b) What factors influence a decision maker’s steps towards solving or addressing a particular problem?
Alexander Lukashenka and his government run directed state, somewhat centralized and guided by 5-year plans economy. A number of factors, including energy and barter deals with Russia, helped Belarus’ economy not only stay afloat but also bring additional revenues to the budget.
Considering such success, receiving general public support for sustained social services provided by the state and restoring its reputation as the soviet styled republic, encourages president Lukashenka to continue his largely unreformed, socially focused economic course and close integration with Russia.
Moreover, despite showing somewhat erratic behavior and playing games with West and generally accepted democratic principles, president Lukashenka understands that closer integration partners might hurt him. By moving closer to the West, he would need to accept various Western requirements involving economic liberalization, political openness and freedom of choice. These factors helped him to stay in power and have full control over Belarusian strategic decision-making.
He will play diplomatic games and allow some form of reforms to obtain financial and political concessions from the West, however, as history shows he is as quick to dismantle them as he is quick to adopt them.
questions:
Model III looks and analyzes individuals and attempts to predict outcomes or possible course of action based on this analysis.
a) Whose opinion and views really count in making a particular economic or political decision?
Considering that incumbent Belarusian President remains in power for 14 years (as of 2008), it should be clear that Mr. Lukashenka is the most influential person when it comes to decision making in Belarus. Undoubtedly, he relies on “Siloviki” (Russian for strongmen, often with past or current connections to law enforcement or state security organizations). After all, they helped him to decimate local democratic opposition often using methods such as kidnapping and murders. However ultimately, president Lukashenka is a sole and undisputed decision-maker as evidenced by his willingness to remove his high-ranked and powerful lieutenants.

b) What factors influence a decision maker’s steps towards solving or addressing a particular problem?
Alexander Lukashenka and his government run directed state, somewhat centralized and guided by 5-year plans economy. A number of factors, including energy and barter deals with Russia, helped Belarus’ economy not only stay afloat but also bring additional revenues to the budget.
Considering such success, receiving general public support for sustained social services provided by the state and restoring its reputation as the soviet styled republic, encourages president Lukashenka to continue his largely unreformed, socially focused economic course and close integration with Russia.
Moreover, despite showing somewhat erratic behavior and playing games with West and generally accepted democratic principles, president Lukashenka understands that closer integration partners might hurt him. By moving closer to the West, he would need to accept various Western requirements involving economic liberalization, political openness and freedom of choice. These factors helped him to stay in power and have full control over Belarusian strategic decision-making.
He will play diplomatic games and allow some form of reforms to obtain financial and political concessions from the West, however, as history shows he is as quick to dismantle them as he is quick to adopt them.

a) What organization/factor plays the biggest role in Belarus?
It appears to be the Soviet Union. Certainly Soviet Union does not exist, yet its legacy weighs heavily on all aspects of the political, economic and social structure of Belarus. It is seen on Belarus’ national symbols, followed by the executive branch, reinforced by the legislative branch, defended by judicial branch and supported by ordinary masses.

b) What are the capabilities and limits of the given organization?
It helped Belarus to preserve an old lifestyle, made sweeping changes of the early 1990′s less painful and to some extent shielded public from modern day problems associated with post-Soviet political and economic transformations. In a midst of chaos caused by the collapse of the Soviet Union, it presented itself to Belarus as the defender of old good values and factors that made this republic so successful. It helped to preserve familiar economic model, spared many Belarusians from unemployment, assisted in paying their bills, and maintained relatively acceptable living standards.
The limits of this organization are quiet clear. Just like its physical predecessor it can only drag an image of success that far. It limits choices and freedom of decision because its ideological values are too rigid, uncompetitive and incompatible with contemporary systems adopted west of its border.
Considering current energy situation in Belarus, the country should seek multiple partners and suppliers of energy and raw materials. However, in order for it to happen, Belarus needs to distance itself from current organizational dogmas, become transparent and liberalize its institutions.

c) How influential the organization is?
It has enormous influence on Belarus as evidenced by the lack of real progress at this point. Furthermore, in 2006 Presidential elections, Lukashenka, an incumbent President of Belarus won 82.6% of popular vote (OSCE, 2006). While there is no doubt among monitoring groups that these elections were rigged, even the most staunchest Lukashenka’s opponents agree that he would have won elections even without falsifying them.

In an attempt to create a complete picture with circumstances, factors and motives that underline Belarus’ energy policies and create grounds for future developments, this discussion will adopt and follow three conceptual models and corresponding questions presented and developed by Graham Allison and Philip Zelikow (1999) in their book “Essence of Decision. Explaining the Cuban Missile Crisis.”

Although authors provide and focus on a specific case in explaining their models, their analytical tools are nevertheless applicable in much broader context of foreign affairs and strategic decision-making. Thus, an analysis of Belarus’ energy policy, its dependency on Russia and potential political problems stemming from it will be applied through their conceptual models.

Model I:

Analysis in Model I assumes that decisions made by states or actors are rational in their nature. It also attempts to explain a conflict or issue from a “why” perspective and by trying to identify goals, objectives, options and choices available or responsible for a particular problem. It stresses that “strategic market conditions-creates incentives and pressures for a government to choose a particular course of action” (Allison, Zelikow, 1999).

a) What are the circumstances that form Belarus’ perception of threats or opportunities?

Belarus has a limited amount of oil, gas reserves; however, those resources can only cover about 7% of its total energy needs (World Bank, 2006). Belarusian economy and particularly its heavy industry sector took off rapidly in the years following the Second World War. As a result, on the eve of independence Belarus found itself having 125 industrial plants and factories (Tiurina, 1994) producing durable goods for the most part.

Such heavy industrialized economy requires significant human capital along with all necessary machinery and electricity to power it. In case of Belarus, 95.4% of its electricity was produced from gas that makes up 60% of country’s energy balance and comes primarily from one source-Russia (Balmaceda, 2004).

And since durable goods along with non-durable goods and service constitute the consumption in economy, then Belarus can only consume that many tractors, appliances and electronic defense systems. The rest, often of uncompetitive quality, is being absorbed by Russian markets.

Therefore, in a current economic and political state, Belarus has Russia as the primary supplier of energy and consumer of its goods. It makes Belarus highly dependable on Russia’s energy supplies and vulnerable to energy price increases.

b) What are the options available to address the issue of energy security as well as rising energy prices?

Belarusian government headed by President Lukashenka does understand that having Russia as the only energy supplier threatens Belarus in variety of ways including freedom of political decision-making. In attempt to improve this situation, the government proposed the following solutions:

(i) To develop domestic natural resources and make larger use of renewable energy sources (Ozerets).

(ii) To build a nuclear reactor on a territory of Belarus. President Lukashenka’s plan calls for construction of 2000 megawatt nuclear plant, consisting of two water-cooled and water moderated reactors (Loukianova, 2008).

(iii) Continued well-structured gas transit business could be a major source of revenue for future state expenditures as well as political leverage (World Bank, 2006).

c) What are the costs and benefits of given options?

(i) Representatives of Belarusian government (Ozerets) made it clear that it views renewable energy sources as a viable option for Belarus. Although current technologies have some limitation, for example, it is not conceivable today to support country on solar, wind and bio-energy alone, they nevertheless help to reduce state’s dependency on conventional sources such as oil and gas.

As evidenced in the example of some European countries, the use of renewable energy is possible, encouraged and committed to by developed countries. However, it requires patient approach and long-term vision, something that seems to be missing in case of Belarus despite strong official rhetoric.

(ii) On one hand, nuclear power is a solution to many problems including an ecological one, although it is disputed by some scientists. It faces two major problems: one is moral as 20% percent of Belarusian territory is uselessly rendered by the explosion in Chernobyl. Another one is familiar to many: where can Belarus find financing for projects with costs estimated to be between 5 to 8 billion USD?

Among potential bidders for the construction contract are Russia, France and USA. It is widely believed that Russia is a likely winner as it has significant experience in building nuclear reactors. However, if this is the case, then the idea of energy security and diversification becomes obsolete. If Russia receives a tender, all technologies, raw materials and supplies necessary for day-to-day station operations would belong to Russia, essentially increasing Belarus’ dependence on it.

(iii) Oil and gas transit remains not only the source of significant cash inflows for Belarus, but also gives it political advantage in its dealings with Russia. Belarus is the second largest exporter of Russian gas after Ukraine. Although Russia attempted to diversify its exports through various networks and proposed couple of alternative routes such as Nord Stream that bypass Belarus, it nevertheless remains tied to Belarusian networks for not only they provide more or less reliable transit but they are also cheaper when compared with competitors such as Ukraine. Belarus also offers oil refinery business for Russia and makes it attractive from strategic as well as financial aspects.

While Belarus certainly derives numerous advantages from its status as a transit state, it slowly gives up its energy infrastructure ownership. Being unable to meet financial obligations, face increased energy costs and unwilling to redirect its economy towards marked based model, Belarus needs significant cash infusion to support various state owned enterprises as well as social obligations to its population. Such situation leaves Belarus with no choice but to give up certain state-owned assets. Although reluctant, in 2007 it promised Russian Gazprom an ownership stake in “Yamal I”, its major gas pipeline, thus significantly reducing points of political advantage.

Being Anchored by the Image of Soviet Success

In the atmosphere of general chaos that followed the collapse of the Soviet Union and suffering from distorted trade links and unsecured currency, the image of Belarus as one of the most stable and successful republic saw a blowing crash. Unable to get public support for painful market reforms and under strong pressure from industrial groups for continuation of the state subsidies for large and for the most part ineffective enterprises, (Savchenko, 2002) Belarus was facing an economic collapse.

Above mentioned factors and skyrocketing inflation put Belarus in a position where by 1993 it owed 112 billion rubles to Russia, was only able to export 4 percent of its production to the countries outside of the former Soviet Union (Tiurina, 1994). A country knowns an “assembly line” of the Soviet Union (Tiurina, 1994), Belarus was no longer able to import cheap energy and export overpriced “soft goods”, a scheme that worked well in the Soviet Union (Bakanova, 2003). In other words, all these aspects as well as high cost of raw materials and energy needed by its factories and plants to produce or assemble finished goods put Belarus at a great disadvantage (Tarr, 1994).

Indeed, while its huge industrial sector along with enormous subsidies and cheap energy helped Belarus to advance in the Soviet period, it eventually contributed to its demise in the post Soviet era. By 1993, approximately 125 Belarusian industrial companies were producing durable goods, primarily for military purposes. They employed 250 thousand people who assembled automated control, communication systems, TV sets, refrigerators and radios for the Soviet markets. Belarusian industry was facing Russian monopoly on raw materials, increased oil prices by as many as 30 times (compared to artificial 1991 price level) and a minimum salary of 4 dollars a month (Tiurina, 1994). Therefore, it should not be surprising that everything was perfectly lined up for a populist Alexander Lukashenka to exploit the very same issues and use them to become the first Belarusian president in 1994 (Balmaceda, 2006).

Back in 1991, Mr. Lukashenka was the only representative in the Belarusian Supreme Soviet who voted against the creation of Commonwealth of Independent States (CIS) because he did not see it as a valid substitution for the Soviet Union (The Economist, 1994). During the Presidential campaign in 1994 and in the midst of economic crisis, he promised to fight corruption, pledged the state support for industrial and agricultural enterprises, promised to freeze prices and end inflation. Mr. Lukashenka was also seen favorably by many because he wasn’t affiliated with the old-Soviet guard and he wasn’t seen as a nationalist (The Economist, 1994).These factors and highly effective public relations campaign further helped his presidential candidacy and ultimately led to his victory.

1990′s: Where Do You Go From Here?

In 1991 Russia, Ukraine and Belarus signed a document that effectively dissolved the Soviet Union and paved the way for its former members towards full independence. On the eve of such grandiose historical event Belarus was rather a successful republic with very high living standards compared to most other republics (Brunat, 2005). While some researchers (Bakanova, 2003) argued that by 1991 Belarus almost exhausted its economic potential due to constrains and flaws of the planned economy, most analysts agree that Belarus was well positioned geographically and strategically to take advantage of future trade between Russia and Western Europe. Its strategic geographical position was further reinforced by developed oil and gas pipeline, refining capabilities (World Bank, 2006) as well as extensive transport networks that included railroads, roads and pipelines (Bakanova, 2003).

gorbachev

Despite a well-developed infrastructure inherited from the Soviet period, couple of serious questions aroused immediately following the dissolution of the Soviet Union. For one, the decision whether Belarus should keep closer to Russia or West had to be made (Balmaceda, 2006). Another question was whether the new Belarusian government had skills and mentality for market-oriented economic reforms as opposed to familiar centrally planned system.

For example, some authors doubted that newly created government composed of the old communist guards would be able to fully embrace various reforms (Brzezinski, 1996). In Belarus, the same logic was applicable because Premier Vyacheslav Kebich, who headed the Belarusian government in the early 1990’s, had been affiliated with the Soviet Communist party in the past and never made serious attempts to separate himself from it. And finally, many wondered how would Belarus go about maintaining a social and economic stability considering the fact that transition to market economy would most certainly be painful for many sectors of Belarusian economy (Tiurina, 1994)?

20th Century: From the Most Backward to the Most Perfect Soviet’ Republic

In all probability, had the recent energy crisis and underlying it geopolitical factors happened in the mid 20^th century, Belarus would not be impacted all that much by it. Because of the above-mentioned historical transformations, before the Russian revolution as well as in the period of 1917-1945, Belarus was seen as one the most backward regions in the Imperial Russia and later the Soviet Union (Ioffe, 2004). Furthermore, according to Grigory Ioffe (2004) because of Belarus’ Western frontier and potential vulnerability to attacks and destruction from the Western powers, the Soviet leadership did not see much sense in building or developing industrial and agricultural sectors in Belarus.

The Second World War changed this perception of Belarus for now there was a “cordon sanitaire” (Ioffe, 2004) composed of newly dependent on the Soviet Union Central European satellites. Thus, the period after the WWII and up until 1989 could be subdivided into three distinct categories:

(i) 1945-1958: the Soviet government began injecting small amounts of investment into Belarusian economy (Bakanova, 2003).

(ii) 1959-1973: the previously started low-level investments become more intensive (Bakanova, 2003).

(iii) 1974-1989: industrial and agricultural production as well as a level of work force skills transitioned to the advanced stage of development (Bakanova, 2003).

Minsk_Belarus

Thus, the roots of current energy dependency could be traced to the period following the WWII because precisely at that moment a poorly endowed with natural resources Belarus began building huge factories and plants which all required imported energy and raw materials for production. The growth of Belarusian economy is fully supported by statistical and empirical data. For example, industrial growth data shows that industrial output in Belarus grew 326 times between 1913 and 1986 far outpacing similar output in Russia (206) and Ukraine (132) (Ioffe, 2004). At the same time, the GDP per capita was above most Republics in the Soviet Union and paralleled impressive economic developments. As a result, by 1990’s Belarus was one of the best managed economies, dominated by industrial sector and featured modernized agricultural economic sector and growing exports, thus making it “the most perfect Soviet’ republic of the USSR” (Balmaceda, 2006) and “undeniable Soviet success” (Ioffe, 2004).

Geographical Position: Blessing or Curse?

It can be said that Belarus is equally blessed and cursed by its geographical location. On one hand, it is positioned between Russian Federation and the Western Europe and can potentially serve as a window of opportunity because Belarus is the direct and closest bridge for Russian energy exports into Western European markets (World Bank, 2006). On the other hand, throughout the centuries many Belarusian neighbors had not been overly friendly or considerate when crossing this symbolic bridge.

Modern day Belarus traces its history from various local princedoms starting with IX century, Grand Duchy of Lithuania in XIII century, Polish-Lithuanian state in XVI and North-Western district of Russian Empire in XVIII century (Arlou, Saganovich, 1997). With an exception of the Grand Duchy of Lithuania historical period, Belarus’ powerful neighbors, Russian and Polish empires, carved up its territory numerous times.

grand-duchy-of-lithuania

Janka Kupala, famous Belarusian writer, portrayed such historical gyrations in his play called “Tuteyshia” or “Locals”. In the play he shows 15 local characters out of which only three identify themselves as Belarusian, the rest thinks of themselves as Polish or Russian and consequently sees borders extending towards West or East. The play not only shows how political and historical precedents are reflected on Belarusian population’s perspectives but it also indicates vulnerability of Belarusian society and identity to Polish and Russian claims on Belarus (Ioffe, 2003). In other words, these transformations and constant political changes left long lasting consequences on not only Belarusian territory but also on its future social and economic institutions.