Presidential Election Aftermath &
the Political Crisis in Belarus
Implications for foreign investors
August 10, 2020
On August 10, Belarus' Central Election Commission (CEC) announced the preliminary results of the Presidential election. According to the CEC, incumbent President Alexander Lukashenko won with 82,2% of votes, with other candidates ranging from 1,3 to 10,09. Svetlana Tsikhanouskaya, a popular late entrant to the election after her candidate husband was barred, officially received only 10,09% of the vote, despite the mass recent protests galvanizing support for her across the country. The official results of the elections will be published before August 19.

This election has been the most difficult so far for Lukashenko, provoking the most serious political crisis of his 26-year rule. The ongoing protests are at an unprecedented level for Belarus and there are as-yet unfounded rumors of some forces refusing to use aggression against protestors, which if true could be crucial for the momentum of the protests. Time will tell whether Lukashenko has overplayed his hand by claiming such a vast majority and threatening to crush any opposition to the results. Should he remain in power, however, the crisis threatens to lead to even greater consolidation of the regime amidst a long period of political instability, significantly complicating the work of large foreign corporations in Belarus and their interaction with a Government looking to recover its dominance.

Immediate consequences of the 2020 presidential campaign include:

  • Legitimacy of the President's powers will be questioned both inside and outside the country. This could provoke an unpredictable period of political instability, especially in the context of further demonstrations amidst the poor economic situation and pandemic response. The authorities will be more preoccupied with solving political problems than with economic development.
  • Redistribution of influence in senior leadership in favor of supporters of the administrative management of the economy, industrial lobby and people from the security forces. In foreign policy, such figures tend towards isolationism rather than integration.
  • Weakening of positions of supporters of market regulation, reforms and development of cooperation with the West.
  • Weakening influence of the National Bank, Government and ministries, strengthening of Presidential Administration, Lukashenko's inner circle and, to some extent, security agencies (the main efforts are to solve short-term problems).
  • Deteriorating business climate. The political crisis will reduce the investment of local, and probably foreign business in the Belarusian economy, as well as the desire to open a new business. An unstable political situation, as well as falling confidence in the rule of law (such as with the case of Belgazprombank), may have a further negative impact on attracting foreign investments.
  • Deteriorating relations with the West. The EU and the US have already condemned the actions of the Belarusian authorities, and a tougher reaction is expected after the election. Even if the Belarusian authorities manage to avoid formal sanctions, cooperation in many areas will be frozen, at least until all political prisoners are released.
  • Weakening of negotiating positions with Russia. It is expected that Russia will increase pressure on Belarus to ensure further integration, including relinquishing some sovereignty in exchange for greater economic support. The Belarusian authorities will resist such a scenario, which could further increase political instability.

In general, current developments, in our estimation, will complicate the activity of foreign companies and communication with state authorities in Belarus because of the following reasons (we rate them as the most likely):

  • It is highly probable that Lukashenko will retain powers despite of the mass protests (consolidated bureaucracy, law enforcement agencies, weak organizational structure of the opposition);
  • But at the same time, it will increase his dependence on Moscow (violent suppression of the protests will derail emerging convergence and warming relations with the West and will decrease Lukashenko's legitimacy in the country);
  • We do not expect tougher sanctions and restrictions from the West that will have a negative impact on Belarus (largely due to Belarus being at the periphery of the current agenda – of course this could change if protests continue and the crackdown increases).

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For further information on the subject of this memo please contact (Pavel Melnikov, Partner).