Crisis in Belarus and possible EU and UK policy response

#Живёт Беларусь – two words that are the rallying cry for what appears to be a tipping point for the Lukashenko regime with mass strikes at factories, schools, TV anchors resigning and signs that security forces are refusing to follow orders or resigning. Despite the repeat of the Lukashenko play book of arresting or brute elimination of opposition figures, the country coalesced around an unlikely figure in the form of a quiet housewife who has fired up the imagination and bamboozled the regime. It is also a test of how the West, the EU and most notably the UK in a post-Brexit setting reacts. It is a fundamental test of basic (liberal) values at the geographical centre of Europe.

Translated literally as ‘Long live Belarus’, this opposition slogan was my go-to phrase as a freshly minted Phd working on macroeconomics and policy advice with government and the central bank in the 90s when I saw boredom set in. Belarus, one of the 15 successor states, was a country with higher per capita income and development in 1990 than even Poland. Unlike other Former Soviet states to the east and south it remains a nation with strong fundamentals, a well-educated populace and a reasonably well run economy without the rampant corruption and oligopolistic structures found in Russia and Ukraine.

Elected in 1994 against the travails and troubles Yeltsin’s Russia and the now-forgotten spectre of high inflation, wage and pension arrears and unemployment. Fast forward 26 years and 6 elections to last week and the massive electoral fraud culminating in an announcement that Lukashenko had secured 80% of the vote. The opposition coalesced around the wife of one of the key opposition figures after he was arrested. A Hong-Kong style decentralised democratic movement managed to outwit the heavily policed state including the lockout of the Internet. To their credit, some polling stations refused to follow dictat and produced a ledger showing an overwhelming vote for Svetlana Tikhanovskaya who was threatened and dumped in neighbouring Lithuania. Trigger a mass outpouring of protests.

In a matter of days, the flames of opposition to the electoral fraud have fanned across society with large state owned enterprises – the traditional working class support base for Lukashenko – supported by first the young metropolitans, then teachers, doctors and spontaneous groups including a chain of women in white carrying flowers for miles on end in the capital, Minsk.

The initial response of any dictator is to use fear and horrific use of brute force and torture were carried out by the Pretorian guard known as OMON police – thugs in short. This led to an outpouring of protest, previously pliant TV anchors resigning and security personnel refusing to use force, particularly outside Mink and even resignations.

EU and UK Policy Responses

The EU’s initial response has been as expected – concerns that the elections were ‘neither free nor fair’ and about disproportionate use of force. The resumption of targeted sanctions on individuals are likely although blanket economy-wide sanctions may not ensue given that both Belarus and indeed the EU is in the midst of the Covid induced economic slump. The UK government followed up on a similar statement on August 10th.

There are at least 2 possible possibilities: Lukashenko leaves or he fights it out by asking Putin for support, which could also be military.

Under option 1 either Ms Tikhanovskaya takes over (she has stated she will be a caretaker president until a new set of transparent elections are held in 6 months) or there is a re-run of the fair elections but in which case Lukashenko would need to first resign for the process to be credible.

Option 2 cannot be excluded. Lukashenko has managed to play off the EU and Russia for two decades although at the cost of de-facto Russification of key Belarusian assets in lieu of subsidised energy which was then re-packaged into petrochemicals by Belarus. This subsidy is now ended, partly due to the macroeconomic challenges facing a Russia even more reliant on hydrocarbons in 2020 than at the collapse in 1991 of the Soviet Union.

Russian President Putin has long pushed for ever-closer union of the two countries that are members of the EU-lite group known as the Eurasian Union that also comprises ex-Soviet Kazakhstan, Armenia and Kyrgyzstan. Russia has key military assets in Belarus and sees the country as a key buffer between it and NATO but also a gateway to its enclave on the Baltic Sea, Kaliningrad.

The unknown is how Russia will act? It does not want to see another colour revolution or on its doorstep following events in Georgia, Ukraine and to some extent in Armenia where a former blogger is now the Prime Minister. There is also strong support for the Belarusian protestors in Russia and both countries are mired in an economic and Covid crises.

What is the reaction function for the West if option 2 plays out – either in the form of military support or a de-facto enlargement of Russia to gobble up Belarus?

The choice of unification should be that of Belarusians to decide. There is no real difference between the two countries ethnically, linguistically or history. However, that choice must be based on fair and free elections and adherence to basic human rights – and not on the basis of de facto invasion.

Any military intervention would be a test and become a major geopolitical risk event, threatening peace and stability in the NATO and EU Member States of the Baltic states – many with significant Russian minorities. It would, without the precursor of fair elections, also likely lead to further escalation of internal instability in Belarus with ramifications into Ukraine which neighbours both and is already at war with Russia for the breakaway Donbas region in western Ukraine. It would also represent a major test for US president Trump in the run-up to the US elections due in November.

The EU and UK initial responses have been measured although the declaration by the three Baltic Prime Ministers on August 14th was more coherent and in line with option 1. The UK needs to remain on the same page with the EU, be it on possible sanctions or in the event of a more aggressive Russian response, be ready to react together under the EU and NATO umbrellas. The UK’s response to China regarding Hong Kong sets the benchmark and the situation in Belarus is similar and closer to home. My one concern is that the end of the EU transition period due in under 140 days and a UK cabinet composed of die-hard Brexiteers does not lead to further British exceptionalism.

* With experience across academia, think tanks, central banking, EU Accession and reforms across 40 developing and transition countries, Dr Rupinder Singh works with multilateral organisations and governments as an independent adviser. He is an Executive member of Liberal International (British Group).

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8 Comments

  • John Marriott 18th Aug '20 - 9:33am

    My advice would be don’t give Putin any excuse to intervene, particularly in his own backyard. How would we feel, for example, if an independent Wales or Scotland was to kick off and Russia sent in ‘advisors’?

    Show sympathy, yes, support, probably, at least moral, possibly even economic. Any more would be seized on by Putin to justify aggression. If he still moves, then we see him in his true colours. In any case, intervening wouldn’t be like it was back in 1956 or1968. The world has moved on.

  • John Marriott 18th Aug '20 - 10:09am

    Just read this morning’s Guardian editorial, which just about sums up my views as well. Let’s not forget either that Putin’s Russia is not the old Soviet Union. Mind you, today’s China is not Mao’s red book waving third world country any more.

  • Lukashenko might have got away with it if the economy was in better shape, but as this article argues https://www.intellinews.com/belarus-economy-increasing-well-managed-but-remains-vulnerable-to-external-shocks-188772/?source=belarus his total inaction in dealing with the coronacrisis is probably the straw that broke the camel’s back – but underlying them all is a decade of economic stagnation and the lack of a future under the one-time collective farm manager’s neo-Soviet model.
    “The one place Lukashenko has been doing well is that the country’s debt is better managed. While he retains tight control over the biggest businesses that have been handed out to a small group of oligarchs close to the president, he has delegated the management of the country’s debt to an increasingly competent group of professionals, led by Minister of Finance Maksim Yermolovich.”
    “And this prudence means the international capital markets remain open to Minsk if it needs to raise more money in theory. In practice this has been more difficult and the Ministry of Finance cancelled a planned Eurobond issue in the first March after the markets “went crazy” thanks to the start of the coronacrisis. However, after Kyiv got a $2bn Eurobond issue away in the last days of July the market has seems to have calmed enough now to make a new issue of bonds possible.”
    This relatively benign position should mean that Belarus can avoid the kind of chaos that has beset Lebanon’s financial system https://www.ft.com/content/5a4090b6-315c-48d2-9825-611acfc61c6c and allow for an orderly political succession given calm heads and support from Russia to see it through.

  • Charles Smith 20th Aug '20 - 9:58pm

    Belarusian authorities on Thursday opened a criminal probe against opposition activists who set up a council to negotiate the transition of power amid massive protests challenging the extension of the 26-year rule of the country’s authoritarian leader in a vote the opposition saw as rigged.
    President Alexander Lukashenko has dismissed the protesters as Western puppets and threatened opposition leaders with criminal charges. Following up on his statement, prosecutors opened a criminal investigation against the opposition activists on charges of undermining national security, and a leading opposition figure reported being threatened with arrest.
    https://worldabcnews.com/belarus-prosecutors-open-probe-against-activists-opposed-to-election-result/

  • Rupinder Singh 21st Aug '20 - 10:51am

    Thank you for your comments.

    In response to John: Unlike devolved governments in the UK, Belarus is a sovereign government and has been since the dissolution of the USSR but has remained part of the Russian orbit – both through its economic, political, military and cultural/linguistic ties. It has a Customs Union and open borders with Russia and large swathes of industry remain tied to Russia.

    But I agree with the thrust of your argument that the reaction function from the EU needs to be thought through and proportional to events in Belarus and Russia’s response. Whilst a lot of Western reaction have focused on the colour revolutions, Moscow is fully aware of the closest relevant example of a de facto regime change of a Russian satellite post-Soviet state that did not materially change Russian interests or influence – Armenia.

  • Rupinder Singh 21st Aug '20 - 5:26pm

    Feedback to comments from Joe, Michael and Charles

    The ”social contract” that many of the post-Soviet leaders – most notably in the hydrocarbon fuelled ‘stans – has been to guarantee citizenry jobs, wages, pensions and price controls – particularly for energy and food – in return for limited democracy. The same was true for Lukashenko and Belarus but this social contract is now broken. Even if continues to strong-arm an extended tenure, Lukashenko is a lame-duck president. Continued political uncertainty will exacerbate the economic woes for a country that has relied on explicit and implicit energy subsidies from Russia since the 1990s. Ironically, it is the cuts in these subsidies that threaten macroeconomic stability that will test Moscow’ mettle – does Putin turn the screw and force a cornered Lukashenko to finally give way to greater integration with Russia under the guise of the bilateral partnership and the Eurasian Union OR see further economic compression in Belarus that could foment further political instability and risk the election of someone less Russo-centric?

    The price and yield on public debt is simply reflecting elevated political risk and a rapid devaluation (not yet the case) of the Belarusian ruble and/or run on reserves would be a real Balance of Payments threat. In the past Belarus has managed to get by on non-conventional external financing including Chinese support rather than bow to IMF conditionality and this remains a likely scenario in the event of emerging financing gaps..at least up to a point.

  • Rupinder Singh 21st Aug '20 - 5:27pm

    It is clear that Lukashenko is digging in and Moscow choosing the option of “do nothing”, waiting to see if things settle down. The EU announced that it does not recognise Lukashenko’s legitimacy so the real litmus test will remain not Russia nor the EU but the reaction of the Belarusian populace. Continued popular discontent and general strikes will determine both the economic fortune of Belarus and for how long the security apparatus/elite continue to support Lukashenko. Equally, whether there is a return to the post-election repression that led to an outpouring of demonstrations and which will further test whether the EU would entertains further measures which would in reality come down to economic ones.

    continued..

    The EU has two decades of experience on how to help transform former planned economies, including the 3 former Soviet republics in the Baltics. Belarus is not North Korea and retains significant comparative advantages that would allow it to accelerate catchup (real convergence in economics parlance) and most significantly, the country continues to retain a very strong civil service and administrative capacity in government, industry and academia.

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