Belarus' Poverty: A Complex Historical And Economic Issue

Belarus, known as White Russia, is a country in Eastern Europe bordering Russia and Ukraine. In the 1990s, following the collapse of the USSR, Belarus was one of the poorest countries in Europe, with around 50% of its population living below the poverty line. However, the country has since made significant progress in reducing poverty, with the poverty rate falling below 1% in 2013. This reduction in poverty can be attributed to various factors, including favourable energy pricing from Russia and economic growth in its trading partners, which boosted the agricultural and manufacturing sectors. Nevertheless, poverty remains an issue in Belarus, with rising income inequality and a lack of social protection for the unemployed.

The collapse of the USSR socialist system

Belarus had been a part of the Soviet Union since its formation in 1922, when a treaty was signed between Russia, Ukraine, Belarus, and Transcaucasia (modern-day Georgia, Armenia, and Azerbaijan). The newly established Communist Party, led by Marxist revolutionary Vladimir Lenin, took control of the government.

Under the Soviet Union, Belarus experienced rapid economic and industrial growth, particularly in the late 19th century with the construction of railways, and in the post-war years, when it became an important trade hub between the Soviet Union and Europe. Manufacturing became a pillar of its economy, with tractors, heavy trucks, oil processing, and metal-cutting lathes among its chief exports. Belarus was also the most technologically advanced of the Soviet Republics, with an unusually high export rate of about 80%.

However, the dissolution of the Soviet Union in 1991 had a devastating effect on Belarus. It is estimated that around 50% of the population lived below the poverty line at the time, making it one of the poorest countries in Europe. The collapse of the USSR led to food and consumer goods shortages, with bread lines becoming common throughout the 1970s and 1980s. The country also suffered from extreme economic distress in the late 1990s due to the financial crisis in Russia, which resulted in a sharp increase in prices, devaluation of the national currency, and a decline in trade with other CIS countries.

The effects of the Soviet Union's collapse were felt across all sectors of Belarusian society. In the agricultural sector, for example, the amount of land under cultivation decreased significantly, and there was a shift from livestock to crop production as crops became more profitable. The industrial sector also took a hit, with gross industrial output declining by 19% in 1994. Additionally, the availability of imported inputs, such as crude oil and deliveries from Russia, decreased, and there was a drop in demand for Belarusian exports among the former Soviet Republics.

The political landscape of Belarus was also significantly impacted by the collapse of the USSR. The country's first presidential election following the dissolution of the Soviet Union was held in 1994, with Aliaksandr Lukashenka winning on a campaign slogan of "taking people away from the abyss."

In conclusion, the collapse of the USSR socialist system had far-reaching consequences for Belarus, leading to economic distress, political upheaval, and social challenges that the country continues to grapple with today.

Favourable energy pricing from Russia

Belarus relies on imports from Russia to meet most of its energy needs. The country has only small reserves of petroleum and natural gas and imports most of its oil and gas from Russia. Belarus also has a well-developed gas transportation and distribution network, which ensures reliable supplies of natural gas to its consumers.

The favourable pricing of energy from Russia has been a major driver of Belarus's economic growth. This has particularly benefited the country's manufacturing and agricultural sectors. Russia's favourable energy pricing has also allowed the Belarusian government to maintain high levels of employment and increase wages, pensions, and social welfare benefits.

The energy sector in Belarus is dominated by three monopolies: Belenergo for power, Belorusneft for oil, and Gazprom for natural gas. The government controls the entire energy sector, with the president holding the exclusive right to make all strategic decisions. This control over the energy sector is believed to guarantee a secure and stable energy supply for the country.

However, there are concerns about Belarus's deep energy dependence on Russia. In recent years, Russia has reduced the price preferences for Belarusian importers, and the oil price for Belarus is expected to reach 90% of the market value. Additionally, there have been attempts by Belarus to renegotiate the terms of Russian gas and oil supplies, with Minsk seeking more favourable conditions.

Despite its heavy reliance on Russian energy imports, Belarus has been working towards reducing its energy import dependence. The country has introduced a green feed-in tariff to attract more investment in renewables and is contemplating power generation fuel diversification to include more coal and renewables. Belarus has also set a target to reach a 9% share of renewables in its energy mix by 2035.

Inequality in wealth distribution

In 2010, the richest 20% of Belarusians owned 36.7% of the country's total wealth, but this figure increased to 38.8% in 2016, indicating a growing inequality. This trend is likely understating the true extent of the problem, as many wealthy individuals have bank accounts abroad and utilise legal methods to avoid paying taxes. Additionally, a sizeable portion of the working population, estimated between 10% and 25%, operates in the shadow economy, further limiting the state's ability to redistribute wealth effectively.

The disparity in income levels is evident when comparing the capital city of Minsk with other regions. Minsk residents generally enjoy higher incomes, with only 1.4% of households considered poor, while in the Homiel Region, this figure rises to 5.9%. This gap between the capital and other parts of the country continues to widen, despite government efforts to mitigate it.

The concentration of wealth among the richest has been influenced by the redistribution of resources, which has gradually shifted in their favour. Moreover, the lack of a robust social protection system for the unemployed exacerbates the problem. Belarusians who are unemployed receive meagre welfare benefits, ranging from $12 to $24 per month, and it is estimated that less than 10% of the unemployed actually receive these benefits. This situation has led to social parasite protests, with people struggling to earn enough to make a living.

The Belarusian authorities' response to the economic crisis has often been to shift the burden onto ordinary citizens, including taxing the unemployed instead of providing support. The government has also incrementally raised the retirement age and increased utility tariffs, measures that disproportionately affect the poorest segments of society.

Poor social protection for the unemployed

Belarus has a poor social protection system for the unemployed, which is a significant factor contributing to poverty in the country. The state fails to provide meaningful support for those who have lost their jobs, with welfare benefits for the unemployed ranging from just $12 to $24 per month. This is in stark contrast to neighbouring Poland, where residents receive around $200 per month in unemployment benefits.

The lack of adequate social protection for the unemployed is exacerbated by the fact that Belarus lacks a proper system to measure the real unemployment rate. The official unemployment rate is reported to be less than 1%, but this figure is questionable due to the absence of official statistics using internationally recognised methods, such as those of the International Labour Organization (ILO). According to the World Bank, the actual unemployment rate is estimated to be much higher, possibly as high as 15% or even 24%.

The low welfare benefits and lack of accurate data on unemployment rates are not the only issues with Belarus's social protection system. The process of registering for unemployment benefits is cumbersome and may even carry negative consequences. Many unemployed people in Belarus try to avoid registration due to the requirement of obligatory public works. This further exacerbates the problem as it prevents the government from having a clear understanding of the true extent of unemployment in the country.

The inadequate social protection for the unemployed has led to widespread dissatisfaction and protests. In the winter, there were "social parasite protests" in 12 Belarusian towns, with around 20,000 demonstrators marching against the country's tax on unemployment. The protests highlighted the struggle of those who are unemployed and not receiving sufficient support from the government.

The Belarusian government's response to the economic crisis has been to shift the burden onto ordinary citizens rather than provide support for the unemployed. Instead of offering assistance, the authorities have imposed fines and taxes on those without jobs, such as the "freeloaders tax" or "social parasite tax". This approach further penalises those who are already struggling and fails to address the underlying issues of unemployment and inadequate social protection.

Poor standard of living in rural areas

Belarus has made significant strides in reducing poverty, but the country still faces challenges in improving living standards, particularly in rural areas.

The standard of living in rural areas of Belarus is significantly lower than in the capital city of Minsk. According to official data, the poor constitute only 1.4% of households in Minsk, while in the Homiel Region, it is 5.9%. This discrepancy between the capital and other regions persists despite the government's efforts to mitigate it.

Place of residence is a crucial factor influencing the poverty rate in Belarus. The more an area resembles Minsk, the less likely its residents are to live in poverty. However, many Belarusian regions, especially villages, remain trapped in a cycle of poverty.

The income gap between Minsk and other parts of Belarus continues to widen, and the government's response to the economic crisis has been to shift the burden onto ordinary people, particularly the unemployed. Instead of providing meaningful support, the authorities have implemented a "social parasite tax" to discourage unemployment, which further penalizes those struggling to make ends meet.

The average worker in some regions earns just $100 per month, barely above the Belarusian poverty line of around $90. The unemployment rate is a critical factor, as Belarus lacks a comprehensive social protection system for those without jobs. Welfare benefits are meager, ranging from $12 to $24 per month, and less than 10% of unemployed individuals receive them.

The lack of social safety nets and the widening income gap contribute to the persistent poverty in rural areas of Belarus, hindering their ability to achieve sustainable shared prosperity.

Frequently asked questions