As Belarus’ debts mount, it’s little wonder that action movie stars have been called in to help wrestle the republic’s image into shape for investors. External government debt grew $847mn (6.8%) in January-July to reach $13.1bn, the Belarusian finance ministry said on August 31.

In April, President Alexander Lukashenko gave his government until September 1 to improve conditions for foreign investors after the lifting of EU sanctions in January failed to bring relief: the former Soviet republic attracted only $1.068bn of net foreign direct investment (FDI) in the first quarter of 2016, down 21% compared with the same period of 2015, according to the National Bank of Belarus (NBB).

Yet months later, not much is moving. So despite lingering distaste in official circles for Western influences, the Belarusian ancestry of former Hollywood star Steven Seagal was enough to make him one new face of efforts to entice foreign money.

In what state media portrayed as a quest by the martial arts master to rediscover his roots while snapping up some real estate in the capital Minsk, Seagal got to hang out with Lukashenko on August 25, producing a slew of photos of them hefting watermelons and chopping carrots.

During his stay, Seagal bought property at the city’s prestigious Mayak Minsk (Minsk Lighthouse) residential and business compound. And in echoes of a press release approved by his PR people, he supposedly gushed about Belarus as a whole being an up-and-coming place to invest.

“The investment climate in Belarus is very favourable. Belarus’ Doing Business 2016 rankings attest to the country’s strong economic status. Within a year Belarus has climbed up 13 points from 57th to 44th position. My friends are also considering options for investing ... the actor pointed out”, read the press report.

It was the absence of big-spending visitors that prompted Lukashenko in April to have his government review and improve regulations governing foreign investment. “If we have economic laws that impede attracting of investments, it’s necessary to react quickly and adapt flexibly to the changing real situation,” the former Soviet state farm director said in his annual address to the nation. Its economy badly hit by the economic crisis in neighbouring Russia, Belarus should draw in at least $1.5bn in foreign investments in 2016, according to Lukashenko.

Previously, hopes were riding on China ploughing funds into Belarus as it develops a modern-day Silk Road trade route through Asia to Western Europe. Lukashenko last year offered his republic as a “stepping stone” for Beijing’s plans, but the response so far has been lukewarm.

Western investors and lenders alike are also reticent to rush in because of Lukashenko’s gruff reminders that his government will not “grovel in the dust” before institutions like the International Monetary Fund (IMF), which as in neighbouring Ukraine expects deep structural reforms in exchange for its cash. The IMF is still weighing Minsk’s requests for a further $3bn credit, although these efforts flagged after Belarus this year received a $2bn credit from the Russia-led Eurasian Development Bank.

Capital investments in the country overall are not looking healthy. According to official statistics, these decreased by 5.9% in 2014, by 17.5% in 2015, and by a record 20.6% in January-July of this year. Around 60% of capital investments occur in the public sector, and the amount is in decline, which Belarusian economists attribute to cuts in state spending.

In response, the chairman of the upper chamber of the Belarusian parliament and former prime minister Mikhail Myasnikovich said on August 24 that the government is drafting a “unified law” on investment operations.

But people aren’t giving up on Belarus. Fitch Ratings on August 8 left its Long-Term Foreign and Local Currency Issuer Default Ratings (IDRs) unchanged at ‘B-’ with a stable outlook as the country slowly moves out of its economic crisis. GDP was down 2.5% y/y in the first half of the year after a 3.6% y/y slide in the first quarter. Real GDP is expected to fall 3% in 2016 overall, and by 0.5% in 2017, the IMF estimates.

Private hopes

Meanwhile, the World Bank will also continue its efforts to encourage the republic to privatise state assets in earnest. The lender will extend a grant agreement with the Belarusian National Agency of Investment and Privatisation (NAIP) for a pilot project to prepare the sale of a limited number of enterprises, despite the lack of results since it started 2011, NAIP director Natallia Nikandrava said on August 25.

“The eight companies that were identified five years ago for the pilot privatisation were for various reasons unable to attract investors,” Nikandrava said. NAIP has now prepared additional companies to be included in the pilot privatisation project, she added, without naming any.

For years, Belarus has avoided privatising its major companies, the only significant exception being the sale of its gas pipeline system under Russian political pressure to Gazprom for $5bn in 2007-2011. Authorities in Minsk were unable to agree any significant privatisation deals due to the high price of assets as well as some social and production conditions set by the authorities that made projects unprofitable and inefficient.

Moreover, the poor state of the economy puts off foreign investors, with constant depreciation of the Belarusian currency, high inflation, capital controls imposed by the central bank, unclear privatisation rules, and a number of precedents where private property was nationalised.

Nor has the repressive political track record of the authorities helped, with former US secretary of state Condoleezza Rice in 2005 dubbing Belarus the “last remaining true dictatorship in the heart of Europe”, ruled by Lukashenko’s iron hand since 1994.

But it’s never too late to change (unless you are Uzbekistan's President Islam Karimov, who ruled his former Soviet republic with brutality from its 1991 independence to his suspected but still-unconfirmed death on August 27).

“I’m not Europe’s last dictator anymore,” Lukashenko told a Bloomberg News reporter in 2015 as the last of the jailed opposition leaders were released before he was elected for a fifth presidential term.