Russia’s motives for propping up Lukashenko have less to do with politics than you think

Last Sunday, Belarus witnessed the largest rally against long-time dictator Alexander Lukashenko since highly contested presidential elections were held on 9 August. 100,000 people in front of the presidential palace demanded that the ruler step down, thus complicating Russia’s goal of keeping him in place – an objective Vladimir Putin is still trying to meet.

While Moscow might be inclined to let the Belarusian dictator go because there are anti-Russian politics at play (as it did with Serzh Sargsyan, the former leader of Armenia, after protests erupted in 2018) these days there are too many lobbyists in and around the Kremlin who aim to back Lukashenko, mainly for economic reasons. 

Russia has supplied Belarus with cheap oil for years. Belarus processed the large part of it and re-exported gasoline and gas oil to Europe (in 2019 it consumed only 4.2 million tonnes of these products and export-ed 10.5 million tonnes). This resulted in a “subsidy” that by official Kremlin estimates amounted to $5bn a year (or 7.9 per cent of Belarusian GDP, or 43 per cent of central budget receipts). Additionally, a $10bn loan was made available for the Belarusian government for the construction of a new nuclear power plant that has now been completed. 

As the protests in Minsk erupted, Belarus asked first for rescheduling $1bn of Belarusian debt, and immediately thereafter for аnother $600m. All these issues were the focus of last week’s negotiations between Alexander Lukashenko and Mikhail Mishustin, the Russian prime minister, who on Thursday was urgently dispatched to Minsk. But even this doesn’t reflect the real influence Russia has on the Belarusian economy as it doesn’t point out the most influential figures involved.  

These days, I would argue that not only Russian state-controlled businesses but also private companies support the current Belarusian leadership. The businesses of Russian billionaire Mikhail Gutseriev profited a great deal, as his oil company Safmar became the only one that was allowed to continue to supply Belarus with oil after Putin commanded the shipments to be cut in January this year. 

Gutseriev has been a reliable ally of Lukashenko and his family for years; he was rewarded already in 2007 when he succeeded in escaping to London via Minsk after a case against him was opened in Russia, and after the charges were dropped, his relations with the Belarusian president became even tighter. 

Another supporter of Lukashenko was the “liberal-minded” German Gref, president of Russia’s largest bank, Sberbank (Savings Bank), who invested hundreds of millions of dollars in Belarusian real estate. Gref’s bank has owned its Belarusian subsidiary, BPS-Sberbank, since 2009.  Predictably, Gref expressed his full support for Lukashenko during his numerous visits to Minsk as well as the latest one in early July, wherein he announced new investments into the country and opened an expensive fountain, presented as a “gift” to the city of Minsk. 

During the meeting with Gref in Minsk during that time, Lukashenko said he “often asks himself how did it happen that two people with considerably different (maybe not political, but definitely economic) worldviews may become such close friends?” I would advise following the money in this case: Sberbank appears to be Gutseriev’s business empire’s largest creditor with the debt estimated at $5.1bn. As Gutseriev’s family fortune doesn’t exceed $3.2bn, it seems Gref encouraged “unauthorised” oil shipments to Belarus earlier this year as a means of improving his client’s financial situation. The Kremlin doesn’t want to incorporate Belarus into Russia, now a next to impossible task. It wants to impose full economic control over the republic while allowing it to remain a sovereign entity. These days, economic incorporation, not a political takeover, is at stake. 

Not only Gref and Gutseriev are now active on the “Belarusian front”. After the protests erupted, another Russian businessman, Dmitry Mazepin, owner of Uralchem, a company that controls a large part of Russian fertilizer production, called for the creation of a “Savior Committee for Belarus” that unites Belarusian and Russian entrepreneurs. The strange point here is that Mazepin’s business is just another of Gref’s clients which owes Sberbank more than $3.9bn, while its entire sales for 2019 were just around $1.2bn. Mazepin created his business empire on a huge pile of debt and initiated several unfriendly mergers and acquisitions being sued in European courts (the claims brought against him at the Supreme Court of Ireland amount to $2bn). Mazepin’s main competitor is the Belarusian giant Belaruskali, valued at around $30bn, which might serve as a good prize for the Russian entrepreneurs who now support Lukashenko.

Today’s Russian oligarchic economic system arose from the privatization of the Soviet-built industrial assets that took place in the 1990s and early 2000s. Russia has not modernized a lot since those times. Twenty-three out of 30 largest Russian companies rely mostly on Soviet assets compared to just seven out of 100 largest Chinese firms still using the facilities built before 1990. 

In Belarus, the Russia-style privatization never took place with the major part of industrial enterprises still owned by the state. I believe Russian business, both “patriotic” and “liberal", looks now on the Belarusian economy as on perfect pray that can be easily appropriated if the former Belarusian leader is forced to buy more time in power in exchange for the best portions of the state property. 

The financially bankrupt Russian oligarchs are now negotiating with a politically bankrupt Belarussian dictator for a mutually beneficial deal of trading power for money. I would argue that Gref, the “liberal” banker, is one of Lukashenko’s most prominent supporters in Moscow as he understands how dependent on the situation his debtors in Belarus are.

Therefore, Russia-Belarus relations shouldn’t be considered as purely geopolitical. Russia’s every move these days can be explained by financial reasons much better than by political ones – the game in Belarus becomes much clearer when looked at through the lens of being a huge business affair with billions of dollars at stake. These billions of dollars, and not thousands of square miles of territory, is what Russia is now fighting for when it accuses the “collective West” of interfering with its affairs. 

Vladislav Inozemtsev is senior associate at the Center for Strategic and International Studies, Washington DC