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. Last Updated: 07/27/2016

Belarus Ends Exemptions For U.S. Fast-Food Giant

MINSK, Belarus -- Belarus has curtailed tax and customs advantages for U.S. fast-food giant McDonald's and told the company to fend for itself.

"McDonald's has not created a single enterprise here as provided for by our agreement. It therefore has no right to any preferential treatment," Enterprise and Investment Minister Alexander Sazonov said Wednesday. "They always needed some sort of special conditions in converting Belarussian rubles, in setting prices and duties. Now McDonald's will have to cope with the same problems all Belarussian enterprises have."

McDonald's operates five restaurants in the capital and has invested more than $15 million in the nation.

McDonald's said it encountered a seemingly endless series of difficulties. With the Belarussian ruble in free fall since March on the unregulated interbank market, McDonald's had to convert local currency at the official rate f several times less favorable than the free-market rate.

Despite the ruble plunge, it was also subject to controls limiting monthly price rises to 2 percent.

Such circumstances help make the 190,000-ruble Minsk Big Mac the cheapest in Europe f 70 cents at the free-market exchange rate of 280,000 Belarussian rubles to the dollar. It costs about $4 at the official rate.

"We understand that living standards in Belarus are low," said Olga Troyan, McDonald's manager in Minsk. "We don't want to turn our clients away because of unaffordable prices."

But she said complying with the provisions of the agreement with Belarussian authorities, under which ultimately only local produce was to be used, would push up the price of a hamburger and hurt the company's business. "We found it difficult to explain to authorities that the company's plans are dictated by pricing considerations," she said. "Meat prices are 30 percent higher here than in Russia. Even straws for drinks cost 10 times what they do in Poland."