RUSSIAN AMBASSADOR ON REFORM IN BELARUS: FREE

C O N F I D E N T I A L SECTION 01 OF 02 MINSK 001061

SIPDIS

SIPDIS

E.O. 12958: DECL: 12/27/2017
TAGS: PREL ECON PINR BO RS
SUBJECT: RUSSIAN AMBASSADOR ON REFORM IN BELARUS: FREE
MARKET FIRST

REF: A. MINSK 1035

B. MINSK 1024

C. MINSK 1032

D. 06 MINSK 1231

E. MOSCOW 4315

Classified By: Charge Jonathan Moore for reasons 1.4 (b) and (d).

Summary
--------------


1. (C) Ambassador met December 19 with Russian Ambassador
Aleksandr Surikov to compare notes on recent Presidential
interactions with Belarus -- the December 7 White House
meeting with a delegation of Belarusian opposition leaders
and the December 13-14 visit to Minsk of Vladimir Putin.
Surikov, who offered no insight into key Lukashenko-Putin
discussions, stated that "reforming" Belarus' state-run
economy is Russia's highest bilateral priority. In the midst
of candid remarks referring directly to "political prisoners"
in Belarus -- whose release the Russians claim to have
advocated to the GOB -- and the "totalitarian" nature of the
regime, Surikov confirmed that the price for natural gas of
USD 119/tcm is guaranteed only for the first quarter of CY
2008 and could go up afterwards. End summary.

Belarusians visit Washington...
--------------


2. (C) Ambassador began the meeting by giving Surikov a
precis of the December 3-8 travel to Washington of a
seven-member delegation made up of Belarusian opposition
political leaders and NGO activists (ref A). She explained
the USG's continuing interest in respect for human rights in
Belarus, including hopes for free and fair elections and more
freedom for the independent media. With the December 13-20
hospitalization of 19-year-old "Malady (Young) Front" leader
Dmitriy Fedaruk -- beaten while protesting against Putin's
visit (ref B) -- as a backdrop, Ambassador noted Fedaruk's
interaction with President Bush in the Oval Office on faith
and youth activities.


3. (C) Surikov seemed uninterested and did not inquire about
the specifics of the opposition visit, choosing only to state
"democracy cannot exist without a middle class," and that
therefore economic reform -- under Russian guidance and a
main reason for Putin's visit (ref C) -- is the only way to
address the political situation in Belarus.

...and Putin visits Belarus
--------------


4. (C) In the context of Putin's December 13-14 visit,
Surikov began a lengthy presentation on Russian largesse
towards Belarus by decrying the Lukashenko regime. He
criticized the authorities for "applying force" and for
blocking "free information." In contrast, Surikov cited
Poland and the Baltic states as positive examples of
democratic transitions supported by economic reforms, and
added that Germany would not now be a democracy without the
Marshall Plan. Therefore, he said, Russia would help
facilitate movement towards a free market economy, as "this
is our contribution to democracy." Surikov noted that the
USD 1.5 billion credit to Belarus confirmed during the Putin
visit was part of their strategy: "We do this hoping that
Belarus will not become more totalitarian."


5. (C) Surikov observed in passing that Russian-Belarusian
political cooperation, including long-term joint military and
border control efforts, remained on track. With the
Belarusian opposition in mind, he argued that "using force"
will not bring democracy, when there is only a "narrow level"
of Belarusian society that is currently interested in
democratic reform. Admitting the existence of political
prisoners and the importance of progress towards their
release, Surikov opined that "if they release them, they will
just arrest others."


6. (C) Ambassador responded to Surikov, explaining that USG
would continue to insist on political progress before any
improvement in relations is possible. The Russian Ambassador
was clearly fixated on his economic points, stating rather
oddly that the USD 1.5 billion credit was "not help to the
Belarusian government, but help to the Belarusian economy",
but conceded that "the people of Belarus have to understand
that democracy brings success."


7. (C) Similar views were offered to A/DCM December 26 by
Counselor Vladimir Pavlovich Pavlenko, head of the Russian
Embassy's political-internal section for bilateral relations.
Pavlenko reiterated that that Russia was interested in
evolution in Belarus, particularly in the economic sphere,

MINSK 00001061 002 OF 002


rather than in revolution. (Note: When A/DCM noted that
Western insistence on freedom for the six political prisoners
was hardly "revolutionary," Pavlenko responded that the
Russian Embassy had urged GOB contacts to "be the bigger men"
and release the prisoners, but the request had been shrugged
off. End note.) Pavlenko said that as part of the Putin
visit Belarus had appealed for a large cash subsidy -- "like
the U.S. gives Israel" -- but that such aid had been refused.
Pavlenko characterized the USD 1.5 billion loan granted to
Belarus as an investment in regional stability, hinting that
a future USD 2 billion loan could be conditioned by the
ability of Russian interests to purchase controlling stakes
in GOB-owned energy firms like Naftan or the Mozyr refinery
(of which Russian firms already control 42 percent).

Natural Gas Prices
--------------


8. (C) In response to the Ambassador's question, Surikov was
very intent on noting that the USD 119/tcm price was for the
first quarter of 2008 only, and that it could rise as soon as
April 2008. The price would continue to rise over time as
previously agreed, with targets of 67 percent of the world
price in 2008, 80 percent in 2009, 90 percent in 2010, and
100 percent in 2011.

Atmospherics
--------------


9. (C) Surikov, courtly and heavy-lidded, remained in the
Ambassador's office for nearly two hours and noted with
relief that he was returning to his native Altai region for
the holidays. He was somewhat more relaxed and open than in
his first meeting with the Ambassador (ref D),where his
predictions of gas prices turned out to be fully on target.
Surikov's harsh comments on Belarus and other interesting
asides -- including a comment that "in Russia, we have far
from a perfect democracy" -- were not recorded by the
diplomats (Senior Counselor Vladimir Tararov and Attache
Nataliya Filipova, Surikov's assistant and English-language
interpreter) who accompanied him and otherwise took copious
notes.

Comment
--------------


10. (C) The Russian Ambassador's core message -- Belarus
needs economic reform first and foremost -- is not new; it
has been discussed by lower Russian officials before (ref E).
It is nevertheless striking to see the resident Russian
Ambassador embrace the idea in such an evangelical fashion.
While Russian interest has been expressed in energy sector
assets -- such as those connected to transit of natural gas
and production of oil products -- it seems unlikely to us
here that any Muscovite oligarch is champing at the bit to
acquire Belarusian television or refrigerator factories, or
that the ridiculously subsidized Belarusian agricultural
sector is a tempting target. There would be merit in
removing the profits of state-controlled businesses from the
Belarusian regime -- hence recent USG sanctions against
GOB-owned energy conglomerate Belneftekhim -- although
Lukashenko-controlled privatization in the name of reform
could give the dictator a huge if short-term economic
windfall. (It is worth noting that Russian bidders would
likely be the best-funded and most interested participants
even if privatization of GOB state assets were fully
transparent, a fact some of the democratic opposition are
reluctant to acknowledge.) In any case, current economic
problems here -- which will not be solved by stop-gap Russian
loans -- continue to be a long-term factor in weakening the
regime, one we can continue to exploit with our own (and
European) political and economic pressure.
MOORE