After an election the place he appeared to win 80% of the vote, Alexander Lukashenko must be resting simply in Minsk, trying ahead to his sixth time period because the president of Belarus. In happier occasions, Lukashenko carried out such mundane duties as harvesting potatoes, inspecting tractors, and teasing Russian president, Vladimir Putin, on his anti-COVID insurance policies.

Lukashenko’s actuality immediately is sort of totally different. The August election was extensively seen as fraudulent, bringing Belarusians onto the streets ever since and resulting in mass arrests and worldwide condemnation. All this introduced the nation to the precipice of an financial crash.

Lukashenko has now discovered himself within the unenviable place of begging the Russian president for assist.

Financial integration

Because the fall of the Soviet Union in 1991, Russia and Belarus have had a decent financial connection via varied regional groupings and bilateral initiatives. The latest and complete of those regional agreements is the Eurasian Financial Union (EaEU), a step in direction of full financial integration among the many founding members of Belarus, Russia and Kazakhstan. They have been joined by Armenia and Kyrgyzstan when the EaEU was launched in 2015.

Very like the Schengen zone of the European Union, in concept, the EaEU has free motion of products, capital and labour throughout the borders of those states, whereas adhering to a standard exterior tariff and commerce coverage. Though the EaEU has been derided as an try to “re-Sovietize” the area, in actuality, it’s a option to re-establish commerce hyperlinks and funding and create a car for concluding commerce treaties with others. It’s additionally a option to amplify Russian tender energy within the area.

Inside the EaEU, Belarus has remained reliant on Russian largesse, regardless of the private tensions between Lukashenko and Putin. The necessity for Russian vitality subsidies and open markets has been essential for Minsk, as Belarus has pursued an financial technique of integration inside the EaEU however with out liberalisation. The Belarusian financial system stays dominated by state-owned corporations and a number of other sectors, specifically vitality, are Soviet in all the things however title.

This financial stability, with gradual development and piecemeal reforms each few years to handle low-hanging fruit, has the truth is been a supply of Lukashenko’s political energy, as he continues to offer the identical Soviet welfare state to Belarusians. Nevertheless, the numbers don’t add up with out continued Russian help within the type of low cost oil and gasoline. Earlier than the protests, this realisation had already despatched Lukashenko wildly trying to find different allies who may present vitality.

Learn extra:

Belarus protests: beleaguered financial system underpins anger at Lukashenko authorities

Few choices

The double whammy of the COVID-19 pandemic and the continued protests have pushed the already-fragile financial system to breaking level. Dollarisation, using US {dollars} as forex, was all the time prevalent in Belarus however began to rocket once more because the protests triggered the Belarusian ruble to plummet.

Sporadic labour unrest in help of the protesters, together with on the Minsk Tractor Works, has created manufacturing disruptions, whereas the continued uncertainty of simply how far Lukashenko will go to suppress the protests has created large uncertainty for the financial system. Add to this the worldwide disaster attributable to COVID-19, and any type of homegrown uncertainty solely creates extra difficulties for Belarusian exporters.

This example – and the realisation that his choices are dwindling – is what led Lukashenko to Moscow on September 14, cap in hand, to attempt to shore up Russian help. Putin isn’t any pal of Lukashenko, and the memes of Putin’s physique language whereas listening to Lukashenko speak went viral within the Russian-speaking world.

Nevertheless, Putin has Lukashenko simply the place he needs him: weak, beset by opposition, and unable to say “no” to any calls for product of him underneath the Union Treaty of 1999, which guarantees a lot stronger integration between Russian and Belarus. Belarus has resisted the formidable aims of the Union Treaty, specifically of “a united parliament, a single forex, and even a constitutional act” as Lukashenko knew that Putin would by no means deal with Belarus as an equal.

The present disaster could present that Lukashenko, determined for Kremlin backing, not has the luxurious of demanding Belarus be revered as an equal in any stronger union. This additionally implies that Putin is ready to exert far more management over Belarus with none of the niceties of getting to recognise its wants.

Loans and leverage

Lukashenko left the assembly in Sochi with what he got here for, a promise of US$1.5 billion (£1.2 billion) in loans. It’s unknown what else he needed to promise Putin to maintain Russia on his aspect, particularly concerning future integration between Belarus and Russia completely – not as a part of the EaEU. It’s doubtless that a part of this settlement, as others have surmised, is likely to be for Russia to take a extra direct function in Belarus’s vitality sector (once more, the primary supply of friction between the 2), placing Belarus much more underneath the financial sway of Moscow.

In contrast to many international locations that have been a part of the Soviet Union, Belarus underneath Lukashenko has stood agency in opposition to any type of freedom or financial liberalisation. This stance, whereas offering a stagnant stability for Belarusians, has undermined the financial system and made it extremely prone to exterior shocks and inside disruption. With Lukashenko’s social contract – social advantages for political acquiescence – irrevocably torn up, the structural weak spot of Belarus has been uncovered.

Learn extra:

Belarus election: why strongman Alexander Lukashenko faces unprecedented resistance

Given Lukashenko’s adamant refusal to yield to the opposition, he’s needed to depend on Russia for ethical and financial help, a selection he (and the remainder of Belarus) could quickly remorse. Belarus could discover that its transfer in direction of integration with out liberalisation can also result in integration with out illustration as nicely.

Christopher Hartwell is affiliated with CASE-Middle for Social and Financial Analysis in Warsaw and as a member of the Supervisory Board of CASE-Ukraine.