ENTREPRENEURS HOLD SMALL ANTI-GOB RALLY

C O N F I D E N T I A L SECTION 01 OF 02 MINSK 000216

SIPDIS

SIPDIS

E.O. 12958: DECL: 03/05/2017
TAGS: ECON PGOV BO
SUBJECT: ENTREPRENEURS HOLD SMALL ANTI-GOB RALLY

REF: A. 06 MINSK 292


B. 05 MINSK 295

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

Summary
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1. (C) On March 12, 300 small entrepreneurs, mostly market
vendors, gathered peacefully to protest new regulations.
Executive order number 760, in particular, would force all
but the smallest business to re-register and potentially
put many out of business. Despite the unanimous opposition
to the executive order, disagreements between would-be
small business leaders make mobilization of a larger mass
of entrepreneurs extremely difficult. A number of senior
opposition leaders participated. End summary.

Peaceful Protest Draws 300 Small Business Owners
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2. (C) On March 12, 300 people, mostly entrepreneurs,
gathered in Minsk's Bangalore Square to protest against
Lukashenko's executive order number 760 (described in
paragraph 4). The protest was organized by "Our Belarus,"
an NGO led by Igor Lednik, a former businessman who was
jailed for eight months in 1999 for alleged embezzlement,
and then again for ten days in the run up to the fraudulent
2006 presidential election (ref A). Aleksandr Makayev,
Chair of the Coordinating Council of Individual
Entrepreneurs in Minsk, told Deputy Pol/Econ Chief that
organizers had hoped for over 1,000 participants. Press
reported authorities detained at least one person en route
to the demonstration from Grodno.


3. (C) "Our Belarus" wants executive order number 760
declared unconstitutional, on the basis that Lukashenko was
not the lawful president when he signed the order.
However, Makayev admitted that most entrepreneurs dislike
it when "Our Belarus'" organizers try to explain to them
that the order should be overturned because Lukashenko's
rule is illegitimate. Small business owners feel such talk
is about politics, and they want to stick to purely
business issues, according to Makayev. While opposition
politicians did attend the rally, organizers kept the focus
on executive order number 760 and at the beginning asked
BSDP supporters to put away a banner calling for the
release of political prisoner Aleksandr Kozulin. [Note:
Poloffs saw former presidential candidate Aleksandr
Milinkevich, two Belarusian Social Democratic Party (BSDP)
deputies and former political prisoner Sergey Skrebets at
the demonstration, but not democratic coalition leaders
Anatoliy Lebedko and Vintsuk Vyachorka, who also attended
according to the press. End note.]

GOB Talks Up the Importance of SMEs while Destroying Them
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4. (C) While the government has publicly stated small- and
medium-sized enterprises must play a bigger role in the
economy, recent policy changes make it harder for SMEs to
survive. Executive order 760 forbids those registered as
individual entrepreneurs from employing more than three
people who are not immediate family members. In addition,
the regulation forbids market vendors from trading in
several lucrative categories of goods, including fur coats
and perfume. To make matters worse, local sales taxes
increased from two percent last year to ten percent (15
percent on imported items). Vladimir Karyagin, Chair of
the Minsk Capital Association of Entrepreneurs and
Employers, said his association told the government seven
percent was the absolute maximum most businesses would be
able to bear. Roman Osipov of the investment consultancy
Uniter told us it will take the GOB at least five years to
enact meaningful reforms to increase the percentage of
Belarus' GDP generated by SMEs.

As Usual, Opposition to the Regime is Divided
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5. (C) Karyagin and Belarusian Popular Front Deputy Ales
Mikhalevich had predicted a lackluster turnout at "Our
Belarus'" demonstration. Karyagin suggested a lack of
organizational skills by Our Belarus' publicist Sergey
Balykin indicated overall weaknesses in the organization.
Mikhalevich told Poloff that Lednik did not have broad
support among entrepreneurs.


6. (C) Our Belarus had no assistance from other

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organizations in preparing the demonstration. Lednik told
us others claiming to represent vendors, the NGO
Perspektiva's Chair Anatoliy Shumchenko (ref B) and United
Civic Party (UCP) activist Viktor Gorbachev, actively
opposed Our Belarus' efforts because they are intent on
political negotiations rather than demonstrations.
Gorbachev told Ambassador he is working instead on an
'economic constitution' under development by Karyagin's
organization. Mikhalevich said Shumchenko wanted to hold
off on rallying vendors until they were politicized by the
impending January 1, 2008 effective date of most of
executive order 760's provisions. UCP Deputy Lyudmila
Gryaznova countered that organizers of the March 25
demonstration on the anniversary of Belarusian independence
would like to have the support of vendors.

Comment: Opposition Unable to Tap Vendors' Frustration
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7. (C) It is important that domestic pressure, however
small, continues against Lukshenko's regime. Market
vendors are representative of the majority of Belarusians
who focus squarely on their pocketbooks when evaluating
policies and politicians. Attempts by Milinkevich and the
UCP to draw support from vendors would be encouraging if
they formed part of a broader strategy to incorporate
undecided voters into the opposition camp. Unfortunately,
entrepreneurs seem even more divided than the opposition as
a whole. Even if the opposition coalition could
successfully align with one group claiming to represent
small business, other groups and the majority of small
businessmen would likely stay outside the coalition.

Stewart