Introduction

Medieval castle in Mir - a UNESCO World Heritage site / Photo: UNDP Belarus

The Republic of Belarus (Belarus) is located in the Eastern part of Europe. Belarus is divided into six regions (oblasts): Brest, Homiel, Hrodna, Mahiliou, Minsk and Viciebsk oblasts.

The capital city of Belarus is Minsk, the biggest political, economic, scientific and cultural centre of the country. The population of Minsk is over 1.9 million people.

The territory of Belarus covers 207,600 square kilometres. The longest distance, 650 km, is from the West to the East, and 560 km from the North to the South.

According to the 2009 population census, the population of Belarus is 9.489 million people. Representatives of more than 100 nationalities live in Belarus. The majority of the population is represented by the indigenous Belarusian nation, who constitute more than 3/4 of the entire population.

The terrain of Belarus is predominantly low, hilly and flat. Agricultural land occupies 45% of the territory, forests account for 36%. There are more than 20,000 rivers and creeks and about 11,000 lakes in Belarus. The biggest lake is the Narach (about 80 square kilometres).

About 30 types of mineral raw materials have been prospected in Belarus. The most significant are potassium salts, the reserves of which occupy one of the leading places in Europe. The country is rich in rock products and has vast reserves of peat. The deposits of oil are insignificant. There are more than 60 mineral water springs on the territory of the country.

Most of the Belarusian economy remains state-controlled: over 50% of people are employed by state-controlled companies. The country relies on Russia for various imports, including petroleum. Belarus's largest trading partner is also Russia, accounting for nearly half of total trade, and the European Union with nearly a third of foreign trade. Belarus's main exports include heavy machinery (especially tractors), agricultural products, and energy products.

Belarus is a founding member of the Commonwealth of Independent States (CIS), whose headquarters are located in Minsk.

History

Belarus gained its independence in 1991. On 19 September 1991, the name of the state was adopted – the Republic of Belarus. In 1994, the country’s new Constitution was adopted by the Supreme Council of the Republic of Belarus, and the presidential system was put in place.

The same year, the first presidential election was held in the independent republic. Alexander Lukashenko became the first president of the country.

In the post-Soviet period, Belarus actively participates in Russia-led integration formations. A treaty to set up the Union State of Belarus and Russia was signed in 1999, and an action programme to implement the agreement was adopted.

One year later, Belarus, Kazakhstan, Kyrgyzstan, Russia, and Tajikistan signed a treaty that established the Eurasian Economic Community (EurAsEC). In November 2009, the presidents of Belarus, Kazakhstan, and Russia signed a set of documents that created a Customs Union as of 1 January 2010.

The next stage of integration was the declaration of a Eurasian economic community. A treaty signed by Belarus, Russia, and Kazakhstan to set up a Single Economic Space came into force on 1 January 2012.

Challenges

Since the 1996 referendum, Belarus’ relations with the EU and USA have been unstable. Except a short period of rapprochement in 2008-2010, relations have mainly been tense. However, trade relations, especially with the EU, are pragmatic. The EU is Belarus’ second trading partner after Russia.

For the EU, Belarus is an important ‘gate-keeper’ which prevents illegal migration and human and drug trafficking from the East. For Belarus, the EU (and the West in general) is a crucial counterbalance to its relations with Russia.

The 2010 presidential elections were followed by a protracted diplomatic escalation with the EU: several rounds of targeted sanctions against Belarusian officials and companies, mutual expulsions of diplomats, etc. At the end of 2012, Minsk began to make small attempts at normalizing relations. In November 2013, Belarus declared its readiness to launch visa liberalization talks with the EU and consultations began in 2014. This can be at least partially explained by the upcoming presidential elections. In the run-up to the presidential campaign, the authorities of Belarus tend to try to minimize political risks, including conflict-driven relations with the EU.

Recent official socio-economic data demonstrate that the Belarusian economy continued to stagnate during 2013 and in the first months of 2014. This leads us to the following conclusions:

1. Economic growth does not come close to the double-digit rates demonstrated before the 2011 currency crisis. The government did not meet President Lukashenko’s 8.5% GDP growth target for 2013, and is also likely to miss the 3.3% GDP growth target for 2014. This is due to further contraction of industrial output, and falling exports amidst the uncertain economic situation in some of the country’s main trading partners (Ukraine and Russia).

2. The inflation rate has steadily decreased but still remains high (15-16%). Growth in pensions and household incomes is stagnating, while household communal service tariffs for electricity and gas are sharply increasing. This trend provides economic challenges to low-income social groups.

3. The current situation raises questions about the ability of the existing socio-economic model to provide high and sustainable economic growth. President Lukashenko recognizes its shortcomings and the need for reform, saying in his State of the Nation address that the choice of that model in the 1990s was not a positive achievement.

4. The recent oil export duty and loan agreements with Russia have the potential to alleviate Belarus’ economic problems, but the exact results will only be seen after their implementation. At the moment, the current account deficit remains high (nearly 10% of GDP) which creates pressure on international reserves and exchange rates.

5. Leading economic indicators that require monitoring in the future include: industrial output and merchandise exports; the current account balance; international reserves and exchange rates; the consumer price index; and communal service tariffs and household incomes.

Successes

The Government has indicated its interest in expanding the private sector’s share of the economy, currently estimated to be less than 30%. It has invited the UN and the IFIs to provide support in this regard. However, it is still unclear whether the political will exists to undertake key legislative reforms in this area.

Regional development and the expansion of SMEs in the regions is also a key priority for both the Government and key donors.

Significant government spending was noted during the preparations for the International Ice Hockey Championship (9 - 25 May 2014). 2014 was announced as the Year of Hospitality in Belarus, but a number of challenges remain in actively promoting tourism in the country.

As envisaged, Belarus will remain a committed member of the UN Group of Friends United against Human Trafficking. Belarus will continue its efforts to elaborate and agree with other states on the promotion of traditional family values as the basis of work on gender. As a country seriously affected by the Chernobyl Disaster, Belarus has pledged to play a leading role for the elaboration of a new framework for international assistance to tackle the Chernobyl legacy post-2016.