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Vol 2, No 36
23 October 2000
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The Supreme Soviet
Business starts to blossom in Minsk
Could Belarus Bloom?
Minsk opens up
for business

Howard Jarvis

Belarus is used to negative publicity. Its features include an unpredictable and highly authoritarian president, independent media that are bullied with frequent arrests and fines and the mysterious disappearances of well-known opposition politicians. Any ethically minded businessman would do well to take a look at the country's human rights record before investing here. But there are signs that Belarus is finally starting to open up politically and economically. Soon, perhaps, the business stories emerging from Belarus will not just be about plummeting prices and vodka smuggling.

A business trip to Belarus may not be at the top of everyone's agenda. It is a large, reasonably accessible nation of ten million people, yet it remains largely unexplored for the businessman. The capital, Minsk, is an open-air museum of the very best of Stalin-era architecture. You are fined by ever-present militia if you cross the road in the wrong place. In short, this is a perfect destination for those nostalgic for the early 1990s, when "emerging markets" were exciting places to do business.

Business centres

There are also plenty of professionals already well-established in their respective fields, eager to make contact and do serious business with other countries in Europe. Several first-stop business centres have been established in Minsk, the Belarusian capital, each of which offers the usual economic statistics, interpreting and sightseeing. Standards differ, however. The Swedish Business Centre is no more than a tiny cubicle inside the Hotel Planeta, one of the city's towering monoliths, offering the meekest secretarial services.

The most professional business centre available is probably the Business Communication Centre (BCC), set up in 1995. The BCC is a private company that identifies suitable business opportunities and offers advice and support all the way through to establishing new ventures. When doing business in Belarus, close co-operation with the government authorities is, unfortunately, essential. The BCC say they can handle this, too.

Belarus made a vital step in reaching out to the businessman when it set up a joint venture with Germany, creating the Internationale Bildungs-und-Begegnungsstatte (International Education and Meeting Centre, or IBB) in 1994. Although hardly up against stiff competition, the IBB is the best hotel in Belarus. Its one drawback is its location. Set amidst cabbage patches in a southwest suburb of Minsk, the IBB is five kilometres from the city centre (transfers by car to the centre and airport are easily organised). A wafer-thin four-storey hotel, circular conference centre and triangular restaurant, the complex is certainly a strange sight.

Yet it is clear that the IBB has already made a name for itself as a reliable base to explore Minsk's possibilities. The IBB's permanent residents, such as the Organisation for Security and Co-operation in Europe, Bayer and Dresdner Bank, have offices in the hotel. Indeed, the IBB markets itself as "a place where people from different backgrounds and countries meet, work together and exchange opinions."

The superior conference facilities, which include an infra-red (rather than cable) simultaneous translation system and four fully-equipped seminar rooms, are used 500 to 600 times a year. Around the IBB, paintings from the Belarusian Academy of Art add to the modernity. Throughout the Centre, disabled visitors are well catered for—a novelty in Minsk. And despite the location, there have been no security problems. Since operations began, nothing has been stolen except for one TV set.

At certain times of the year, businessmen may be easily exposed to the vagaries of the Belarusian heating system. The IBB's manager, Igor Fokin, confirms how much of a world away the IBB is from the rest of Belarus. "Last year, a group went from our hotel to Vitebsk. They froze. They were very happy to come back and warm up here, where we have our own heating system."

Up to now, most Belarusians have supported President Alyaksandr Lukashenka's adherence to a planned economy. Most companies remain in state hands. But the times are changing. According to the Independent Institute for Socio-Economic and Political Studies (IISEPS), a Minsk-based non-state research centre, 68.6 per cent of Belarusians would prefer to live under a market economy.

Making amends with the market economy

Within a year of becoming president, Lukashenka was calling market traders, the indispensable bottom rung of any market economy, "lousy fleas." Recently, though, he has been speaking of opening up trade with the rest of Europe. There could be a political reason for this change of heart. For years, Lukashenka dreamed of succeeding Yeltsin as the head of a unified Russian-Belarusian state. With Putin now in the Kremlin, Lukashenka's position has changed significantly. It is likely that Moscow has told Lukashenka that it will agree to a union of states only if Belarus improves its economy.

This can only be achieved with the help of Belarusian entrepreneurs—people like Mikhail Shurim, director of Teploseti, a company with a USD two million turnover that replaces underground hot water pipes. Shurim also runs a club for entrepreneurs, and says he is negotiating with the prime minister of Belarus to buy property to develop an independent business centre.

"I am confident that Belarus is on the way to the free market. With Putin now in charge in Russia, it is our only choice. There are still many opportunities and niches, and business can be developed very quickly." Shurim makes no secret of his close contacts in the government, yet he calls himself independent and his company private. He lays pipes, but this is anything but an "underground business."

Those who find themselves on the wrong side of the authorities risk losing more than their investments. Contrary to Russia, the dangers come not from the mafia. Belbiznesbank is one of the largest banking institutions in the country. On 26 June, its executive director Ivan Lemyasheuski sent an open letter to Lukashenka in which he accused the KGB of attempting to kill his son Illya. The KGB had tried twice to get Illya to spy on his father, who is a former adviser to Mikhail Chyhir, an opposition leader who could defeat Lukashenka in presidential elections next year. Belarus is the only country to retain the name KGB for its secret services.

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If only the story would end well economically for Belarus, a country that suffered unequalled horrors during World War II and vast swathes of which remain contaminated by Chernobyl. Belarus is still reeling from the effects of Russia's economic crisis. The average wage is about GBP 25 a month. A sizeable proportion of Belarusian trade is made through barter, since Belarusian goods are produced to pay for oil and gas from Russia.

Prices of consumer goods are so low that, despite tightening border controls, smuggling anything from alcohol to Russia's rusting stockpile of weapons is a lucrative business. This is not difficult to find. I departed by bus to Lithuania, Belarus's freer and more fortunate neighbour, only to be heckled by a horde of middle-aged women for refusing to help them take more than their fair share of vodka, cigarettes and sausage across the border.

Howard Jarvis, 23 October 2000

This article was originally published in Travel IQ, a magazine for business travel and tourism in Central and Eastern Europe and the CIS, and appears with the editors' kind permission.

Travel IQ
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Mixed Nuts

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