Belarussian Foreign Investment Slows as Russia’s Involvement Deepens

Russia’s drive to renewed (formal) hegemony in the former Soviet sphere has Ukraine as its intermediate goal; for that, Moscow has made Belarus an example of what Ukraine could be if it would merely join Russia’s customs union, a Soviet Union in all but name.

Based on the latest economic news, the Kremlin may wish to reconsider this approach.

Foreign investment in Belarus is down, the state media is reporting, by roughly 25 percent year-over-year. Russia remains the largest investor in the totalitarian state, with roughly 47 percent of all investment originating from Russia’s state-owned and state-linked enterprises. The United Kingdom and Austria were also significant sources of decreased investment. (If state media is reporting a 25 percent decrease, in Belarus, that translates to a 40-50 percent decrease.)

As a therefore unsurprising consequence, public debt climbed significantly in 2012 (a fact Minsk blames somewhat ridiculously on an attempt to pay down IMF debt burdens), sending the country back to Russia for another round of low-interest EurAsEC loans, a turn of events that will only deepen Russian involvement and consequently slow economic development.

Anyone attempting to do business in or with Belarus has a similar tale to tell: a country increasingly mired in red tape, with a number of new, impromptu “regulations” designed to mirror and place Russia. The cost of this increasingly intimate embrace with Moscow has been, and continues to be in the future, economic disaster for the dictatorship of Aleksandr Lukashenko.

This is a warning signal to Ukraine and all of the remaining parts of the Soviet Empire Moscow would peacefully reconquer: Not only must you shed democracy and control over your foreign policy on re-entering Russia’s sphere, but your economies will be next.

Image Copyright EU-Russia Centre