ZOiS Spotlight 13/2020

Belarus’s increased vulnerability in times of crisis

by Nadja Douglas 01/04/2020
Mozyr Refinery in Belarus: the country strongly depends on Russian oil supplies. © imago images / Natalia Fedosenko / TASS

Life was not easy for Belarus before the global coronavirus crisis hit Europe. The country had been struggling with socio-economic problems, societal discontent, and long-lasting frictions with its most important economic partner and brotherly neighbour, Russia. Now that the crisis has arrived, many of these problems are amplified. The country’s outlook seems even bleaker, especially as the full consequences of the pandemic cannot be predicted.

Since coming to power in 1994, Belarusian president Alexander Lukashenka has ensured stability through redistributive policies that aim to share the benefits of economic surpluses across all layers of society. This ‘Belarusian model’ is a type of social contract between the state and various groups of society, including in particular the country’s hand-picked officials and state employees. It has worked based on a system of tacit public consent to decisions taken by state authorities, which in turn acquired certain rights and guaranteed social protection. Much of this arrangement was based on promises of stability today and a brighter future tomorrow. Yet, as Belarus’s economy falters, traditional state allowances, in particular prior to elections, will fail to materialise in 2020.

Economic worst-case scenarios collide

Belarus’s external trade and exports are on a negative trend, and its budget deficit is growing. International oil prices are plummeting, too, although these are not the main problem for the country. Belarus generates its energy rents by importing subsidised commodities from Russia and exporting processed goods. However, declining oil and gas prices are likely to coincide with a weakening of the Russian rouble, to which the Belarusian rouble is tied. For its exports, Belarus needs a stable currency.

For several months, Belarus refused to buy oil from large Russian companies that add a premium onto the oil price for long-term contracts. This led to a 76 per cent drop in Russian oil supplies in the first two months of 2020. As a result, exports of Belarusian oil and gas products have decreased sharply, from 1 million tonnes in January 2019 to 305,900 tonnes in January 2020. The country successfully replaced its supply with imports from other suppliers, but at a much less competitive rate than Russia’s. 

Relations with Russia hit rock-bottom

Despite the current disagreements about delivery conditions, Russia remains Belarus’s most important trading partner. In the past, such conflicts were mostly resolved thanks to the two partners’ mutual dependence. Since December 2018, Russia and Belarus have been pursuing negotiations on even closer integration, but recently bilateral relations have reached an all-time low. On 5 March 2020, Belarusian foreign minister Uladzimir Makei declared that further integration talks with Moscow would make no sense before an agreement about oil deliveries from Russia had been hammered out.

Lukashenka enjoyed considerable popular support for a long time, but now it is dwindling. Despite obstacles to the freedom of assembly and people’s high financial dependence on the state, subdued social and political protest has occurred more frequently in Minsk but also in the regions in recent years. The latest wave of protest took place in December 2019 against a potentially renewed Union State agreement with Russia and the secrecy of the negotiations. As a recent ZOiS survey revealed, almost half of young people either have low or no trust in their president. The country’s parliament was distrusted by over 60 per cent of respondents.

Belarus’s handling of the coronavirus crisis

The Belarusian authorities’ handling of the coronavirus pandemic has been met with severe criticism from society. The opposition has claimed that many people have begun to distrust official information. In terms of preventive measures, Belarus remains the least proactive of the countries in the region. Kindergartens and schools are still open, and the country’s football league continues to hold games. Around 16,000 people have signed an online petition that urges the Belarusian health ministry to introduce quarantine measures for all education facilities.

Meanwhile, Lukashenka told the public that the global panic ‘is just another psychosis that will play into someone’s hands and, at the same time, will do harm to others’. Moscow, by contrast, has taken drastic measures. On 16 March, Russia unilaterally closed its borders with Belarus.

Belarus is in dire need of extensive structural reforms to diversify its economic base and employment structure, modernise its public administration, and expand its external trade partners. Once again, these reforms will not be tackled this year, because of the coronavirus crisis and the presidential election due in August. That leaves the country with grim prospects for economic recovery and little hope of addressing the needs of the population. Necessary measures to prevent a looming economic collapse because of the coronavirus pandemic are far from being implemented. The state’s reserves will not be sufficient to inject great amounts of cash to sustain social and economic groups, as other European countries are doing.

What is worse, Belarus has become extremely vulnerable to external shocks. Despite being less interconnected with the global economy than other countries, it remains dependent on its big neighbour and its market. Russia, itself overstretched, will be neither able nor willing to sustain the Belarusian economy any longer. To some extent, Belarus has been left to fend for itself and can no longer rely on external support to maintain the Belarusian model.

Nadja Douglas is political scientist and a researcher at ZOiS where she coordinates the project Public initiatives and state power structures – a post-Soviet comparison.