The impact of economic problems in Belarus on the military needs of the Russian Federation

Context

The economic situation in Belarus: In 2025, Belarus finds itself at a crossroads of geopolitical isolation, strict sanctions and deep dependence on Russia. To accurately assess the state of the Belarusian economy, let us look at some recent statistics.

High inflation: inflation in 2025 is estimated at 17%. The main driver of inflation is import (electronics, branded clothing, pharmaceuticals). There is also a shortage of goods.

Inflation is also rising due to the significant devaluation of the national currency. This complicates the population's access to basic and especially imported goods. The defficit of imported products arises from a cumulative effect: on the one hand, due to sanctions and, as a result, limited trade with the West, and on the other hand, the systematic destruction of the supply chains, which the Russian Federation uses to bypass sanctions, prevents Minsk from gaining access to imports.

Trade deficit: The trade deficit rose up to 3.4% of GDP in the first quarter of 2025 (compared to a surplus of 0.2% of GDP in the first quarter of 2024).

The shift from a trade surplus to a deficit means that the country spends more on imports than it earns from exports. This situation is an alarming sign of a loss of external economic balance. Belarus cannot fully compensate for the consequences of this through the financial instruments and banking system available to it. Therefore, the only option is direct loans from other countries, such as Russia or China. 

The drastic change in the trade balance was the result of a decline in demand for Belarusian exports (to Russia) and an increase in the cost of critically needed imports. Pressure on the exchange rate is growing, which also contributes to inflation and instability in the financial market.

Critical labour defficit: As of 1 July 2025, employers reported about 220,600 job vacancies, which for a country of 9 million people is already showing signs of a crisis.

The large number of unfilled vacancies indicates a systemic labour shortage. This is a consequence of emigration (especially of young and skilled workers), contry's ageing population, and the unwillingness of some citizens to work under the current conditions. As a result, the labour shortage slows down economic activity and deepens the economic crisis.

The country undoubtedly has economic problems. But the complexity of the situation lies in the fact that Minsk has few options for solving these problems.

Dependence on Russia

One option is to ask the Kremlin for help, which would just make them even more dependent. In 2024, Russia already made up  about 65% of Belarus's foreign trade. Two-thirds  of Belarusian exports go to Russia, and a big chunk of the rest depends on Russian supply chains.

From this, we can conclude that Russia is Belarus' main trading partner, both in terms of exports and imports. This level of concentration of foreign trade creates a one-sided economic dependence, which reduces Belarus' flexibility in foreign policy and economic decisions.

In the event of changes in Russia's economic situation or its foreign policy, the Belarusian economy automatically becomes vulnerable. It also limits the possibility of diversifying the economy and forces the country to tailor its policies to the needs of one state.

Given this, it is difficult to imagine a situation in which Minsk turns away from Russia and begins to pursue an independent policy. It is also wrong to assume that Lukashenko's behaviour will be predictable based on what he has demonstrated since February 2022. The crisis and, as a result, Belarus's deepening dependence on the Kremlin will narrow Minsk's ability to avoid the actions it has been avoiding so far.

The scale of Russian aid

Russia provides Belarus with loans and other financial assistance. For example, in 2023, Moscow provided Minsk with a $1.7 billion loan. There is also the concept of reverse excise duty. This is a form of financial compensation whereby the exporting country (in this case, Russia) refunds part of the taxes paid when certain goods are sold.

In Belarus, reverse excise taxes and other transfers from Russia have reached a histroric high, providing revenues of about 3% of GDP. Without this external support, Belarus would likely face a serious fiscal deficit.

This large-scale financial support from Russia has in fact become a critical factor in stabilising Belarusian public finances during a period of economic turbulence, sanctions and declining export revenues.

At the same time, it further deepened Minsk's financial and political dependence on Moscow. The loans, transfers and reverse excise taxes received allow the Belarusian authorities to maintain social payments, finance state programmes and support key industries, but this support comes at a price — both economic and geopolitical.

However, as the crisis in the Russian economy deepens, this will inevitably have a negative impact on Lukashenko's regime.

The accumulation of debt obligations to Russia weakens Belarus' ability to manoeuvre independently, and the annual inclusion of Russian transfers in the budget makes Belarus' fiscal system economically unstable and dependent.

Therefore, assuming that Russia will soon demand active military cooperation from its neighbour, Lukashenko is likely to agree.

So, it is extremely important not to take Lukashenko's behaviour in 2022 as a given. Deepening dependence due to the crisis will lead to Minsk's broader involvement in supporting the Kremlin.

Current military cooperation

Experts estimate that military orders and cooperation with Russia generate an additional $5-7 billion annually for Belarus. This is difficult to verify, but given the level of their interaction, it can be assumed that the revenues from this activity are significant.

There is sufficient evidence that Belarus supplies Russia with sights for armored vehicles, combat drones, components for military equipment, and electronic systems for the defense sector.

"Integral", a state-controlled Belarusian microelectronics manufacturer, is a key supplier of microchips used in Russian missiles, including Russian-made Iskander, X-101, X-59M2A, and S-300 missiles.

According to Ukrainian intelligence , a plant for the production of composite components for unmanned aerial vehicles has opened in Belarus. It began operating in February 2025.

The "Zenit-BilOMO" enterprise manufactures optical targeting systems and auto components for both the domestic market and export to Russia. It is planned to reach full capacity by the end of this year.

Belarusian enterprises not only support the Russian military-industrial complex, but also help to bypass  international restrictions by supplying the necessary components and equipment both for themselves and for the Kremlin.

Therefore, in light of the deepening crisis in Minsk, we can hypothesise that the military sphere will be the first area in which Belarus and Russia will deepen their cooperation. Many factories plan to reach their maximum capacity this year and next. Continued cooperation seems to be the most likely scenario.

Threat to the Belarusian economy

Belarus has become completely dependent on Russia. As we mentioned above, the share of exports to Russia has grown to around 65%. Moreover, most of the remaining 35% is exported through Russia, using Russian infrastructure. Therefore, it would be fair to say that Russia in some form “controls” about 90% of Belarusian exports.

In such conditions, there is very little room for maneuver.

The main risk to the Belarusian economy is the instability of the Russian economy. The Belarusian authorities have violated the classic rule: never put all your eggs in one basket. 

The economic crisis in Belarus has indeed become a catalyst for closer integration with the Russian military-industrial complex.

This creates a vicious circle:

1. Sanctions → Isolation → Dependence on Russia

2. Military-industrial cooperation → Short-term economic relief

3. Deepening dependence → Loss of economic autonomy

Although growing trade between Minsk and Moscow has eased the former's current economic difficulties, Belarus is becoming more dependent on the Kremlin in the long term and is surrendering its economic sovereignty.

Attempts at diversification. China

In addition to Russia, Belarus has been working hard to strengthen its economic ties with China, particularly since sanctions were tightened.

For example, in August 2024, Belarus and China signed an agreement to create a free trade zone for services and investments. According to Lukashenko, this agreement should contribute to a 12% increase in exports to China and attract 30% more Chinese investment over the next five years.

In August 2024, the Chinese premier, Li Keqiang, visited Minsk. As a result, five industrial projects worth $1 billion were launched, with additional 12 projects worth $2 billion which are currently awaiting approval.

These projects include cooperation with the Chinese provinces of Chongqing and Shaanxi, as well as the modernization of the BelGee joint venture, which has produced more than 300,000 cars in 14 years. Overall, according to Chinese statistics, the volume of bilateral trade between Belarus and China in the first half of 2025 exceeded $4 billion, which is 5% more than in the first half of 2024.

In 2024, the total trade volume amounted to $8.4 billion, of which China's exports to Belarus amounted to $6.58 billion. Belarusian exports to China include chemical products, rapeseed oil, wood, dairy products, and cellulose.

Despite these efforts, the diversification of economic dependence through China faces several limitations:

Trade volume

Although trade with China is growing, it remains significantly lower than trade with Russia. Belarus' total foreign trade volume in the first half of 2025 amounted to $41.2 billion, of which exports accounted for $19.007 billion and imports for $22.190 billion (BelTA). Assuming that trade with China for the whole of 2025 will reach $8-9 billion, this represents only about 10-11% of total trade, while Russia dominates with a 65% share.

Energy dependence

Belarus remains critically dependent on Russian energy resources. Energy dependence limits economic autonomy, as China cannot replace Russia just as an energy supplier.

Logistical constraints

A significant portion of Belarusian exports, even to countries other than Russia, pass through Russian infrastructure. This makes Russia a key player in Belarus' logistics chains, complicating diversification.

Exports through Belarus to Europe are important to Beijing, but the current sanctions regime prevents Minsk from accessing Baltic ports, which are of interest to China. Given these facts, it can be said that Belarus has made some progress in diversifying its economy through cooperation with China. However, these efforts have not led to a significant reduction in economic dependence on Russia. Russia remains the dominant partner due to its significant share in trade, energy dependence, and control over logistics routes. Cooperation with China is strategic in nature, but its volume and influence remain limited compared to Russia.

As for future forecasts, Belarus will likely continue to try to develop relations with China, as this is obviously beneficial to it. However, given the dependence of their trade on Russian infrastructure, it is difficult to imagine that Russia will allow China to remove itself from its dominant position in the short term.

Potential for reconciliation with Europe

Relations between Belarus and the EU have remained tense since 2020, when rigged presidential elections and the violent suppression of protests led to large-scale sanctions by the Union. As of August 2025, the EU continues to impose restrictive measures, including asset freezes, travel bans on officials, and trade restrictions.

In February 2024, the EU Council adopted new conclusions reaffirming its support for the Belarusian people in their aspirations for a free, democratic, sovereign, and independent Belarus, but expressing concern about the worsening human rights situation, the persecution of civil society, and actions affecting national identity. In addition, the EU does not recognize the legitimacy of Lukashenko's regime, which complicates any dialogue at the government level.

However, from time to time, certain materials appear that indicate Minsk's desire to improve relations with Europe.

For example, a  study by the Carnegie Endowment for International Peace indicates that Belarus has begun to pose some  counter-sanctions against the West, particularly in the area of agricultural products, and has expressed interest in a gradual dialogue with the EU on trade, transit, transport, and political prisoners.

In addition, Minsk is taking certain steps to reduce migration flows to the EU through its territory. In particular, Belarusians have restricted the issuance of visas and stopped facilitating access for refugees from the Middle East to areas bordering the EU.

Interestingly, some counter-sanctions were lifted immediately after Lukashenko's recent visit to Beijing. Such measures are not just a gesture towards the West; they reflect larger geopolitical shifts: with tensions between Israel and Iran, China is increasingly interested in expanding the northern transit corridor through Belarus. At least, that is the impression given, considering how much time has passed since the visit to Beijing. It is quite realistic to assume that China is demanding that Minsk seek ways to normalize relations with Europe.

Therefore, there is dialogue between Minsk and Brussels, but the parties are probably very far from a compromise, given, among other things, the factor of Tikhanovskaya, who is not interested in normalization. The European Union is still publicly calling on Lukashenko to leave power. Some EU countries have provided shelter to Belarusian opposition figures, keeping up their tough stance on Minsk. The leaders of Lithuania and Poland have been meeting with the Belarusian opposition and speaking out against working with Lukashenko's regime.

The US, under the new administration, has changed its approach. Washington has promisted to ease sanctions in exchange for the release of political prisoners. But here, too, it is important to note that this only applies to sanctions imposed for election fraud. Sanctions imposed in response to Belarus' support for the war in Ukraine remain outside the scope of negotiations.

They have achieved limited results, and some political prisoners have been released. It is safe to say that under the new Trump administration, contacts will be more frequent, but it is still difficult to imagine how they can outweigh Russia's influence.

What to expect from future cooperation with Russia

With the economic crisis, isolation from the outside world, and growing dependence on Moscow, it's pretty likely that Belarus and Russia will keep working together on military stuff. The way things are going, this isn't just a possibility, it's almost inevitable.

First, economic realities are forcing the Belarusian leadership to seek sources of foreign currency income more actively. Military-industrial cooperation with Russia is already bringing Minsk billions in revenue, and given the lack of alternatives, this direction will only continue to develop. The launch of new production facilities, the modernization of defense enterprises, and the signing of contracts all point to systematic cooperation that is not limited to one-off deliveries.

Second, the political logic of Lukashenko's regime is to retain power at any cost. This means that he is unlikely to confront the Kremlin, especially given that it is Moscow that guarantees him political, financial, and even military support in the event of internal threats. In exchange, Belarus will likely continue to open up its resources, territory, and production facilities to the needs of the Russian army.

Third, military cooperation is becoming increasingly institutionalized. Joint military centers, Russian troops, and elements of nuclear infrastructure are already located on Belarusian territory. This indicates not only cooperation but also the gradual integration of the two countries' defense policies.

We probably shouldn't expect military cooperation to weaken in the coming years. On the contrary, it'll probably get stronger in response to sanctions pressure, Belarus's internal problems, and the Russian army's needs in the context of the long war against Ukraine and confrontation with the West.

Thus, Belarus' economic dependence will most likely lead to even closer military integration between the two countries in the medium term.

Analytical article prepared by Anatolii Horshkov specifically for the international information and analytical community Resurgam.