BELARUS yesterday became the first former Soviet republic to abandon the attempt to have a national currency of its own and to put itself effectively back under economic control from Moscow.
The Prime Minister, Vyacheslav Kebich, signed a Treaty on Monetary Union with his Russian counterpart, Viktor Chernomyrdin, in the White House. In exchange Belarus, which is in deep economic crisis, hopes to benefit from subsidised supplies of Russian raw materials including fuel, as it did in the days of Soviet Communism.
The treaty will come into force in two stages. Customs dues and debts for the transit of Russian cargo across Belarus will be cancelled. Then Belarus money will be exchanged for Russian roubles at a one-to-one rate. This is very favourable to Belarus, since its currency is worth 18,600 to the US dollar, while the rouble is valued at 1,785.
Before the union is complete, there must be a 'political expression of the Belarussian people's will for unification', Tass news agency said, without making clear whether this meant a referendum or, more likely, just a parliamentary vote.
Minsk's capitulation to its old imperial rulers does not mean the Soviet Union is about to be reconstituted. But the heady atmosphere of nationalism after the republics bolted from the empire in 1991 has been replaced by a sombre realisation of just how grim the economic situation is. Yesterday's treaty could start a trend towards greater economic cohesion in the Commonwealth of Independent States.
Of the 15 former Soviet republics, only Tajikistan, a very poor, war-torn country on the border with Afghanistan, opted to stay in the zone of the Russian rouble after the empire collapsed. The other republics expressed their national pride by launching currencies with names such as Azeri manats, Kyrgyz som and Kazakh tenge. Russian bankers jokingly called them the 'Matryoshka currencies' because they issued from the Mother Rouble like the little wooden babies in the famous nests of dolls.
The Estonian kroon is now relatively strong. But other nations, such as Ukraine and Georgia, are in such an economic mess that the rouble seems a very hard currency by comparison with their coupons.
The currency of Belarus was called the zaichik, or little hare. It was by far the prettiest currency of the former Soviet Union, with a hare printed on it. But it failed to run.
Reversion to the rouble will be a blow to Belarus nationalists but the republic, which was dominated for centuries by Lithuania and Poland before falling under Soviet rule, has a much weaker national consciousness than neighbouring Ukraine or any of the Transcaucasian states.
In January the pro-independence Belarus leader, Stanislav Shushkevich, who in 1991 joined the other two Slav nations of Russia and Ukraine to help bring down the Soviet Union and who was trying to promote market reforms in his republic, was ousted by the conservative parliament. Belarus has since closely followed Moscow's line on political issues such as policy towards the former Yugoslavia.
Reformers such as Yegor Gaidar and Boris Fyodorov, who left the Russian cabinet earlier this year, said monetary union with Belarus would mean too heavy an economic burden for Russia. But Mr Chernomyrdin evidently believes it is worth paying for the loyal friendship of Belarus.
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