Dec. 23, 2014
The Putin alternative to the European Union stumbles on the ruble.
Russia's President Vladimir Putin talks to his counterpart from Belarus Alexander Lukashenko. REUTERS
The Russian ruble’s downward spiral has claimed a new casualty: neighboring Belarus and its heavily Russia-dependent economy. The regime of Alexander Lukashenko, one of Moscow’s closest allies, has begun blocking independent news sites and several online-shopping outlets in an apparent attempt to prevent a bank run and shore up the Belarusian ruble.
Internet censorship is par for the course in Mr. Lukashenko’s Belarus. It follows the enactment earlier this month of a new law granting the Minsk regime broad authority to ban websites, similar to the power Mr. Lukashenko already wields over traditional media. That law hasn’t gone into effect yet, according to the Index on Censorship watchdog, but then there’s a reason the former Soviet republic has long been known as Europe’s last dictatorship.
The depth of Mr. Lukashenko’s panic was revealed on Friday, when the central bank announced a “temporary” 30% tax on foreign-exchange transactions, raised interest rates on its own standing facilities to 50% from 24%, and decreed that exporters must convert half of their foreign-currency proceeds into the local currency. The Belarusian ruble has lost about 13% of its value against the dollar since the beginning of the year, according to the country’s central bank.
“Don’t rush like crazy with the [Belarusian] ruble to exchange points and don’t change it for foreign currency,” Mr. Lukashenko warned his people. “Don’t trade it, because it will have consequences.”
Message not received. Many Belarusians last weekend lined up for hours to clear their accounts and used their Belarusian rubles to buy safer assets like new appliances. “The regime is bankrupt,” Andrei Sannikov, a former Deputy Foreign Minister turned exiled oppositionist, told us. “Lukashenko’s trying to cope with it the only way he knows, which is repression.”
All this bodes ill for Mr. Lukashenko and the Kremlin. Most of the trade between Belarus and Russia has been denominated in Russian rubles—hence Mr. Lukashenko’s vulnerability when the Russian economy tumbles. Belarus, along with Kazakhstan and Russia, is one of the founding member-states of the Eurasian Economic Union, the customs union that launches Jan. 1. Russian President Vladimir Putin hopes it will emerge as an alternative to the European Union.
Belarus’s currency troubles teach a powerful lesson to other states in Eastern Europe, Central Asia and the South Caucasus about the risks of economic interdependence with the Kremlin. The West should seize the moment to press for change in Belarus.
Messrs. Lukashenko and Putin aren’t best friends, and the Belarusian has been trying to present himself less as a Kremlin vassal and more as a bridge between East and West. On Sunday, while the currency crisis was under way, Mr. Lukashenko met with Ukrainian President Petro Poroshenko in Kiev, where Mr. Lukashenko reaffirmed his commitment to help resolve the Ukrainian crisis. Minsk hosted a round of failed Ukraine talks in September, and Mr. Poroshenko said in a statement on Monday that another round of talks may be held in the Belarusian capital on Wednesday and Friday.
It would be a mistake for the U.S. and EU to unconditionally embrace the anxious President for life, who in all likelihood is hedging his bet on Moscow. If Mr. Lukashenko wants greater Western integration, Washington and Brussels should insist he loosen his grip on Belarusian civil society. Unblocking opposition and independent news websites would be a good start.
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