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Russia Gives Belarus $1.5 Billion Loan To Boost 'Brotherhood'

Belarusian President Alyaksandr Lukashenka (left) meets with Russian President Vladimir Putin in the Black Sea resort of Sochi on September 14, 2020.
Belarusian President Alyaksandr Lukashenka (left) meets with Russian President Vladimir Putin in the Black Sea resort of Sochi on September 14, 2020.

In his first foreign summit since national protests against his reelection began over a month ago, Belarusian President Alyaksandr Lukashenka has received from Russia a critical economic lifeline – a $1.5 billion state credit -- that some analysts consider part of his strategy to stay in power.

“The economy is at the heart of everything,” remarked President Lukashenka, in a joint September 14 appearance with Russian President Vladimir Putin in Russia’s Black Sea resort town of Sochi.

For a politician who has staked much of his 26-year hold on power on contested claims that he has provided economic stability, that remark was no exaggeration.

A severe credit crunch has hit Belarus since national protests started against official results that named Lukashenka the winner of the Eastern European country’s August 9 presidential vote.

The $1.5 billion state credit to Belarus amounts to nearly the total $1.6 billion in 2020 debt payments that the Belarusian government reportedly owes Moscow, its largest foreign creditor and investor.

Minsk earlier had expressed interest in refinancing this debt since it cannot meet the payments.

The Belarusian ruble lost over 10 percent of its value against the dollar since early August, with the country’s $4.3 billion in foreign currency reserves as of early September sufficient for less than a month and a half of imports, according to economist Anders Aslund.

Domestic currency also appears to be in short supply. One Belarusian businessman told Current Time that Belarusian banks are now offering depositors interest rates three times the standard 8-percent rate and refusing to make on-demand payments.

Even the announcement of a credit line from Russia does not appear to have improved matters. The National Bank of the Republic of Belarus announced on September 14 that “constantly available liquidity support and withdrawal operations” will not be available until October 13.

The country’s economic cushion against these shortfalls appears thin: The World Bank estimated that Belarus’ predominantly state-controlled economy will contract by 4 percent this year because of the economic effects of the COVID-19 pandemic. Talks with the International Monetary Fund for $940 million in pandemic support have fallen through.

Meanwhile, the European Union and United States are now considering sanctions against Belarusian officials for human rights abuses in the treatment of Lukashenka’s critics after the election.

Against this backdrop, Lukashenka has put away his pre-election charges that Russia, which has offered financial bailouts in the past, was plotting to undermine Belarus’ presidential vote.

“These events,” he said on September 14 in reference to Belarus’ ongoing protests, “showed that we need to stay closer with our older brother and cooperate on all questions, including the economy.”

Terming Belarus “our closest ally,” Putin, in turn, presented the $1.5 billion credit agreement, and unspecified plans for further trade and investment, as part of Moscow’s “obligations” toward Belarus under the two countries’ 1998 agreement on creating a “union state.”

Prominent Russian business figures likely already have state-run Belarusian companies in mind for acquisition, in sectors ranging from transportation to fertilizers, Vladislav Inozemtsev, a senior associate for Russia and Eurasia at Washington, DC’s Center for Strategic and International Studies wrote in a September 2 commentary for the Atlantic Council.

But no matter the opportunities for Moscow in any deal with Russia, former Kremlin political strategist Gleb Pavlovsky predicted ahead of the Lukashenka-Putin talks, that Belarus receiving economic help from Russia would require Lukashenka convincing Putin that he has the power to protect long-term Russian interests.

If Lukashenka does not show that he is in control, “even if he wants to sell [the country] to Putin, Putin won’t buy it because he’s not convinced of his control, not convinced of his ownership right,” Pavlovsky said.

In an interview with Current Time, presidential candidate Svyatlana Tsikhanouskaya ventured that police detained 774 people at September 13 protests throughout Belarus to convince Putin of that point. Columns of armed vehicles were photographed in Minsk.

Yet even if such a display of force did not reassure the Kremlin, it does not appear to have any publicly known, potential alternatives to Lukashenka, its on-again, off-again ally since 1994.

It already has made plain that it will not talk with the Coordination Council, the group of Lukashenka critics seeking a transition to Tsikhanouskaya, senior Council member Paval Latushka told Current Time.

Instead, though it distrusts him, Moscow intends to “back” Lukashenka, “while encouraging steps toward an eventual succession,” five unidentified sources “close to the Kremlin” told Bloomberg ahead of the summit.

What those “steps” would entail – and whether Lukashenka would agree with them -- is unclear.

Former Kremlin aide Pavlovsky contends that Lukashenka is “deadly afraid” of “a Putin onslaught” – Moscow somehow gaining sufficient influence over Minsk to dictate terms to the country or him.

“If he will crawl up to him (Putin) on all fours and request help, then Putin can make anything out of him,” Pavlovsky said. “And he doesn’t want that situation.”

After Lukashenka landed in Sochi on the morning of September 14, Belarus’ official news agency BelTA reminded readers that the “main thing” is to retain “an equal partnership … in all spheres.”

The two countries already appear to have synchronized their state-run TV broadcasts on Belarus’ protests. On September 14, they found another point in common: As their Moscow counterparts did toward Russian protesters in the summer of 2019, Belarus' state prosecutors have threatened to deny the parental rights of Belarusians who bring their underage children to a demonstration.

President Putin earlier offered police troops to put down violent unrest at these rallies, if needed, but, post-summit, his spokesman, Dmitry Peskov, announced the withdrawal of reserve police and National Guard units stationed near the Belarusian-Russian border.

As it has for other domestic conflicts in former Soviet republics, Moscow is claiming that it takes a longer-term, peace-oriented view toward Belarus' political crisis.

To resolve its standoff with protesters, Minsk has told Moscow and the Organization for Security and Cooperation in Europe that it will hold a constitutional referendum by 2022, followed by a general election, the Russian news outlet RBC reported on September 8.

In late August, Russian Foreign Minister Sergei Lavrov expressed support for Lukashenka’s call for another round of constitutional reforms. This summer, Moscow organized its own national vote on constitutional changes, which reinforced Putin’s hold on power.

Belarus’ own proposed constitutional changes, which have not yet been officially endorsed by Lukashenka, would include granting greater power to parliament and expanding parties’ participation in the political system, according to RBC.

In their joint appearance, Lukashenka and Putin did not mention these alleged plans.

Little suggests, however, that what was discussed between the two men will mollify Lukashenka’s opponents.

While Russia may draw up agreements with Lukashenka now, it should bear in mind that a new Belarusian government will not honor those arrangements, they say.

“We’re very sorry that the Russian authorities accepted the dictator’s side and not the will of the people,” Tsikhanouskaya said on September 14, commenting about Russia’s role in the protest standoff with Lukashenka.

While Russia’s readiness to support Lukashenka with troops or otherwise “is worrying,” Tsikhanouskaya believes that Putin has adopted “a wait-and-see position about how things will develop further in our country.”

No one, she emphasized, wants to sever Belarus’ “friendly” ties with Russia.

Coordination Council leader Latushka, a former Belarusian culture minister and ambassador to France, Poland, and Spain, noted on September 10, though, that if Russia wants to protect its strategic interests in Belarus, it needs “to talk with those who will be in power tomorrow.”

Kremlin officials "perfectly understand that Lukashenka’s time is over,” he said.

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