The first requirement is democratic regime change, which will open the way for rapid economic growth. Once the democratization process in Belarus starts, sanctions against it will quickly be frozen and eventually rescinded, as the root cause of the human rights violations and disruptions to international order in Belarus will have disappeared. Belarusian private business will once again start to grow, old foreign investors will return, and new ones will arrive.
Second, Belarus needs institutional reform, a proposal
for which was published in 2021 by Chatham House Publications following discussions with more than 25 Belarusian and international economists. This proposal was based on a vision of the institutional foundations of the Belarusian economy as described in an open letter published in October 2020. The letter was signed by more than 60 Belarusian and foreign economists and renowned specialists who are prepared to use their knowledge to help the democratically elected government of Belarus.
Reforms in certain sectors of the Belarusian economy are described in more detail on the Ideas Bank
website (like restructuring and privatizing state-owned enterprises, reforming the labor market, family policy, social policy, green economics, tax policy, and the pension system).
Below are some crucial steps for economic reform:
- limit the government’s role in the economy: its primary duty should be to oversee the development of institutions and social infrastructure;
- create an equitable, amenable business environment for all enterprises, regardless of ownership, size, and type of activity;
- improve the management of state enterprises (by changing stimuli, splitting up the government’s role as both owner and regulator); audit them and privatize most of them;
- make the social protection system more effective: divert resources away from loss-making collective farms and industrial enterprises in favor of direct social assistance;
- increase the efficiency and transparency of the labor market and protect workers’ rights (by developing independent labor unions and transitioning away from the contract system);
- rid the banking sector of bad loans, especially to state enterprises, and develop the financial market;
- invest in e-government to increase the transparency of the public administration system and economic relations between citizens and the state;
- increase the competitiveness and innovativeness of the economy by fostering entrepreneurship, creating ecosystems for startups, and stimulating venture investment;
- guarantee the energy security of Belarus by diversifying energy sources, creating an electrical energy and gas market, and investing in renewable sources of energy and energy efficiency;
- stimulate the development of the green economy in certain priority areas, including renewable energy sources, circular economics, resource efficient production, eco-friendly transportation, organic agriculture, and biodiversity.
Third, the international community is prepared to provide support as the economy recovers. In 2021, the European Commission, in coordination with Sviatlana Tsikhanouskaya’s economic team, adopted a Comprehensive Plan
of Economic Support to Democratic Belarus amounting to three billion euros (about five percent of the GDP of Belarus) for the first years of economic reform. The EU plan encompasses financing for private business, large infrastructure projects, cross-border projects and other initiatives in the Eastern Partnership program, support for Belarus’s entry into the World Trade Organization, and much more.Negotiations
are being held for the US to announce a “Marshall Plan” for Belarus. The IMF, which is ready to support the economic stabilization program approved by the new Belarusian government, will also join the plans of the EU and the US. The World Bank will finance the development of the private sector, investments in infrastructure, and the modernization of the healthcare and education systems. The European Investment Bank and the European Bank of Reconstruction and Development will finance projects in the energy sector and the transition to a green economy, facilitating the activities of strategic investors in Belarusian state enterprises.
International support will also be required to restructure government debt, including refinancing (especially debts to Russia) by European countries at lower interest rates and for longer periods, with deferred repayment of the loan principal for the first few years. Assistance will also be provided to ensure energy security for the economy if Russia decides to blackmail Belarus.
Fourth, a program is needed to encourage the repatriation of Belarusian businesses and individuals from abroad. It should stimulate the Belarusian diaspora to invest in a new Belarus, return to their homeland, or promote Belarus’s national interests in their new countries of residence. One example of such an effort is the 2021 creation of the Association of Belarusian Business Abroad
, which comprises enterprises from Poland, Lithuania, the Czech Republic, and the US that are not affiliated with the regime.
In recent years, the Belarusian diaspora has grown and unified. This is an additional source of human, financial, and political capital. The diaspora must be encouraged to help grow the economy and reform the country. The best way to do this will be to ensure that the economy grows rapidly, rule of law is protected, the business climate improves, the country becomes more open to foreigners, and the Belarusian economy integrates into the global one. The Belarusian diaspora and foreigners with Belarusian roots should be eligible for a simplified procedure for receiving a “Belarusian card,” allowing them to participate unhindered in Belarusian affairs.
It is worth studying the successful experiences of countries whose diasporas have contributed significantly to national building and economic transformation, such as Ireland in the second half of the 20th
century or Israel after it received independence in 1948.
Fifth, building an economy based on the rule of law should entail holding those most closely involved in repressions accountable. Such individuals should also be forbidden from occupying government positions for a certain period. Totalitarian ideology needs to be unambiguously rebuked and victims of repressions should receive compensation
. At the same time, government-affiliated individuals who did not have a hand in the regime’s crimes should not be sanctioned. Divisions in society can be overcome be restoring
lawfulness and seeking national reconciliation.
The result of these reforms will be a Belarus with an open, resilient economy where the private sector—grounded in small and medium-sized business—plays a dominant role. It should have a transparent government that invests in its people through education, healthcare, and other social services while using social policies to level the playing field for disadvantaged citizens.