isn’t the most vital thing. Honestly, we’re tired of this ‘splattering’ of certain individuals, as Belarusians say. They go abroad and throw mud at our country. Is it normal? Are they politicians?
Healthcare is a great priority; public health is the major aspect. We’re doing everything possible, and will continue to do so, to preserve current prices for domestically manufactured drugs. There won’t be any change here; prices will remain steady. As far as imported medicines are concerned, all those which have been previously bought, including by private companies, are still sold at reasonable prices; we are constantly controlling this. What will be the future price? I think there will be some growth in prices at chemists but not at healthcare institutions. If we speak honestly, some imported goods may rise in price. However, this doesn’t mean that it’s necessary to run to the pharmacy and buy up all the medicines. You see, this is a very delicate topic and we can’t escape it…
However, we completely control the process in healthcare institutions and hospitals, where we cure almost everyone free of charge, except for some small part where we provide services for a charge (giving a better room or something else). We can’t bow people in this situation.
About the OSCE Office
Offices and other ‘field kitchens’ are created by the OSCE, the UN and others where serious problems exist. Speaking of the Organisation for Security and Co-operation, do we create any problems regarding security and co-operation in Europe? No — absolutely not. We are a member of the OSCE and we could have worked directly with the OSCE Secretariat, without any intermediaries.
If we speak about the OSCE over all, if it desperately needs to solve particular issues, we can probably consider them. Let they send their representative. For instance, if this is a representative of Germany, from the German Embassy, we may agree to offer some assistance. What do they need a whole office for? Probably, we’ll agree on some representative, if the OSCE needs this. This isn’t a principle issue. One or two more OSCE representatives might come. What will this change?
About state programmes
At present, we shouldn’t scrap anything. This is fundamental. We should adjust to the situation, but not scrap initiatives. Why discard our plans when the situation will certainly change for the better. Maybe it will change even this year? What will we do then? Yes, there will be some slowing down… but we shouldn’t scrap anything.
About the Customs Union
I will give you two examples to help you understand the benefits. Ukraine is currently arguing with Russia, as are we, regarding gas prices. By late 2011, the price for Ukraine is likely to reach $400. We pay $270 because of customs duty. The Ukrainians also have customs duty added to the gas price but were they a member of the Customs Union, they’d enjoy practically the same price as we do.
I’m also concerned about the automobile topic. Several say: ‘Those who are rich will pay’. I don’t adhere to this viewpoint. Access to a car is vital but these car duties are our payment for the Customs Union, from which we receive other benefits. However, we’ll find a way out from this situation so our people will be able to afford cars. We’ll elaborate various options with Russia and, soon, I’ll tackle these issues. Probably, we’ll even construct an automobile factory in Belarus.
Those who are rich will always be able to buy a car, regardless of customs duties. We’re thinking of those on middle and lower incomes. I guarantee we’ll find the solution.
The Customs Union hasn’t brought us any damage so far. Moreover, Russia has removed all restrictive barriers, introduced during the crisis, within the Customs Union. We haven’t been allowed to make state purchases in Russia and we couldn’t even compete with them. From January 1st, we’ll have this access. This is a great achievement.
Dear friends, don’t worry! Everything will be fine. I don’t need to calm the public with promises, as the situation is stabilising itself. I think people will also become calmer. Soon, we’ll do everything necessary to ensure that the nation can’t say it has been left in trouble. We’ve already started to take action. However, we’ll do even more from July-August. I think, by the end of the year, we’ll solve the current problem. Let’s be optimists. Fortunately or unfortunately, we don’t have another land. Let’s take care of our land, because it’s desirable that we and our children live on it. It’s desirable that our children have a piece of their native land under their feet. It’s vital that our children are never bowed or obliged to bend their knee, as previously in our history.
This will happen only on having our own land. That’s why we should preserve an absolutely independent — as much as possible — sovereign state for our children and grandchildren.