Error executing child request for handler 'System.Web.Mvc.HttpHandlerUtil+ServerExecuteHttpHandlerAsyncWrapper'. WebpartsBlocks/HeadlinesBox/SomeWebparts
Daily Israel Report

Lukashenko Takes an Economic Offer He Cannot Refuse

A pariah in the West, Belarus President Lukashenko must turn to Russia to prop up his regime.This support comes with strings. LIthuania afraid.
By Amiel Ungar
First Publish: 5/19/2011, 9:43 PM / Last Update: 5/22/2011, 10:09 AM

 

Vladimir Putin came is calling on Belarus and its president Alexander Lukashenko with a $3 billion offer that comes with strings. Russia is willing to throw the Belarus regime an economic lifeline that will keep the regime afloat for another few months. The price will be to turn Belarus economically into a wholly owned subsidiary of the Russian republic.

Lukashenko is in a bind. He cannot turn to the west after spurning the European Union's offer of free elections in return for economic assistance.

In the run-up to the last elections, the government went on a spending spree to make voters happy and topped it off with promises to convince them that not only were happy days here again, but there would be even happier days in the future.

This did not quite suffice and therefore the elections were rigged. Protests over the falsified results were brutally suppressed. Rival presidential candidates were arrested. The wife of one of them, Andrei Sannikov, has been conducting an odyssey around the various detention centers without being able to find her husband for a court-sanctioned conversation or to deliver a  parcel to him. With such behavior, Lukashenko not only will be denied assistance but will be targeted by sanctions.

Foreign currency reserves are rapidly being  depleted. Although the exchange rate on foreign currency for private citizens is 3 times the rate for government and industry, there was no foreign currency available at the cashpoints as the Belarus Ruble was in freefall. Imported goods have vanished and there already was a shortage in imported drugs.

Vladimir Putin is willing to lend Belarus the needed funds, but in a parody of Western bailouts, is imposing terms for the assistance, namely, privatization of assets.  Wen Putin speaks of privatization, he is not talking about an auction of state assets that will be sold to the highest reasonable bidder. He is talking of a rigged auction where Russian companies, working hand-in-glove with the Russian government, acquire the oil refineries, the pipelines that connect Russian fuel to Western European markets, the mobile telephone carrier and possibly the potash industry.

It is not Russia who is giving the funds directly. The $3 billion loan would be issued by the Eurasian Economic Community (Eurasec), a Russia-dominated regional grouping that includes Belarus, Kazakhstan, Kyrgyzstan, and Tajikistan. This is reminiscent of the old CMEA the Council of Mutual Economic Assistance in Soviet Times.

The Western attitude has been that Lukashenko and Russia deserve each other and the West will not bailout Lukashenko simply to save him from the grip of Russia. The Washington Post, in an editorial, suggested that the West put pressure on Russia not to prop up Lukashenko and condition the "reset" of relations on this point.

A major exception to the common Western position has been Lithuania. Lithuania feels that a Russian dominated Belarus, Lithuania's neighbor, poses a threat to Vilnius. Therefore, Lithuania has even expanded ties, pushing ahead with an Ikea plant in Mogilev that will supply the Russian market.. Keeping Belarus out of the Russian orbit is more important for the Lithuanians than Democratic practices in Minsk.