Background:
After seven decades as a constituent republic of the USSR, Belarus attained its independence in 1991. It has retained closer political and economic ties to Russia than any of the other former Soviet republics. Belarus and Russia signed a treaty on a two-state union on 8 December 1999 envisioning greater political and economic integration. Although Belarus agreed to a framework to carry out the accord, serious implementation has yet to take place.

Economy - overview:
Belarus' economy in 2003 posted 6.1 percent growth and is likely to continue expanding through 2004, albeit at a slower growth rate. The Belarusian economy in 2004 is likely to be hampered by high inflation, persistent trade deficits, and ongoing rocky relations with Russia, Belarus' largest trading partner and energy supplier. Belarus has seen little structural reform since 1995, when President LUKASHENKO launched the country on the path of "market socialism." In keeping with this policy, LUKASHENKO reimposed administrative controls over prices and currency exchange rates and expanded the state's right to intervene in the management of private enterprises. In addition, businesses have been subject to pressure on the part of central and local governments, e.g., arbitrary changes in regulations, numerous rigorous inspections, retroactive application of new business regulations, and arrests of "disruptive" businessmen and factory owners. A wide range of redistributive policies has helped those at the bottom of the ladder. For the time being, Belarus remains self-isolated from the West and its open-market economies.

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