The most frequent term in international news has become the word “crisis” in the last three years. The international elite seem to see no way out of it. Total pessimism dominates, not only on the markets, but also in society in general. “Let it be a dreadful end, than dread without end.” There is no chance of standing to the side in the current globalized world. However, who will manage to overcome the crisis with the least losses?
Such many-sided analysis can be conducted by special research institutes and special services only. There are too many factors to be considered: structure of foreign trade, external accounts, national debt, investments, banking sphere problems, the internal and foreign political situation… At the same time, the crisis in 2008 defined some common moments for everyone. For example, free foreign capital doesn’t invest in industry, waiting for better times. Those investors who have already invested in some business try to gain some benefits or even take money from the country. In such cases the IMF helps states with credits for providing payments. However, the conditions of stabilization of the national budget lead to the fact that political elites try to postpone the moment of getting the “aid”, in order not to lose power due to public discontent. It causes stagnation, as the population has no money for purchasing, which leads to a slowdown in the pace of production. In the CIS countries you must sell something to buy something else.
VK tries to analyze the anti-crisis prospects of the former Soviet states, considering their export structures, demand for goods, trade balance and some other factors.
The last Soviet republic
Let’s start with Belarus. It should be stated that global economic rules don’t develop classically in this country. The reason is elements of a state-controlled economy, left over from the times of the USSR. However, today, when many economists refer to Marx’s “Das Kapital” in the sphere of describing crises, this peculiarity might be an advantage.
The other peculiarity is that Belarusian economic prosperity relies on direct and indirect support from Russia. First of all – cheap energy resources, which not only enable the price of products to be lowered, but also provide for its re-export. The biggest Belarusian crisis in early 2011 didn’t coincide with the terms of the global one – its reason was the cooling relations between Minsk and Moscow.
Objectively, the export positions of “the last Soviet republic” seem to be quite attractive. The capacious market of Russia and the market of the Customs Union make exports of Belarusian products promising, even in the context of the crisis. For example, despite a reduction of industrial production, people need to eat. For normal harvests mineral fertilizers are need. Belarus produces them. It also produces agricultural machinery. Agricultural food products from Belarus have a positive image.
Production of cars might be damaged by the crisis, but tires are needed for every produced car. The capacity of Belshina can satisfy the demands of the whole CIS. However, 2011 ended with a negative external balance for Minsk – about $5 billion. So until Russian-Belarusian relations become closer, Belarus has no hopes for a stabilization of the economy.
Fruitless multi-vector nature of Kiev
Kiev is on the edge of failure. Citizens are buying foreign currencies, which are being issued by the National Bank from its fading reserves. The IMF demands the cancellation of gas subsidies for the population, which is unacceptable for the authorities ahead of the parliamentary elections in autumn 2012. In 2011 the country balanced between the Customs Union and the Free Trade Zone with the EU. The Customs Union could provide Ukraine with $10 billion of direct revenues; the Free Trade Zone’s promises were smaller, but the EU attracted Kiev with its capacious market. As a result Ukraine is still going round in a circle. This provokes a cool attitude from Moscow, a Kiev doesn’t want to integrate in “the eastern direction” and continues paying twice as much for Russian gas than Germany. In its turn, Germany makes the products of Ukrainian metallurgical and chemical industries uncompetitive. The 2008 crisis began with their dramatic reduction. Probably the same situation will be repeated in the context of a new wave of the crisis.
At the same time, Europe isn’t eager to embrace Kiev, demanding the release of the opposition leader, the former premier Julia Timoshenko. As the result of such turbulence in Ukraine the crisis is growing, even in a period of relative stabilization of the world economy.
When oil is the staff of life…
Russia’s position seems to be more favorable. Of course, there are many metallurgical enterprises, which will suffer if the world situation worsens. Moreover, after its accession to the WTO, direct protectionism of the internal car industry will be impossible for Moscow. However, the Russian economy has another powerful stabilizing factor – high demand for energy resources, which are 70% of exports, surpassing imports by more than $200 billion last year. More than $12 billion were saved for the stabilization fund. Reduction of oil prices seem to be improbable, considering the crisis around the Iranian nuclear program.
To be continued
Yuri Kramar. Exclusively to VK
