Numbered Days: Bailing Out Europe’s Last Dictator

Once a mark of his power, Belarus’ economy, now in near free fall, may finally bring an end to Lukashenko.
For the past 16 years, President Aleksandr Lukashenko has quelled movements against his regime by carefully securing Belarus’ regional power and economic prosperity.  By procuring lucrative oil deals with Russia and fulfilling his country’s desire for regional and political recognition, his savvy politics and innate stubbornness in playing Moscow off the West delivered the vital economic gains that have, until recent months, kept him largely popular with the Belarusian electorate.
Yet since December 2010 and the onset of a 36% devaluation of the Belarusian ruble and spiraling inflation that have wracked Belarus in the months since, the economy, once a strong suite for Lukashenko, now poses a grave threat to his regime. As waves of peaceful protesters take to the street, risking imprisonment and the regime’s harshest crackdown in 17 years, political and economic chaos, price instability, and frustration with the old rule abound.  Though hardly over, Lukashenko’s days as Europe’s last ironclad ruler may finally be coming to an end.
Looking Back: 16 years of Stability over Democracy
In early November 2010, inspired in part by a three-billion-euro aid package from the European Union and the prospect of bettering his relations with the West, President Aleksandr Lukashenko promised to hold more open elections in Belarus. Though his relationship with Russia had rapidly deteriorated over the prior year, he agreed nevertheless to election terms that seemed certain to strain his rapport with the Kremlin and, ultimately, slacken his longstanding clench on power.
Yet, in an about-face not uncharacteristic of Lukashenko, a man often regarded as “Europe’s Last Dictator,” all that changed on December 19, 2010. After successfully negotiating a price reduction of Russian oil imports less than a week before, he ignored the West’s calls for an open and fair election, threw over 600 protesters in jail, and actively crushed his opposition.
However, despite Lukashenko’s forceful suppression of the uprising, opposition in Belarus to Lukashenko’s regime remained largely fractured at the outset of the December uprisings, just as it had for the past 16 years. The opposition movement has only begun to solidify this summer.
Why? Volha Charnysh, executive editor for Belarus Digest and Ph.D. Candidate in Government at Harvard University, portrays a civil society in Belarus kept weak in the past two decades by Soviet-style intimidation, state run industry, and easily terminable short-term labor contracts.
Indeed, Lukashenko’s ability to provide his country with economic and social stability—due in part to aid deals from the West and lucrative oil contracts with Moscow—played the most important part in anesthetizing any opposition against him over the past two decades.
Margarita M. Balmaceda, Ph.D., Professor of Diplomacy and International Relations at Seton Hall points out, “It would be a mistake to think that Lukashenka [has ruled] only by force.”
Instead, by profiting from his country’s strategic role in the transit of oil and gas from Russia to Europe and in the refining and resale of Russian oil, Lukashenko augmented his popularity through the increase in average income and regional political heft which he brought to his country throughout his 16 years of autocratic rule.
“Quite frankly, life [was] not terrible unless you [were] a particularly political person,” Mathew Rojanksy of the Carnegie Endowment said about life in Belarus prior to this past December’s election. “If you’re the average Belarusian, in the past decade you were employed more often, had better access to government services, and witnessed less crime than your cousin in Ukraine.”
Economic Crisis and Selling the “Family Silver”
Yet now, in the midst of the most severe economic crisis to hit Belarus since the fall of the Soviet Union, economic unrest has mobilized the formerly colorless opposition movement to openly protest and demonstrate in spite of Lukashenko’s public promise to harshly crack down. The crisis, which at its worst saw a 25% devaluation of the Belarusian ruble against the dollar in only one day, sent average Belarusians rushing to stores to stock up on sugar, flour, appliances, used cars— truly anything of value.  In addition, since June 15^th alone, an estimated 1,730 protesters have been arrested by police forces, including several dozen western journalists.  For the first time in years, Lukashenko has been seriously losing control of the failing economy and the ensuing opposition movements, with the momentum of both threatening his clench on power.
Even worse for Lukashenko, in the days since the economic deterioration began, Russia has continued to play hardball, reneging its pre-election promise of aid and demanding the sale of some of the country’s most valuable infrastructure (including gas pipelines) as part of a smaller loan deal.  Undoubtedly, the days of Lukashenko manipulating his sometimes foe and sometimes ally to the east seem to be over.  Therefore, with the West unlikely to provide the $8 billion of aid Lukashenko is so desperately seeking from the IMF without a free election (that would likely result in his political death) and the release of Belarus’ growing number of political prisoners, Lukashenko has had no choice but to accept tough deals with Russia.
Not the least of these deals came in June, when Belarus received a paltry $800 million (of a total package of $3 billion) in aid from Russia, with the onerous requirement that the Belarusian government privatize a total of $7.5 billion of state assets. Included in this selloff is Russia’s $2.5 billion purchase of the Belarusian government’s remaining 50% stake in Beltransgaz, the Soviet-era gas pipelines jointly owned with Gazprom (Russia) from which Belarus derives great economic vitality.
Furthermore, Russia also has plans to buy Belaruskali, the world’s second largest producer of potash (despite China’s own recent threat to bid higher).  Such sellouts by Lukashenko, regarded by many in Belarus as being as disloyal as “selling the family silver,” will certainly weaken Belarus’s economy and recovery efforts in the coming years. However, in the eyes of its large eastern neighbor, if all goes as planned, such deals may alter the politics of Eastern Europe for years to come and expand Russia’s regional influence, both economically and politically, over that of the former Soviet Union.
A Russian Relationship Gone Sour
So how did the Belarus-Russia relationship, once favorable to Belarus, finally reach this point?
Indeed, with the Belarusian economy so heavily dependent on Russia since the collapse of the Soviet Union for nearly half of all its trade and for lucrative Russian oil and gas pipelines, it would seem understandable that Belarus regularly took the back seat in economic deals with Russia. However, the preferential pricing that Belarus received in past decades from Russia in the energy sector– allowing it to mark up Russian oil for sale in Europe and essentially subsidizing Lukashenko’s regime– actually underscores the complexity of the Kiev-Moscow relationship
“You see many cases when Lukashenko was able to exert much more power [in the past] than the economic reality would justify,” Balmaceda said. “This is because he was able to manipulate the political side of the relationship.”
Throughout the 1990s, Lukashenko not only passionately declared himself as an ally of Russia, but also succeeded in convincing the Kremlin that he was Russia’s only remaining ally—a card he played not only with the Russian leadership hoping to retain some facets of the old union, but with the Russian electorate as well.
And as Balmaceda suggests, because “energy policy [in Belarus] was much more concentrated in the hands of one person, Lukashenko himself… [he was able] to manipulate the relationship with Russia much more decisively.”
However, Lukasz Adamski of the Polish Institute of International Affairs contends that animosity in Russian-Belarusian relations is certainly not unprecedented: “There has always been a big mistrust between Lukashenko and Russian leaders. The Russians have a big aversion to this man.”
In fact, Russia’s primary interest has always been a weak Belarusian economy that can be dominated by Russian big business—and a post-election Belarus isolated from the West and experiencing economic and political turmoil this past winter proved just that.  Since then the tenor of the relationship has dramatically changed as Russia has begun to bargain hard for the valuable economic underpinnings (including Beltransgaz, Belarus’ national oil company) of its less-than-loved neighboring dictator.  Now that true economic reality is rattling Belarus without Russia economically insulating it at every turn, the country is in for a rocky economic ride.
To Bail or Not to Bail Out
Ultimately, the inefficiencies of the Belarusian economy that persisted while oil and gas profits remained steady and preferential pricing deals with Russia kept the country afloat are what will continue to take their toll on Belarus in the days ahead.  However, one large question still looms in Eastern Europe: will the IMF provide Lukashenko with the $8 billion of aid he needs to keep his country, and his regime, afloat?
As Professor Mitchell Orenstein of Johns Hopkins University insists, the IMF should not be held ransom to such a plea and should send Lukashenko the same message that it sent Libyan leader Moammar Gadhafi and Syrian President Bashar Al-Assad—“No IMF money to prolong the life of the regime.”
Truly Belarus is another example of a county wracked by opposing forces – nascent liberation set against harsh interference and retrenchment. For that outcome, and for whether the international community decides to bail or not bail out Europe’s last dictator, stay tuned.
Photo credit: Guardian.co.uk