Economy
GDP (2006 est.): $36.99 billion (2006 IMF estimate).
GDP growth rate (2007 est.): 5.5%.
Per capita GDP (2006): $3,700.
Natural resources: Forest land, peat deposits, potash, small amounts of oil and natural gas.
Agriculture: Products--grain, potatoes, vegetables, flax, beef, milk.
Industry: Types--machinery and transport equipment, chemical products, fabrics, and consumer goods.
Trade (2005): Exports--$16.0 billion (refined petroleum, machinery and transport equipment, chemicals, foodstuffs, metals, and textiles). Major markets--Russia, Germany, Netherlands, Poland, Great Britain, Ukraine, and Lithuania. Imports--$16.7 billion (mineral products, machinery and equipment, metals, crude oil and natural gas, chemicals, foodstuffs). Major suppliers--Russia, Germany, Ukraine, Poland, Italy, Lithuania.
Exchange rate (April 2007): 2,145 BYR (Belarusian rubles)=U.S. $1.

BELARUS ECONOMY
As part of the former Soviet Union, Belarus had a relatively well-developed industrial base; it retained this industrial base following the breakup of the U.S.S.R. The country also has a broad agricultural base and a high education level. Among the former republics of the Soviet Union, it had one of the highest standards of living. But Belarusians now face the difficult challenge of moving from a state-run economy with high priority on military production and heavy industry to a civilian, free-market system.

After an initial outburst of capitalist reform from 1991-94, including privatization of state enterprises, creation of institutions of private property, and development of entrepreneurship, Belarus under Lukashenko has greatly slowed, and in many cases reversed, its pace of privatization and other market reforms, emphasizing the need for a "socially oriented market economy." About 80% of all industry remains in state hands, and foreign investment has been hindered by a climate hostile to business. The banks, which had been privatized after independence, were renationalized under Lukashenko. The government continued to nationalize companies in 2005, using the "Golden Share" mechanism--which allows government control in all companies with foreign investment--and other administrative means.

Economic output, which declined for several years, revived somewhat in the late 1990s, but the economy has remained dependent on heavily discounted oil and natural gas from Russia. Belarus has historically re-exported the oil and oil products at world market prices, using the profits to subsidize state enterprises. Price controls on industrial and consumer staples have also constituted a major feature of the Belarusian economy. Inflationary monetary practices, including indiscriminate monetary growth, have been regularly used to finance real sector growth and to cover the payment of salaries and pensions.

In December 2006, Belarus and Russian gas giant Gazprom signed a deal which will eventually end Russia's subsidies of Belarusian gas. Under the deal, Gazprom raised prices for Belarus gas deliveries in 2007 to $100 per 1,000 cubic meters--a significant rise from the subsidized previous price of $46, but still far less than the price paid by EU member states. The price for Russian gas will continue to increase incrementally until it equals the price paid by EU members in 2011. Additionally, Gazprom will gradually acquire a 50% stake in Beltransgaz, the Belarusian gas pipeline firm. In January 2007, Russia followed up with a steep duty on oil deliveries, which caused a significant drop in revenue from exports of oil products and Russian-sourced crude oil. The increase in gas prices and simultaneous moves by Moscow to reduce the profitability of refining Russian oil in Belarus for re-export disrupted plans to upgrade industries ranging from oil refining to cement production.

Peat, the country's most valuable mineral resource, is used for fuel and fertilizer and in the chemical industry. Belarus also has deposits of clay, sand, chalk, dolomite, phosphorite, and rock and potassium salt. Forests cover about a third of the land, and lumbering is an important occupation. Potatoes, flax, hemp, sugar beets, rye, oats, and wheat are the chief agricultural products. Dairy and beef cattle, pigs, and chickens are raised. Belarus has only small reserves of petroleum and natural gas and imports most of its oil and gas from Russia. The main branches of industry produce tractors and trucks, earthmovers for use in construction and mining, metal-cutting machine tools, agricultural equipment, motorcycles, chemicals, fertilizer, textiles, and consumer goods. The chief trading partners are Russia, Germany, Ukraine, and Poland.

The massive April 26, 1986 nuclear accident at the Chernobyl power plant, across the border in Ukraine, had a devastating effect on Belarus; as a result of the radiation release, agriculture in a large part of the country was destroyed, and many villages were abandoned. Resettlement and medical costs were substantial and long-term. Many living in Chernobyl afflicted zones have infrequent access to medical treatment due to remoteness, inadequate equipment, and substantial costs. Although the Belarusian Government claims otherwise, many radiation monitoring stations, especially in rural areas, are either ill-equipped, poorly staffed, and/or no longer in operation. Resettlement of those in affected areas remains incomplete.

Due to the economic and political climate, little new foreign investment has occurred in recent years. In 2002, two major companies, the Swedish furniture firm Ikea and Russian beer producer Baltika, ended operations in Belarus due to unrealized government commitments or unwelcome interference. Ford Motors did the same in 1999. In July 2007, Lukashenko threatened to take unspecified actions against American businesses in Belarus.

Growth in 2005 was reportedly robust, but peculiarities in official Belarusian statistics complicate analysis. Officially, inflation moderated to 8% in 2005, though hidden inflation remains a problem. Salaries are being increased by government directive, fueling some increased consumption but also making Belarusian firms less competitive. Close to 40% of enterprises and a majority of collective farms currently operate at a loss, a level that has persisted since 2002. The government made progress in reining in its fiscal policies, largely due to constraints imposed by financial difficulties caused by the earlier economic slowdown. Belarus continues to be heavily dependent on Russia, with the potential for greater economic dependency in a long-proposed EU-style union between the two states. Prospects for an eventual union remain weak, however, largely due to the apparent lack of interest on the part of the leadership of both countries.

The World Bank's 2002-2004 country assistance strategy for Belarus focused on areas such as targeted social assistance to help open up Belarusian society, AIDS/HIV and tuberculosis prevention, environmental protection, Chernobyl-related damage, and small and medium enterprise development. The World Bank's most recent project in Belarus began with its June 2001 approval of a $22.6 million loan to finance repairs in over 450 schools, hospitals, and homes for orphans, the elderly, and the disabled throughout Belarus. In 2004, Belarus rejected a World Bank loan to help fight AIDS and tuberculosis. International Monetary Fund (IMF) cooperation is currently limited to policy and technical consultations.

Environmental Issues
Belarus has established ministries of energy, forestry, land reclamation, and water resources and state committees to deal with ecology and safety procedures in the nuclear power industry. The most serious environmental issue in Belarus results from the accident in 1986 at the Chernobyl nuclear power plant. About 70% of the nuclear fallout from the plant landed on Belarusian territory, and about 20% of the land remains contaminated. But government restrictions on residence and use of contaminated land are not strictly enforced, and the government announced plans in 2004 to increase agricultural production in the contaminated regions. The government receives U.S. assistance in its efforts to deal with the consequences of the radiation. Belarus also faces growing air, land, and water pollution levels from potash mining in the south of the country.

DEFENSE AND MILITARY ISSUES
The United States continues to support Belarus' adherence to arms control agreements and treaties into which it has previously entered, including the Open Skies Treaty which Belarus ratified in 2001. Cooperation in all such agreements has been exemplary.

Humanitarian aid continues to be the primary engagement between the U.S. military and Belarus. In early 2004, the United States European Command announced the allocation of $200,000 for the continued renovation of the Gomel Emergency Treatment Hospital. The hospital had already received more than $600,000 in humanitarian assistance, which included funds for the renovation and establishment of its blood transfusion center in 2001. In addition, in May 2004, the U.S. military donated $95,000 for the renovation of the Turov regional hospital. These programs, coupled with the continuous flow of Humanitarian Excess Property from U.S. Cold War stocks, define the U.S. military's humanitarian assistance program.

Direct military to military cooperation continues to be minimal. Belarus currently has no International Military Education and Training (IMET) program, and bilateral exercises and cooperation are nonexistent. There is a great desire on the Belarusian side to re-establish such cooperation and contacts, but it has not been possible due to the political situation. The only program that is still functional within this category is the attendance of Belarusian military officers in George C. Marshall Center programs.

Belarus is currently cooperating with the North Atlantic Treaty Organization, through the Partnership for Peace Trust Fund, to destroy a total of 700,000 conventional landmines. Belarus also has a stockpile of over 3 million non-conventional anti-personnel mines, which it has pledged to destroy by March 2008. In addition, there are numerous World War II-vintage minefields, which are still in place and kill or injure several Belarusians every year.

The Ministry of Defense is experiencing success in the area of military reform. Planned changes include combining the Air and Air Defense Forces, downsizing the force structure about 30% from 83,000 to 60,000, transitioning from a conscript to a contract force, and modernizing the command and control structure by creating a Ground Forces Command between the Ministry of Defense and the units in the field. Implementation of these reforms will take an unspecified amount of time.

There have been numerous reports of Belarusian sales or delivery of weapons or weapons-related technologies to states of concern, including state sponsors of terrorism. In April and September 2004, the United States imposed sanctions on a Belarusian entity, Belvneshpromservice, pursuant to the Iran Nonproliferation Act of 2000 for the transfer to Iran of items on a multilateral export control list or items having the potential of making a material contribution to weapons of mass destruction (WMD) or cruise or ballistic missile systems.