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. Last Updated: 07/27/2016

EDITORIAL: Ruble Crash In Belarus Is Self-Inflicted




Belarussian President Alexander Lukashenko has found a convenient but highly implausible scapegoat for the collapse of the national currency.


The Belarussian ruble, or the "hare" as it is better known in a glib reference to the animal that adorns the notes, has never been too highly regarded.


But over the past couple of weeks, it has crashed by about 25 percent in trading on the Moscow Interbank Currency Exchange.


Lukashenko says the currency crash is all part of a shadowy plot by his liberal opponents in Moscow, especially First Deputy Prime Minister Anatoly Chubais, to "cause discontent in Belarus by a collapse in the price of staple foods."


It is true that trading in the Belarussian ruble is mostly based in Moscow, but this is only because Russia is Belarus's only real trading partner and because free trade in the hare is impossible in Lukashenko's tightly regulated economy.


Within Belarus, the business community uses either an unrealistically overvalued official exchange rate or the black market. The crash on the Moscow market is one of the few clear barometers of the state of the Belarussian economy


The official line put out by Minsk is that business in Belarus is booming. According to the deeply suspect figures released by Lukashenko's government, the economy grew 17 percent last year.


The crash of the hare undercuts this propaganda, suggesting that any growth in Belarus was achieved by unsustainable government spending, financed by printing money. This has in turn blown out the money supply and set inflation on the rise.


Russia can derive moral satisfaction from the strength of its own ruble. After all, Russia was making the same mistakes Belarus is making today as recently as the Black Tuesday crash of 1994 when the ruble collapsed 25 percent in a day.


But as Chubais pointed out this week, the problems in Belarus may have repercussions for Russia. Belarus, which has long since broken links with the International Monetary Fund and the World Bank, is likely to come to Russia for financial help in stabilizing its currency.


Belarus already profits from the biased terms of its customs union with Russia. Lukashenko will no doubt expect Russia to offer more help now, perhaps in the form of loans or of discounts on its energy bills.


Russia's hopes for closer integration with its neighbors and its economic ties with Belarus might encourage some in the Kremlin to offer that help. But Belarus's currency problems are of its own making, and no help should be given until Belarus itself shows it is getting its house in order.