Belarus - Domestic policy



Lukashenko has been reluctant to push for many structural changes in the economy lest they result in social upheaval. As of 1999, Belarus still had a tightly centralized Communist-style economy that was yielding hyperinflation and shortages of consumer goods, and the World Bank was withholding further loans unless market reforms were implemented. Many entrepreneurs left for Russia and observers estimated that the private sector fell from 30% to 10% of Belarus's economy as a result. Then when Vladimir Putin was hand-picked by the resigning Boris Yeltsin to lead Russia in December 1999, the new Russia no longer had any prosperous political niche for Aleksandr Lukashenko. The brotherly feelings that had been demonstrated by Yeltsin were replaced by Putin's impartial, more practical approach. By 2001, most Russian politicians had begun to realize that Belarus could be more of a burden than an asset were the two countries to consolidate their economies further. In late 2002, Putin summoned Lukashenko to a meeting in Moscow, but observers felt it was unlikely that Russia would agree to a union with the poverty-striken Belarus.

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