BELARUS NEWS AND ANALYSIS

DATE:

28/07/2009

Belarus may get EU assistance, must meet conditions

By Timothy Heritage

BRUSSELS, July 27 (Reuters) - The European Union could offer Belarus economic assistance if it meets similar conditions to those set for a loan package by the International Monetary Fund, an EU official said on Tuesday.

But EU officials also made clear after talks with Belarus that the former Soviet republic would have to make more progress on democracy and human rights before it could receive such assistance to combat the global economic crisis.

'We could unlock the full potential of our relationship if indeed convincing and irreversible reforms will be there,' Benita Ferrero-Waldner, EU commissioner for external relations, told a joint news conference with Belarussian Foreign Minister Sergei Martynov.

'We are ... considering macrofinancial assistance and the possibility for Belarus to receive EIB (European Investment bank) and EBRD (European Bank for Reconstruction and Development) loans in the future.'

She said it was far too early to say how much money Belarus might receive. Asked about the conditions attached, she said: 'The conditionality is, so to say, the IMF conditions.'

The IMF approved a $2.5 billion emergency loan package with Belarus last December to help it through the financial crisis.

It said Belarus had agreed to measures including a strengthened monetary and exchange rate policy framework, fiscal restraint through cuts in public investment and directed lending by banks, and strict public-sector wage restraint.

The Fund increased financing support for Minsk last month by $1 billion under a revised economic programme.

Belarus, which is squeezed between the EU and Russia, has been trying to improve links with the West after years of isolation over accusations that long-serving President Alexander Lukashenko violated fundamental rights.

The EU is interested in boosting ties with Belarus as it is a transit state for energy supplies from Russia.

Russia has pledged $2 billion in credits to Belarus to help it combat the economic crisis, but relations between Moscow and Minsk have deteriorated since a row over energy prices in 2007.

Russia is also concerned by Minsk's improving ties with the EU, which has lifted some punitive measures in the past year, including an entry ban on Lukashenko and other officials.

But making clear more reforms were needed, Ferrero-Waldner said: 'We stand ready to support and re-engage with Belarus if indeed Belarus shows itself to be very serious in pursuing moves towards democracy and fundamental freedoms.'

Source:

http://www.lse.co.uk/MacroEconomicNews.asp?ArticleCode=158ed405868y9pl&ArticleHeadline=belarus_may_get_eu_assistance_must_meet_conditions

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