Everything you wanted to know about the Belarusian economy but were afraid to ask is now in the open domain. Belenergo, President Alexander Lukashenko's state electricity monopoly, cannot pay its Russian counterpart about $20 million it owes for electricity supplies. The Belarusians are saying they have the amount of Belarusian rubles needed for payback, but do not have the facility to convert them into some other currency (ostensibly, Russian rubles), because the Central Bank in Minsk doesn't have the funds for this. Now if this is not a description of a bankrupt state than I do not know what is.
The Russians switched off electricity supplies to their neighbor and ally early on June 29. Russian electricity accounts for no more than 12 per cent of Belarus' overall consumption, so, Belenergo says, it will make up the difference itself. When Russian First Deputy Prime Minister Igor Sechin rushed to tell the journalists that “there is no political undercurrent in this dispute,” everyone immediately understood that, on the contrary, that undercurrent is very strong. The scandal follows a renewed attack on Lukashenko by Russia's Gazprom-owned NTV television channel – this time in the form of a documentary, detailing, how the Belarusian dictator ruined his country's economy. It was in response to an extremely rude commentary about President Dmitry Medvedev, aired by Lukashenko's favourite TV commentator Yury Prokopov. Prokopov is one of the functionaries of the Belarusian regime who is barred from entering the EU and the U.S. The cold war between Moscow and Minsk is in full swing. I would even venture that the Russian-Belarusian union is on its deathbed.
Not that it was a real union before. Despite an open border, officially open job market and freedom for Russians and Belarusians to settle and live anywhere in both countries, there was always a strain on relations. A succession of Russian leaders strived to present relations with Belarus as proof of Russia’s staying power in the post-Soviet space, as well as a counterbalance to NATO enlargement. They had to pay for this geopolitical pleasure by feeding Lukashenko’s outmoded Soviet-style state-dominated economy mainly with cash and oil. The dictator in Minsk perfected the art of blackmailing Moscow by threats of turning towards Europe and the West. This went on for 15 years. Russia diligently defended Lukashenko’s dismal political and human rights record at international forums, having served as his most active international advocate.
When economic reality caught up with Lukashenko’s economic romanticism, the crash was swift and painful. Although Moscow is not in the least concerned with democracy and good governance in Belarus, it is very keen to acquire the country’s remaining functioning assets. They include Beltransgaz – the pipeline monopoly. They thought that Lukashenko, in his isolation and financially dire straits, will agree to divest himself of property in exchange for credits.
But the Kremlin miscalculated: the Belarusian strongman cannot afford to lose control of those assets, because they form an integral part of his governance. Tight grip over the economy facilitated total political control. In the mind of Lukashenko, to let Beltransgaz and other key enterprises go amounts to surrendering his presidential chair. He knows that he’ll become an irrelevant vassal once he loses economic supremacy. He still hopes Vladimir Putin will come to the rescue: he seems to have ordered his TV to refrain from directly criticizing the Russian prime minister.
Hence his desperate attempts to fend off the Russian bids for assets and his weird promises to close the borders and isolate the country. His last chance seems to be China, which has been increasing its presence in Belarus recently – and, it seems, not only economically and culturally. There are persistent rumors that Minsk has offered the Chinese facilities for conducting electronic intelligence gathering in Europe. Even if this is not the case, Lukashenko would definitely prefer the far away Chinese to bail him out. They will not be interested in removing him from power, while Moscow might well consider the option appealing at some point, if it does not already. If Beijing indeed lends a helping hand to the Europe’s last dictator, it will be a slap in Russia’s face. And Russia will have no one to blame for this but itself, because it let the tail wag the dog for too long.
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What is Russia's place in this world? Unashamed and unreconstructed Atlanticist, Konstantin von Eggert believes his country to be part and parcel of the "global West." And while this is a minority view in Russia, the author is prepared to fight from his corner.
Konstantin Eggert is an independent Russian journalist and political analyst. In the 1990s he was Diplomatic Correspondent for “Izvestia” and later the BBC Russian Service Moscow Bureau Editor. Konstantin has also spent some time working as ExxonMobil Vice-President in Russia. He was made Honorary Member of the Order of the British Empire by Queen Elizabeth II.
