EMBASSY MINSK WEEKLY POL/ECON REPORT - AUGUST 28, 2006

UNCLAS SECTION 01 OF 03 MINSK 000938 SIPDIS SIPDIS E.O. 12958: N/A TAGS: PGOV PREL PHUM ECON EPET EAGR ENRG KTDB BO SUBJECT: EMBASSY MINSK WEEKLY POL/ECON REPORT - AUGUST 28, 2006 MINSK 00000938 001.2 OF 003 ¶1. The following are brief items of interest compiled by Embassy Minsk. TABLE OF CONTENTS INTERNATIONAL RELATIONS -------------- - Lawmaker Calls Union State Act 99 Percent Ready (para. 2) - CSTO Consultations on Military Training (para. 3) LOCAL ELECTIONS -------------- - Opposition Parties in Gomel Sign Cooperation Accord (para. 4) CIVIL SOCIETY -------------- - Youth Sentenced to Four Days in Jail for Demonstration (para. 5) - Border Guards Apprehend Families on Religious Retreat (para. 6) - Activists Again Petition BKGB over Neo-Nazism (para. 7) - Anonymous CD on Protests Circulating throughout Minsk (para. 8) TRADE AND INVESTMENT -------------- - Belarus Reports USD 9.27 Billion in Trade with Russia (para. 9) DOMESTIC ECONOMICS -------------- - Belarus' Pipelines Report Almost 50 Percent Profits (para. 10) - Banks Raise Interest Rates on Corporate Deposits (para. 11) - QUOTE OF THE WEEK (para. 12) -------------- International Relations -------------- ¶2. Belarusian Lawmaker Calls Union State Act 99 Percent Ready On August 24, Nikolay Cherginets, chairman of the Committee on International Affairs and National Security in the Council of Republic of the Belarusian National Assembly, characterized the draft Constitutional Act of the Belarusian-Russian Union State as "99 percent ready." Cherginets was hopeful that Presidents Lukashenko and Putin would approve the draft and that both Russia and Belarus would hold national referenda to adopt the act. However, Cherginets conceded the two sides still could not agree whether a Union President or the Supreme State Council would govern the Union State. ¶3. Belarusian Delegation Attends CSTO Talks on Military Training On August 17, a delegation from the Belarusian Defense Ministry attended consultations on personnel training in the Collective Security Treaty Organization (CSTO) held in Moscow. The consultations followed up a 2005 agreement on the creation of a single system of joint CSTO training and draft regulations governing cooperation between CSTO members in military staff training. The CSTO defense ministers previously approved a list of 60 military schools that will train cadets from CSTO countries, which includes Armenia, Belarus, Kazakhstan, Kyrgyzstan, Russia, Tajikistan and Uzbekistan. Russian military schools train about 1,000 cadets from other CSTO states each year. Approximately 800 receive full or partial tuition waivers. -------------- Local Elections -------------- ¶4. Opposition Parties in Gomel Sign Cooperation Accord On August 23, the Gomel region chapters of the opposition United Civic Party (UCP),the Belarusian Party of Communists (BPC),the Belarusian Popular Front (BNF),the Belarusian Social Democratic Party "Gramada" (BSDP),and several pro-democracy organizations, including the Independent Union of Electronics Industry Workers, signed a cooperation agreement for local elections scheduled for January 14. The agreement provides for cooperation in selecting and training candidates, sharing information and legal support, and joint election monitoring. Earlier this summer, opposition parties signed similar agreements in Grodno, Brest, Mogilev, and Vitebsk regions. Approximately 24,000 seats on more than 1,600 municipal councils throughout Belarus will be open to challenge in the upcoming elections. -------------- Civil Society -------------- ¶5. Youth Sentenced to Four Days in Jail for Demonstration MINSK 00000938 002.2 OF 003 On August 24, a Minsk district court sentenced opposition youth activist Yuliya Goryachko to four days in jail and fined five others between USD 290 and 420 after finding them guilty of participating in an unsanctioned demonstration under Article 167 of the Administrative Offenses Code. On August 23, a group of opposition youth activists gathered near the Tsentralny district police station in Minsk for what they called "making friends with police officers." Two youths attempted to give policemen booklets while others were holding candles. Two other youth activists failed to appear at the hearing. ¶6. Border Guards Apprehend Children, Parents on Religious Retreat On August 9, Belarusian border guards took into custody and transported to Minsk 47 children and their parents, all Baptist church members who were on retreat at a private homestead in the western Grodno region. The previous day, the local authorities had ordered the gathering to disperse and threatened to take the children to a police juvenile facility. Head of the Minsk City Executive Committee Department for Religious and Ethnic Communities Alla Ryabitseva has conceded that the retreat was legal since private individuals organized the event. One of the parents, Igor Biskupsky, has already collected 20 signatures to complain to the Minsk and Grodno governments about the psychological trauma caused to the children. ¶7. Civil Society Activists Again Petition BKGB over Neo-Nazism On August 22, participants at public hearings on the crimes of Stalinism in Belarus decided to renew their petition to the BKGB to raise awareness of the revival of Nazism. A group of Belarusian students, retirees, journalists, historians, and former political prisoners sent their first petition to the BKGB in May to condemn vandalism at the Kurapaty Stalin-era massacre site near Minsk, the memorial of Belarusian writer Vladimir Korotkevich in Vitebsk, and a mosque in the western city of Slonim and to express their concern about the authorities' failure to respond to the spread of swastika graffiti. Belarusian historian Yakov Basin reported he received a reply from the Prosecutor General's Office on August 4 stating the Prosecutor General is considering the group's petition. ¶8. Anonymous CD on Protests Circulating throughout Minsk On August 24, independent media reported the grassroots distribution of an anonymous multi-media CD containing video footage and photographs of post-March election opposition protests in Minsk's Oktyabrskaya Square. Called "Open Air Revolution," the CD also features local and foreign media reports about young opposition supporters who camped out in Minsk's central square between March 19 and 24. The anonymous creators of the CD describe the demonstration as a "round-the-clock extreme party in cramped facilities" marked by "excellent self-organization." They describe the demonstrations not only as protests against President Lukashenko's fraudulent re-election on March 19 but also a "social conflict between riot police officers and their peers" and a "revolution in the minds of young Belarusians." Police dispersed the encampment in a pre-dawn raid and arrested hundreds of demonstrators, most of whom received jail terms of 15 days. -------------- Trade and Investment -------------- ¶9. Belarus Reports USD 9.27 Billion in Trade with Russia On August 18, the Belarusian Economics Ministry reported that Belarusian-Russian trade totaled USD 9.3 billion in the first six months of 2006. Belarusian exports reportedly rose by USD 409.7 million on the year to USD 3.1 billion and imports by USD 1.9 billion to USD 6.2 billion. Belarus' export of tractors increased by USD 70.6 million, trucks by USD 39.8 million, tires by USD 25.3 million, auto and tractor parts by USD 17.6 million and combustion engines by USD 10.7 million. Increased energy purchases drove up imports. For example, imports of oil and gas jumped by USD 1.2 billion, an increase of 70.8 percent. Belarusian trade with Commonwealth of Independent States (CIS) countries amounted to USD 11 billion during January to June, of which trade with Russia accounted for 87.4 percent. On the year, Belarusian exports to the CIS increased by 17.5 percent to USD 3.8 billion and imports by 43.1 percent to USD 6.9 billion. -------------- Domestic Economy -------------- ¶10. Belarus' Pipelines Report Almost 50 Percent Profits On August 24, the Belarusian Ministry of Statistics and Analysis reported that natural gas transportation through Belarus' pipeline MINSK 00000938 003.2 OF 003 system rose 6.6 percent on the year from January to July to 39.1 billion cubic meters. During that period, Belarus' natural gas imports increased 5.4 percent to 12.1 billion cubic meters. Gas transit via Belarus' pipelines increased 7.1 percent on the year to 27 billion cubic meters. Russian gas transit via Belarus' pipelines to Poland accounted for 70 percent of the total. Gas transit to Ukraine and Lithuania made up 20 percent and 8 percent, respectively. Gas transit to Kaliningrad Region accounted for the remaining two percent. Belarus' pipeline companies reported profits of 49.1 percent from January to June 2006, down from 61.5 percent in the period in 2005. ¶11. Belarusian Banks Raise Interest Rates on Corporate Deposits On August 24, the National Bank of Belarus announced Belarusian banks raised the average interest rates on corporate short-term and long-term deposits in Belarusian rubles to 7.8 percent in July from 7.2 percent in January and to 10.2 percent in July from 9.6 percent in January, respectively. Meanwhile, interest rates on corporate long-term loans in hard currency increased to 8.5 percent from 6.4 percent. Interest rates on corporate short-term deposits in hard currency, however, dropped to 5.3 percent in July from 6.1 percent in January. Belarusian ruble deposits of domestic companies amounted to 3.205 trillion rubles (USD 1.4 billion) as of August 1, up 14.9 percent from January 1. Hard currency deposits increased 24.4 percent to USD 1.3 billion. -------------- Quote of the Week -------------- ¶12. When asked about the distribution of an anonymous multi-media CD containing video footage and photographs of post-election opposition protests at Minsk's Oktyabrskaya Square, opposition youth leader Dmitriy Dashkevich told independent media: "The protests have shaken up the sluggish life of the Belarusian society. I am sure that not only underground materials but also certain paragraphs of Belarus' modern history will soon feature this brave act by the Belarusian youths. The country saw the emergence of a new political elite consisting of youths who are free from the burden of the Soviet legacy and, unlike the older generation, are prepared to self-sacrifice for their ideals and Belarus." Moore