EMBASSY MINSK WEEKLY POL/ECON REPORT - SEPTEMBER 5,

UNCLAS SECTION 01 OF 03 MINSK 000963

SIPDIS

SIPDIS

E.O. 12958: N/A
TAGS: PGOV PREL PHUM ECON EPET ENRG KTDB BO
SUBJECT: EMBASSY MINSK WEEKLY POL/ECON REPORT - SEPTEMBER 5,
2006


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

TABLE OF CONTENTS

LOCAL ELECTIONS
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- Opposition Council Discusses Local Coalitions (para. 2)

CIVIL SOCIETY
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- Milinkevich Visits France, Opposes Union State (para. 3)
- Police Seize Protestor, Nine Reporters in Bobruisk (para. 4)
- Three Journalists to Be Awarded Dmitriy Zavadskiy Prize (para. 5)
- Writers' Union Evicted from Headquarters (para. 6)
- Belarusian Border Guards Stop Two Opposition Leaders (para. 7)

INTERNATIONAL RELATIONS
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- South African National Assembly Speaker to visit (para. 8)
- Mayors of 27 CIS Cities to Attend Minsk Conference (para. 9)
- Delegation Attends Conference on Nuclear Materials (para. 10)
- Belarus Ready to send Aid to Lebanon, Lacks Airlift (para. 11)

TRADE AND INVESTMENT
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- Beltransgaz Assets to Be Appraised in October (para. 12)
- BMZ Director General Backs Belarus and Russia Merger (para. 13)

DOMESTIC ECONOMICS
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- Belarus Budget Surplus at 1.5 Percent GDP thru July (para. 14)
- Belarus' Foreign Debt Down 1.1 Percent (para. 15)
- Belarus' Internal Debt Up 4.5 Percent (para. 16)

- QUOTE OF THE WEEK (para. 17)

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Local Elections
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2. Opposition Council Discusses Local Opposition Coalitions

The Political Council of the United Democratic Forces (UDF)
coalition convened a meeting on August 30 to discuss the
establishment of local opposition coalitions in the run-up to local
elections currently scheduled for January 14. Opposition
Belarusian Popular Front (BPF) leader Vinstuk Vyachorka predicted
local coalitions would likely include NGOs and trade unions that
are not part of the national UDF coalition but support its
strategy. According to Vyachorka, the Political Council did not
discuss proposals for organizing a new congress of pro-democracy
forces but would in September. Earlier, BFP Deputy Chairman Viktor
Ivashkevich suggested convening a second congress of pro-democracy
forces that would include activists who collected more than 500
signatures for the local elections. Opposition United Civic Party
leader Anatoliy Lebedko expressed support for the second Congress.

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Civil Society
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3. Milinkevich Visits France, Opposes Union State

On September 1, former opposition presidential candidate Aleksandr
Milinkevich visited France to discuss a possible referendum on
unification of Belarus and Russia with French Interior Minister
Nicolas Sarkozy, Foreign Minister Philippe Douste-Blazy, and NATO
Parliamentary Assembly President Pierre Lellouche. Milinkevich
decried any such referendum as illegitimate and observed that
Belarusian youth will not accept the "loss of their homeland." He
asserted French politicians share his opposition and called upon
other western leaders to oppose the creation of a Russian-
Belarusian Union State.


4. Police Seize Opposition Protestor, Nine Reporters in Bobruisk

On August 31, police detained opposition Bobruisk City Council
member Ales Chigir and nine journalists in the central eastern city
of Bobruisk for several hours. Chigir had chained himself to a
pole in the city's central square to protest his dismissal from a
local school after working as a history teacher for 13 years.
Chigir headed opposition presidential candidate Aleksandr
Milinkevich's campaign team in Belarus' eastern Mogilev region
during the 2006 presidential elections. According to Chigir, the
education department fired him for political reasons.


5. Three Journalists to Be Awarded Dmitriy Zavadskiy Prize

On August 31, a source with the Belarusian Association of

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Journalists (BAJ) told independent media that Russia's First
Channel will award three Belarusian journalists its annual Dmitriy
Zavadskiy Prize on September 11. This year's recipients include
independent newspaper "Nasha Niva" editor-in-chief Andrey Denko and
photographer Yuliya Doroshkevich and "Komsomolskaya Pravda" staff
writer Oleg Ulevich. The prize was instituted six years ago to
commemorate a Belarusian cameraman with the Russian television
network who disappeared in Minsk under mysterious circumstances in
2000, and recognizes courage and professionalism of journalists in
the face of government repression.


6. Writers' Union Evicted from Headquarters

On August 30, the Union of Belarusian Writers (UBW),which was
founded in 1934, was evicted from its headquarters in central
Minsk. In March, the Minsk City Economic Court ruled that the UBW
had occupied premises in the House of Writers illegally since
January 2003 when its lease with the Presidential Administration
(PA) Property Management Department expired without renewal. The
UBW lost government support in 2001 and subsequently refused to pay
the PA rent on the grounds that its building, the House of Writers,
was built with writers' royalties. According to UBW Chairman Ales
Pashkevich, the union will hold a meeting in October on the return
of its headquarters. In the meantime, the UBW needs to find a
different legal address to remain a registered organization.


7. Belarusian Border Guards Stop Two Opposition Leaders

On August 29, Belarusian border guards prevented two leaders of the
Brest chapter of the opposition Belarusian Social Democratic Party
"Gramada" (BSDP) from crossing the border into Ukraine.
Authorities pulled Brest regional BSDP Head Igor Maslovsky and his
predecessor, Georgiy Rutskiy, off their train to Kiev, searched
them, and seized their notebooks without explanation. The BSDP
leaders were permitted to board another train to Kiev later that
day. On August 21, border guards detained a group of BSDP youth
activists as they traveled to the Ukrainian city of Shatsk.

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International Relations
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8. Speaker of South African National Assembly to Visit Belarus

On August 29, South African National Assembly Speaker Baleka Mbete
accepted an invitation from Belarusian Foreign Minister Sergey
Martynov to visit Belarus. Martynov issued the invitation during
his four-day visit to South Africa for talks on economic and
political cooperation wth South African President Mbeki, Defense
Ministr Lekota, and Arts and Culture Minister Jordan. Jrdan and
Martynov signed an interstate agreementon artistic and cultural
cooperation.


9. Mayos of 27 CIS Cities to Attend Minsk Conference

O August 30, Minsk City Economic Committee Chief Vldimir Tishurov
announced the mayors of 27 citiesand vice mayors of 11 cities in
the Commonwealthof Independent States (CIS) are expected to attend
the tenth conference of the International Assembl of Capitals ad
Lrge Cities scheduled for Septmber 8 and 9. The conference
agenda includes sihtseeing, a visit to a Minsk commercial
exhibitin in front of the new building of the National Library,
and tours of municipal utilities. The Interational Assembly of
Capitals and Large Cities, wich is headed by Moscow Mayor Yuriy
Luzhkov, curently includes 59 cities in the CIS.


10. Belarsian Delegation Attends Conference on Nuclear Materials

On August 29, a Belarusian delegation attended an international
conference on nuclear materials control at Ukraine's Khmelnitski
nuclear power station. Other attendees in the conference included
experts and officials representing the European Union, Lithuania,
Russia, Sweden, Ukraine, the United States, and the International
Atomic Energy Agency (IAEA). Participants discussed proposals for
an international framework to control nuclear materials and IAEA
safeguards. The U.S. Department of Energy helped organize the
conference.


11. Belarus Ready to Send Aid to Lebanon, Lacks Airlift

On August 31, the Belarusian Emergency Management Ministry
expressed its readiness to send Lebanon humanitarian assistance
including diesel power generators, water purifiers, blankets, tents
and food. However, the Ministry noted that Belarus had no aircraft
for transporting the aid, but would turn to Russia for logistical
support.

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Trade and Investment
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12. Beltransgaz Assets to Be Appraised in October

On August 30, Belarusian First Deputy Prime Minister Vladimir
Semashko announced an appraisal of the assets of Belarus' gas
transport company will be conducted in October. According to
Semashko, the Dutch firm ABN Amro will estimate the upper and lower
limits of market prices for Beltransgaz. In 2003, Gazprom
announced its intention to buy 50 percent of Beltransgaz assets
after determining the net assets value. However, Beltransgaz
insisted on appraising the true market before agreeing to sell. In
May, Semashko had offered to sell Gazprom a controlling share of
Beltransgaz for a share of Russian gas production amounting to 12
billion cubic meters of gas per year.


13. BMZ Director General Endorses Union State

On August 30, Belarusian Steel Works (BMZ) Director General Nikolai
Andrianov urged Russia and Belarus to sign the Constitutional Act
on the Belarusian-Russian Union State as soon as possible. He said
the two countries should form one state in order to provide equal
conditions for Belarusian and Russian enterprises. He predicted
that equal prices for energy would result from the union, allowing
BMZ to increase its profits by seven or eight percentage points
above the current 20 percent.

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Domestic Economy
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14. Belarus Budget Surplus at 1.5 Percent of GDP

On August 31, Belarus' Ministry of Statistics posted a state budget
surplus of USD 297 million, or 1.5 percent of GDP, from January to
July. State budget revenues amounted to USD 7.2 billion during
that period. Profit tax revenues reached USD 449 million, while
VAT and excise revenues totaled USD 1.3 billion and USD 651
million, respectively. Meanwhile, foreign trade and foreign
economic activity revenues amounted to USD 521 million. State
budget expenditures reached USD 6.8 billion, 54.6 percent of the
GOB target for 2006. Total state expenditures and the budget
deficit for 2006 are projected at USD 12.5 billion and USD 608
million, respectively.


15. Belarus' Foreign Debt Down 1.1 Percent

On August 31, the Belarusian Ministry of Finance (MinFin) announced
that Belarus' state foreign debt decreased 1.1 percent in July to
USD 746.3 million as of August 1. The debt declined 4.8 percent
from January to July. As of August 1, long-term government debt
accounted for 69.6 percent of foreign debt, and short-term debt
totaled 4.3 percent. The GOB has set its foreign debt limit for
late 2006 at USD 2 billion. Belarus' largest creditors are
Germany, the World Bank, the United States, and Russia.


16. Belarus' Internal Debt Up 4.5 Percent

On August 31, the MinFin reported Belarus' nominal internal debt
increased 4.5 percent on the month in July to USD 1.8 billion as of
August 1. Nominal debt rose four percent from January to July
while real debt increased 0.4 percent. Internal debt decreased by
USD 69 million in during January to July, or 0.4 percent of GDP.
Belarus' state budget restricted the annual increase in internal
debt to 3 percent of GDP. Long-term debt and short-term government
debt amounted to 56.4 and 25.3 percent of all internal debt,
respectively.

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Quote of the Week
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17. During an interview about the recent death of the Lithuanian
vice consul in the western city of Brest, Belarusian Member of
Parliament Nikolai Cherginets warned other countries against
sending intelligence agents posing as diplomats to Belarus:

"Unfortunately, many countries do that. The country that sends an
intelligence officer as a diplomat into our country is risking its
image. So I can only say: whatever they want to do, let them do
that, we won't advise against that, but let me warn them: if any
intelligence officer of any country will act in Belarus against the
interests of our state, he will be treated accordingly."

Moore