Faced with Democracy Protests and COVID-19, Belarus Receives $1.5 Billion Russian Loan

During a meeting with Belarusian President Alexander Lukashenko in Sochi on September 14, Russia’s President Vladimir Putin announced that Russia had agreed to provide Belarus with a 10-year, $1.5 billion loan. Although the announcement did not specify what the loan was meant to be used for, it did acknowledge that Belarus was enduring a “complicated period.” While the pandemic has certainly been a contributing factor to the country’s current financial strain, it seems just as likely that the loan is intended to help Lukashenko overcome the ongoing civil unrest in the wake of a presidential election that has faced widespread allegations of fraud.

Over the past several years, Lukashenko has sought greater independence from Russia, pursuing closer relations with Western partners, including the United States and the European Union, with encouragement in this direction from Lithuania and Austria among others.  In the wake of condemnation from both the United States and European states following Lukashenko’s crackdown on protestors, however, this effort to open up new channels of potential economic and financial (and even political) support were severely undermined.

The Russian loan is scheduled to be delivered in a $1 billion tranche by the end of 2020, and the remainder in 2021.  On the day after the meeting, a Kremlin spokesperson asserted the loan comes with no political conditions, however, Belarusian opposition leaders have questioned the veracity of this statement. Indeed, the loan appears intended to help keep the Lukashenko government in power and, in this connection, resembles the $3 billion loan provided to Ukraine’s then-President Yanukovych in late 2013 during the early stages of the pro-democracy protests in Maiden Square.

In addition to Russian lending, the Belarusian economy has benefitted from Russian investment, trade, and preferential oil prices in recent years.  A Polish think tank, Obserwator Finansowy, guessed that Belarusian gains reaped from discounted oil accounted for 10% of Belarus’s GDP.  Earlier this year, the Russian government declined to renew these discounts for Belarus, which contributed to financial difficulties, and may have contributed to the request to restructure loan payments.