Lukashenko's Justified Mediation

Meeting on measures to eliminate unjustified and unfair brokering. Source: president.gov.by

Lukashenko decided to eliminate his family's competitors

On March 12, at a meeting on combating "unjustified intermediation," Lukashenko demanded drawing a "clear line" between intermediaries that are allegedly necessary for the economy and those who, in his words, profit at the people's expense.

Every economy has intermediaries — logistics companies, trade agents, distributors. Sometimes it is impossible to organize supplies without them, especially to distant markets. The problem is that in Belarus this "line" does not follow economic logic. It follows the principle of loyalty to the regime and closeness to the Lukashenko family.

In other words, a "justified intermediary" in Lukashenko's system is one connected to his illegitimate power. An "unjustified" one is anyone outside that circle. Let us look at specific examples.

BelAZ production. Source: autonews.ru

The first example is BelAZ. It is one of the symbols of Belarusian industry. Enormous quarry dump trucks operating worldwide — from Africa to Latin America. The cost of a single such truck can range from two to seven million dollars.

But an investigation by the organization BELPOL shows that due to intermediary schemes, the enterprise may be losing up to half the value of each machine.

How does this happen? BelAZ sells its equipment not directly to the buyer, but through a so-called general distributor — the BelAZ Trading House. This trading house is registered in Russia. It purchases equipment at a reduced price and then sells it at market price. As a result, the profit ends up not at the factory itself or in the Belarusian budget, but in the intermediary structure.

In 2023, the revenue of the BelAZ Trading House amounted to approximately 700 million dollars. Meanwhile, the net profit of BelAZ itself in its best years was only around 80 million dollars. A logical question arises: who is actually earning from Belarusian equipment? The Belarusian people — or the intermediary structures?

But most importantly — taxes. They are paid not in Belarus but in Russia, because that is where the distributor (the BelAZ Trading House) is registered. According to investigators, a portion of the funds from it is directed to structures connected to the so-called Presidential Sports Club, which is headed by Dmitry Lukashenko. That is how the BelAZ scheme works.

And here the central question arises. If intermediaries are evil, as Lukashenko says, why does the largest intermediary scheme exist precisely around state enterprises? Why has it been operating for years? The answer is obvious. Because these are the "right" intermediaries. Because they are inside the system.

Let us look at another example — the export of potash fertilizers. Belarus is one of the world's largest potassium producers. After sanctions were introduced, logistics changed. Previously, fertilizers were shipped through the Lithuanian port of Klaipėda; now they go through Russia's Saint Petersburg. The main markets today are China, Brazil, and Indonesia.

And here again an intermediary appears. According to the Belarusian Investigative Center and international journalistic organizations, Belaruskali signed a contract with the Cypriot firm Dimikandom Invest Holding. The transshipment rate is approximately 20 dollars per ton. But the real market price is around 11 dollars.

The difference is almost twofold. That means millions of dollars go to the intermediary. And this intermediary then pays the port the actual cost of the service. And again the question: who stands behind this scheme? Investigators point to Lukashenko's closest associate — Viktor Sheiman. Once again we see a familiar picture: the intermediary is connected to Lukashenko. And therefore he is "justified."

Aftrade DMCC at a meeting during the 55th International Trade Fair "FACIM" in Marracuene, Mozambique, 2019. Source: rsa.mfa.gov.by

The same schemes operate in other sectors as well. The export of equipment to Africa goes through the company Aftrade DMCC, registered in the United Arab Emirates. This company buys Belarusian buses for approximately 50,000 dollars and sells them for nearly 100,000. The markup on spare parts reaches 250 percent. To conceal the origin of the goods, the MAZ marking is even erased from some parts. Yet the regime continues to talk about fighting intermediaries.

Why? Because the fight is not against intermediation. The fight is against those who do not belong to the system. Lukashenko says that intermediaries raise prices and deceive consumers. He cites the example of a cardan shaft that rose in price from 140 to 935 rubles.

Minsk Automobile Plant (MAZ). Source: logist.today

But the problem is that the largest markups arise precisely in schemes connected to the dictator's inner circle. There the figures are not hundreds of rubles, but hundreds of millions of dollars. For thirty years Lukashenko has regularly declared war on "unjustified intermediation."

But every new round of this fight ends the same way: the redistribution of financial flows in favor of a narrow circle of insiders. This is not a fight against corruption. This is the management of corruption. This is a system in which state enterprises operate, produce goods, and create value — while profits are extracted by private structures connected to the regime.

In such a system, economic development is impossible. Because the key principle of business is efficiency and competition. But in Belarus a different principle operates — access to power. That is precisely why state enterprises fall short of profit. That is precisely why the budget loses millions of dollars in taxes. That is precisely why the country remains economically dependent and weak.

Belarus needs a different model. A model in which state enterprises operate transparently. A model in which there are no "right" and "wrong" intermediaries. A model in which profits from Belarusian resources and labor remain in the country rather than settling in offshore accounts and foreign shell structures.

This is possible. But only in a state governed by rule of law. Only in a country where an independent judiciary exists, and where business develops according to transparent and stable rules that are the same for everyone and are not rewritten "on the fly" by decree from above. True stability is not a frozen command economy, but predictability and protected property rights, without which the arrival of real capital cannot be expected.

This is possible in a country where journalists can freely investigate corruption. Where power is accountable to society. Belarus will certainly become such a country. And then we will finally draw the real line — not between "justified" and "unjustified" intermediaries, but between corruption and the law.

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