The European Union and the US seem to be coordinating further sanctions iterations, having picked the low-hanging fruit thus far by restricting air travel to and thru Belarus.
On the sanctions front, it’s interesting that there seems to be unusual unanimity within the West as to the merits of aggressively sanctioning Alexander Lukashenko.
I guess this reflects a range of factors:
First, Lukashenko has clearly crossed a red line in his actions with the Ryanair flight, and it’s hard not to agree with this. Lukashenko is also so obviously a bad guy. Who would not share the wish to help the poor oppressed opposition movement? And, after all, they are calling for aggressive sanctions. So if they are willing to bear the economic costs, why not let them decide?
Second, Lukashenko is not Vladimir Putin, and the West is less concerned about backdraft from sanctions on Lukashenko. Unlike Putin, Lukashenko has fair less ability to hit back at the West, and he has far fewer allies and friends, and patronage channels into the West as does Putin, to lobby on his behalf. There are just much fewer economic channels from Belarus to the EU/West – maybe potash, and crude oil refineries, but even these are relatively easily substituted. Belarus needs the West, far more than the other way around.
Third, some Russia hawks realize that in hitting Lukashenko, it’s a backdoor way of getting at Putin, as in the end Lukashenko is still Putin’s man in Minsk (for Putin better the devil you know, and perhaps for some, quite literally).
There is an understanding that Putin will have to pick up the tab if the West cripples the Belarus economy. Notable here that the Russian papers today are highlighting that the cost to Russia of bailing out Lukashenko could increase now to $5 billion, from roughly $2 billion a year. On a stand-alone basis that is still not punitive for Moscow, but if you add in the ongoing costs of bailing out Crimea, the Ukrainian Donbas, South Ossetia, Abkhazia, TransDniestr and Syria, this just adds to the deadweight on Russian finances that are already struggling to fuel growth and recovery in the stagnant sanctions pitted Russian economy. And likely the fact that they are all just bailing out all these Putin adventures might just weigh on the minds of the Russian electorate when they go to the polls in September.
On what sanction might be rolled out:
a) Sanctioning sovereign debt – very low-hanging fruit. And a paper from the Atlantic Council called for as much this week. Why is Belarus able to borrow in external markets for dollars and euros, but Russia is not, at least not in dollars and now Ruble? That’s nonsensical. And the West might think of extending this to sanctioning primary external issuance and secondary trading in new issues.
b) Oligarch sanctions. Go after friends and family with big businesses.
c) Large regime enterprises, so think potash, tractors, and refineries. Sure, Russia will pick up some of the slack, but it’s been noticeable in recent weeks that even Russian entities have been cutting back trading links into Belarus for fear of being caught up in secondary Western sanctions
If Putin wants to pick up the tab, let him, but increase the size of the tab perhaps to make him think twice how much he really values the relationship with Lukashenko.
In many respects, I would argue that banning flights to/from Belarus hurts ordinary Belarussian more. I am sure regime cadres can still get there private jets or use state owned planes. But if Belarussians want to leave, we should keep the channels therein open, to allow them to see how life is really much better in the West. Better focus more on the economic sanctions as noted above.
