MR. AHMADINEJAD COMES TO MINSK MAY 21

C O N F I D E N T I A L SECTION 01 OF 02 MINSK 000416

SIPDIS

SIPDIS

E.O. 12958: DECL: 05/18/2017
TAGS: PREL PGOV ECON EPET BO IR
SUBJECT: MR. AHMADINEJAD COMES TO MINSK MAY 21

REF: MINSK 104

Classified By: Charge Jonathan Moore for reason 1.4 (d).

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


1. (C) Iranian President Ahmadinejad will pay a two-day visit
Minsk starting May 21. Post understands Tehran will seek to
equip its military -- through purchases of weapons and
dual-use technologies, expanding the presence of Belarusian
companies producing dual use manufactures, and training
Iranian personnel -- in return for granting Belarus
privileged access to Iran's market and oil. Contrary to the
GOB's claims, Iran will not likely invest large sums in
Belarus, as witnessed by the weakness of its current project,
the production of Samand cars. End summary.

Give Us Your Tired and Weary Armaments
--------------


2. (C) On May 17, the Belarusian MFA announced May 21 as the
date for Iranian President Ahmadinejad's two-day visit to
Minsk. The visit will complement visits by Belarusian
cabinet officials to Tehran in January (reftel). Although an
MFA spokesman announced earlier in the month that the
countries would cooperate in all areas, Tehran will seek
primarily to improve its military capabilities.


3. (C) Aleksandr Alesin, reporter for the independent
economic weekly newspaper "Belarusy i Rynok," told Deputy
Pol/Econ Chief that Iran values increased cooperation
Belarusian state-owned heavy equipment companies. The
Iranian partner in the Minsk Automotive Factory (MAZ)
assembly line opened in Iran is ostensibly a private company,
but Alesin speculated the Iranian government actually backed
the project. The MAZ plant in Iran produced dump trucks, but
the chassis could also serve for military trucks. BelAZ,
Amkodor and MTZ were other companies Alesin suspects interest
Iran for similar reasons.


4. (C) Alesin believes Iran will also purchase dual-use
technologies from Belarus to upgrade its air defenses,
rocketry, tanks and armored personnel carriers. Alesin
listed Belarusian electronics, software, laser optics,
composite materials, rocket and radio components, passive
radar systems and long-distance photography technology as
likely the most interesting for Iran.

Belarus Thankful for a New Export Market
--------------


5. (C) Valeriy Karbalevich, analyst with the Strategy Center,
told Deputy Pol/Econ Chief Belarus sought primarily to expand
its export markets in order to reduce its reliance on Russia.
He said the order to expand exports to Iran had come from
Lukashenko, and state-owned companies would give the
appearance of following through. He cautioned that past
high-level meetings between the two countries had brought
about a mere USD 40 million in trade. Karbalevich dismissed
claims Iran would find anything attractive sectors in Belarus
for investment. Alesin concurred that Iran would only invest
modest amounts in Belarus. He held out the possibility Iran
might invest in Belarus' power generation sector, but granted
the interest might only be a pretext to kept relations solid.


6. (C) Press has made much of Iran granting Belarus access to
the Jofeir oilfield. Alesin asserted any oil pumped would be
sold on the world market. Belarus prefers oil access to
cash, viewing participation in exploration as a means to
export seismic sensors developed in a Gomel-based firm.
Additionally, the project will provide employment for
Belarusian geologists, many of whom worked a generation ago
in then Soviet oil fields.

Iranian Auto Production in Belarus: Better than Nothing?
-------------- --------------


7. (C) Despite talk of a bank and a hotel, the only Iranian
concern currently operating is Samand cars. The production
line went into operation last year and has already been
following significantly behind its very modest schedule for
output. We have seen only two Samands on the local roads.
Both were likely assigned to GOB ministry motor pools, as all
Belarusians we have spoken to would rather buy a used German
car for the price Samand is charging, 12,000 euros. Vitaliy
Arbuzov, CEO of Fenox Corporation, which makes parts for the
cars, told us Samands were "crap." Aleksandr Kovtunenko,
editor-in-chief of the magazine "Direktor" and at one time an

MINSK 00000416 002.2 OF 002


auditor for Ford's failed efforts at the same plant, said the
Samand venture was better than leaving the factory empty.
The Samand display at Minsk's annual auto show May 5-9 mostly
touted the car's ability to run -- if modified -- on natural
gas.

Comment: Looking for Love in All the Wrong Places
-------------- --------------


8. (C) With relations with Russia still unresolved, Belarus
will continue to reach out to regimes willing to turn a blind
eye to its unenviable title as Europe's last dictatorship.
Luckily for Belarus, many of these countries include many of
those unable to purchase state-of-the-art goods due to their
poor economic performance and/or international sanctions.
Moore