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. Last Updated: 07/27/2016

Belarus Bans 'Bunnies' As Payment for Imports

It's not easy to get fiscal respect when your national currency is nicknamed the bunny, as in "That will be 500,000 bunnies, madam. Cash or credit card?''

But in Russia's westerly neighbor Belarus, where the bunny is king, appellation is the least of the economic worries.

The Belarussian ruble -- called the zaichik, or little hare, after the engraving that is its main feature -- has lost half its worth in five months, and more than 10 percent in the last week alone. International lending agencies all but wrote off the economy last spring. Foreign investors have been packing up and leaving for months.

Now, the government has announced a new and perhaps unintentionally revealing plan to shore up the ruble's value: Starting next week, the country will no longer accept its own currency as payment for exports.

That will keep outsiders from pumping more rubles into an economy already flooded with so many that the currency is essentially worthless. But outside experts say it will not solve the real problem: The Belarussian government, which controls most of the country's industry and the prices of most goods, insists on printing more and more rubles whenever it runs short of cash.

The latest plunge in the ruble's value occurred after the nation's autocratic and eccentric president, Alexander Lukashenko, said the government would issue more bunnies to pay for the fall harvest.

Its currency aside, Belarus is not the sort of place these days that brings to mind fields of cuddly cottontails. Lukashenko is that rare leader who openly longs for a return to the Soviet Union's glory days, and he brooks little dissent. Personal and press freedoms are sharply limited, and the country's human rights record has come under growing attack.

"It's just another blip in what's become a long, slippery slope," said an official of one international lending agency in the Belarussian capital of Minsk. "They control prices while they push up the money supply," said the official, who asked not to be identified. "The two actions are incompatible, and the result is inflation."

Officially, inflation is no problem in Belarus. The official exchange rate is about 41,000 rubles to the dollar. But there are at least three other less official exchange rates, up to and including the black-market rate, which now hovers around 85,000 rubles per dollar.

Similarly, prices in Belarus are officially stable, a result of government decrees capping them. But unofficially, prices are edging up by 3 percent to 4 percent a month.

One result is hardship. Inflation gnaws at the average worker's take-home pay of $50 to $100 a month; pensions are smaller. Another is isolation. Foreign companies, especially Western ones, have slashed their investments in Belarus. Motorola abandoned a semiconductor-manufacturing venture in May, and a Western maker of television picture tubes pulled out this summer.

Almost all of Belarus' foreign trade is now conducted with Russia, and even there much of the trade takes the form of barter rather than using scarce cash.

Lukashenko's policy has been to keep state control of industries while allowing them to react somewhat to the forces of capitalism -- "market socialism," as his government calls it. According to government statistics, it has worked: The nation's gross domestic product leaped 11 percent last year, and exports swelled by 27 percent.

Unfortunately, so did inflation.

"To boost production, they have to pay salaries," said Mikhail Seleznev, a Belarus native and an investment analyst for United Financial Group, in Moscow. "And to pay salaries, they simply print money. The local currency is being printed whenever they need it."