The Belarusian ruble lost more than a third of its value Oct. 20, adding to the growing list of serious economic and financial problems Belarus already faces. There are many causes to the current economic situation in which Belarus finds itself: an increase in populist spending by Lukashenko ahead of presidential elections in Dec. 2010, high global energy prices and a significant decrease in Russian subsidization for key resources like energy. While there is no shortage of issues faced by Belarusian President Aleksandr Lukashenko as he tries to keep the country afloat, one of the most important financial indicators to watch from a social and political perspective is inflation. Trends like the falling value of the ruble and the rising costs of essential goods such as food and fuel — rather than recent pro-Western protests — will ultimately serve as the true test for Lukashenko's ability to maintain his grip on power. These economic issues, when combined with the sanctions imposed by the European Union and the United States against Belarus after elections and the subsequent security crackdown, created a shortage of foreign exchange reserves in the country's Central Bank and triggered a free fall in the value of the Belarusian ruble. There have been several devaluations of the ruble over the past year, with the most recent Oct. 20 drop in value of 34 percent (falling from the official rate of 5,712 rubles against the dollar to 8,680). As of early October, Belarusian inflation for 2011 exceeded 80 percent. Nadezhda Ermakova, head of the National Bank of Belarus, does not rule out the possibility that year-end inflation could reach 100 percent. While Belarus has seen many worrying statistics in the form of falling exports, rising current account deficit and rising debt levels, rising inflation is one of the key aspects to watch from a social and political perspective. Belarus has seen double digit rises in costs for key goods compared to the previous year, including an increase of more than 10 percent for the cost of bread and more than 20 percent for the cost of fuel. It is these rising costs that act as catalysts for social tension — as evidenced by Lukashenko's latest popularity ratings, which have reach an all-time low of 20 percent according to the Independent Institute of Social-Economic and Political Research, showing a steep decline from the 53 percent seen just after elections. The source of potential political instability in Belarus is not a question of whether the country should turn to Russia or get closer to the European Union, as is the case with Ukraine. Belarus does not have the same sharp national political divide on this issue that Ukraine does, and the Lukashenko administration has isolated itself from virtually all cooperation with the West. Rather, it is the country's ability to stay afloat economically — and Lukashenko's ability to maintain his populist social and economic model — that have the greatest impact on public opinion, but that are also increasingly under threat with rising costs and the government's decreasing ability to provide subsidies to the public without seriously harming the country’s financial position. Furthermore, additional Russian financial assistance would not solve the inflation problem; instead, it would prolong Lukashenko's resistance to structural economic reforms. STRATFOR therefore found it noteworthy when a small but significant truck driver protest blocked the main boulevard in Minsk on June 7 to challenge rising fuel prices — a protest that caused Lukashenko to lower the cost of fuel in the country. It is this type of economically-oriented protest put on by ordinary citizens, not the pro-Western protests organized on Facebook and attended by younger segments of society, that could truly pose a threat to Lukashenko's regime. And as inflation continues to grow, this threat can be expected to grow as well.