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Breakingviews

Breakingviews - Belarus is a headache for Russia, not the world

Belarusian President Alexander Lukashenko with Russian President Vladimir Putin pose for a photo as they arrive to participate in the state council of the Union State of Russia and Belarus in Minsk, Belarus, June 19, 2018.

LONDON (Reuters Breakingviews) - Here is a joke doing the rounds in Belarus, where protesters over President Alexander Lukashenko’s reported landslide victory in the Aug. 9 election threaten to end his 26-year reign. Policemen arrest a man in Minsk, the capital. “But I voted for Lukashenko,” he declares. “Don’t lie,” the police retort, “nobody voted for him!” Lukashenko’s potential departure is no laughing matter for the Russian President Vladimir Putin.

The protests have brought Belarus unusually global attention. The population of 10 million and gross domestic product of less than $60 billion are too small to have much global impact. A few international investors hold Belarusian debt – including Fidelity and Ashmore, according to Refinitiv data. But the government has only $7 billion of bonds in international circulation.

The former Soviet state is of much greater significance to its main economic ally: Russia. For Moscow, Belarus is a strategic buffer against NATO and the European Union. To keep it close, Russia sells the country oil at below-market prices. Obserwator Finansowy, a Polish think tank, estimates that this perk contributed 10% of the country’s GDP in 2018.

Putin has long backed Lukashenko, but the relationship was testy, as the Belarus leader rejected Moscow’s calls for greater economic and political ties, although Russia still buys about 40% of Belarus exports. Russia had been scaling back its subsidies.

Belarus is important to Putin, but probably not important enough to risk a direct military intervention in the style of the 2014 annexation of Crimea from Ukraine. The situations are quite different. Flexing Moscow’s muscles in Belarus could bring stronger local resistance than six years ago, and Russians, who are suffering the economic pain of lower oil prices and Covid-19, would probably be less enthusiastic about such an adventure.

Also, Belarus isn’t necessarily pivoting towards Europe as Ukraine was, especially as the Western powers have also lost interest in eastward expansion. There is little appetite for helping Belarus reduce its economic dependence on Russia. Putin has plenty of leverage to help the country find a new leader whom he finds acceptable.

Breakingviews

Reuters Breakingviews is the world's leading source of agenda-setting financial insight. As the Reuters brand for financial commentary, we dissect the big business and economic stories as they break around the world every day. A global team of about 30 correspondents in New York, London, Hong Kong and other major cities provides expert analysis in real time.


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