The financial crisis in Belarus could mark the beginning of the end for “the last true remaining dictatorship in the heart of Europe.”
President Alexander Lukashenko has ruled Belarus since 1994, making him the longest serving head of state in Europe. Despite this, his time in office has been dogged by accusations of electoral fraud, brutal crackdowns of political opposition and increasingly economic mismanagement. (For more, see James Kirchick’s blog on last December’s election)
To date his position has been secured by the ruthless use of the security services and the country’s economic success since the collapse of the Soviet Union, much of which has relied on large gas and oil subsidies from Russia.
By the middle of 2009, however, the Belarusian economy had stalled. An unwise government-led credit boom during the financial crisis, coupled with the incremental removal of natural resource subsidies from its neighbour, put public finances on an inescapable downwards spiral.
Officials were forced to go cap-in-hand to the IMF for a bailout that ultimately totalled $3.5 billion with a further $2 billion added by Russia. These measures were aimed at averting a contagion effect that could have had broader humanitarian and economic repercussions, especially considering the fragility of the global financial system at that point.
Nevertheless these interventions did little to alter the attitude of the Lukashenko regime to dissent. Following the announcement that the incumbent had won an overwhelming 79.1 per cent of last year’s presidential vote—widely criticised by election observers—more than 10,000 opposition supporters took to the streets calling for the president to go.
The response was brutal. Riot police beat protesters and arrested hundreds, including seven of the nine opposition candidates. Lukashenko himself dismissed the protests as “banditry” and suggested they were in fact the product of “too much democracy” as he sought to undermine hopes of a popular revolution.
It is against this backdrop that the current crisis in Belarus should be seen. In May the country was forced to devalue its currency by 36 per cent against the dollar as it struggled to turn around its current-account deficit, which reached 16 per cent of GDP in 2010. Such is the severity of the problem that without foreign intervention the country would effectively be…