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After seven decades as a constituent republic of the USSR,[link widoczny dla zalogowanych], Belarus attained its independence in 1991. It has retained closer political and economic ties to Russia than any of the other former Soviet republics. Belarus and Russia signed a treaty on a two-state union on 8 December 1999 envisioning greater political and economic integration. More recently Belarus has signed up to the Collective Security Treaty Organization and Customs Union, headed by Russia. Both these institutions are aimed at increasing integration of member states with a view to forming the Eurasian Union in 2015.
Since his election in July 1994 as the country's first president,[link widoczny dla zalogowanych], Aleksandr Lukashenka has steadily consolidated his power through authoritarian means. Government restrictions on freedom of speech and the press, peaceful assembly, and religion remain in place. Although officially Belarus is a republic,[link widoczny dla zalogowanych], in reality it is more like a dictatorship. This has evolved since its independence with a series of changes to the constitution which have increased presidential powers (1996) and removed presidential term limits (2004).
Political Landscape
• Belarus retains a well-developed industrial base which is a legacy from its days as part of the USSR however this is now outdated and relies on subsidized energy from Russia.
• Its agricultural industry is inefficient and dependent on government subsidies,[link widoczny dla zalogowanych].
• There remains little private business activity, with the majority (80%) remaining under control of the government.
&bull,[link widoczny dla zalogowanych]; Foreign investment has been hindered by a hostile business climate and the US do not advise any investment in the area citing opaque legal and regulatory systems.
• State banks account for 75% of the banking industry. Many which had been privatised after independence have been renationalised.
• Belarus imports most of its crude oil and natural gas from Russia at prices substantially below the world market.
• Belarus exported refined oil products at market prices produced from Russian crude oil purchased at a steep discount. In late 2006, Russia began a process of rolling back its subsidies on oil and gas to Belarus.
• Tensions over Russian energy reached a peak in 2010, when Russia stopped the export of all subsidized oil to Belarus save for domestic needs.
• In December 2010, Russia and Belarus reached a deal to restart the export of discounted oil to Belarus.
• In 2011,[link widoczny dla zalogowanych], a financial crisis began, triggered by government directed salary hikes unsupported by commensurate productivity increases. The crisis was compounded by an increased cost in Russian energy inputs and an overvalued Belarusian ruble, and eventually led to a near three-fold devaluation of the Belarusian ruble in 2011.
• In November 2011,[link widoczny dla zalogowanych], Belarus agreed to sell to Russia its remaining shares in Beltransgaz, the Belarusian natural gas pipeline operator, in exchange for reduced prices for Russian natural gas.
• Receiving more than half of a $3 billion loan from the Russian-dominated Eurasian Economic Community Bail-out Fund, a $1 billion loan from the Russian state-owned bank Sberbank, and the $2.5 billion sale of Beltranzgas to Russian state-owned Gazprom helped stabilize the situation in 2012; nevertheless,[link widoczny dla zalogowanych], the Belarusian currency lost more than 60% of its value and economic risk remains high for 2013.
• Belarus may also have received a loan from China following the 2011 currency devaluation,[link widoczny dla zalogowanych].
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