How to Handle Belarus

Russian natural gas colossus Gazprom plans to charge its ally Belarus market rates for natural gas when new contracts are negotiated in 2007. At current prices, such a move would more than triple the $47 per thousand cubic meters the former Soviet republic pays, effectively swinging a wrecking ball into the Belarusian economy.

Just don't expect Russia to follow through on Gazprom's threat. Putin wants to gain operating control of gas pipelines in Belarus, as he has gotten in neighboring countries. But yanking subsidies completely would trigger economic collapse in Belarus and breathe life into a democracy movement that had been badly defeated in the country's rigged March 19 presidential elections.

Belarusian strongman Alexander Lukashenko, known as "Europe's last dictator," has bet the farm politically on his belief that Belarusians prefer sclerotic stability to the roller coaster capitalism in neighboring countries. In his 12 years of rule, the former collective farm director has implemented "market socialism," a fancy name for dodging badly needed structural reform at every turn.

This policy has spared his subjects the painful transition to democracy but left the economy mostly government-owned, uncompetitive, and money-losing. A quarter of the population is mired in poverty, an economic voucher system has failed, and inflation is brewing. Meanwhile, trade deficits and a lack of foreign investment foretell a grim future.

Despite this, a vote for Lukashenko has been a vote for subsidized decrepitude, whereas a vote for reform has carried the threat of freezing in the dark. It's a ratchet effect: the weaker the economy, the greater the threat. Yet Putin knows that threat goes away if Belarusians actually are freezing in the dark.

If Russia keeps gas subsidies in some reduced form in exchange for control of the gas pipeline network in Belarus, Lukashenko will retain power but come under increased economic pressure. This will not be good for the democracy movement in Belarus or for democracy movements around the world.

Belarus has a Soviet-era arms industry that earns hard currency selling to shady regimes that don’t want to pay a lot to fix their civilian or rebel problems. They also sell more advanced weaponry to rogue states that Putin would just as soon not be linked to. With increased economic pressure, Lukashenko would certainly test the industry’s surge capacity, raising the ability of rogue regimes to crush budding democracy movements around the world.

The United States, E.U., and many of Belarus's neighbors have reacted angrily to blatantly rigged March elections in which Lukashenko awarded himself nearly 83 percent of the vote (while leaving his nearest opposition candidate in single digits). Yet with Belarus isolated -- and insulated -- from the West, Lukashenko's future lies squarely in the geo-strategic calculations in the Kremlin, not in any privileges or memberships the West can remove.

The free world can best help the democracy movement in Belarus -- as well as others around the world -- by going beyond mere visa bans and asset freezes. The focus should be on imposing costs on the rogue regimes that source weaponry from the increasingly proliferation-minded Lukashenko.

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Note: Also posted earlier today at Human Events Online.