THE VIEW FROM MITTELEUROPA: Belarus is now just a pawn in the Kremlin's bigger game

THE VIEW FROM MITTELEUROPA: Belarus is now just a pawn in the Kremlin's bigger game
Despite public displays of bonhomie, Vladimir Putin (right) regards Lukashenko (left) as a liability who must not only at some stage relinquish office, but power altogether.
By Gunter Deuber and Marcus How in Vienna December 14, 2021

On 2 December, the European Commission introduced a fifth round of sanctions on Belarus, responding to an escalation in hybrid border provocations by Minsk. As revenge for previous sanctions, Minsk had facilitated the flying in of migrants from Iraq, some 10,000 of whom were subsequently bussed to the Polish border so that they could seek asylum in the European Union. In a way, Belarus has thus begged for new sanctions – with greetings from Moscow.

A humanitarian crisis ensued as the migrants were stuck in no-man’s land, held back by the Polish security forces while being left to their own devices by the Belarusian authorities. The situation de-escalated somewhat when the Iraqi government dispatched planes to Minsk to repatriate citizens who wanted to return, but some 1,000-2,000 migrants remain trapped.

The economic sanctions introduced by the Commission do not represent a departure from its strategy thus far. They target the individuals and companies held to be responsible for engineering the crisis, including the national airline Belavia and tour operator Tsentrkurort.

However, strategic companies were also added to the sanctions list, including national oil company Belarusneft, fertiliser company Grodno Azot and tyre manufacturer Belshina, thereby further choking off major streams of hard currency for Minsk.

Furthermore, the US and UK governments expanded their respective sanctions regimes, with the former taking an especially significant step in banning new issues of Belarusian sovereign debt on primary and secondary markets, while also tightening restrictions on potash exports.

Snowballing sanctions

Such sanctions are snowballing through the economy, gradually deepening their bite, which has yet to be really felt. Indeed, GDP growth is only estimated to flatline during 2022, sinking from a modest 2% to 0.5%.

This is probably the best-case scenario for Minsk, as the EU is likely to follow up with a sixth round of sanctions in 2022. These will echo steps taken by the US such that maximum impact can be achieved.

Belarus is of sufficiently low political and economic value that the EU has an incentive to act, with this momentum likely to be reinforced by the entry into office of the “Ampelkoalition” in Germany, which is pledging a harder line on Minsk. In a way, the EU was able to position itself vis-à-vis the rather insignificant Belarus as a fast-acting player in geopolitical and geo-economic issues. Well done EU – even if, of course, the EU still finds it much harder to agree on sanctions against Russia than against insignificant Belarus.

The question will be at which point the sanctions become counterproductive, inflicting social consequences that undermine the credibility of the exiled opposition as well as the EU and its allies. And the more dependent Belarus becomes on Russia, the harder it will be to change course.

Western investors must therefore come to terms with the fact that a turnaround in economic relations is highly unlikely at this point. Balancing sanctions with maintaining a local presence will become increasingly challenging.

Neither are economic sanctions a one-way street; Minsk has already banned imports of Western foods, following the lead of Moscow. Substitutes for banned products are then to come from "friendly" countries like Russia, which already has a lot of experience with import substitution.

Moreover, doing business on the ground is not such an easy thing anymore. For a long time Austrian telecom company A1 (one of the largest foreign investors in the country) was criticised by the opposition for its (implicit) support of Belarus’ repressive government. Now things have turned upside down, as at the end of last week Telekom Austria announced that the spokesperson of its local subsidiary had been arrested and accused of publishing sensitive information. The Austrian State Department remains “extremely concerned” about the situation, while Austrian A1 “strongly condemns this interference with the privacy of one of its employees”. 

A coal in the “Ring of Fire”

A clearer picture of the outlook in Belarus can only be formed by locating the country within the interests of the Kremlin. This was to some extent always the case, but Belarus has now decreased in its relative importance, becoming a secondary actor in a larger geopolitical theatre that is being improvised from Moscow – a small part of what the Bertelsmann Foundation described as a “ring of fire” at the EU outer borders, extending from Belarus to North Africa via Ukraine, Moldova, the Caucasus and the Western Balkans.

The strategic approach of Moscow to Belarus – and its self-declared president, Alexander Lukashenko, in particular – has in many respects been characterised by ambivalence. On the one hand, Belarus is integral to its regional security architecture, informing Russian moves to enable greater control of events on the ground, while simultaneously increasing the dependence of the Lukashenko regime on Moscow. Allowing it to be consumed by a popular uprising viewed favourably by the EU and US was never an option.

And while Moscow did not mastermind the provocations of the Lukashenko regime – such as the hijacking of the Ryanair flight in May and the facilitation of illegal migration movements from July – it is highly unlikely that it was out of the loop. The security and intelligence structures of Belarus and Russia are increasingly integrated.

As such, the state-led smuggling of thousands of migrants would not have escaped the notice of Moscow, which was happy to show (implicit) tolerance – and use the occasion to mock European migration policy, even as it allowed the Iraqi embassy in Moscow to repatriate some of the migrants via Russia. In view of the fact that some EU and Nato members were at times even talking about incidents under Articles 4 and 5 of the Nato Statutes at the borders to Belarus, it can be assumed that provocations at the EU's external border are not taking place entirely without (implicit) tolerance by the Kremlin.

On the other hand, financial support for Minsk is largely being drip-fed through the gradual disbursement of a $1.5bn loan, while a further package worth $3bn from the Eurasian Fund for Stabilization and Development is being negotiated. Economic support is also being provided through Russian absorption of Belarusian exports. However, these measures are modest, mostly serving to keep the Belarusian economy on life support without providing treatment for a full recovery, leaving it a dependent patient.

It is also an open secret that, despite public displays of bonhomie, Vladimir Putin regards Lukashenko as a liability who must not only at some stage relinquish office, but power altogether. Lukashenko promised Moscow that a constitutional referendum would be held in February 2022 to facilitate a controlled political transition; but the Kremlin suspects that this is a ruse to engineer a ‘Belazakhstan’ scenario in which Lukashenko retains power through switching from the presidency to chairmanship of a newly empowered All-Belarusian People’s Assembly.

Indeed, the Kremlin made its reservations apparent when Putin spoke in support of a dialogue between the government and the opposition. This should not be taken to mean support for a democratic transition, the prospect of which is now highly remote. Rather, it suggests that Moscow would prefer a political transition to be informed by some degree of pluralism and consensus between stakeholders, not least because this would maximise its influence over proceedings.

So long as there are no other escalations in the region, Russia could also be seen as a useful partner in the Belarus crisis, since dialogue with the current rulers is not an option for the EU and this is unlikely to change anytime soon. Without an outright escalation in the Ukraine conflict we would not underrate the willingness of the EU to see Russia as a constructive actor in the Belarus crisis.

Improvise, adapt and exploit

So far, the Kremlin has managed to work the conduct of the Lukashenko regime to its advantage. Prima facie the border provocations in themselves made little strategic sense. They were arguably even counterproductive, prompting the rare feat of the EU acting decisively on foreign policy, in addition to providing a sanctions toolbox for responding to future hybrid threats to member states.

At best, the conduct of the Lukashenko regime provided a convenient distraction for the Kremlin while it prepared for the round of poker that it was to play with the US over Nato expansion and Ukraine. Belarus is not anomalous in this respect: moves by the Serb Republic in Bosnia to initiate secession from key institutions in Bosnia & Herzegovina – including by forming its own army – have further spread thin the geopolitical attentions of the US and EU.

The Russian agenda was also served by the fact that Belarus is now fully within the geopolitical camp of Moscow: Lukashenko can no longer hedge his bets by positioning his country as a “neutral” territory.

Quite the opposite; Minsk has sold out entirely on its status as an intermediary between Russia and the West on Ukraine. Lukashenko has openly endorsed the status of Crimea as the de jure territory of Russia. He also stated that his administration would support Russia in the event of an invasion of Ukraine, describing it as “ours.” This is not empty bluster: Belarus has emerged as a viable deployment zone for the Russian military, opening up a northern front with which Kyiv would have to contend.

The question is how seriously Moscow is considering a full-scale invasion of Ukraine. Although winable, such a campaign would be very costly, not least as the support of the Russian population – let alone that of Belarus – is by no means given. Past precedent suggests that Moscow tends towards targeted interventions with clear trade-offs in costs and benefits.

More likely, Moscow is attempting to consolidate the geopolitical gains – including Belarus – it has accumulated in recent years within the framework of a new agreement with the West. This would codify the red lines of Moscow within its regional sphere of influence, while sealing off certain policy paths for hostile neighbours, such as Ukraine and Moldova.

The new normal?

Belarus was always within the orbit of Russia, but Lukashenko had ensured for decades that it remained relatively autonomous. The trajectory of events in Belarus, combined with the interventions of Moscow, have brought the country closer to its neighbour than ever. And the fact that Moscow has worked towards self-sufficiency in strategic areas has implications for foreign investors from outside its regional orbit. This will very likely have an impact on policymaking in Belarus, which in any case only learned to love foreign investment over the past decade.

Such developments are very difficult to reverse and must necessarily inform the strategic outlook of foreign investors. Lukashenko will likely exit the stage in some form or other, which would lower the (geo)political temperature; but the protectionist interests that sustain him will remain.

For the time being we see a democratic transition and/or even a surprising transformation in the sense of a surprise overthrow in Belarus – if necessary, on the basis of the cyber capacities of the private sector – as completely unlikely and as unenforceable vis-à-vis Russia. Deeper change in Belarus can only become possible with broader change in the region, specifically in Russia. Anything else will be little more than the shuffling of deckchairs.

Gunter Deuber is head of research at Raiffeisen Bank International in Vienna. Marcus How is head of research & analysis at ViennEast Consulting in Vienna.