AMERICAN BUSINESSES WARY OF COZYING UP TO DICTATOR

C O N F I D E N T I A L SECTION 01 OF 02 MINSK 000161

SIPDIS

SIPDIS
KYIV FOR STEFFENS

E.O. 12958: DECL: 02/22/2017
TAGS: ETRD PGOV PREL BO
SUBJECT: AMERICAN BUSINESSES WARY OF COZYING UP TO DICTATOR


Classified By: Ambassador Karen Stewart for reason 1.4 (d).

Summary
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1. (C) Executives from two American businesses, Microsoft and
American Express Bank, asked post about the advisability of
expanding their presence in Belarus. Microsoft asked for
advice on which GOB officials were off-limits, and on whether
to move forward with talks on upgrading the regime's
communication systems. American Express Bank (Amex)
representatives sought guidance on whether they should
continue to compete in the foreign currency payments business
given the possibility of sanctions under the Belarus
Democracy Reauthorization Act (BDRA). Post's advice to
business people has been consistent: given the absence of the
rule of law, the possibility of expanded sanctions, and the
unpredictability of the regime, this is not the time to
initiate or expand business in Belarus. End summary.

Microsoft: Support for Lukashenko Bad Career Move
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2. (C) Valery Lanovenko, the General Manager of Microsoft's
Kiev office, which also covers Belarus, told Deputy Pol/E
Chief that he met with the GOB's Minister of
Telecommunications to discuss a possible contract to upgrade
IT systems for the government. Lanovenko said the program
would cover all government ministries. He expressed concern
that ministries directly responsible for repression would
increase their capacity if the deal went through, but also
noted if Microsoft declined a competitor would likely get the
job. Lanovenko was admittedly worried that possible press
reports about Microsoft allegedly backing a dictator would
damage his future career prospects.


3. (C) Lanovenko also noted Microsoft was considering
Belarusian ministers to invite to an annual government
leaders conference. He mentioned the Minister of Education
as a possibility. Post advised Minister Radkov (who is on
the visa ban list) might not be the best choice as
educational institutions had expelled students for exercising
their right to free speech.


4. (C) Lanovenko said Microsoft was in the initial stages of
exploring whether to open a representative office in Minsk,
in part to promote respect for intellectual property rights.
Belarusian law specifies that legal cases for selling
counterfeit goods can be pursued only if the copyright or
patent holder presses charges. Microsoft remains unclear
whether they could press charges absent an official presence
in Belarus. (Note: Currently an employee of Microsoft's
Moscow office works in Minsk, but he has no legal standing as
a Microsoft representative in Belarus. End note.) Deputy
Pol/E Chief informed Lanovenko few American businesses had
established an official presence in Belarus since Lukashenko
came to power. Furthermore, with BDRA sanctions possibly on
the horizon and the continuing unpredictability of the
Lukashenko regime, this was a potentially risky time to set
up operations.

American Express Bank: Does Business in Belarus Make Sense?
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5. (C) Catherine Tibault and Marina Drevetskaya, Chair and
Corporate Client Representative, respectively, for Amex's
Moscow branch, traveled to Belarus to ask Ambassador about
the possible impact of BDRA on their operations. Drevetskaya
said Amex had received many calls from its partners asking
for the bank's assessment of whether the law increased risk
to international bank transactions. Amex has the majority of
the USD payments business, but would rather take a loss now
than expand significantly and have to take a bigger loss
later. Tibault explained the company values its reputation
above short-term profit. Tibault and Drevetskaya seemed to
take seriously Ambassador's suggestion to exercise caution
because the extent of new sanctions, if any, was impossible
to predict at this point.

Comment: Who Benefits from Western Business in Belarus?
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6. (C) Belarus is certainly not a huge market all serious
players need to enter a la China. However, Microsoft and
Amex represent the multinational service industries that a
post-Lukashenko, free market Belarus could hope to attract in
greater volume. While the threat of sanctions has increased
their sensitivity to engaging the regime, the executives

MINSK 00000161 002 OF 002


already were conscious of the need to keep a safe distance
from Lukashenko. Their companies' current interest in
Belarus to a large extent reflects the ability of leaders in
the banking sector and a nascent IT park to secure more
independence from the government than other segments of the
economy.
Stewart