I would like to begin my final statement by answering a question, which was raised by some working groups at their classes. I wish you to pay attention to this question, because it has accidentally coincided with my today's reflections.
"We have not got the full idea of the fundamental features of the 'Belarusian model of development', neither during the lectures nor at the workshop." If such a model does exist why then are there no intelligible working-outs on its principles and prospects?" (Vasily Borisovich Dolgolev and others raised this problem).
So today I just thought that we have been mentioning much: " the Belarusian model of development," "our own way," "the Belarusian way" and so on, but actually we have not yet clearly crystallized this model, though, as a matter of fact, my final statement, which had been prepared before, is focused from the outset on the characteristics of this very model.
However, I will tell you what I have never before told you on this issue. Prior to the presidential election, before the start of 2001, my aides, the head of the presidential administration (Mikhail Myasnikovich held this post at that time) and many Government executives would often insert the word combination "the Belarusian model of development" into my statements. And I would always cross it out; I feared I would be criticized for having invented some particular "Belarusian model," some "special way" which did not resemble anything else.
Now we have decided to speak openly (especially after the election) about the "Belarusian model of development," after our foreign partners and our opponents (not only partners) started speaking about it themselves. Assessing our way of development many (even the World Bank and the IMF) say already that Belarus have acted rightly by not accepting the Russian style break-ups: let's do it and then we'll see how it goes. They assessed positively and actually recognized this way, not a special one though, of development, a way of Belarus development - the" Belarusian model" with some of its particular features. Only after that I have agreed that I would be speaking about the "Belarusian model of development." But the idea existed long ago. I was just trying to avoid mentioning it in order not to run the gauntlet of criticism voiced by the opposition and the "conscientious" part of our society, including yourselves. Today we can speak about it.
Indeed, the "Belarusian model of development" or the "Belarusian way of development" objectively exists. Everything we have today in our economy, in social and other fields is a result of our going our own way for all these years, of our relying upon our own reason.
I would like to point out two recent distinctive events.
First. Collapse of Argentina's economy. Not so long ago many politicians and economists claimed that country's liberalization model to be a universal standard for us, the post-Soviet, post-socialist states. I remember how one used to invite the draft-makers of this model to Russia in order to introduce "the Argentine miracle" and enhance Russia's development.
But, as the recent events demonstrated, the Argentine experience of liberalization is a direct way to the system profound crisis, rather than to the long-term stable growth. And that was actually the result. You are aware of it.
Second. The 2001 Nobel Prize in economic sciences was awarded to three American scientists Joseph Stiglitz, George Ackerlof and Michael Spence. In their works they prove that the purely liberal model of development (the market model as we would say) does not bring about greatest efficiency, and they point to the necessity of most active regulation of market processes by the state. Just think it over, what has happened. The Nobel Prize today is awarded for what we had started doing seven years ago. Doesn't it mean recognition of our right choice?
At present the liberal theories dominating in the Western economics are being fundamentally revised. For one thing, I am referring to rejection of the principle of unlimited competition and to recognition of an important role of the social factor.
Having rejected the "shock therapy" we were being imposed, we have created our own model of development. And we have not done it out of nowhere. Much had been done by others. We have just brought everything together and added something of our own. Our model takes into account the regularities of social development as well as experience of other states. Above all else, such European states with the developed socially oriented economy as Belgium, Sweden, Germany, France. We also learn from the instructive example of evolutionary transition to the market economy methods, which is demonstrated by China.
Incidentally, German and Swedish models of the social market economy are considered as axiomatic. I was telling you this five and six years ago. And these models have been guiding us. Their main feature is active involvement of the state in the regulation of socio-economic processes. The Swedish (Scandinavian) model attributes the role of the main socio-economic force to the state. Hence the most striking results they have in the socio-economic sphere in comparison with all the states of our planet.
Time has proved the right choice of the priorities laid down in the Belarusian model of development; it has proved the vitality and effectiveness of this model. Our country was the first in the post-Soviet space to overcome crisis tendencies in the economy and to regain the production level of 1990.
Despite extremely limited resources of Belarus, we have been successfully realizing the main goal - stage-by-stage advance in the living standards of our people. In 2001 alone the real monetary income of the population grew by 25 per cent whilst the real wages and salaries grew by more than 30 per cent.
Already now the UN experts rank Belarus the first among the CIS states as to the human development index.
Now about the distinctive features of our development model. Some may argue: why should we need our own "Belarusian model of development?" I will tell you bluntly: we need it very much!
Our course is establishment of the socially oriented economy with an adequate infrastructure, effective mechanisms of state and market regulation which are sensible to scientific and technological progress.
Why have we indulged in creation of our own model?
The point is, that, given the experience of economic transformations in other countries, there is no universal model. It is impossible to mechanically transfer the practices of one country to another, due to specificity of their conditions, particularities of their economic life and national traditions.
It is our approach that meets to the greatest extent the traditions of the Belarusian people, the interests of our citizens. It implies that even the most complicated socio-economic problems of the society must be resolved at minimal social risks.
What are the distinctive features of this model?
First. Strong and efficient state authority. To safeguard the citizens' safety, to ensure social justice and public order, not to allow expansion of crime and corruption is indeed the role of the state. Only the strong authority managed to drag the Belarusian economy out of the economic crisis abyss.
Our nearest neighbors have in the long run realized that, if there is no strong hierarchy of authority, liberalization of the economy in the transition period brings about social instability and legal unheard-of disorder. It results in public unruliness!
As for us, we had a clear idea at the very beginning that premature expansion of market relations would not allow us to radically resolve any of the existing pressing problems. On the contrary, new problems would emerge, generated by the specificity of the market relations. Public accord would break, resulting in conflicts and instability. And it is political stability that is one of the main conditions for gradual integration into the world economy. I would refer to it as one of the distinctive features or consequences (whatever you call it) of the model of development of the Belarusian economy.
Here we proceed from the fact that mentality, traditions and way of life of the people cannot be changed overnight. Must they be changed at all? It cannot be possible to throw unprepared people into the market abyss. One needs decades to work out a new world outlook.
The second distinctive feature of our model is in the fact that the private sector can and has to be developing alongside the public sector. But not to the detriment of national interests. I emphasize: if you are a private owner, it does not imply you should do whatever you like. National interests, the state, must be the main priority and the main goal for the work of every citizen, enterprise or entrepreneur whose production is based on private ownership.
As distinct from our neighbors, we have not been speeding up artificial growth of the non-state sector of economy. Indeed, the barriers were put in place. But only to those who would establish companies for taking away capital to off-shore zones, who would take loans without intending to repay them, who would establish paid universities without intending to teach students, who would obstinately evade from tax payments.
Any civilized state acts exactly in the same way, defending lawfulness and interests of its citizens.
It is because of the crime-related business that the public at large often has negative opinion about private entrepreneurship as a whole. Associations of entrepreneurs take last places as regards the level of trust among the public. Even the so-called "independent" sociological research centers have to admit it.
Our state is interested in developing private business and in enhancing confidence to it. But only honest business is implied here, that which yields benefit both to entrepreneurs and the state. Above all else, to the public. In October last year we had already said it, at the meeting with the business community of our republic, and we reached common consent.
In the future the aim of the dialogue between the authorities and the business community will be to reduce interference by the state and at the same time to raise responsibility of business entities for the observance of laws.
As to the role of the state and interference or non-interference, I would say the following. At any rate, I have been following these principles in pursuing my policy. The state may and must interfere whenever such interference allows it to act efficiently, to achieve and yield results. Therefore wherever you - the subjects of the state and leaders of the respective sectors - feel that your interference will do good, do interfere. But wherever you see it will do worse, do not interfere. It is as simple as that.
More than 60 thousand of non-state owned enterprises and about 200 thousand individual entrepreneurs have been registered in Belarus. The non-state owned enterprises manufacture more than 40 per cent of the industrial output. Their share in the retail turnover exceeded 77 per cent in 2001.
I believe that not all the problems concerning support and development of entrepreneurship require decision taking at the level of the President and the Government. Local authorities too have considerable power in accordance with our legislation. The authorities in the regions must not stay aside if it concerns support and development of normal and honest business, especially in the production field.
The second distinctive feature of the Belarusian model is in the fact that privatization is not a goal per se, but a tool to find interested investors, to generate efficient owners.
We count on the investors capable of taking responsible and interested actions. On those, who will ensure attraction of investments to the real sector of economy, who are interested in long-term development of the Belarusian enterprises, who are ready to commit themselves to improving the social conditions of the workers. The result would be reinforcement of our state. Wheeler-dealers of all kinds would be placed before reliable barriers.
At present we are starting privatization of major state-owned enterprises. Can we have risks here? Of course, not. Amongst various options of privatization of major enterprises we select those, which optimally meet the interests of the state, of the workers, of the enterprises and of the sector as a whole. During the first stage the control packet of shares is, as a rule, kept with the state, to get convinced that the investor is going to be involved for a good long while. If privatizing some enterprises of non-strategic importance one can also afford the selling of the control packet of shares. But the mandatory condition here is that this process must be carried on openly and honestly, on a competitive basis.
The distinctive feature of the privatization process is in the fact that it is a very difficult and serious process. We have not had any sweeping privatization as it was in Russia. Our privatization is of individual or, if one can put it this way, of personal character.
No sweeping privatization is implied. Do remember it. We are selling the state property created by all the people! Created by us and by our ancestors. Therefore, we have no right to treat this process lightly, to say the least. We should be meticulous in deciding to sell anything and at what price.
We have worked out 12-15 conditions for those who wish today to buy a part of an enterprise or an integral enterprise in the Republic of Belarus. The only aspiration of ours is to get great dividends for the state from this deal. In selling, I strive to a most expensive price, close to the price of a new enterprise. Also, additional conditions are put forward: no turning to the worse, more efficient production and better for the society. Such is the goal of joint-stockization and privatization; such is the method and the way I follow.
There's another popular view. Of course, the major enterprises, half of the existing enterprises, carry the main burden, they feed people. As for the agricultural enterprises, one quarter of them is narrowly surviving, due to various causes: both objective and subjective. So they say: let us give the available funds to those who yield results, i.e. to the already mentioned major enterprises, it is they that feed the country. As to the 25-30 per cent of the farms, let them live as they want, that is to say, we will not care about them.
But if we abandon one quarter of our rural areas to self-survival, they won't be able to survive without us. What will happen then? There would be an outflow of the rural population to the crowded cities, which even now lack job places. What sphere will these people fill in? The criminal sphere! Well, tell me now, what would be the cost of fighting against such additional crime? What will we gain out of it?
There is a whole range of subjective causes, which prevent one quarter of the farms from normal functioning. I am telling you this for you to avoid simplified approaches to privatization, for you not to shout: ah, but over there, in Germany...Over there the people are toiling from early morning till night. As soon as we too start toiling from early morning till night, there will more than enough of meat and milk!
The fourth distinctive feature of the Belarusian model is integration processes with the CIS participating states, first of all with Russia. Their purpose is to get high economic results.
We started such integration in the economic field first of all. Proceeding from the fact that the market is distributed. Nobody is waiting for us in other markets. That is why our foreign economic strategy has been aimed at restoring the ties with our traditional partners. Now such integration covers all the spheres of the social life.
The fifth distinctive feature of our model is strong social policy of our state, the cornerstone of our policy. We are well aware that economy is efficient when it is socially oriented. Such orientation is not only meant to help the needy people. It means investments to the health of the people, to their professional, cultural personal development. So, in the long run, investments to their future and the future of our country.
Formation of a new type of individual - the one who is enterprising and full of initiatives, active and creative, producing material values, wishing to work and earn - is an important goal of our state at present.
President of the Republic of Belarus