Don’t go changing, Belarus

With all the doings in the Middle East, it’s easy to miss developments elsewhere.  Let’s take a look at Eastern Europe, shall we?  Like Belarus, in which the latest developments suggest a uniquely Belarusian path to misery. 

The Financial Times’ Jan Cienski notes that Greece and Portugal aren’t the only European countries looking for a bailout: 

Away from frantic negotiations over how to save Portugal and Greece, another peripheral European country is scrambling for a bail-out. But Belarus is looking not to the European Union or the International Monetary Fund but to a grouping of ex-Soviet republics led by Russia.

Vladimir Putin, Russia’s prime minister, flew to Minsk on Thursday to offer Belarus about $3bn in loans over three years from the Eurasian Economic Community, in return for undertaking economic reforms and privatising state companies – which could see Russia take controlling stakes in strategic assets such as oil refineries and pipelines.

“It will help to improve investor sentiment,” said Anastasiya Golovach, an analyst with Renaissance Capital. “But Belarus will definitely have to pay something for this and Beltransgaz [operator of the east-west pipeline shipping Russian natural gas to the EU] will be the price.”

Moscow is relishing Alexander Lukashenko’s discomfort, as the authoritarian leader of Belarus, who has long had a prickly relationship with Russia, endeavours to calm the growing panic surrounding the Belarusian economy.

Belarus has plunged into a balance of payments crisis, with the current account deficit soaring to 16 per cent of gross domestic product and currency reserves dwindling to a month of import cover. The central bank has introduced multiple exchange rates, seeing a collapse in the rouble’s black market rate….

The outlook is gloomy. “We are heading in the direction of Zimbabwe here,” said a foreign diplomat stationed in Minsk.

Note to the Belarusian government:  anytime your country is compared to Zimbabwe, you are in Very Big Trouble. 

As the article notes, Lukashenko has managed to box himself into a corner.  After flirting with the West for a time, a domestic crackdown that intensified in December of last year alienated Germany and the United States, leaving Russia as Lukashenko’s only lifeline. 

Russia is, not surprisingly, exploiting the situation in a manner remarkably consistent with trends I wrote about in The Sanctions Paradox oh so many years ago.  As a scholar, it’s always nice to see a model demonstrate its durability.  In this case, there’s the added frisson of seeing Russia tell others to enact policies that Moscow steadfastly rejected about a decade ago in order to advance Russian interests.  And there’s something oddly comforting about watching Belarus continue to make policy misstep after policy misstep — it’s the IR equivalent of rooting for the San Diego Clippers. 

The downsides are that it prolongs Belarusian misery — and makes the Visegrad states  just a wee bit more jittery. 

Developing….