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

UNCLAS SECTION 01 OF 03 MINSK 000261 SIPDIS SIPDIS E.O. 12958: N/A TAGS: PGOV PREL PHUM ECON EPET ENRG BO SUBJECT: EMBASSY MINSK WEEKLY POL/ECON REPORT - MARCH 22, 2007 ¶1. The following are brief items of interest compiled by Embassy Minsk. TABLE OF CONTENTS INTERNATIONAL RELATIONS -------------- - German MP Zapf Seeks Dialogue with Regime (para. 2) - GOB Delegation Arrives in Venezuela (para. 3) - New Ukrainian Ambassador Meets Foreign Minister (para. 4) CIVIL SOCIETY -------------- - Supreme Court Defies UNHCR Decision (para. 5) - Police Arrest Opposition Malady Front Activist (para. 6) - Polish Reporter Jailed for 10 Days (para. 7) INTERNATIONAL TRADE AND INVESTMENT -------------- - GOB Offers Russian Oil Traders 90 Percent Subsidy (para. 8) DOMESTIC ECONOMY -------------- - First Nationalization of 2007 (para. 9) - GOB Tightens E-Commerce Regulations (para. 10) - Belarus' 2006 Tax burden Down One Percent from 2005 (para. 11) SOCIETY -------------- - Protestors Demand Return of Former Monastery (para. 12) QUOTE OF THE WEEK (para. 13) -------------- INTERNATIONAL RELATIONS -------------- ¶2. German MP Zapf Seeks Closer GOB and Opposition Relations On March 16, Head of the OSCE Parliamentary Assembly's ad hoc group on Belarus and German MP Uta Zapf called for better relations between the government and the opposition during an OSCE workshop in Minsk. Zapf lauded the Belarusian government for permitting "opposition" politicians and NGO representatives to participate. Although attending GOB officials insisted that "all is right" in Belarus, she described their participation as a sign of progress insofar as they sat down together with critics of the government. Democratic opposition members expressed objections to her visit. In a briefing with OSCE diplomats before her departure from Minsk, she reluctantly acknowledged having made no true progress. ¶3. GOB Delegation Arrives in Venezuela On March 19, Security Council State Secretary Viktar Sheyman led a GOB delegation to Venezuela for seven days of talks. Sheyman is expected to meet with Venezuelan President Hugo Chavez and other government officials to discuss political, military, and economic cooperation, including oil production, refining, power generation, construction and agriculture. In July 2006, Chavez visited Minsk to discuss long-term strategic partnerships. In September 2006, a Belarusian delegation signed technical and defense agreements that would reportedly total more than USD 1 billion if implemented. ¶4. New Ukrainian Ambassador Meets Foreign Minister On March 21, newly appointed Ambassador of Ukraine to Belarus Ihor Likhovyy presented copies of his credentials to Foreign Minister Sergey Martynov. However, the Ukrainian Embassy indicated that it remains unclear whether President Lukashenko will receive Likhovyy. Ukrainian President Viktor Yushchenko appointed Likhovyy, a former Minister of Culture and Tourism, as Ambassador to Belarus in early February. The position had been vacant since May 2006. Born on June 12, 1957, Likhovyy headed the Kanev Nature Reserve between 1989 and 2005 and served as Minister of Culture and Tourism between October 2005 and November 2006. -------------- CIVIL SOCIETY -------------- ¶5. Supreme Court Defies UNHCR Decision On March 17, independent media outlets reported that the Supreme Court refused to examine the GOB's non-compliance with the UN Human Rights Council's (HRC) ruling to allow the liquidated regional NGO Civil Initiatives to resume its activities. After the GOB took no MINSK 00000261 002 OF 003 steps to follow the HRC's decision, NGO activists filed a complaint with the Supreme Court. The HRC ruled that the forced closure in June 2003 was illegal, inconsistent with Belarus' commitments under international treaties, and mandated the GOB to provide compensation to Civil Initiatives Head Viktor Korniyenko. Korniyenko intends to file another complaint. ¶6. Police Arrest Opposition Malady Front Activist On March 21, police arrested Malady Front opposition leader Boris Goretskiy on suspicion of acting on behalf of an unregistered organization. On March 13, BKGB officers conducted searches of his apartment and that of his parents. If found guilty, Goretskiy faces up to two years in prison. ¶7. Polish Reporter Jailed for 10 Days On March 21, Judge Natalya Kozel in the western city of Grodno sentenced Igor Bantsyr, a reporter for the independent Polish-language magazine "Magazyn Polski na Uchodzstwie," to 10 days in prison for "uncensored swearing" in public. Bantsyr denies the accusation. The magazine's editor, Andrey Pochobut, contended that the authorities sought to prevent Bantsyr from reporting on how the arresting officers harassed bystanders the previous evening. Bantsyr has written several recent articles critical of local authorities in the magazine, which is distributed to the Belarus' ethnic Polish minority. -------------- INTERNATIONAL TRADE AND INVESTMENT -------------- ¶8. GOB Offers Russian Oil Traders 90 Percent Subsidy According to independent media, the GOB informally announced on March 14 it would provide Russian oil traders selling crude on a tolling basis with a subsidy of 90 percent of Russia's USD 53 export duty for Belarus. The parties reached the agreement on export duties in early in 2007 following Russia and Belarus' tense energy standoff. The accord reportedly made crude oil shipments for refining on a tolling basis unprofitable. -------------- DOMESTIC ECONOMY -------------- ¶9. First Nationalization of 2007 On March 20, the GOB issued a resolution to apply the "golden share rule" to a furniture factory in the Minsk region. The rule allows authorities to seize property, except for banks, if the government owned at least one share at any time. Russian investors' share in the factory is 40 percent, while the GOB holds only 19 percent. The reasoning provided by the government for Belarus' first application of the golden share rule in 2007 was typical; poor management and economic losses. Press reports the Securities Department of the Ministry of Finance has submitted a proposal to abolish the golden share rule. ¶10. GOB Tightens E-Commerce Regulations On March 19, the GOB implemented new regulations that require Belarusian e-trade retailers to register a domain name in the domain address space with the State Center for Information Security under the President. The new regulations do not establish procedures for domain name extensions. Trade Ministry officials claim that new measures aim at securing consumers' rights, economic interests of Belarus, and target shadow imports and tax evasion. ¶11. Belarus' 2006 Tax Burden Down One Percent from 2005 Belarus' Tax Ministry announced on March 14 that the share of taxes in Belarus' GDP in 2006 decreased 0.9 percent on the year to 42.8 percent. Taxes, social insurance payments and tariffs totaled 30 percent, 11.7 percent, and 1.1 percent of GDP respectively. Indirect taxes (VAT, sales, excise),direct taxes (income, profit, and real estate),and miscellaneous taxes (land, ecology and innovation fund payments) made up 17.8, 9.2, and 4.1 percent of GDP respectively. -------------- SOCIETY -------------- ¶12. Protestors Demand Return of Former Monastery On March 20, approximately 130 members of the St. Joseph Roman Catholic community gathered for prayers at a former Bernardine monastery in the center of Minsk, which currently houses the State Archives. Since learning in 2004 that local authorities plan to MINSK 00000261 003 OF 003 transform the building into a five-star hotel, the community has been organizing daily prayers in front of the building. Since March 7, they have collected more 3,000 signatures to petition President Lukashenko to return the monastery to the community. -------------- QUOTE OF THE WEEK -------------- ¶13. On March 19, the Supreme Certification Commission officially rejected a dissertation on post-WWII Belarus by dissident Belarusian State University doctoral candidate Irina Kashtalyan on the following grounds: "The material is intended to lead the reader to the conclusion that the Soviet state was not a natural mother but an evil, heartless stepmother for the Belarusian people and that the operation of this monster state contravened human nature." Stewart