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 -------------- ¶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 -------------- -------------- ¶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? -------------- -------------- ¶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? -------------- -------------- ¶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