Leu Marholin: Campaign for import substitution is the next step of Belarusan economy’s degradation

Belarusan economy switches to the principles of “Juche”, the economist assumes.

The first signs of a new approach to promotion of Belarusan goods didn’t please Belarusans – one can hear a lot about the quality of Belarusan medicines that the ill are being transferred to in drugstores. One also encountered an offer to paper walls with exclusively Belarusan wallpaper. We can expect other offers that we cannot decline, too. As Leu Marholin, the deputy chief of the United Civil Party, economist, noted in the interview with the “EuroBelarus” Information Service, Belarusan economy is becoming more and more similar to the one of the North Korea, the Foreign Minister of which has been discussing cooperation with the Belarusan Prime Minister Andrei Kabiakou the other day.

- I believe that import substitution as interpreted by Belarus is absolutely ineffective; this is the next step of Belarusan economy’s degradation. We gradually transfer to the recipes well-known as “Juche” and have been used in North Korea for decades. When we create some artificial privileges for Belarusan goods, their producers immediately lose impetus to improve the quality, as only competition gives this stimulus. Any artificial limitation of competition leads to degradation of the domestic goods, not only on quality, but also on costs of their production and their profitability. Someone might think that import substitution is profitable, but it isn’t a way out in the current economic situation. First, because our domestic market is not so capacious for us to consume all the goods produced in the country completely; secondly, goods that are produced for such limited market lose on quality and lose any possibility to compete at foreign markets.

- You are a supporter of liberal reforms; however, the government also talks about reforms. Sometimes.

- Reforms at state level have been under discussion for a long time; there were even some attempts to introduce them. But in order to understand their necessity we need to understand that Belarus is a small country; thus, we cannot close ourselves within our market by definition. We urgently need to become a part in the world system of differentiation of labour, find some niches where we would be able to compete with the enterprises of other countries; join the world chain with progressive methods and markets that have long ago been opened up. Only then we will be able to improve our well-being and resolve social problems. All other ways lead to nowhere.

- Why is the state delaying that? Is it afraid of the shock therapy experienced by our neighbors – Poland and Lithuania?

- I don’t think that Belarusan authorities are afraid of that, as we will experience shock anyway – with therapy or without it. This year Belarus will face considerable job cutbacks, decrease in salaries, etc. However, Belarusan authorities are afraid of something else – they are afraid to release the economy from the slipknot of administrative methods, they are afraid of letting the economy into the free market. The state should establish clear rules, but by no means try to manage the economy, just watch closely how these rules are observed. And that is what the current authorities fear – not for nothing – when one slackens the reins in the economy, one doesn’t manage to hold them in the other spheres, too, including public administration. Fear to lose the reigns of power is the main thing that limits Belarusan authorities, and one famous figure, first of all. All the rest just put on themselves self-censure: they understand what to do perfectly, but they are aware that Lukashenka won’t liberalize economy and all the other spheres.

- How quickly can the Belarusan economy be converted to the market system?

- In our situation everything can be done very quickly. Once Grigory Yavlinsky wrote a program “500 days” for the Soviet economy, but I think this program hasn’t lost its urgency even now. Two-three years are needed to reorient our economy to the normal market direction, create a system of laws for the investors to come without fearing for the fate of their investments. The statistics says that now 8 enterprises pay more than 22% of all taxes in Belarus, which means that two dozens of such enterprises could seriously influence the situation. I’m not even touching upon the freedom of small entrepreneurship that is constantly strangled in our country…

- What circumstances could make the management of the country introduce reforms?

- The management of the country will only do that if the risks of deciding against it are higher than the possible threats in the administrative-command system. I think there is little time left to wait. Situation will be worsening; towards the end of the year it will become deplorable, regardless of whether we get a loan from Russia or not. All the Russian money will go to payment of debts and interest on debts.