EMBASSY MINSK WEEKLY POL/ECON REPORT - December 28, 2007

UNCLAS SECTION 01 OF 02 MINSK 001059

SIPDIS

SIPDIS

E.O. 12958: N/A
TAGS: PGOV PREL PHUM ECON ENRG BO
SUBJECT: EMBASSY MINSK WEEKLY POL/ECON REPORT - December 28, 2007


1. The following are brief items of interest compiled by Embassy
Minsk. The next weekly will come out January 11. Happy New Year!

TABLE OF CONTENTS

Civil Society
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- Authorities to Approve Undergraduate Matriculation (para. 2)
- Polish Catholic Priest Expelled from Belarus (para. 3)
- Youth Urge Political Prisoner Release (para. 4)

Domestic Economy
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- Tax benefits to support rural entrepreneurs (para. 5)
- Average wages fall in November (para. 6)

International Trade and Investment
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- Rumors of Major Asset Sales to Russia Denied (para. 7)
- Gazprom Leaves Price Formula for Belarus Unchanged (para. 8)
- Belarus' Largest Bank Seeks Foreign Investment (para. 9)

Quote of the Week (para. 10)
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Civil Society
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2. Authorities to Approve Undergraduate Matriculation

Education Minister Aleksandr Radkov announced plans December 25 to
require potential undergraduate students in public administration,
international relations, and journalism to present letters of
recommendation from special commissions under local executive
authorities. Radkov maintained the move would neither restrict
people's right to education nor violate any enacted legislation. He
also noted university administration should assess whether
undergraduate studies applicants could be enrolled for highly
responsible majors and professions. He called journalism a
"respected" profession and said journalists should feel
"responsibility" and "not propagate anti-governmental ideas."


3. Polish Catholic Priest Expelled from Belarus

Polish Catholic Priest Grzegorz Hudek left Belarus December 23 after
a deportation order against him was issued in November. Hudek
served over 14 years in Rechytsa, Gomel oblast, before receiving a
deportation order in November over his allegedly critical comments
in a Polish newspaper. Rechytsa religious affairs official Mikhail
Zhukevich claimed Hudek did not maintain "a dialogue with
authorities" and "spoke negatively about Rechytsa." He also stated
that deportation was "Hudek's personal problem" and not a sign of
"confrontation" with the church. Over 700 believers singed a
petition in vain urging the GOB to extend Hudek's registration in
Rechytsa.


4. Youth Urge Political Prisoner Release

Opposition youth staged a picket in central Minsk December 26 to
protest the sentencing of political prisoner Artur Finkevich
sentence to 18 months six days earlier. Police took away
Finkevich's portraits and briefly detained five demonstrators.
Picket organizers plan to continue such rallies across Belarus.
Finkevich intends to appeal the conviction and the sentence.

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Domestic Economy
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5. Tax benefits to support rural entrepreneurs

Lukashenko signed decree number 9 December 21 to provide tax
benefits and exemptions for businesses and individual entrepreneurs
registered and operating in rural areas. The decree comes into
effect on January 1, 2008 and will provide five-year exemptions from
profit and real estate tax, transfers to the innovation fund,
customs payments and VAT on equipment imported to contribute to
firms' charter funds. The decree also allows banks to issue up to
20,000 Euro loans without collateral to support investment projects
in rural areas. The decree does not apply to highly profitable
activities or to companies and entrepreneurs enjoying other
preference or benefits.


6. Average wages fall in November

Belarus' average pre-tax monthly pay dropped from USD 343 in October

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to USD 342 in November, according to the Ministry of Statistics.
The Ministry reported December 24 that the country's average real
pre-tax monthly salary in November feel by 2.4 percent from October.
However, year-on-year salaries rose 0.8 percent in real terms.

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International Trade and Investment
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7. Rumors of Major Asset Sales to Russia Denied

Belarus' Deputy Economy Minister Oleg Melnikov stated December 21
that the GOB has no plans to sell stakes in Naftan, one of the
country's two oil refineries, to foreign investors. One of Belarus'
few opposition newspapers, "Nasha Niva," wrote December 19 that
Russia's Lukoil would like to buy more than 50 percent of Naftan's
shares. The company performed poorly this year, with profitability
plunging from 27.1 percent in 2006 to just 1.5 percent. Melnikov
also dismissed rumors Belarus would sell any of the country's blue
chips to Russian companies in return for a USD 1.5 billion
stabilization loan, which Belarus received December 26.


8. Gazprom Leaves Price Formula for Belarus Unchanged

According to press services, Gazprom Chairman Alexey Miller held a
working meeting on December 21 with Belarus' Deputy Premier Vladimir
Semashko. The parties discussed gas supplies and related issues,
and reiterated their commitment to the four-year agreement signed
December 31, 2006. In echoing comments made by Vladimir Putin in
Minsk on December 14, Gazprom signaled GOB failure to minimize
further natural gas price increases in 2008.


9. Belarus' Largest Bank Seeks Foreign Investment

Vladimir Novik, Deputy Chairman of the Board of Belarus' largest
state-owned bank, Belarusbank, told Reuters December 24 that the
bank has plans to sell a stake of at least ten percent to a foreign
investor in 2008. Belarusbank, 99 percent owned by the government,
would prefer a major Western bank to a Russian bank as a strategic
partner, as state-of-the-art banking technologies and management
methods are still new in Russia, according to Novik. Belarusbank's
plans for 2008 also include issuing Eurobonds.

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10. Quote of the Week
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Deputy Prime Minister Ivan Bambiza told journalists he found a
silver lining in complaints by Belarusians that they cannot afford
certain "delicacies," such as cured meats. When people feel they do
not have enough money "that is normal. If a person feels
dissatisfied all the time by his salary, that's good. That means he
will always be motivated to earn more."

Moore