Lukashenko’s Belarus has long been a success story in the post-Soviet world. In the 2000s it had some of the fastest GDP growth in the world. Belarus had the lowest unemployment rate among all the countries of the former Eastern Bloc, the lowest level of poverty in the region, one of the best public health services, the best road infrastructure, and no foreign debt.

In 2003 it became the third country in the region whose GDP returned to its 1990 level (after Uzbekistan and Estonia). Over the next five years, its economy had grown by another 60%. During the financial crisis of 2009, Belarus remained the only post-Soviet country whose economy didn’t shrink.

These outstanding results made scholars talk about Lukashenko’s Belarus as the post-Soviet economic miracle. But what were the foundations of that miracle?

After Aleksandr Lukashenko was elected President of Belarus in 1994, he immediately rolled back market reforms and privatisation and reintroduced a Soviet-style planned economy. His reforms implied, among other things, the preservation of state ownership of over-scaled and inefficient industry and agriculture. This helped to maintain a low unemployment rate but at the same time required constant state subsidies to keep these sectors afloat.

Lukashenko’s enormous popularity over the years can be largely explained by the fact that he managed to find the source of these subsidies – Russia. Starting from the mid-90s, Lukashenko has been constantly offering his friendship to the Kremlin in exchange for tangible economic benefits. That policy became popularly known as “oil and gas in return for kisses”.

Thanks to this policy, Belarus enjoyed heavily discounted Russian energy, as well as unlimited access to the unlimited Russian market. One of the main sources of Belarus’ prosperity was Russia’s cheap oil, which Belarus processed at its refineries and then resold at market prices to Europe, keeping the margin. This simple trick brought tens of billions of dollars to the Belarusian economy. In the 2000s, petrochemicals amounted to over 30% of the country’s export despite the fact that Belarus barely has any oil deposits.

Another pillar of Belarusian prosperity over the years was unlimited access to the Russian market. Russia remains a destination for 90-95% of Belarusian exports of dairy products, 75% of machinery and equipment, and 70% of vehicles. On top of that, the power-consuming heavy industries of Belarus are only competitive because they rely on cheap Russian gas as their energy source. In other words, the Belarusian economy became dependent on Russia in so many ways that it could be seen as merely a function of the economy of its big brother.

However convenient for Belarus, the trade of billions of dollars in subsidies for declarations of friendship began to face mounting opposition in Russia. Over time, the Kremlin started to demand more and more concessions, while Minsk still wanted to stick with kisses. This discrepancy was the main trigger behind numerous conflicts between Russia and Belarus popularly known as Oil, Gas, and Dairy Wars that have occurred every few years.

During one such conflict in 2010, Russia effectively stopped all its subsidies to Belarus, leading to the collapse of the Belarusian economy and the severe economic crisis of 2011.

The level of Russia’s oil and gas subsidies for Belarus, 2003-2012 (belrynok.by)

Unable to recover properly, Belarus has been immersed in stagnation, which lasts till this day. The country’s GDP has remained largely unchanged since 2010. Real wages of 2020 have dropped to just 70% of their 2010 level (considering the inflation rate). Public debt has skyrocketed.

But most importantly, the social contract of the 2000s, which can be described as a limitation of personal freedoms and rights in exchange for economic prosperity, has stopped working. All this was reflected in Lukashenko’s popularity, which plummeted from pre-crisis ratings of 50-60% to just 20% in 2011.

During the elections of 2015, Lukashenko regained his support mainly because of the war in Ukraine, when a new social contract temporarily emerged: popular support in return for security and protecting Belarus’ sovereignty. It didn’t last long, though. Right after the election, economic stagnation turned into a full-on recession and with it, support for Lukashenko has only dwindled. In summer 2016 his rating dropped below 30%, right after which the authorities permanently banned any independent surveys.

Lukashenko’s actual rating between 2005 and 2016 (iiseps.org)

In recent years, there have been limited attempts at economic liberalisation, but any real reforms coming from the government have been blocked by Lukashenko and his conservative administration.

Instead, even more restrictions have been introduced, the most prominent of which is the so-called ‘social parasite tax’ which essentially fines people for being unemployed.

At the same time, massive cuts began in the struggling state sector. Many of those who weren’t fired were forced to work part-time. As a result, in the past decade, Belarus has turned from being a country with a positive net migration into a country with a negative one. Hundreds of thousands of Belarusians have moved for work to Russia. Well over 50,000 now work in Poland.

But the most alarming fact for the Belarusian authorities is that the economic stagnation of the 2010s was set against decreasing but still significant Russian subsidies. Recently, Russia has launched a so-called tax manoeuvre, which in a few years’ time will essentially strip Belarus’ petrochemical sector of its lucrative margin that is crucial to sustain the country’s economy.

The Kremlin says it is ready to resume its financial support, but under one pesky condition – Belarus and Russia will have to form a union state, envisaged once in a 1999 treaty, which for Minsk would essentially mean giving up its independence and becoming one of Russia’s oblasts. There is no doubt Lukashenko would never agree to that, as it would mean the end of his career as an authoritarian leader.

Effectively, Belarus has ended up in a deadlock. The old foundations of its economy are long gone but no new formula has been found to replace them. The attempts of the last five years to improve relations with the West have returned almost nothing, as Lukashenko still refuses to make any democratic reforms. For many years, Belarusian authorities have been cherishing hopes that China could replace Russia as a key partner and donor, but Beijing hasn’t shown much interest. Basically, Belarus’ only visible achievement from the past ten years is increasing debt.

The level of Belarus’ public debt. The official one is in blue and the real one is in red (wikipedia.org)

At the same time, all available surveys show that the absolute majority of Belarusians want market reforms. So do Lukashenko’s ministers, whom he openly accuses of being ‘marketeers’ and ‘crypto-liberals’. However, all liberalisation and modernisation attempts are being blocked by Lukashenko, who insists that the key to recovery is more discipline and a wartime mobilisation. Because of all this, Lukashenko’s popularity in the last four years has been oscillating around 20-30%. Not much, but enough if you control the Election Committee and have no real rivals.

But then came the coronavirus (COVID-19). Lukashenko not just completely disregarded it, he accused victims of being not healthy enough or eating cheap low-quality food. He advised people to simply work more, play ice hockey and drink vodka. The authorities openly ridiculed people for wearing facemasks or taking other precautionary measures. It was not the state but ordinary people who were collecting money and providing struggling medics with necessary equipment. The state said that there is no virus, just a ‘psychosis’.

For many people, it is reminiscent of the way the Soviet authorities treated the Chernobyl disaster, Belarus’ national trauma (Belarus was the worst-affected country by the disaster with more than 20% of its territory still contaminated). With more than 60,000 COVID-19 cases, Belarus has one of the worst figures per capita in the world. The last remaining part of the social contract between Belarusians and Lukashenko – limited freedoms in exchange for security – has been irreparably broken.

And now, against this backdrop, a presidential race has started. It was supposed to be just another formality to secure Lukashenko his sixth term in office. Lukashenko, his life-long sparring partner Gaidukevich, and a few opposition no-names on the ballot – a repeat of the plan which worked out perfectly in 2015. But something went wrong. For the first time in Lukashenko’s career, not one, but three strong opposition candidates stepped forward.

 

Left to right: Tikhanovski, Babariko and Tsepkalo (tut.by, probusiness.io)

The first is Sergei Tsikhanovski, one of the country’s most popular political bloggers. A straightforward fellow who became extremely popular with Lukashenko’s former supporters, blue-collar workers and people from provincial towns. He doesn’t beat around the bush, simply saying that elections in Belarus are so rigged that it makes no sense to participate in them. He has said that he wants to use this election campaign to ignite anti-Lukashenko protests all across the country to force Lukashenko out.

The second candidate is Viktor Babariko, who is perhaps the wealthiest man in the country, whose fortune is not derived from Lukashenko’s goodwill. For 20 years he has been CEO of Belgazprombank, Belarus’ largest private bank. Even though the bank is owned by Russia’s Gazprom, Babariko can hardly be seen as a pro-Russian candidate. He is extremely popular among Belarusians for his art patronage and support of various cultural initiatives aimed at the revival of the Belarusian language and culture (as opposed to Lukashenko, who openly says that the Belarusian language is ugly and still tries to preserve his small Soviet Union).

The third is Valery Tsepkalo, a former ambassador to the US who had worked alongside Lukashenko for over 20 years but fell out with the regime in 2016. He is also very well known in Belarus for creating the IT Park in Minsk – Belarus’ Silicon Valley, and the only sector of the economy that has been growing in the last decade.

We don’t know the exact level of their support, as political surveys are banned, even online polls. But it is extremely likely that any of these three would beat Lukashenko in a fair election. This is once again a new situation for Belarus, where, although all previous presidential elections have been severely rigged by the Central Election Commission, Lukashenko has always been far ahead of the competition (instead of the official 83% he had 40-60% depending on the year). He has always been so confident in his position that he openly admitted to having ordered the Election Commission to falsify the election of 2006.

Now that Lukashenko is behind three other candidates, he is clearly worried that the usual falsifications might not be enough, especially since Babariko has launched a campaign called “Fair People” aimed at covering all polling stations with independent commission members, or at least observers. If successful, Babariko’s initiative could massively limit the room for falsification.

The situation is so worrying for Lukashenko that he urgently had to dismiss the entire government two months ahead of the election, as its key ministers, including the Prime Minister Sergei Rumas, were known for having very good relations with Viktor Babariko.

The newly appointed Cabinet can rightly be called a National Rescue Government. It is the first time in Belarusian history when all key positions are being held by siloviki – people from the KGB and other security agencies whose main asset is loyalty and readiness to execute any order from Lukashenko. Announcing the changes, the President said: “Today is not the time to destroy. Nor is it the time to build. Today is the time to save what has been built”.

The newly appointed Belarusian Prime Minister Roman Golovchenko staying behind the country’s President Aleksandr Lukashenko (emerging-europe.com)

The economy has been switched into manual mode. All talks with the IMF, EBRD and other international financial institutions about possible loans in exchange for reforms are now cancelled. So are attempts to improve Belarus’ relations with the EU and the US. Paraphrasing Lukashenko, it is not the time to think of tomorrow, it is the time to survive.

An unprecedented crackdown has begun three months ahead of the election, before the actual race has even started (in previous years, crackdowns usually followed the election). Sergei Tsikhanovski was denied registration and soon afterwards arrested as the result of an obvious police provocation. He is now facing up to six years in prison. Lidia Yermoshina, the chairwoman of the Central Election Committee, accused him of no less than “trying to change the President through the signature collection” – which is a preliminary part of the election campaign.

Viktor Babariko-linked Belgazprombank was raided by the financial police. Its entire top management was arrested. Babariko’s election campaign fund was seized. The authorities shut down Belarus’ largest crowdfunding platform, created by Babariko’s son, which was a crucial instrument to helping abandoned medics during the COVID-19 crisis. Finally, Babariko, along with his son and many of his family friends and business partners, has been arrested and put into the KGB detention centre.

Hundreds of activists all across the country have been kidnapped and arrested. The detainees have been denied the right to see a lawyer. Their homes have been searched, their families threatened. Policemen broke the arm of one of the detainees’ mothers. There have been reports of policemen pointing their guns at children during searches. Wives of the detainees have been threatened with the seizure of their children. Those activists who have already been released are talking about unprecedented torture. One of the activists, leader of the Christian Democrats Pavel Severinets, while in custody tried to cut his wrists in protest against torture and inhumane conditions.

The same goes with businesses. Those who have dared to express their support for the opposition candidates are being shut down under various pretexts. One of the producers of national-themed souvenirs had to stop part of his company’s operations, as it “constituted a threat to national security”.

Before his arrest, Viktor Babariko had been breaking all popularity records. He had the most campaign members among all opposition candidates in Belarus’ history. His people collected 425,000 signatures in support of his candidacy, which is again an absolute record. The second-best ever was Zianon Pazniak in 1994 with 216,000.

Lukashenko is clearly afraid. Every day he attacks his opponents on TV, calling them thugs, pigs, lice and fat bourgeois. Realising that even falsifications might not be enough this time, Lukashenko has turned to terrorising his people. In a recent speech, he has warned Belarusians what happens when people do not obey their ruler by referring to the case of the 2005 Andijan Massacre, when representatives of the government of Uzbekistan opened fire into crowds of civilians.

All this has happened in just the few weeks after the election date was announced. In the remaining two months, we will undoubtedly see even more violence: more arrests, threats and provocations. There is a chance that for the first time in history, no real opposition candidate will be allowed to run. The Election Commission has until 14 July to make the decision. But no matter whether all the candidates are arrested now or right after the rigged election; the level of discontent is so high that protests on 9 August, election day, are almost unavoidable. Moreover, judging by the unprecedented number of people who came out on the streets even in the smallest provincial towns to support Tsikhanovski after his arrest, it is likely that for the first time in the history of Belarusian elections, protests will take place not only in Minsk but also in other cities and towns.

Police arrest a man and his bike in Minsk on 19 June (nn.by)

Lukashenko is trying to work proactively, but he must also bear in mind the potential protests. For the first time in 26 years, he has significantly 

A video emerged showing what's actually being done to #Lukashenko's Minsk residence - perimeter wall is being extended + extra barbed wire on top of it. A small thing but it shows how seriously Lukashenko treats the current situation. For 26 years he was fine with the old one pic.twitter.com/M8vGzOyGdZ

— Tadeusz Giczan (@TadeuszGiczan) June 1, 2020  the security of his main Minsk residence. Students of police and military academies have been denied summer holidays. Retired policemen are also being urged to return to the service. The army is calling reservists up for military service one week before the election. There are reports of mass production and purchasing of anti-riot equipment. Lukashenko is preparing to give Belarusians one last decisive fight.

There is almost no doubt that he will win it. But what next? Next, Lukashenko loses legitimacy not only in the eyes of the people but also a significant portion of the nomenklatura. The Western vector is closed to him. In the East, Mother Russia is not shy to say that further support comes only in exchange for sovereignty. The Russian tax manoeuvre deprives Belarus of one of its two main sources of income. The other one – export of potassium fertilisers – is also going through a hard time because of low procurement prices. Yes, Belarus can still count on loans from Russia, China and Lukashenko’s Middle East cronies, but the terms of these credits are far from friendly and at best they could help the economy hold on for another year or two.

After that, however much Lukashenko tries to avoid it, Belarus will need deep structural reforms. Otherwise, as long as Russia doesn’t change its mind and resume support, the most likely future for Belarus would be to default on its loans and devolve into a failed state.

Lukashenko understands that better than anyone else. A few years ago, he initiated a constitutional reform, which he probably sees as the beginning of a Kazakhstan-like transit to post-Lukashenko Belarus. It is likely that the new constitution will significantly weaken the President and transfer more power to other branches, leaving Lukashenko with the status of an arbitrator in a different capacity.

The system Lukashenko built no longer works. He himself is no longer popular. He can extend his time in office with the help of the bayonets, but at the end of the day, he will have to make a decision: to reform Belarus himself, or to give up power and let others do it.

Tadeusz Giczan is a PhD candidate at the University of London, School of Slavonic & East European Studies. This comment first appeared as a blog post here.