Europe’s Last Dictator Feeling Lonely

Today the Economist Intelligence Unit is reporting on the changing winds in Belarus, and how Russia’s sudden oil cut off and gas price hikes are forcing the odious dictator Alexander Lukashenko toward rapprochement with the West. lukashenko3.jpg What, me worry? Slogan in the poster reads “We will attain the further uplifting and flourishing of all collective farms of the country!” They write:

Having spent years fulminating against Western aggression and double standards, Mr Lukashenka’s recent pro-Western statements are obviously somewhat surprising. On occasions in the past he had also professed a desire for better relations with the West, but rarely has he gone as far as in recent weeks. He and his officials have lately, and repeatedly, declared an interest in a partnership with the West, even going so far as to offer to be Germany’s “eager pupil” and adopt the Euro. The recent deterioration in energy relations with Russia is clearly the catalyst for Mr Lukashenka’s about-face. Late last year he discovered that his country—despite its loyalty to Russia and shared desire for a common state—is no longer exempt from the higher prices that Russia now charges to gas customers in the former Soviet Union. This is a serious threat to the Belarusian leadership, which has depended on subsidised energy prices to keep its unreformed economy afloat. It therefore spent much of December and January bickering with Russia over gas import prices and over Russia’s insistence that Belarus hand over most of the windfall profits it earns from processing cheap Russian crude for export to the West.

This echoes a similar sentiment voiced by Lionel Beehner (who also does some great work on Russia for CFR) in the New Republic in January, taking the argument even a step further to contend that Russia’s imperialism is good for the west in that without enormous Soviet-era subsidies, Lukashenko’s dictatorship will crumble to pieces. He writes:

But these arguments fail to mention an important point: Higher energy costs could help unseat Belarusian President Alexander Lukashenko. His Stalinist-style regime has been labeled Europe’s last “outpost of tyranny” by the U.S. State Department. Western governments have tried to undermine the mercurial ruler for years, but he has survived thanks to the economic, political, and military support of Moscow. Yet the gas crisis–which lasted for 60 hours before Lukashenko lifted the transit tax–may portend worse relations ahead. A proposed political union–a decade-old plan between Minsk and Moscow to establish open borders, a common currency, and eventual political integration–has been delayed if not permanently derailed. And, without Russian handouts, Belarus’s economy will suffer and Lukashenko’s power may unravel. Meanwhile, his domestic opposition, emboldened by a strong showing at the polls last year, will gain more strength amid such an economic slowdown.

Certainly we have no sympathy for Lukashenko’s oppressive regime, but I find it hard to give the Kremlin any credit in assisting this perceived move toward democracy. Clearly, the energy row came down to dollars – and although Russian officials have defended their conduct reasoning that they only want to get fair market prices for their gas from ALL consumers, cutting off supply lines to Europe, breaking contracts, strong-arming negotiations, and holding the consumers hostage in the middle of winter is no way to go about building a partnership of trust. (also it is important to note that by the end of the gas prices row, Belarus still ended up with much lower prices than Ukraine). Furthermore, it isn’t enough to just pull the plug on energy subsidies and expect a vibrant civil society to arise out of nowhere to install a benevolent social democracy. This is the same kind of reasoning that has kept the U.S. embargo on Cuba with no effect for more than three decades (In reference to this case, Cato writes, “Economic sanctions have not been responsible for the region-wide shift toward liberalization … They have, in fact, failed to bring about democratic regimes anywhere in the hemisphere), the humanitarian crisis caused by sanctions on Iraq (which a 2002 Harper’s article details here), and the current disengagement with Iran. You don’t encourage democracy by punishing those who happen to have the misfortune of living under an undesirable autocrat. Much more needs to be done to help Belarusian civil society to grow and become an influential force in building a free country – raising the heating bills won’t make this happen automatically. I’m more inclined to agree with the Economist’s conclusion that Lukashenko will likely exploit any trust the EU extends toward him, and will consider all possible angles to ensure his political survival at the cost opening up the country, both politically and economically. At best, we can expect him to “fake” some moves toward reform modernization – but don’t buy the spin. The Economist:

The EU is demanding that he dismantle this entire edifice as a precondition for even being considered for a set of vague and distant concessions. Mr Lukashenka will never risk that transformation, and will at most try to fake it. He might hope that some token gestures—including a bit more freedom for the marginal independent press and even amnesty for certain jailed opponents—will suffice to improve his dialogue with the West. Some concessions, as seen in the case of the Helsinki Committee, certainly seem possible, particularly as Mr Lukashenka’s domestic position is relatively secure: the fractious opposition enjoys little popular support, while its recent in-fighting has neutralised it far better than even the regime could have done. Moreover, with the January 2006 local elections now over, the next chance for the opposition to mobilise around an election is years away. … The question is whether the Belarusian economy can survive that long. While the country secured a good deal by regional standards, natural gas prices have still doubled relative to last year, and the budget is going to lose most of its windfall oil earnings. Already deeply uncompetitive after years of under-investment, state-mandated wage hikes and insufficient reform, Belarusian manufacturers will struggle under the weight of higher energy prices. They can only get so much help from the state, which will struggle to lavish even more subsidies on both consumers and enterprises at a time of depleted revenue inflows. Presuming that preferential treatment from Russia is now far less forthcoming, the sustainability of the Belarusian economic model is obviously the thing to watch. For the time being, Mr Lukashenka is most likely safe. Even though the macroeconomic performance in 2007 will be considerably shakier than in past years, Mr Lukashenka can depict himself as the defender of Belarusian sovereignty and complain about Russian pressure, and thereby retain at least a critical mass of support. But sooner or later he will face a tough choice—namely whether to embrace the liberalisation needed to adapt his economy to new realities and secure meaningful Western help, or else to return to the Russian fold. Given the nature of Mr Lukashenka’s regime, the latter remains by far the likelier option.