When gangster states turn citizens into criminals
By : Erik D'Amato
Editor's note: Marek Matraszek will return next week.
With all its griping about taxes and regulation in Hungary, readers may sometimes get the feeling that the purpose of this column is to brand the country as the most anti-business place on Earth. Balderdash: I've set foot in at least 25 countries more difficult than Hungary to work or live in. In fact, while you were recently keeping cool at the Balaton, I was roasting in what may be the most hellish spot in Europe to do business: Belarus.
Let me first say that "White Russia" is in many ways as fine a place as one could hope to ever visit or set up shop in. It is strategically located and modestly well endowed with natural resources. More importantly, it has excellent human resources, having been the most developed republic in the Soviet Union. Its 10 million people a fifth of whom, as in Hungary, live in or near the capital are serious, well-educated and hardworking. The problem with Belarus is that it is saddled with a quasi-dictator obsessed with preserving or enhancing his near-absolute power.
As the international media step up coverage of the country ahead of next month's presidential elections, they have focused on President Alexander Lukashenko's strong-arming of the country's feeble opposition groups and figures (including the disappearance and alleged murder of a handful of leading dissidents). However, few have bothered to examine the machinery that allows one man to so thoroughly dominate a country while only rarely resorting to wholesale Gestapo-style tactics.
One reason for Lukashenko's continuing hold is the historical passivity of the population, which has never enjoyed true sovereignty. Another is the fear of pensioners that any change will further dilute or destroy their tiny incomes, and of workers in the massive state sector that reform will leave them jobless and hungry. But if Lukashenko is legally re-elected as most insiders expect it will be due in large part to a bizarre and perniciously successful campaign to create a nation of outlaws.
This doesn't mean that Belarus is one of those post-Soviet wastelands where mobsters shoot it out in broad daylight. Minsk may be the safest big city in Eastern Europe, thanks to the legions of police and militiamen deployed throughout the capital. Indeed, Belarussian cops are so concerned with public safety and order that they are known to check the oil in cars they pull over, just to make sure the level isn't below the legal minimum.
Investigators from economic control bodies go to similar lengths to make sure enterprises possess the correct licenses (of which there are about 150), adhere to directives from commissions that set prices for hundreds of products, pay the crushing taxes and fees, and heed the often lunatic decrees that emanate from the all-powerful presidential administration.
One leading private businessman I met pointed out that even if one wanted to fully comply with all the rules, it would be all but impossible. "Even with enterprises like ours, which can afford lots of accountants and lawyers, there are still 'misunderstandings,'" he said.
While the impassable tangle of laws and decrees is an obvious source of payola to the cops and officials in charge of enforcing them, this isn't the point. Nor is the intent to drive the country's entrepreneurs out of existence. Instead, the objective is to make sure each and every soul in the country has something they can be nailed for, should the authorities decide to do a bit of digging. The key word, of course, is "decide." In such a system of selective enforcement, only those out of favor with the authorities are held to account.
Yet even if it is impossible to comply with all the laws and decrees, and enforcement is arbitrary or obviously discriminatory, the effect is in some ways more sinister than the traditional midnight knock on the door. After all, it's kind of hard to take a dissident seriously if they have been convicted of embezzlement or fraud and all they can say for themselves is "everyone does it."
The system works all too well. The anonymous businessman quoted above requested anonymity for a reason, having on more than one occasion noticed the link between seeing his name in print and having his premises ransacked by militiamen and inspectors. And it is not only individuals implacably opposed to the regime who are targeted, but those who fail to obediently follow orders from above even illegal orders. A number of senior executives in the banking sector were recently charged with economic crimes; according to some critics, the bankers merely resisted improper orders to steer credits to politically favored enterprises.
Of course, Lukashenko didn't invent this form of social control. It was a favorite approach of the "softer," post-Stalin Soviet regimes, which sought to turn every potential dissident into a self-loathing co-conspirator, while giving the lawless state the mantle of legalism.
And such a system needn't be the intentional product of a program of repression. All that is required is a thicket of laws and regulations most individuals or enterprises are unable or unlikely to comply with, and a selective system of enforcement.
You should hopefully see where I am going with this. Are you and your business in full compliance with the dense underbrush of laws and regulations? Are you fully up-to-date with all your taxes? And do you believe that all of these laws are uniformly enforced?
Neither Hungary nor Poland is Belarus. But that unfortunate country's plight should remind us of the danger of imposing laws and regulations with which the average person or business cannot be reliably expected to comply. Put it this way: If everyone is guilty of breaking a law, it is probably the government that is the guiltiest party.
A comprehensive feature on Belarus by former Budapest Business Journal editor Erik D'Amato will be published in next month's issue of Euromoney magazine. He can be reached at erik@erikdamato.com (mailto:erik@erikdamato.com).
