LUKASHENKO'S ANNUAL SPEECH FOCUSES ON

UNCLAS SECTION 01 OF 02 MINSK 000349

SIPDIS

SENSITIVE

SIPDIS
KYIV ALSO FOR USAID

E.O. 12958: N/A
TAGS: PGOV PREL ECON PHUM BO
SUBJECT: LUKASHENKO'S ANNUAL SPEECH FOCUSES ON
ECONOMIC AND ENERGY INDEPENDENCE

Summary
--------------


1. (U) In his annual address to the Belarusian parliament,
President Lukashenko announced plans to prevent future
energy crises, which include diversifying Belarus' energy
supplies, building a nuclear power plant, and encouraging
Belarusians to be thriftier. Naming China as Belarus'
number one international ally, Lukashenko called for a
multi-faceted foreign policy, including normalized
relations with Russia, the EU and the U.S. and closer
cooperation with CIS and Non-Aligned Movement nations. End
summary.

Belarus Must Diversify Energy Resources
--------------


2. (U) In his annual address to the National Assembly and
Belarusian people on April 24, President Aleksandr
Lukashenko stated that Belarus must diversify its energy
resources in order to prevent future energy crises. The
president announced that Belarus will continue to purchase
energy supplies from Russia but will look into developing
oil production and refining projects with countries that
have significant energy deposits such as Iran and
Venezuela. Additionally, Lukashenko presented plans to
create a state oil exporting company, modeled after the
state potash company Belaruskaly, which ostensibly would
eliminate intermediary retailers, increase state profits,
and improve domestic oil refineries' system of buying and
selling of oil products.

Nuclear Power Plant Construction a Certainty for Belarus
--------------


3. (U) Lukashenko reaffirmed Belarus' plans to build a
nuclear power plant. While not ruling out Russia as the
possible builder, Lukashenko explained that Belarus will
hold an open international competition to select the
safest, yet cheapest bid proposal to construct the nuclear
power plant. He ridiculed the EU's strategy of offering
assistance in the energy sector in exchange for
democratization and warned the opposition not to capitalize
on the GOB's decision to build a nuclear power plant to
gain political ground.

Belarusians Need to be More Economical
--------------


4. (U) Noting that Belarus is not a rich country,
Lukashenko implored Belarusians and Belarusian companies to
adopt the "principle of frugality" to facilitate economic
growth. He mandated that Belarus must cut its energy
consumption by six or seven percent in 2007 and by 50
percent by 2015. The president also suggested creating
energy servicing companies to monitor energy consumption
and develop energy saving programs.


5. (U) Lukashenko warned existing Belarusian oil companies
that they will have to carry some of the burden for the
high export duties on foreign oil and should not expect to
be reimbursed from the state budget. Since he plans to
significantly decrease state subsidies to businesses,
Lukashenko also told entrepreneurs to find ways to lower
costs and become more economical.

Belarus Must Pursue a Multi-Faceted Foreign Policy
--------------


6. (U) Lukashenko announced Belarus' plans to pursue a
multi-faceted foreign policy. He named China as Belarus'
number one international ally, praising the strong economic
and investment ties between the two countries and the
almost one billion dollars of bilateral trade in 2006.
Lukashenko discussed cooperating with Ukraine to develop
secure reliable energy supply routes, launching joint
projects in several spheres with Azerbaijan, and increasing
cooperation with Kazakhstan and Non-Aligned Movement member
nations. He also noted that Belarus is interested in
developing normal, mutually-beneficial relations with the
U.S. and EU but warned that "Belarus would not be dictated
to."


7. (U) While asserting that Belarus must exert every effort
to maintain its independence, Lukashenko also called for

MINSK 00000349 002 OF 002


the normalization of relations with Russia. He conceded
that the gas and oil crisis had hindered the development of
a Belarusian-Russian Union State, but he urged both
countries to seek compromise and rid themselves of
ambitions and distrust.

Independent Media Should Abide By Regulations
--------------


8. (U) During a brief question and answer session, a deputy
asked Lukashenko about the future of independent media in
Belarus. The president stressed that he does not oppose
the existence of independent "opposition" media, so long as
they are "fair and just in their reporting" and operate
within the framework of existing Belarusian law. He warned
that any paper that knowingly prints false or unverified
information would not be allowed to publish in Belarus.

Comment
--------------


9. (SBU) Lukashenko's strong emphasis on diversifying the
country's energy resources, constructing a nuclear power
plant and strengthening relations with oil rich countries
underscores his determination to minimize Belarus'
dependence on Russian energy. Lukashenko's renewed calls
for normal relations with Russia and a multi-faceted
foreign policy may indicate his growing realization that
Belarus cannot survive in isolation.

STEWART