Published May 25, 2011
MINSK, Belarus – A sharp devaluation of the Belarusian ruble has spread panic across the country, with people rushing on Wednesday to buy dollars, euros, toasters and canned goods — anything that will not lose its value as quickly as the national currency.
Belarusians swept store shelves and queued for entire days at currency exchange offices in a desperate attempt to protect their savings from the country's sinking fortunes.
President Alexander Lukashenko promised that the national currency will remain stable following the devaluation ordered a day earlier, but experts warned it will continue its nosedive if Russia doesn't provide a quick bailout.
Confidence in the ruble, whose value is fixed in Belarus, has dropped for weeks amid fears over the country's finances and the country's lack of support from its neighbors, both the EU and Russia.
Belarusian officials on Tuesday cut the ruble's official value against the dollar almost in half Tuesday — to 4,930 rubles per dollar from the previous 3,155. The perceived value of the local currency is much lower, however — on the black market it takes 6,000 rubles to buy a dollar.
To make matters worse, there is a physical shortage in the country of dollars and euros, which companies and households desperately want to own to protect themselves from a worse devaluation in the future.
The government's own reserves are badly depleted and exchange offices have run out of foreign currency because they are allowed only to sell what they buy from clients.
Andrei Krylevich, 42, has spent a week in lines outside an exchange booth in downtown Minsk without a chance to buy a single dollar. The computer company he works at has sent its employees on an unpaid leave, and he urgently needs to pay back a $9,000 loan to a bank.
"In just one month, I have virtually turned bankrupt, the entire country has gone bankrupt," Krylevich said. "Even during the Soviet collapse we didn't go through such nightmare."
Krylevich's 40-year-old wife, Svetlana, also was sent on an unpaid leave.
"It's a matter of survival — I will soon have nothing to feed the family," she said. "How should I treat the government that has led the nation into a deadlock?"
People in the queue show up at the exchange booth several hours before it opens in the morning, bringing chairs, food and hot drinks to spend a day in vain hopes of buying foreign currency.
Most Belarusian industries are state-owned, and the government has tried to keep its scarce currency reserves for vital imports. On Tuesday, it set tight limits on interbank currency trading, effectively stifling the market.
Many Belarusians have turned to black market traders despite the authorities' attempts to stem the practice with arrests. The government recently cut access to a foreign-based Internet portal that currency buyers and sellers were using to find each other.
Unable to buy foreign currency, people bought all they could from stores, both to stock up on food as well as to invest in tangible goods whose value won't deplete as quickly as the ruble's. Home appliances, electronics and other durable consumer goods have vanished from the shelves, which now eerily resemble the waning days of the Soviet Union.
"I fought my bank to close my account and get 5 million rubles ($1,000) in cash, and I want to buy at least something before my money turns into dust," said Dmitry Malishevsky, a 48-year old tractor factory worker who showed up at Minsk's main department store only to see empty shelves.
"I feel scared when I think of the future," he said. "We are struggling to survive instead of living a normal life, and Lukashenko is to blame."
Nadezhda Gorelik, a clerk at a shopping center in central Minsk, said that people were hoarding sugar, salt and other staples. "There is a feeling that a war is about to erupt," she said.
The flamboyant Lukashenko, in power for nearly 17 years, has kept an unusually low profile in recent weeks as his government has been pleading Russia for a vital loan. Moscow has been reluctant to provide it, with experts saying it is pushing Belarus to sell its industrial assets at a rock-bottom price.
While the two neighbors have an agreement to keep close political, economic and military ties, their relations have long turned sour as Lukashenko launched angry tirades against Moscow. He has threatened to approach the West for help to squeeze more subsidies out of the Kremlin.
But Lukashenko burned his bridges to the West when he unleashed a violent crackdown on dissenters after December's presidential election, which international observers criticized. The EU and the U.S. responded to the repressions with new sanctions, including a travel ban on Lukashenko and his officials.
The Belarusian president sought to mend ties with the West, saying Wednesday during a trip to Kazakhstan that his government could free opposition activists jailed for taking part in the election night protest. He also defied Moscow, saying that he still sees no need to sell them any assets in exchange for help.
Russia's Finance Minister Alexei Kudrin said Tuesday that Belarus can get the total of $3 billion in loans from an economic alliance of several ex-Soviet nations over the next three years, including the first $800-million disbursement that could be delivered next month. Kudrin added that Belarus could earn another $7.5 billion by privatizing its industries, most of which remain in state hands.
Belarus' former National Bank chief, Stanislav Bogdankevich, said the nation needs $8 billion to shore up its economy. "The government's policy has led the nation to a catastrophe," he told The Associated Press.
Bogdankevich said that Lukashenko has triggered the financial crisis by raising public sector wages by one third as part of his election campaign.
"Belarus could make its ends meet as long as Russia was subsidizing it," said Leonid Zaiko, head of the Minsk-based Strategiya independent think-tank. "But once Russia stopped offering loans, everything has collapsed."
Vladimir Isachenkov in Moscow contributed to this report.