IFLR 1000
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"In Belarus we didn't really have such a crisis as the rest of Europe, though of course there are long-term consequences such as the mounting exchange rate against the Ruble and the devaluation of our currency." As can be seen from the above comment from one partner, Belarus is a market that has seen its fair share of turmoil over the past 12 months, at different times being shaken by rumours of currency devaluation, dealing with the stuttering pace of the long-mooted privatisation scheme and attempting to change the perception of the country as a somewhat difficult place to get in involved in business-wise....

"In Belarus we didn't really have such a crisis as the rest of Europe, though of course there are long-term consequences such as the mounting exchange rate against the Ruble and the devaluation of our currency."

As can be seen from the above comment from one partner, Belarus is a market that has seen its fair share of turmoil over the past 12 months, at different times being shaken by rumours of currency devaluation, dealing with the stuttering pace of the long-mooted privatisation scheme and attempting to change the perception of the country as a somewhat difficult place to get in involved in business-wise.

"Government meddling affects all work," says one partner, while another highlighted the pervading traditionalist attitude as an issue: "Tradition is good but it is an old attitude that the people who work in these state-owned companies have. It is a purely political decision as to whether this changes or not."

Putting these problems to one side though, partners do report some bright spots. "The market is definitely on the rise. The real estate, M&A and banking & finance sectors are definitely growing," says one, and another agrees: "Finance work has kept me very busy this year."

In terms of legislation, "2011 is the year of liberalisation" according to a lawyer in the market, and changes have been happening. "The country is in a process of liberalisation so there are changes happening almost every month. There are new tax codes, changes in licensing and a loosening of controls," explains a partner.

Despite Belarus's endemic political instability the much-anticipated privatisation process does interest investors. As part of a stated liberalisation strategy investment hopes were high, but it is said that less than 20 of a putative 600 stakes were sold, the scheme seemingly stalling before it was even out of the gate.

There is pressure coming to bear on this though, as Russia, through the Eurasian Economic Community, has agreed to a $3 billion loan to Belarus, $800 million of which they have received upfront. The rest they will only receive if the government goes ahead with the privatisation of state-owned companies. This is an interesting incentive, and it would be right to expect further interest from investors as and when this begins.

"The state privatisation drive has been a disappointment," comments one partner. Another peer agrees: "We need investment as there has not been a major policy of privatisation."

Rumours of a currency devaluation continued to persist through the year, so much so that there were reports at some points that Belarus was to dispense with its own Ruble and make the Russian equivalent the national tender. This has not come to anything to date, and one partner explains the situation succinctly:

"The IMF and other experts are saying it [the devaluation] is a good thing, but I think the government will try to avoid devaluation at all costs. They are looking to borrow heavily to do this and it will be mainly from the Russian government and Russian banks."

This also further showcases the intimate cultural and economic ties of cooperation that exist between Russia and Belarus, the former still being the latter's foremost trading partner despite some butting of heads over export duties for oil and oil refining products. Russia also owns the majority of the banks in Belarus, and is more willing to take on the political risks in the country than other investors, putting them in a strong position regarding the privatisation.

"Russia has an interest in Belarus coming up to speed and will help any way they can," says one partner, while another adds "Belarus is very close to Russia yes. We do a lot of commodities work with them at our firm."

This perceived reliance was one thing that spurred the government in Minsk to take action to diversify and free up the market in order to attract investment, but it remains to be seen whether this trickle of privatisation activity will turn into the anticipated flood in the next year or so, and how far it will be dominated by Russia and Russian investors.