A Tale of Two Countries: The Post-Soviet Evolution of Belarus and Ukraine

How come that Belarus, which used to be four times economically less productive than Ukraine, has become such a success story?

Tue, Apr 14, 2015
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Two very different post-Soviet paths...
Two very different post-Soviet paths...

Yury Nickulichev is a professor at the Russian Academy for National Economy and Civil Service


How long ago, my dear friends, did you read “A Tale of Two Cities” by Charles Dickens? Marvelous prose, isn’t it? What an exquisite epigraph, to begin with:

It was the best of times,

It was the worst of times,

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It was the age of wisdom,

It was the age of foolishness,

It was the epoch of belief,

It was the epoch of incredulity,

It was the season of Light,

It was the season of Darkness…

 

Now, do you know to which historical epoch, other than that of Dickens’, this most beautiful poem applies best of all? I’ll tell you. Here’s a Tale of Two Countries.

It was the year of Our Lord one thousand nine hundred and ninety-one (pray to be excused, but after reading Dickens, I always discourse like this. Just can’t help it). Spiritual revelations were conceded to the USSR at that favored time. (See, it’s him again). I mean that, with Mikhail Gorbachev in power, a most vigorous spiritual renaissance flourished in the country. As a result, it fell to pieces.

Among the shards of what used to be an empire, there were two countries – Belarus and Ukraine. It was their leaders, with Boris Yeltsin of Russia presiding (for in the Slavonic world it’s a folk custom to take the most important decisions in troikas), who did away with the USSR. The lethal blow was dealt by the then President of Ukraine, Leonid Kravchuk, an ideologist. He had run the Propaganda Department of the Ukraine’s Communist Party for quite a time, before being elected president, which was a huge change for the better. In 1990 – 1991, his communist ideology was to never give Kiev’s consent to the New Union treaty, which was intended, being one of Mikhail Gorbachev’s last spiritual revelations, to save what there was left of the Old One. So with enormous commitment, common to all propagandists, Leonid Kravchuk of Ukraine kept defying and deriding all spiritual hallucinations coming from Moscow, and this finally did it. Because the Union - New, Old, or whatever - could have wonderfully kept dragging on, say, without the tiny Estonia or even the faraway and most obscure Tajikistan, but it couldn’t drag on without the populous and industrially developed Ukraine. No Ukraine – no USSR. (I won’t elaborate, since the Big Zbig, a Big Chessboard in his hand, has long illuminated it all most clearly). In a word, after those epoch-making troika binges of December 1991, the forever-unbreakable USSR instantly broke up and, a wonderful fact to reflect upon, nobody at that time seemed very much distressed about it.

Making a long story short, there they were – the now independent Belarus and Ukraine. Ukraine was the second, after Russia, economy of the former USSR and produced roughly four times the output of the next-ranking republics, Belorussia and Kazakhstan. Belorussia (today it’s Belarus, the Belarussian for Belorussia, lest you, my friends, should never be confused about such subtleties) visibly trailed behind. Ukraine’s agriculture, with its famous black soil, had provided huge quantities of meat, milk, grain, and sugar to other republics, its share being well over one-fourth of the Soviet agricultural production. The Belarusians, whose land is marshy (it is the largest marshlands in Europe) with only 27% of the country arable (whereas in Ukraine, it’s roughly 54%) struggled, with only their potato crops and a couple of other things keeping up the pace. Ukraine was famous for its scientific institutions, while Belarus was commonly looked upon as a Soviet “assembly shop.” So there were (are) fairly striking differences between the two. As of today, for instance, Ukraine’s labor force is 22 million, while that of Belarus is 5 million. The territory of Ukraine is almost three times larger than that of Belarus. Thus, it’s only in the maritime status that the two countries have recently become more or less equal, after Jen Psaki located a coastline in Belarus, to which the 6th fleet of the USA will be sent some day.

Well, where was I? Now… nobody has yet coherently explained why some countries are rich and others are poor. Still more enigmatic is the question how a country can grow richer or poorer. I mean the process of it. In the times of Charles Dickens, a certain Karl Marx intended to answer this and all the rest of the questions, but it always required a good dictatorship of proletariat to make sense of what he wrote. Just try to read “Das Kapita,l” especially if you don’t possess any (I mean any of the “das kapital,” to say it in good German.) The thing will take so much time you’ll stop working and, if it’s a highly prosperous market economy plus austerity around, they’ll just fire you. It works just the same with countries. With “Das Kapital” as a Bible to study and follow, they always grew poorer, not richer.

So… (Where was I again?)

As time went by, strange things began happening. Ukraine was slackening, while Belarus was accelerating. To illustrate it in numbers: by 2013, well before the Ukrainian Revolution of Dignity, the real GDP growth rates were 2.1% in Belarus but only 0.4% in Ukraine; the numbers of GDP per capita were $16,100 in Belarus, and $7,400 in Ukraine. If you google (there’s a wonderful web resource for comparing any two countries you like) “If Belarus were your home instead of Ukraine,” you’d find that, were it so, you would be: 87.5% less likely to be unemployed, make 2.7 times more money, live 3.01 years longer, be 55.06% less likely to die in infancy, use 16.53% less electricity, spend 15.71% more money on health care, and have 15.41% more babies. But the numbers, again, refer to 2013, and only the Lord God Almighty knows how it all’s changed since then.

See, there’s a mystery here. How come that Belarus, which used to be four times economically less productive than Ukraine, has become such a success story? Off to Belarus now! And let’s finally drop the funny part of it here.

***

I am afraid that many in the West (and in the East, too) may still think of Belarus as nothing more than Europe’s last dictatorship ruled by a bombastic and pompous character, who has remained in power (for 20 years now!) solely thanks to his stony and ruthless methods. Let’s leave it for a moment here. Because, for better or for worse, President A. Lulashenka may, indeed, have some easily seen authoritarian proclivities; way much more important is the fact that the international media has just never seen the whole of the land, Belarus proper, behind what they habitually label as “Lukashenko, the autocrat.”

Here’s quite a different story for you. In the United Nations 2014 Human Development Index (HDI), Belarus ranked 53rd out of 183 countries, doing much better than its fellow post-Soviet states – Russia (57th), Kazakhstan (70th), and Ukraine (83rd). What’s more, the country has been steadily moving upwards in the HDI lists since the turn of the millennium. HDI reflects “people and their capabilities,” combining population, health, access to knowledge, and the standard of living. It’s in education that Belarus hits its highest. Belarussian children are expected to study for nearly 16 years, this being only two years fewer than the maximum of 18 allowed in the HDI “access to knowledge” scale. Over half of the Belarusian young population has obtained tertiary education, which is greater than in almost every single country of Central and Eastern Europe. 70 percent of kids under age 6 attend nurseries and kindergartens, access to preschool education being one of the highest in the world. As for the Belarussian health care system (still free as in Soviet times), it is now outperforming not only all post-Soviet states, but in some respects (infant and maternity mortality, for instance) even such countries as Australia, Great Britain, Germany, Norway, and USA. Minsk is doing so well in its healthcare policies that Belarus has now become quite an attraction for medical tourism, with patients visiting from all over the CIS and Europe.

Add to this, low unemployment, job protection and retirement programs, state-subsidized housing, a range of other social services, most comfortable agro-villages, low crime, decent highways and good hotels, those cranes that dot the urban skylines, the mushrooming restaurants and cafes, green cities and, this being a brand feature of Belarussian cities, very clean streets! Yes, “the first impression one has of Belarus is how clean it is — there’s hardly a cigarette butt on the street,” writes a Western journalist, “and the second is the immense number of trees and parks in the cities.”

Looks like Belarus, in reality, is little more than just Lukashenka.

We know, however, that leaders matter (and how)!

An often overlooked fact about Alexander Lukashenka is that, before winning his first presidency, he had served as the chairman of the anti-corruption committee of the Belarussian parliament. Fighting corruption has always been his agenda, his credo, his hobby horse, and his most deeply ingrained political philosophy (recently he remarked that Ukraine had its coup d’état of 2014 solely because of corruption). In 1994, it’s exactly on this anti-corruption platform that he, the most popular politician of the time, was elected, with more than 80% of the vote, as the president of Belarus.

We should catch on to the inner logic of what followed. By the middle of 1990s, with the inter-republic economic connections disrupted, the number of the Belorussian poor had risen more than 20 times, with two-thirds of the population living below the official poverty line. Now, where to? Belarus is a resource-poor country and it had almost nothing in the way of those privatization schemes that generated capitals (mostly in the extraction industries) in Russia. What Belarusians had, however, were their industrial enterprises, archaic but still half-functioning. To give them away into private hands (to “thieves and robbers,” in Lukashenka’s words), would have been tantamount to a complete destruction of any social protection in the country. In this cliff-hanging situation, the “last dictator” did what perhaps any responsible leader would’ve done in his place: he rushed himself to save this sector. Most of the factories remained intact. The plants, still generally in state hands, were being propped up by subsidies. The wages began to grow slowly and, while in some other countries the powers that be were industriously erecting presidential golden palaces, the Belarussian government, often with Lukashenka in flesh and blood, was hitting the roads across Russia to look for new markets. Today they are doing the same elsewhere, actively promoting Belarussian production in markets as varied as China and Latin America.

Well, it’s a long story. Making it short, to the lasting surprise of many, the emerging model worked. From 1995 on, the economy grew at 7 to 11 percent per year. By comparison, Ukraine’s economy continued to contract until 1999. Note, also, that because of the government’s refusal to undertake market reforms, Belarus had one of the lowest rates of foreign investments among the post-Soviet countries – to be precise, only 1.7 billion from 1993 to 2003. Nonetheless, the “least reformed” European economy soon achieved near full employment, reduced poverty to the lowest level in the post-Communist world and gradually developed into a strong socially-oriented state. Yes, there were slowdowns and rollbacks, of course, but with the well-educated and disciplined work force, the Belorussian miracle is still here.

(But try to learn something of the kind from the Western media).

…I enter the Moscow supermarket: people are looking for Belarussian dairy products. You go along the street and notice the “Belarussian furniture” boards. Or cosmetics. Or textile. Or carpets. Or footwear.

Good we are getting closer.

The famous P.J. O’Rourke once remarked: “The complexity of economics can be calculated mathematically. Write out the algebraic equation that is the human heart and multiply each unknown by the population of the world.” Maybe this goes for individual countries, too. 

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