Belarus, a nation in turmoil

Authors: Harsh Didwania, Sasthaa Gingee Babu

Region Head: Sasthaa Gingee Babu

Editor: Sakshi Sanganeria

Illustration by Cham Reikia

Abstract

In this paper, the authors take a look at the protests that are taking place in Belarus currently (November, 2020). These protests are against the current President Alexander Lukashenko for committing election fraud and illegally retaining his position as President. The authors take a look at the impacts of the protests and what the future holds for the country.

The Current Status

Belarus is engulfed in protests because of the recent election results which were believed to be rigged in favour of Alexander Lukashenko (who has been leader for 6 consecutive terms, from 1994-present).

The protests, which have seen around 100,000 people gathering around the center of Minsk (capital city), have been occurring since August 9th-the day the results were declared. The protestors have been met by violent responses by the police such as baton beatdowns and use of tear gas. Around 7000 people have been detained since the election results but protests show no signs of slowing down as they continue even 50 days after the elections.

Background

President Lukashenko claimed power in 1994 and has tried to maintain Soviet era communism in the country. He is Europe’s longest serving ruler. Most manufacturing enterprises are under state control and even the media doesn’t criticise the government. Although there have always been elections, the opposition party claims that there is too much corruption for anyone but Lukashenko to win.

This year, however, citizens got sick of the widespread poverty and absence of opportunities which was only made worse by the pandemic. An opposition party, led by a trio of women, offered possibly the strongest opposition to Lukashenkos’ reign, demanding new democratic leadership and more economic freedom. Sviatlana Tsikhanouskaya, a 37 year old teacher, was the one running for president representing the opposition.

What happened in the elections?

On August 9th, the day of the election results, the officials announced that Lukashenko won by a landslide victory, with 80% of the votes going to him. The opposition claims that if the results were polled fairly, they would’ve come out with 60%-70% of the votes in their favour.

These results upset the people, who took to the streets to express their discontent. The results received criticism from the EU’s foreign minister as well who said the elections were “neither free nor fair”. The opposition leaders were given a choice to either voluntarily leave the country or be forced out. This happened after one of them was kidnapped by some men who many believe were goons hired by the current government to quell unrest.

Impact of the protests

Belarus’s economy is forecast to experience a sharp recession in 2020. Real GDP will fall by 5.0% in 2020, down from growth of 1.2% in 2019. Domestic activity will be affected by the COVID-19 pandemic and political unrest, whilst exports will be limited by the slowdown in key trading partners due to the crisis. Donor aid is offering significant support to the economy during the crisis.

Belarus has often depended on trade with Russia to sustain it’s outdated Soviet-era style of operating. Now, this relationship is rocky because of the protests. Vladimir Putin has agreed to grant a $1.5bn loan to the Lukashenko government in order to “get the economy in order”. Although this is more than the EU package, this is far less than what is required to bring stability to the economy as we will see.

On August 20th, news that the government was considering freezing deposits (in order to stop foreign currency withdrawal) was released to the public. Although it was never confirmed, people got spooked and rushed to ATMs to withdraw their cash. Prolonged persistence can lead to a currency crisis which is characterised by hyperinflation and effects all through the economy. Elina Ribakova, an economist at the Washington-based International Institute of Finance, said the Belarusian central bank doesn't have the reserves to defend the currency. Which means that the currency is in for massive devaluation.

Large state owned enterprises (SOEs) are regarded as being the pillars of Lukashenkos’ economic model. Workers in these enterprises have heard the calls by the opposition and have staged walkouts from the industries. Belaruskali, one of the SOEs, is the largest producer of Potash in the world. It is expected to produce only 70% of the expected output this year due to the walkouts. Similar instances are occurring in Grodno Azot, a fertilizer producer, and Naftan, an oil refinery. A prolonged walkout of this level puts immense pressure on the already weak economy and on the government. These industries are major sources of foreign currency as they make a bulk of the exports. This can be seen as another indicator of an incoming currency crisis.

What the future holds for Belarus

The Government of Belarus is unlikely to undergo change considering that the current government is heavily backed by the russian administration and a large portion of exports majorly depend on the Russian Federation. The present government is gonna blame the abysmal state of the economy on the protests (and the opposition) and the pandemic.

Actions taken by President Lukashenko in order to drive the prices of gas and oil down from Moscow has led to resentment between the two nations and strong opposition from protestors like Mikhail can lead a revolution. The anti- russian sentiment and the protests could lead to a similar military intervention as in Ukraine which can topple the Lukashenko government and bring the economy to shambles.

Exports for the upcoming year is expected to be low as foreign demand is diminishing. A mixture of the current political situation and disinterest of Russia (Belaruss’ main trading partner) are contributing to this. Investments are also set to reduce because businesses are unable to operate with any form of certainty under the current political and economic situation. The countrys’ poor response to Covid-19 also poses a huge risk to the country in the long run as they will now take longer to recover from the pandemic. FocusEconomics panelists project the economy to shrink 3.4% in 2020. In 2021, the economy is expected to rebound and grow 2.5%.

There are a number of scenarios at play and depending upon the following actions of Lukashenko and his administration, the fate of Belarus is yet to be decided.

References

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