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Thursday 4 December 2008

Can Lord Bell’s PR skills combat the aroma of communism and cabbage?

Neil Barnett reports from Belarus

Minsk is not a mecca for entrepreneurs or foreign investors, but it seems that the perpetual leader of Belarus, Aleksander Lukashenko, has decided to change that. The kolkhoz (collective farms) are not about to be broken up, and nor is the KGB ready to give up its paternalistic interest in business. But Lukashenko, Europe’s answer to Kim Jong-Il, needs cash and he needs it yesterday. The reason is that the cheap Russian gas that used to subsidise the economy is getting a lot more expensive: Gazprom has pushed the price up from a trifling $47 per 1,000 cubic metres in 2006 to $119 today. It’s still cheap compared to the European market price of roughly $370, but for a subsidised Brezhnev-type economy, it’s cold turkey. Worse still, if they hadn’t agreed to sell their pipeline operator to Gazprom, the tariff would have gone up much more, and in any case will climb to market levels in the coming years. True, Moscow still gives Lukashenko cheap crude that he can refine and flog to EU countries, but things are getting tighter. Now some of Belarus’s largest banks are on the auction block and a scheme to build a new nuclear reactor is also reportedly open to foreign investors. Minsk needs money, yes, but it also wants to be a little bit friendlier with the West.

With its labour camps, occasional purges and general cabbage aroma, Belarus has an image problem. Lukashenko, very sensibly, has approached Lord Bell to fix it. ‘They asked us to make a proposal, we made it, and we have not yet had a response,’ says the PR guru. If the pitch is accepted, Belarus will make a slightly incongruous addition to Lord Bell’s client list, which has included Margaret Thatcher, Boris Berezovsky and the late Aleksander Litvinenko. He says, ‘Lukashenko told me that he hasn’t paid attention to external relations for years, and that it’s about time he did. He wants to have foreign investment and he wants to have better relations with the West.’ At the risk of sounding old-fashioned, it may be that Belarus faces a problem of substance rather than image.

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