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Opinion
March 1, 2019 www.intellinews.com I Page 21
economic position to finance a state-building project. As was the case with the GDR, ‘official’ data, self-delusion and propaganda might be concealing the true economic picture in Belarus.
Moreover, unlike in Germany, popular support
for unification in Russia and Belarus is simply lacking. Indeed, civil unrest risks would likely increase in Belarus. Putin could surely identify less politically and financially costly ways to stand for re-election. After all, the Russian president in particular is more than aware of the economic, social and political aspects that continue to divide former West and East Germany today.
A more likely scenario is that Moscow will entertain piecemeal initiatives in order to shield its remaining economic influence in Belarus, mindful of its loss to China and the EU in Central Asia and Ukraine, respectively. Minsk will resist anything beyond this: why an authoritarian leader such as Lukashenko would consent
to relinquishing any significant powers to a supranational body is unclear. Moreover, with
a “political merger” Lukashenko would expose himself to the “Putin Succession Conundrum” that Russia will face sooner or later.
Risk outlook
We assess that investment risk is unlikely to
be significantly impacted by the most realistic scenario with respect to (no) unification; namely, technical preparations for deeper integration
in some areas. At the current stage, we do
not expect that this will extend beyond closer cooperation in customs in order to better control, for example, re-exports of sanctioned EU products to Russia via Belarus.
The establishment of a supranational court would coordinate their legal and regulatory systems but it is not clear that this would necessarily lead to deterioration in investment risks in Belarus.
The imposition of a single currency could have some long-term benefits for Belarus, but is highly unlikely as long as Russia and Russian markets are targeted by Western/US sanctions and Belarus continues to pursue stability-oriented economic policies.
More generally, Minsk is highly unlikely to agree to any unification measures that somehow subordinates Belarus to Russia in practical terms. There would have to be very significant incentive, which Moscow is not in a position to provide. The status quo in relations - interdependency with opportunistic geostrategic diversification
by Belarus in certain areas - is likely to persist.
Negotiations, with occasional theatrical flourishes, will persist in the 2-3 year outlook, especially given that Belarus is due to hold presidential and parliamentary elections in 2020. If significant steps are taken towards unification, political instability and civil unrest risks would likely rise in Belarus.