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. Last Updated: 07/27/2016

Bachelor Lukashenko's Dirty Dowry

Russia's relations with neighboring Belarus have been rocked by one more in a long line of scandals. In 2001 and 2002, the Russian Central Bank issued credits to Belarus totaling 4.5 billion Russian rubles to help prop up the Belarussian ruble, commonly known as the zaichik, or bunny rabbit. The loans carry a 5 percent annual interest rate. Last week, repayment of the latest tranche was postponed for another year.

Vedomosti reported that most of the rubles loaned to Belarus to stabilize the zaichik never made it to their destination. They were salted away in Russian banks instead. A deposit of 635 million rubles was made into a NOMOS Bank account yielding 10 percent annual interest. Another 700 million was deposited in the Bank of Moscow at 14 percent. Rosbank was the big winner, receiving deposits of 293 million and 794 million rubles and paying out zero and 5 percent annually, respectively.

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In addition in 2002, 159 million rubles were deposited in an account at Lanta Bank at 12 percent per annum. Another 500 million earned 15 percent interest at MDM Bank, while deposits of 635 million and 53 million rubles in accounts at Alfa Bank earned 3 and 1 percent per annum, respectively.

In all, 3.7 billion of the 4.5 billion rubles loaned to Belarus to prop up its national currency were deposited in Russian banks to generate income. Using a low-interest loan this way is like asking for money to pay for your mother's cancer treatment and then later it transpiring that you blew it all on your girlfriend.

According to the author of the Vedomosti article, the well known financial reporter Alexander Bekker, in one year Minsk cleared no less than 225 million rubles just by arbitraging on the difference in interest rates.

The deposits in accounts yielding less than 5 percent interest are rather more suspicious. It's true that you're not a thief until you get caught stealing. But in the old days, when a red director deposited his factory's money in a zero-percent account, it usually meant that he was collecting a little interest income for himself on the side -- in cash. This used to be a favored method for transferring a company's money to the director's pocket.

If the Financial Action Task Force, or FATF, doesn't raise an eyebrow when money from a stabilization loan is deposited in an account at zero percent interest, this suggests that FATF may be doing a little laundering itself. In this case, however, the process seems to be moving in reverse: Clean money (a stabilization loan) is converted into dirty interest payments. Money is not being laundered, it is being flushed into the sewer. There's no reason to suspect the banks involved of operating as washing machines -- but as toilets, that's a different matter.

President Alexander Lukashenko of Belarus is quite similar to Queen Elizabeth of England. She died a virgin, as we know, but the prospect of her hand in marriage was a powerful instrument of British foreign policy. Lukashenko's Belarus is unlikely ever to unite with Russia for the same reason that Haiti never managed to unite with the United States during the 29-year Duvalier family dictatorship. Countries where political opponents vanish without a trace never unite with other countries, much less with those where political opponents haven't yet begun to disappear.

And yet, as bridegroom Lukashenko is allowed to live on the interest from his dowry without tying the knot. Our Central Bank floats loans to Lukashenko at a loss. Gazprom sells him natural gas at the domestic rate of $24 per 1,000 cubic meters, knowing full well that Lukashenko's Beltransgaz resells it for twice as much. Our railways ship Belarussian freight for the domestic fee. The customs agreement with Belarus amounts to renting out a stretch of the Russian border to Lukashenko so that his buddies in the shipping business can make a mint delivering goods to the Russian market.

The union of Belarus and Russia is like having a tapeworm in your gut. For you, this is nothing short of unification. But for the worm, it's full autonomy.

Yulia Latynina is host of "Yest Mneniye" on TVS.