The Belkan economic crisis was a severe economic recession that took place in Belka during the 1980s. The crisis was the leading cause of the Belkan War in 1995. Exorbitant military spending and a failed collaboration with Osea led to a secession of territory and nationwide protests, allowing an extremist party to gain control of Belka's government.
Federal Law Review
Throughout the 1980s, Belka's military budget was substantially increased. This led to the development of numerous experimental projects, including the Excalibur laser tower, ADFX-01 and ADFX-02 Morgan aircraft, and XB-0 Hresvelgr. However, this increased military spending resulted in a national recession.
In an effort to stabilize the nation's economy, the government underwent an internal "Federal Law Review" on December 17, 1987. The review resulted in the secession of Belka's eastern territories and the withdrawal of Belkan troops from those territories. These newly autonomous territories eventually became the nations of Gebet, Recta, and Ustio.
As part of the effort to stabilize the economy, Belka entered into negotiations to sell its western Great Lakes territories to the Osean Federation. On August 29, 1991, the date of the sale, Osea proposed a joint venture with Belka to gather the natural resources in the region; in return, Belka was promised a substantial portion of the profits. Belka agreed and formed the Five Great Lakes Resource Exploration Company with Osea.
Barely one month later, however, the company was insolvent; it was soon discovered that Osea had exaggerated the amount of natural resources in the region, likely in an effort to damage Belka's economy further. The international community condemned Osea's actions, calling them "predatory", but the damage had been done. On December 16 of that year, the borders between Belka and its neighbors were re-drawn and finalized, considerably diminishing Belka's domain.
Rise of the DLP
Main article: Belkan War
The nation's continued instability, significant territorial losses, and defrauding by Osea created public distrust of Belka's incumbent government. Nationwide protests were organized by the government's minority opposition, the Democratic Liberal Party (DLP), which used populist appeal and Belkan exceptionalism to garner political support. In the following election, the DLP gained majority power in the government. Aiming to undo the damage caused by the recession, the DLP renewed military spending and authorized the invasion of Ustio and other neighboring nations, triggering the Belkan War.
The extent of Belka's recovery during the DLP's military buildup remains unknown; manufacturing centers such as Sudentor and Hoffnung, however, presumably benefited from the DLP's pre-war economic policies and later, wartime expenditures. Furthermore, the consequences of Belka's defeat likely resulted in more damage to the national economy, effectively undoing whatever progress had been made.