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 �A;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