EMBASSY MINSK WEEKLY POL/ECON REPORT - JANUARY 5, 2007

UNCLAS SECTION 01 OF 03 MINSK 000018 SIPDIS SIPDIS E.O. 12958: N/A TAGS: PGOV PREL PHUM ECON EPET ENRG BO SUBJECT: EMBASSY MINSK WEEKLY POL/ECON REPORT - JANUARY 5, 2007 ¶1. The following are brief items of interest compiled by Embassy Minsk. TABLE OF CONTENTS ELECTIONS -------------- - Prosecutor Not to Investigate Election Fraud (para. 2) DOMESTIC ECONOMY -------------- - Finance Ministry to Adjust 2007 Budget (para. 3) - Belarus Worst Country for Taxpayers (para. 4) - Baranovichi Fabric Factories May be Privatized (para. 5) INTERNATIONAL RELATIONS -------------- - GOB Condemns Saddam's Hanging (para. 6) - Suspected Belarusian Spy Appeals Extradition (para. 7) INTERNATIONAL TRADE AND INVESTMENT -------------- - Belarus Suspends Russian Oil Contracts (para. 8) - Russia to Supply Belarus With Electricity (para. 9) - Russian Customs Suspends Belarusian Sugar Release (para. 10) CIVIL SOCIETY -------------- - Kozulin Seeks Common Opposition Policy on Russia (para. 11) - Pro-GOB Youth Picket Russian Embassy (para. 12) - Polish Community Member Appeals Criminal Charge (para. 13) - Roman Catholics Hunger Strike (para. 14) - Opposition Youth Leader Awarded Literary Prize (para. 15) - Former Parliamentary Candidate Charged (para. 16) - QUOTE OF THE WEEK (para. 17) -------------- ELECTIONS -------------- ¶2. Prosecutor Not to Investigate Election Fraud On January 4, the Prosecutor General's Office notified United Civic Party chairman Anatoliy Lebedko that it had rejected his appeal to launch an investigation over Aleksandr Lukashenko's statement that the 2006 presidential election was rigged. The Prosecutor General's Office wrote that it did not have evidence of election falsification. -------------- DOMESTIC ECONOMY -------------- ¶3. Finance Ministry to Adjust 2007 Budget On December 29, newly appointed Deputy Finance Minister Vladimir Amarin announced that the Finance Ministry is prepared to amend the 2007 State Budget Law to take into account the increase in the price of Russian gas. The Finance Ministry made the country's 2007 budgetary estimates in July and August 2006 based on government's projections for a maximum 15-percent rise in the price of Russian gas. Amarin also said the Ministry plans to use USD 560 million of the National Development Fund, which receives extra taxes from the best performing enterprises. ¶4. Belarus Worst Country for Taxpayers On December 28, independent media reported international audit experts naming Belarus as the worst country for taxpayers. PricewaterhouseCoopers and the World Bank Group compared the level of tax rates and tax collection methods across 175 economies. In Belarus, companies are subject to 12 taxes on inputs and outputs and make approximately 125 payments to three agencies by paper, spending an average of 1,188 hours. Tax refunds take up to two years to process and despite the many deductions and exemptions, in extreme cases companies' payments can add up to 186 percent of profits causing 42 percent of business activity within the country to go unrecorded. ¶5. Baranovichi Fabric Factories May be Privatized On December 31, President Aleksandr Lukashenko tasked the government with privatizing a group of cotton fabric factories in Baranovichi, Brest region. The Minsk-based private lingerie company, Serge, would receive control of the factories. MINSK 00000018 002.2 OF 003 -------------- INTERNATIONAL RELATIONS -------------- ¶6. GOB Condemns Saddam's Hanging On December 31, the Belarusian Foreign Minister's "Special Representative for relations with European Parliamentary Organizations" Sergey Gaydukevich condemned the execution of Saddam Hussein as a hasty lynching. In 1982 and 1983, Gaydukevich served as a Soviet military "expert" in Iraq. Gaydukevich claimed that the execution would prove a symbol towards further struggles against the United States and increase tension within the divided nation. ¶7. Suspected Belarusian Spy Appeals Extradition On January 2, the lawyer for Sergey Monich, a Belarusian citizen wanted in Poland for alleged espionage, filed an appeal against his extradition from Lithuania. The Vilnius County Court approved extraditing Monich to Poland in accordance with the European Convention on Extradition and Lithuanian regulations after authorities arrested him in Vilnius on November 25 on suspicion of spying against Poland. -------------- INTERNATIONAL TRADE AND INVESTMENT -------------- ¶8. Belarus Suspends Russian Oil Contracts On December 30, the Belarusian State Petrochemical Industry Concern (Belneftekhim) suspended all 2007 contracts with Russian oil companies, stating that the economy will suffer huge losses if Belarusian companies continue buying oil from Russia. Russia imposed an export duty of USD 180.1 per ton on crude oil delivered to Belarus as of January 1. ¶9. Russia to Supply Belarus With Electricity On January 3, Belarusian State Energy Concern aide Vladimir Korduba announced that Russia's national power utility has contracted to supply Belarus with 3.5 billion kilowatt-hours of electricity this year for an undisclosed value. This statement contradicts a public comment by Russian Ambassador Aleksandr Surikov in November 2006 that Russia would not sell electricity to Belarus in 2007 due to increased domestic use. ¶10. Russian Customs Suspends Belarusian Sugar Release On January 3, Belarusian State Food Industry Concern (Belpisheprom) Head Ivan Danchenko said that the customs clearance of Belarusian sugar heading for Russia was again suspended on December 29. Belarusian sugar producers have been experiencing customs delays as the Russian Union of Sugar Manufacturers complained that the sugar was made from imported raw cane sugar instead domestically refined sugar beets. Belarusian sugar producers claim losses of approximately USD 2 million and 50 percent of their sales due to the delays. -------------- CIVIL SOCIETY -------------- ¶11. Kozulin Seeks Common Opposition Policy on Russia On December 30, imprisoned former presidential candidate Aleksandr Kozulin urged Belarusian opposition forces to present Moscow with a common opposition strategy for Belarusian relations with Russia. The previous day, Kozulin's wife Irina denied media reports that her husband was hospitalized. She stated that although he was examined at the Vitebsk Regional Hospital in connection with his recent hunger strike, authorities returned him to the prison the same day. Kozulin conducted his hunger strike from October 20 through December 11 to protest the illegal reelection of Aleksandr Lukashenko for a third term and draw the UN Security Council's attention to the situation in Belarus. ¶12. Pro-GOB Youth Picket Russian Embassy On December 29, 50-60 pro-government Belarusian National Youth Union activists picketed the Russian embassy in Minsk displaying Belarusian and Russian flags and chanting to protest an expected rise in the gas price for Belarus and a possible gas cutoff. The protesters, who played to state media, displayed posters with various anti-Gazprom and pro-Union State slogans. ¶13. Polish Community Member Appeals Criminal Charge On December 29, the lawyer for Mieczyslaw Jaskiewicz, an activist MINSK 00000018 003 OF 003 from the Polish community in Belarus, appealed to drop a hooliganism charge in connection with a November 5 fight. The appeal claimed that the client's actions had not constituted any crime and the witnesses' reports contradicted each other. Authorities failed to notify Jaskiewicz of the charge against him until December 27. ¶14. Roman Catholics End Hunger Strike On December 28, Roman Catholics in the village of Lazduny, Grodno region, went on a hunger strike to protest the authorities' refusal to extend the Belarusian visa of Polish priest Mariusz Iliaszewicz. The priest has served the community for 13 years. The parishioners suspended the hunger strike on December 31 after learning that Grodno Regional Executive Committee chair Vladimir Savchenko had agreed to discuss their demands. On January 3, the Roman Catholic community e-mailed a letter to Aleksandr Lukashenko asking him to extend their priest's visa. (On September 20, 2006, authorities refused to extend the visas of 12 Roman Catholic priests in the Grodno Diocese, citing the need to provide young priests with positions.) ¶15. Opposition Youth Leader Awarded Literary Prize On December 29, independent media reported that the Belarusian PEN Board awarded the 2006 Ales Adamovich Literary Prize to convicted opposition youth leader Pavel Severinets for his recent series of stories "Letters from the Forest" published by the private newspaper "Nasha Niva." Severinets was sentenced to three years of restricted freedom in May 2005 for staging unauthorized demonstrations against the fraudulent 2004 parliamentary elections. ¶16. Former Parliamentary Candidate Charged On January 3, authorities brought a formal charge of resisting police against Konstantin Lukashov, a candidate in Belarus' 2004 parliamentary elections. Authorities charged Lukashov on his 15 day of detention in connection with a police attempt to arrest his half-brother prominent opposition activist Vyacheslav Sivchik, on March 29. Plainclothes police flashing police ID cards attempted to arrest Sivchik as he was leaving the hospital in Minsk, saying that he had been charged with disorderly conduct. -------------- QUOTE OF THE WEEK -------------- ¶17. On January 1, during his traditional New Year's address to the nation President Aleksandr Lukashenko warned the Belarusian people: "We should be ready for having to make difficult and unusual decisions because those seeking to grab little morsels of property in Belarus will not abandon their attempts to break us economically and politically." MOORE