The price of dependence on Russia. The economic consequences of Belarus’s complicity in Russia’s aggression against Ukraine
The price of dependence on Russia. The economic consequences of Belarus’s complicity in Russia’s aggression against Ukraine

Author(s): Kamil Kłysiński
Subject(s): National Economy, Economic policy, Government/Political systems, Political behavior, Peace and Conflict Studies, Russian Aggression against Ukraine
Published by: OSW Ośrodek Studiów Wschodnich im. Marka Karpia
Keywords: Russia’s aggression against Ukraine; Belarus GDP; decline in GDP; The toxic economy syndrome;
Summary/Abstract: In Q1 2022, Belarus’s GDP contracted by 0.4% – the first GDP decline since the end of 2020. Being Russia’s closest military ally, Belarus has made its territory available to the Russian Armed Forces, thereby joining Russia’s invasion of Ukraine, which resulted in it being targeted by Western sanctions. The sanctions imposed in March 2022, mainly those covering the export of timber, as well as wood, metal and steel products, have not only upheld but also expanded previous sanction packages introduced in response to the Lukashenko regime suppressing the street protests following the rigged presidential election held in 2020. As a consequence, under increasing isolation by the West in recent weeks, Minsk has lost almost all of its most profitable export categories to both EU member states and Ukraine. Moreover, Belarus’s present situation is prompting foreign investors and Belarusian companies’ business partners, which continue to operate there, to leave the Belarusian market. At present, Belarus is unable to refinance its foreign debt, which has not only resulted in a decline in foreign currency reserves, but also exacerbated solvency problems. The introduced mitigation measures are provisional and the only external source of support Belarus can count on is Russia, which itself has been affected by tough sanctions and therefore is reluctant to provide the assistance Minsk needs. As a consequence, 2022 will most likely see a profound recession in the Belarusian economy: the country’s GDP may shrink by as much as 6% or even 15%

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