Russia and Belarus Silence Protests Fighting Corruption

Protests are sweeping across Russia and Belarus against corruption. Aleksei Navalny, head of the Russian opposition, was taken into custody for his role in organizing dozens of rallies throughout the country. The Putin government has branded all but a handful of the protests illegal. Putin’s actions have led for calls from American politicians to speak out about the level of government oppression. This development complicates President Trump’s stated desire to pursue a closer relationship with Putin.

Anti-corruption protests in Russia and Belarus spark harsh government response.

Unemployment Tax Sparks Protests in Belarus

While Russian authorities have so far refrained from reacting violently to the demonstrations, the same is not true for Belarus. Police, under orders from President Alexander Lukashenko, have attacked hundreds of people who gathered to complain about high unemployment and about changes to the relationship between Russia and Belarus. The last straw for many of the protesters was the implementation of a “social parasite” tax on the unemployed.

Belarus Shuns Putin in Favor of Western Allies

Until now, Russia and Belarus acted as close allies. However, in recent months President Lukashenko has worked to build ties with the West, including encouraging tourism and capital investment by waiving visas for EU and US travelers.  This is also part of Lukashenko’s plan to rebrand, after years of being referred to as Europe’s “last dictator”. The President has managed to remain in power since 1994.

Rising Oil Prices Create Rift between Russia and Belarus

Another conflict between the two countries arose over the handling of Russian’s crude oil resources. Belarus purchases most of its gas from Russia, paying contractual prices that are currently higher than those that are available on the open market. Russia is currently working with OPEC to restrict gas supplies in an attempt to raise prices. Russia’s refusal to renegotiate with Belarus has left a breech, and pro-democracy groups have taken the opportunity to step in, working with the elite in Belarus to strengthen ties to Europe.

Belarus Law Enforcement Suppresses Demonstrators

While Lukashenko is working towards creating a more balanced image, the resulting rallies went beyond what his government was prepared to allow. Police in the Belarusian capital of Minsk arrested several protesters. In an attempt to justify the government’s harsh action, a spokesman of the Foreign Ministry accused the protestors of planting bombs and bringing weapons, declaring the steps taken by law enforcement to be “completely appropriate”. Meanwhile, government critics have pointed to the disappearance of Mikalay Statkevich, an opposition leader, who has been missing for several days. The Belarusian government denies involvement in his departure.

Putin Silences the Opposition

In Russia, anti-corruption activists have tried to create a credible opposition to President Putin, who has been leading the country in one role or another for almost 20 years. Before his recent arrest, Navalny faced a fraud conviction. This effectively ended his chances for running against Putin as President. Navalny’s supporters argue that the charges were a fabrication. The charges stemmed from a string of reports Navalny published disclosing how Putin’s close associates have benefited financially. The exposure of the levels of favoritism was Navalny’s way of gaining support, despite Putin’s generally high levels of approval.

Does Trump Back Putin’s Crackdown?

Donald Trump’s position on the Russian crackdown on dissent is unclear. Mark Toner from the State Department did call Russia’s strong reaction an “affront to core democratic values”. But there has not yet been a sign that Trump plans to change his planned drive towards improved relations. This has led to a strong critique of the administration, particularly in light of charges that Russia hacked the U.S. elections in 2012 and 2016. These concerns have led to a probe by the FBI into links between the Trump administration and Russia.

How Will the Protests Affect Trading?

Analysts are watching whether the unrest continues to spread in Belarus. Then, the country may cancel its oil contract with Russia and turn to another supplier. This could lead to lower oil prices as Russia deals with its oversupply by flooding the market. This could also affect the Saudi Tadawul index. Many Middle Eastern companies would need to manage the fallout of a worsening economy due to lower gas prices.

Look for the U.S. dollar to fall if President Trump continues to ignore the growing unrest in Russia. This would give Democrats more artillery for their fight to stop the administration from putting their agenda in place. Additionally, civil unrest could make it harder for U.S. businesses to work in the region, bringing down U.S. indices like the Dow and the S & P 500.