Tuesday 21 May 2024 | 01:16

Point of view: Belarus caught in the middle between EU and Russia

22.02.2016  |  Politics   |  Riccardo Dugulin, Global Risks Insights,  
Point of view: Belarus caught in the middle between EU and Russia

Belarus’ future is torn between the potentially positive implications of the lifting of EU sanctions and the current major losses suffered by the national currency due to Russia’s economic crisis.

On Monday, February 15th, the EU decided to put an end to a set of sanctions, in place for five years, against Belarus. Travel restrictions, the freezing of personal assets, and sanctions on state-owned firms were in place since the repression of political opposition following the 2010 presidential elections.

Minsk seeks closer ties with EU

Monday’s decision concerns 170 government officials, including President Aliaksandr Lukashenka, as well as three national firms: BelTechExport, Beltech Holding, and Spetspriborservice. Only four individuals directly implicated in earlier repressions against members of the opposition are still under the sanctions. The EU had temporarily suspended sanctions following the presidential elections held in October 2016 that saw Lukashenka secure a new term with more than 83 percent of the total vote.

The scrapping of EU sanctions is a testament to President Lukashenka’s recent policies. Indeed, Belarus’ head-of-state has been trying, since the beginning of 2015, to develop closer relations with the EU by releasing political prisoners, a gesture widely appreciated by Brussels. In addition, Minsk has also tried to assert itself as a key regional player throughout the mediations between European partners, Russia and Ukraine.

While international observers have criticised the October elections, the latest ballot was carried out without major human rights violations. EU officials repeatedly stated that Monday’s goodwill gesture is a first tentative step aimed at testing President Lukashenka’s long-term intentions. The facilitation of EU travel visa policies, a major demand by Belarusian authorities, would necessitate additional reforms by Minsk, such as the enhancement of its local private media sector and the enabling of a wider sociopolitical discourse unhindered by government controls.

Belarus suffers from inflation, reliance on Russia

While the regional position of Belarus may be improving, the country’s domestic economic situation is quickly deteriorating. The local economy is largely dependent on Moscow’s investments and subsidies. However, the current crisis is leading to a net loss of value of the Belarusian Ruble (BYR). The local currency hit a historic low against the USD of more than 22,000 BYR more than 24,000 BYR against the Euro.

Belarus had initially planned for a gradual loss of value due to the current economic hardships that would lead to a USD/BYR exchange rate of 1:18,600 by December 2016. The 2016 national budget had also been predicated on $50 oil; with the current plunge of oil prices one of the main factors affecting the local economy.

Despite being faced with the current structural economic crisis, President Lukashenka is continuing to push forward with socialist-style policies linked to the non-optimal management of assets and high employment rates aimed at keeping social and political stability. At this point, the government and the national bank have not yet taken any measures to combat currency devaluation, as they speculate that the situation may favour the export-driven sectors of the national economy.

The next major economic policy change is likely to remain the redenomination of the Belarusian Ruble slated to occur in July 2016.

President Lukashenka is expected to remain torn between foreign policy successes and a faltering domestic economy. Specifically, Belarus seeks to maximise its relatively limited assets by bargaining between the EU and Russia for a better position. However, the devaluation of the national currency along with high inflation rates and the lack of structural reforms will continue to put a strain on the local population.

As long as the government is able to pay public sector wages, Belarusian society is expected to remain docile, with the economic crisis unlikely to lead to any major unrest or political instability. In addition, given Minsk’s current attempts to reach out to the EU, Moscow is likely to continue to subsidise the local economy in a bid to avoid losing its partner and buffer.

As such, while the economic health of the country is far from reassuring, President Lukashenka may weather the storm by relying on current regional geopolitical tensions, which are pushing the EU and Russia to strive to avoid the breakdown of Belarus’ economy.

Global Risks Insights

Other news section «Politics»

Andrei Yahorau — Al Jazeera: “Lukashenko is irresponsible”
Andrei Yahorau — Al Jazeera: “Lukashenko is irresponsible”
He said Belarus would likely face economic tightening not only as a result of the coronavirus pandemic but also a Russian trade oil crisis that worsened this past winter.
Shhh! Belarus Wants You to Think It’s Turning Over a New Leaf
Shhh! Belarus Wants You to Think It’s Turning Over a New Leaf
Minsk’s muddled media clampdown could jeopardize warming of relations with the West.
Statement of the BNP in connection with the wave of searches in the editorial offices of the Belarus
Statement of the BNP in connection with the wave of searches in the editorial offices of the Belarus
The Belarusan National Platform of the EaP CSF issued a statement in connection with the wave of searches in the editorial offices of the Belarusan media and the detention of journalists.
Statement of the Belarusan EaP CSF National Platform on solidarity with the civil society of Armenia
Statement of the Belarusan EaP CSF National Platform on solidarity with the civil society of Armenia
The Belarusan National Platform of the Eastern Partnership Civil Society Forum issued a statement on solidarity with the civil society of Armenia.
"Vilnius Consultations": Key points and recommendations on the future of EU Eastern Partnership
"Vilnius Consultations": Key points and recommendations on the future of EU Eastern Partnership
On September 11, the inaugural „Vilnius Consultations“ conference was organized by Vilnius Institute for Policy Analysis and Lithuanian Ministry of Foreign Affairs.
From farewell to a new Eastern policy and towards a new development
From farewell to a new Eastern policy and towards a new development
Poland and Germany were both initiators and drivers of a New Eastern policy linked to the Eastern neighborhood and Russia/Soviet Union.
Uladzimir Matskevich: The sooner the "Union State" is denounced, the better for Belarus
Uladzimir Matskevich: The sooner the "Union State" is denounced, the better for Belarus
Not only does the "Union State" undermine the establishment of civilized relations with Europe, but it hinders the possibility of normal relations between Belarus and Russia.
Uladzimir Matskevich: The regime can no longer control the situation in the country
Uladzimir Matskevich: The regime can no longer control the situation in the country
The authorities are unable to prolong the social contract with the people: there is no way out of the social crisis.
Press release in connection with the dialogue in the format of the EU-Belarus Coordination Group
Press release in connection with the dialogue in the format of the EU-Belarus Coordination Group
Belarusan National Platform of the EaP CSF welcomes the dialogue process in the format of the EU-Belarus Coordination Group, the third round of which was held in Minsk on 3-4 April 2017.
Statement of the BNP in connection with the events of March 25-26, 2017 in Minsk and other Belarusan
Statement of the BNP in connection with the events of March 25-26, 2017 in Minsk and other Belarusan
Belarusan National Platform of the EaP CSF issued a statement in connection with the events of March 25-26, 2017 in Minsk and other Belarusan cities.
Statement by the Eastern Partnership Civil Society Forum on mass repressions in Belarus
Statement by the Eastern Partnership Civil Society Forum on mass repressions in Belarus
The EaP CSF Steering Committee issued a statement on repressions against civil society activists and journalists in Belarus, in view of the demonstrations planned on 25 March 2017.
Uladzimir Matskevich: Belarus-Ukraine relations need to be re-established
Uladzimir Matskevich: Belarus-Ukraine relations need to be re-established
"Case of Zhadan" demonstrated that Belarus does not actually have a clear policy - neither domestic nor foreign.
Belarus
Belarus's Lukashenko alleges “fifth column” plot as unrest continues
Belarusan President Lukashenko said on Tuesday a “fifth column” was plotting to overthrow him with the help of foreign-backed fighters, days before a planned street protest in Minsk against a new tax.
In Belarus, a rising fear: Will we be the next Ukraine?
In Belarus, a rising fear: Will we be the next Ukraine?
The relationship between Russia and Belarus has never been an easy one.
Andrei Yahorau: European window of opportunity is slowly closing, relations take form of fatigue
Andrei Yahorau: European window of opportunity is slowly closing, relations take form of fatigue
The Belarusian regime is not able to pursue a truly multi-vector policy, and the EU cannot decide what it needs in the region on the whole and from Belarus in particular.
Uladzimir Matskevich: Today Belarus is in a very difficult situation
Uladzimir Matskevich: Today Belarus is in a very difficult situation
But even under the circumstances the authorities have various ways out.
Uladzimir Matskevich: Lukashenka does not disrupt Russian plans to annex Belarus
Uladzimir Matskevich: Lukashenka does not disrupt Russian plans to annex Belarus
But Lukashenka is afraid for his fate and position - he needs Belarus to be sovereign to fully exercise his power.
Andrei Yeliseyeu: Russia is taking drastic unconstructive steps  
Andrei Yeliseyeu: Russia is taking drastic unconstructive steps  
There should be no actual passport control for the Belarusians arriving in Russia within the framework of the existing Belarusian-Russian agreements.
Uladzimir Matskevich: Visa-free regime is not a political concession to the West
Uladzimir Matskevich: Visa-free regime is not a political concession to the West
It is a process of normalization of Belarus-EU relations. Belarus just fulfils its international commitments.
Andrei Yahorau: Belarusian regime is self-improving, the only threat so far is the economy crisis
Andrei Yahorau: Belarusian regime is self-improving, the only threat so far is the economy crisis
Political analyst emphasizes that Belarus is the first modern authoritarianism in the European space, a phenomenon not yet studied by anyone.
Gintautas Mažeikis: The relation of political field and arena in the framework of information war

In his report, philosopher Gintautas Mažeikis discusses several concepts that have been a part of the European social and philosophical thought for quite a time.

“It is our big joint work”

It is impossible to change life in cities just in three years (the timeline of the “Agenda 50” campaign implementation). But changing the structure of relationships in local communities is possible.

Shhh! Belarus Wants You to Think It’s Turning Over a New Leaf

Minsk’s muddled media clampdown could jeopardize warming of relations with the West.

Mikhail Matskevich: How to create a local agenda and make it a problem solving tool

To achieve changes, you need to be interested in them and stop pinning all hopes on the state.