Identifier
Created
Classification
Origin
06MINSK1075
2006-10-03 11:27:00
UNCLASSIFIED
Embassy Minsk
Cable title:  

EMBASSY MINSK WEEKLY POL/ECON REPORT - OCTOBER 03,

Tags:  PGOV PREL PHUM ECON EPET ENRG KTDB BO 
pdf how-to read a cable
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R 031127Z OCT 06
FM AMEMBASSY MINSK
TO RUEHC/SECSTATE WASHDC 5168
INFO RUCNOSC/ORGANIZATION FOR SECURITY COOPERATION IN EUROPE
RHMFISS/HQ USEUCOM VAIHINGEN GE
RUFOADA/JAC MOLESWORTH RAF MOLESWORTH UK
UNCLAS SECTION 01 OF 03 MINSK 001075 

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E.O. 12958: N/A
TAGS: PGOV PREL PHUM ECON EPET ENRG KTDB BO
SUBJECT: EMBASSY MINSK WEEKLY POL/ECON REPORT - OCTOBER 03,
2006


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UNCLAS SECTION 01 OF 03 MINSK 001075

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SIPDIS

E.O. 12958: N/A
TAGS: PGOV PREL PHUM ECON EPET ENRG KTDB BO
SUBJECT: EMBASSY MINSK WEEKLY POL/ECON REPORT - OCTOBER 03,
2006


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1. The following are brief items of interest compiled by
Embassy Minsk.

TABLE OF CONTENTS

INTERNATIONAL RELATIONS
--------------

- Lukashenko Discusses Union State Agenda with Borodin (para. 2)
- China's Ambassador Calls Belarus A Friend and Partner (para. 3)

CIVIL SOCIETY
--------------

- Lukashenko to Reinforce BKGB (para. 4)
- BPF Not Permitted to Hold Rallies Featuring Milinkevich (para. 5)
- Lukashenko Creates New Socio-Political Think Tank (para. 6)

TRADE AND INVESTMENT
--------------

- Belarus' Foreign Trade Exceeds USD 25 Billion (para. 7)
- Russia, Germany, Poland and Belarus Plan Joint Rail (para. 8)
- Belarus Contemplates Exporting Electricity to Russia (para. 9)

DOMESTIC ECONOMICS
--------------

- Cabinet Increases Pay of Industrial Giants' CEOs (para. 10)
- Housing Construction Reportedly Rises 16.7 Percent (para. 11)

- QUOTE OF THE WEEK (para. 12)

--------------
International Relations
--------------


2. Lukashenko Discusses Union State Agenda with Borodin

On September 28, President Lukashenko met Belarusian-Russian Union
State Secretary of State Pavel Borodin in Minsk to discuss the
agenda of the Supreme State Council's next meeting scheduled for
later this year. The talks focused on a common Belarusian-Russian
currency, the Union State's legislative and executive agencies, and
the Union State's draft Constitutional Act. Lukashenko and Borodin
also discussed proposed reforms of the Parliamentary Assembly,
Council of Ministers, and supervising agencies of the Union State.
Both agreed that the latter two should remain advisory bodies. On
the topic of Russian natural gas giant Gazprom's intention to raise
the gas price for Belarus fourfold next year, Borodin advocated
uniform gas prices. The meetings also included discussion of a
project to develop the transport route from Brest to Vladivostok.


3. China's Ambassador Calls Belarus A Friend and Partner


On September 28, a commemoration in Minsk of the 57th anniversary
of the proclamation of the People's Republic of China, Chinese
Ambassador to Belarus Wu Hongbin described China and Belarus as
"honest friends in the political sphere and reliable partners in
the economic sphere." Wu noted that China and Belarus would soon
observe their 15th anniversary of diplomatic relations and voiced
support for Belarus' foreign and domestic policies. In particular,
Wu praised Belarus' effort to form the Union State with Russia on
the grounds that union advances "the well-being of the people in
the two countries, stability in the region, and the improvement of
the country's relations with European and American countries." Wu
also expressed China's gratitude to Belarus for its support on the
issues of Taiwan and Tibet. According to Wu, the Chinese embassy
in Minsk had issued more than 2,200 visas by September, as many as
in the entire previous year. On September 21, Belarus's State
Control Committee and the People's Bank of China signed a
memorandum of understanding on combating money laundering.

--------------
Civil Society
--------------


4. Lukashenko to Reinforce BKGB

On September 28, while speaking to security service heads of the
Commonwealth of Independent States (CIS),President Lukashenko
announced his intentions to reinforce the BKGB. According to
Lukashenko, powerful security agencies are necessary to ensure the
security of any state, even a nuclear power. Lukashenko pledged
increased support for the BKGB and called upon the agency to
develop a robust action plan.


5. BPF Not Permitted to Hold Rallies Featuring Milinkevich

On September 28, the Executive Committee of the northeastern region

MINSK 00001075 002.2 OF 003


of Vitebsk denied local opposition Belarusian Popular Front (BPF)
activists permission to hold a rally featuring former opposition
presidential candidate Aleksandr Milinkevich on September 29.
According to Vitebsk BPF Chairman Konstantin Smolikov, the Regional
Executive Committee's ideological department denied permission on
the grounds that written authorization from the BPF Board was not
attached to the application. Smolikov's legal counsel described
the requirement as both unprecedented and illegal. Authorities
also denied BPF activists in the eastern city of Orsha permission
to hold a rally in which Mr. Milinkevich would have participated on
September 30.


6. Lukashenko Creates New Socio-Political Think Tank

On September 25, President Lukashenko issued a presidential edict
transforming the Presidential Administration's Institute of Social
and Political Studies (ISPS) into an Information and Analytical
Center. According to the edict, ISPS' new purpose will be to study
"the electoral preferences of the population during electoral and
other public and political campaigns, conducting systematic
monitoring of the mass media, and studying ways of improving
ideological work." President Lukashenko himself will appoint the
head of the center, which will have 76 staff members.

--------------
Trade and Investment
--------------


7. Belarus' Foreign Trade Exceeds USD 25 Billion

On September 23, the National Bank of Belarus reported that
Belarus' foreign trade in goods and services in the first seven
months amounted to USD 25 billion, a rise of 31.9 percent over the
same period in 2005. The export of goods increased by 26.6 percent
to USD 11 billion, and imported goods rose by 40.8 percent to USD
12 billion. The export of services totaled USD 1.2 billion, an
increase of 10.3 percent, as imports rose 16 percent to USD 777
million. GOB analysts attribute the high import surplus to a 31.3
percent decrease in the export of potash fertilizers and to a jump
in the import of crude oil, automobiles, petroleum products,
ferrous metals, agricultural machinery, and natural gas.


8. Russia, Germany, Poland and Belarus Plan Joint Rail

On October 1, independent media related that rail operators in
Russia, Germany, Poland and Belarus plan to form a joint venture
called EurasiaRailLogistics, which will be registered in Moscow
before the end of 2006. The joint venture will focus on rail
shipments along European Transport Corridor II (Berlin-Warsaw-Minsk-
Moscow-Nizhniy Novgorod),developing and selling logistical
products, and offering cargo delivery services between Europe,
Russia, and China. Russian Railroads will hold 40.1 percent in the
venture, while 34.9 percent is to belong to Germany's Railion
Deutschland AG, 15 percent to Poland's PKP, and 10 percent to
Belarusian Railroads.


9. Belarus Contemplates Exporting Electricity to Russia

On September 28, Belenergo Director Pavel Yakubovich announced that
Belarus might export electricity to Russia. Although Belarus
currently imports electricity from Russia and Ukraine, Yakubovich
claimed that Russian officials raised the possibility of purchasing
Belarusian electricity. He added that Belarus does not need to
import electricity, but such imports benefit Belarus for
technological and economic reasons. However, Belarusian Energy
Ministry Department Head Vladimir Bobrov cautioned that future
Belarusian imports and exports of electricity would depend on the
creation of the Belarusian-Russian Union State. Bobrov also noted
that the price and the amount of electricity imports and exports
would be linked to the price of natural gas.

--------------
Domestic Economy
--------------


10. Cabinet Increases Pay of Industrial Giants' CEOs

On September 23, independent media reported that the Belarusian
Council of Ministers increased the multipliers used for calculating
the pay of Belarus' top CEOs. Starting October 1, a six-to-one
ratio between the pay of the CEO and the average pay at the
enterprise will determine compensation to the directors general of
the Atlant refrigerator plant, the Minsk Automobile Plant (MAZ),
the Minsk Tractor Works, the Belarusian Automobile Factory (BelAZ)
in Zhodino, the Gomelmash farm equipment factory in Gomel, the
Belarusian Steel Works in Zhlobin, and the Minsk Engine Plant, and
a multiplier of five to the directors general of the Mogilev
Metallurgical Plant, the Mogilev Elevator Plant, and the Minsk
Wheeled Tractor Plant.


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11. Housing Construction Reportedly Rises 16.7 Percent

On September 23, the Belarusian Ministry of Statistics and Analysis
claimed that finished new housing construction totaled 2,441,000
square meters during the first eight months of 2006, a 16.7 percent
rise over the same period in 2005. Authorities officially spent
public funds on the construction of 102,000 square meters, 15.5
percent less than during the same period of 2005, while enterprises
used their own funds to construct 96,000 square meters, 12.4
percent less. Meanwhile, home construction financed by individuals
and bank loans rose. Housing built in rural areas totaled 835,000
square meters, including 4,553 apartments and single-family houses.
Rural housing construction totaled USD 191 million in fixed capital
expenditures, 55.7 percent of the GOB's target. The GOB's
Chernobyl relief fund financed 113 apartments totaling 3,500 square
meters and accounted for 23.3 percent of the 2005 target. The
government had projected that housing totaling 3,700,000 to
4,200,000 square meters would be ready for use this year, including
8,645 apartments and single-family houses in rural areas.

--------------
Quote of the Week
--------------


12. During a three-hour press conference on September 29,
President Lukashenko enumerated the following reasons why Russia's
Gazprom should not raise prices on Belarus:

"If tanks start rolling from there [the West] to Russia, we will be
dying for Russia. We give food and drink to Russians that are
kicked out of Lithuania like dogs if they are deported for some
reason. The Chechens that were traveling to Poland via Brest were
thrown out of the train cars. Hundreds of people were there. We
received and accommodated them, gave them food and drink. They bore
children there and named them after me."

Stewart