Belarus aims for sporting dividend despite economic problems

Mired in a multi-year recession and bitter loan talks with the International Monetary Fund, it would appear a strange time for Belarus to take on the burden of hosting a major sports event.

That hasn't deterred President Alexander Lukashenko, who has been in power for over two decades, from pledging last month to host the 2019 European Games — a multi-discipline event modeled on the Olympics that had a multi-billion dollar price tag when first staged in the fellow ex-Soviet state of Azerbaijan in 2015.

Though Belarus is keen to stage a low-cost sequel of an event that has yet to establish itself, the contrast between star foreign athletes and low-paid locals rankles with some Belarusians.

"Having between $300 and $350 in salary (a month), Belarusians will see the European Games as a banquet during plague times," predicts Minsk-based political analyst Alexander Klaskovsky.

Others point to the many often-empty hotels which are part of the visible legacy of Belarus' last venture into international sports, the 2014 world hockey championship.

Belarus' Soviet-style attitude to sport as a reflection of national prestige is matched by its Soviet-style economy, with most major industries in state ownership and a heavy dependence on neighboring Russia.

Its economy is in a fairly parlous state at the moment, largely because of low oil prices. Though the country has no oil itself, Belarus is heavily reliant on refining crude sold by Russia at cut-price rates. Belarusian state companies buy cheap crude, refine it, and make a profit on the difference, money which can be used to subsidize unprofitable government-run factories. That margin has been squeezed by low oil prices.

Following a 4 percent contraction in 2015, the IMF is predicting that Belarus' economy will shrink a further 3 percent this year and 0.5 percent next. At the same time, annual inflation is over 12 percent, a further dent to living standards in the country of almost 10 million.

A tough backdrop then as Lukashenko's government discusses a $3 billion loan from the IMF.

The IMF is insisting that the government carry out structural reforms to the economy, including more privatization and cuts to subsidies. These are not intended to just apply to the often unprofitable state-run factories, but also on politically sensitive municipal services.

The government is keen to obtain the IMF cash before looming debt repayments come due, but is resisting — in blunt language — the subsidy cuts.

"It's not just humiliating for me, it's humiliating for the whole Belarusian people," Lukashenko said last month, though the government's approach has since been more conciliatory.

The strained economic backdrop has also stoked up long-running tussles with Russia over oil and gas prices and the way in which some Belarusian companies have been relabeling food from European Union countries — which would otherwise come under Russian sanctions — and selling it to its larger neighbor at a steep markup.

In addition to the wider worries about Belarus' ability to host the European Games, there's widespread skepticism over how the capital Minsk can actually do it, not least because no one is actually sure how big the event will be.

Organizers aren't sure how many sports will be on the program — between 10 and 15 — and that's created uncertainty over how many venues will be needed.

The European Games' lack of pedigree means it has so far struggled to include top-quality competitions. Last year's event in Azerbaijan featured only low-level track and field and swimming competitions as a result — the two sports have their own well-established European championships — and Belarus may have none at all. Since athletics and swimming are two of the most-popular sports at the Olympics, that doesn't bode well for potential commercial returns.

Despite the uncertainty, the country's sports minister, Alexander Shamko, has already set the budget at $30-40 million, vastly below the estimated $5 billion cost of the inaugural European Games last year in oil-rich Azerbaijan.

Belarus argues that the substantially lower price tag is largely to do with the fact that it will use existing venues, rather than build costly new sports arenas. It also says it will do without the pomp which accompanied Azerbaijan's games, including an opening ceremony that cost almost $100 million.

Whatever the financial shortcomings of Belarus, Lukashenko faces the prospect of widespread criticism over human rights and corruption — as Azerbaijan found out. In Belarus, the focus is likely to be on media repression and the country's status as the last European nation to use the death penalty.

The Netherlands was originally the host for the 2019 games but pulled out citing financial worries — and its economy is way-bigger than Belarus'.

In accepting the offer to host the European Games, Lukashenko pitched his country as a safe backup option, saying "you can count on Belarus."

Whether Belarus can count on an economic and image boost from the game remains unclear.