EMBASSY MINSK WEEKLY POL/ECON REPORT - FEBRUARY 22, 2007

UNCLAS SECTION 01 OF 02 MINSK 000160

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SIPDIS

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TAGS: PGOV PREL PHUM ECON EPET ENRG BO
SUBJECT: EMBASSY MINSK WEEKLY POL/ECON REPORT - FEBRUARY 22, 2007


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

TABLE OF CONTENTS

INTERNATIONAL RELATIONS
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- French Ambassador Seeks Belarus-EU dialogue (para. 2)
- Foreign Minister Martynov Visits India (para. 3)

CIVIL SOCIETY
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- Internet Cafes Mandated to Provide GOB Info on Users (para. 4)
- Opposition Activist Denied Early Release (para. 5)
- Fertilizer Factory Employees to Stage Protest (para. 6)

DOMESTIC ECONOMY
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- Producer Price Index Reaches Record High in January (para. 7)
- Finished Inventories Up 18.3 Percent in January (para. 8)

INTERNATIONAL TRADE AND INVESTMENT
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- Imports of Iranian, Venezuelan Oil via Baltic Ports (para. 9)
- Free Economic Zones Outperform Rest of Economy (para. 10)

QUOTE OF THE WEEK (para. 11)

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International Relations
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2. French Ambassador Seeks Belarus-EU dialogue

On February 21, during an interview with Belarusian independent
media, newly-appointed French Ambassador to Belarus Mireille Musso
expressed hope that France will help forge "real and fair dialogue"
between Belarus and the European Union. While suggesting that
Belarus could play a special role in the European family and could
participate in its activities, she stressed that Minsk must make
more progress in economic and democratic reform. She also noted the
need to improve the investment environment and adopt regulations
aimed at protecting business.


3. Foreign Minister Martynov Visits India

On February 22, Belarusian Foreign Minister Sergey Martynov arrived
in India for discussions on political and economic cooperation.
During the visit, Martynov is expected to meet with Foreign Minister
Pranab Mukherjee, Commerce and Industry Minister Kamal Nath, and
Indian business people interested in establishing ties with
Belarus.

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Civil Society
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4. Internet Cafes Mandated to Provide GOB Info About Users

On February 10, Prime Minister Sergey Sidorsky signed a decree
requiring internet clubs and cafes to submit information about the
web sites visited by their customers upon request from the
law-enforcement agencies. According to the decree, these
establishments must file electronic histories of the web sites and
make it available to the law-enforcement agencies within 12 months.
Managers will be held liable for granting minors access to
inappropriate information and must inform relevant security agencies
of any violations or misuse of computer equipment and software.


5. Opposition Activist Denied Early Release

On February 20, a parole board denied prominent opposition youth
leader Pavel Severinets early release on the grounds that he had not
taken the "correctional path." Severinets refused the conditions of
his release, put forth by the board, to plead guilty and make a
commitment not to commit the same crime in the future. He stressed
that the officials expected his reaction and only followed a
bureaucratic procedure to review his case, although by law he had a
right to be released some time ago. Sentenced to two years of
correctional labor in internal exile ("khimya") in May 2005,
Severinets is now working for a timber company located a small
village in northern Belarus. He is due for release in May.


6. Fertilizer Factory Employees to Stage Protest

On February 20, members of a branch of the Independent Trade Union
at the Soligorsk-based Potassium Fertilizer Factory submitted a

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petition signed by approximately 500 workers to the city authorities
for a permit to stage a rally on March 14. The labor union
activists demand higher wages for processing plant employees and
protest against existing problems with housing and draft amendments
to the social security (pension) law regulating retirement benefits.
According to the bill, employees of the retirement age who work in
hazardous conditions will receive pensions. Factory union leader
Nikolay Novik stated that the negotiations with the factory
administration have remained unsuccessful, and the labor union
intends to hold an information campaign to engage more people in the
protest. The factory management claims that it has not received a
single complaint and expects little support for the rally.

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Domestic Economy
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7. Producer Price Index Reaches Record High in January

On February 16, independent media reported that Belarus' producer
price index (PPI) jumped 12.6 percent in January but is not expected
to increase more than 14-16 percent by the end of the year. Higher
energy prices accounted for most of the hike, since Belarus' 2006
PPI was only 8.5 percent.


8. Finished Inventories Up 18.3 Percent in January

On February 19, Belarus' Ministry of Statistics and Analysis
reported that industrial enterprises' finished inventories rose 18.3
percent, or USD 1.4 billion worth of goods, in the first half of
January. As of February 1, this figure accounts for 57.4 percent of
the average monthly output, up from 53.2 percent one year ago.
Inventories of hosiery exceeded average monthly output by 252.8
percent. Of all the retail items, fertilizers accrued the smallest
inventories at 3.8 percent of monthly output.

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International Trade and Investment
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9. Import of Iranian, Venezuelan Oil via Baltic Ports

On February 21, Belarus Deputy Prime Minister Vladimir Semashko
announced that Belarus plans to use ports in the Baltic for
importing Iranian and Venezuelan oil. Belarus recently started oil
exploration in Iran and Venezuela, but extraction is not expected
for at least three to four years. Experts believe that until
extraction begins, there is little incentive to import oil via the
Baltic since Russian oil remains a cheaper alternative, despite
Russia's recently introduced USD 53 export duty.


10. Free Economic Zones Outperform Rest of Economy

On February 16, Belarus' Ministry of Statistics and Analysis
reported that the 269 companies registered in Belarus' six free
economic zones (FEZ) increased their production by 41.8 percent to
USD 1.3 billion in 2006, an increase that far exceeded the overall
national rate. The FEZ companies exported USD 804.5 million in
furniture, foodstuffs, packing materials, aluminum products,
refrigerators and other products, mainly bound for Russia. Their
USD 804.7 million worth of imports came primarily from outside the
CIS and included production equipment, aluminum, plastic goods, fish
and seafood and lumber.

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Quote of the Week
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11. On February 16, former opposition presidential candidate
Aleksandr Milinkevich told independent media:

"Today, Belarus is a number one problem in Europe, and the front
pages of many newspapers in Europe cover the situation in our
country. It is a tribute to all those people who are reminding the
world that human rights in Belarus are violated, free elections are
non-existent, and independent press is extinct. I call upon all
Belarusians and friends of our country to pray for early release of
all Belarusian political prisoners and for the restoration of
democracy in Belarus."

Stewart