USSR Torgsin Shops May Return to Belarus, Economist Says

New sanctions are causing great difficulties for the economy.

Sectoral sanctions against the Belarusian public debt have become one of the key elements of the fifth package of sanctions, recently imposed by the U.S.

Charter97.org asked economist Lev Margolin what Belarusian citizens and banks should expect from the new sanctions.

- It means that neither banks nor legal entities can borrow in dollars. It does not matter where or from whom, because all transactions in dollars pass through the banks of the United States. Therefore, it will de facto affect the Belarusian companies, which have links in import or export, and it will affect the Belarusian banks as well. It applies to any investment for more than three months. Neither companies nor banks will receive any investments, no loans in American dollars.

- Some banks have already announced they are suspending payments in dollars and euros to Belarusian banks. How does it threaten the financial system of Belarus?

- This foreshadows great difficulties. There's no need to think that payments in dollars go only to American companies. The majority of counterparts of the Belarusian enterprises located outside Europe - Russian firms, the African continent, Asia, the Near and Far East - basically have payments in dollars. The dollar is, after all, the world currency. And all the payments in dollars, even if one Belarusian bank pays to another Belarusian bank or a Russian one, are still made through American banks. For example, Belarusbank has a correspondent account in some New York bank and, say, Russian Alfabank. When these two banks settle accounts with each other in dollars, it simply means that funds are withdrawn from one account in the New York bank and transferred to another account in the New York bank. As soon as an American bank sees the name of a Belarusian bank, it will reject it. As a rule, it turns out to be more significant, because even if this operation does not contradict the sanctions, it will delay payments a lot. Clerks in the bank will check ten times whether they are violating these bans. Accordingly, payments can last a day, two days, three weeks or even a couple of weeks.

- What about payments in dollars for the Belarusian enterprises? Is there a threat that they will stop?

- They will try to transform these payments in some way. If there are no bans in euros, then euros. If the euro is banned, the reserve currencies are the Swiss franc, the British pound. But if things get really bad, we will have to agree with Russia. It categorically disagreed to receive payments for gas and oil in Russian rubles. It used to be done in dollars. These are big problems that are not fatal for the economy but cause great difficulties.

- Could there be a foreign currency deficit in Belarus?

- No, there won't be a shortage of foreign currency, because if we take into account the cash currency, it would float from hand to hand. Someone sells currency, someone buys it. Any problems with the cash currency will begin as soon as the government or the National Bank impose any restrictions on the exchange. We remember how one could buy currency with a passport only, they may introduce some restrictions on the amount. But if that does not happen, if the state does not shoot in its foot, there will be no problem with the cash currency. While payments in this currency may face problems.

- What options can the authorities take to "replenish" the currency pumping?

- The authorities can do anything. For example, there were Torgsin shops in USSR in the thirties. They had all kinds of goods there, but they were sold for foreign currency or precious metal items only. If the Government needed it, it could sell some goods only for foreign currency. In the history of the world, there are many different ways for the state to pump money out of the citizens. However, this is more of a problem for businesses than for the state.

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