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

UNCLAS SECTION 01 OF 03 MINSK 000542

SIPDIS

SIPDIS

E.O. 12958: N/A
TAGS: PGOV PREL PHUM ECON EPET ENRG BO
SUBJECT: EMBASSY MINSK WEEKLY POL/ECON REPORT - June 22, 2007



1. The following are brief items of interest compiled by Embassy
Minsk.

TABLE OF CONTENTS

International Relations
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- South African Delegation Visits Belarus (para. 2)

Civil Society
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- Minsk Authorities Want to Remove Small Retail Kiosks (para. 3)
- GOB Hosts Summer Camps for Disadvantaged Youth (para. 4)

Religion
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- Judge Denies Deported Protestant Pastor's Appeal (para. 5)
- Protestants Pray to Change Religious Law (para. 6)
- Minsk Hosts Catholic Bishops' Conferences (para. 7)

Domestic Economy
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- Almost 19 Percent Retail Turnover Growth in Belarus (para. 8)
- Belarus' Industrial Output up 7.7 Percent (para. 9)

International Trade
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- GOB Fails To Meet Export Surplus Goals (para. 10)
- GOB Reports USD Half-Billion Energy Trade Deficit (para. 11)

- Quote of the Week (para. 12)

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International Relations
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2. South African Delegation Visits Belarus

On June 17, a group of representatives from South Africa's upper
house of Parliament arrived in Minsk to discuss trade and
cooperation with Belarus. The delegation met with their
counterparts in the Belarusian Parliament, President Lukashenko, the
Deputy Chairman of the Chamber of Commerce and Industry, as well as
the head of the Academy of Science. The talks focused on production
of synthetic fuels from Belarusian coal, as well as water
purification and pharmaceutical manufacturing as possible projects
for South African-Belarusian collaboration. Both parties have
repeatedly cited the active involvement of both Belarus and South
Africa in the Non-Aligned Movement as grounds for increasing
cooperation. An interstate commission for trade and economic
cooperation between the two countries will begin operating in July.


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Civil Society
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3. Minsk Authorities Want to Remove Small Retail Kiosks

On June 19, independent media reported that the Minsk sanitary
authorities are considering removal of all the private retail kiosks
in the city citing the lack of sewer access and the kiosks "being an
eyesore." Head of the Minsk city Center for Hygiene and
Epidemiology Fedor Germanovich maintained that "order should always
be both inside and outside the kiosk, and there is none at present."
Retail kiosks are currently located only at bus stops. Small
business and entrepreneurs associations criticized Germanovich's
statements, and believe authorities are trying to shut down small
retail trade network in Minsk. They also suggest the large grocery
store chains supported the proposal, which will help them increase
their revenues.


4. Interior Ministry Hosts Summer Camps for Disadvantaged Youth

On June 19, independent media reported that Interior Troops units
opened 15 military summer camps to host more than 700 teenage boys,
mostly from disadvantaged families. The camps are located
throughout Belarus, and their declared curricula and activities
include "spiritual, moral, historical, and patriotic" education for
boys of pre-draft age, as well as training them for future military
service.

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Religion
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5. Judge Denies Deported Protestant Pastor's Appeal

On June 20, BelaPAN independent news agency reported that a Myadel
District Court judge denied Polish Protestant Pastor Yaroslav
Lukasik's appeal to challenge the GOB's annulment of his permanent
residence permit and expulsion orders. Authorities forced Lukasik
to return to Poland leaving behind his wife and three children as
the BKGB accused him of conducting illegal religious activities,
partaking in radical politicized activities, and residing in an area
different from his official registered residence. Lukasik's wife
stated that the judge had no valid grounds to deny the appeal since
there was no proof of Lukasik 'being a threat to the national
security of Belarus.' She also noted that the family appealed to a
higher court in Minsk; however, the papers related to the case were
lost. A police officer said "the incident is over" as expulsion
orders can only be appealed within five days following the issuance.
Lukasik's wife demanded the police find the papers and the court
uphold her appeal.


6. Protestants Pray to Change Religious Law

On June 17, more than 500 Protestant communities across Belarus
gathered at churches to conduct prayer services calling for changes
in the religion law that they see as discriminatory against the
Protestant congregations. Sergey Lukanin, Protestant lawyer,
explained that the Protestants wanted "to ask God to intervene in
the dispute between the government and the Protestant communities."
He also noted it was one of the largest events to protest the
religion law and that more than 20,000 people have signed a petition
to challenge the law since the signature collection campaign started
on April 22. The objective of the campaign is to collect 50,000
signatures, and send the petition to the President, the
Constitutional Court, and the Parliament. On June 15, according to
independent media, 50,000 Belarusian Protestants throughout several
denominations participated in a two-day fast following the GOB's
arrest and fining of pastor Antony Bokun for holding an unauthorized
prayer service.


7. Minsk Hosts Catholic Bishops' Conferences

On June 18, the General Secretaries of Catholic Bishops' Conferences
of Europe concluded their four-day forum held in Minsk. It was the
first time in the contemporary history of Belarus that the
secretaries gathered in Minsk. Antoni Dziemianko, Secretary General

SIPDIS
of the Bishops' Conference of Belarus and the Apostolic
Administrator, briefed his counterparts about the issues that the
Roman Catholic communities face in Belarus, including difficulties
with building new churches in large cities, and assistance granted
to the Belarusian Roman Catholics who immigrated to the European
Union. On June 15, the secretaries met with Metropolitan Philaret,
Head of the Belarusian Orthodox Church. According to Dziemianko,
Metropolitan warmly greeted the secretaries and asserted
constructive dialogue, mutual respect, and amicable relations
between the two Churches in Belarus.

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Domestic Economy
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8. Almost 19 Percent Retail Turnover Growth in Belarus

On June 19, a GOB official announced that retail turnover in Belarus
came to USD 65.4 billion in the first five months of 2007, up 18.8
percent from the previous year. The portion of sales comprised by
private retailers and foreign retailers rose .4 percent to 81.6
percent and 3.2 percent respectively, while the portion held by
state-owned retailers fell .8 percent to 15.1 percent.
Approximately 67 percent of turnover was through commercial
organizations while the other 33 percent was by sole entrepreneurs,
and 76.2 percent of retail sales were of Belarusian made goods.
Retail sales growth for the whole year is projected at 9.5-10.5
percent.


9. Belarus' Industrial Output up 7.7 Percent

On June 18, a GOB official announced that Belarus' entire industrial
output in the period of January to May 2007 amounted to over USD 16
billion, a growth of 7.7 percent from 2006. Individual industries
which experienced output growth during this period included
engineering and metalworking (up 12.6 percent),fuel (up 0.2
percent),chemical and petrochemical (up 17.5 percent),ferrous
metallurgy (up 7.9 percent),construction materials (up 16.5
percent),woodworking and pulp-and-paper (up 9.3 percent) and light
industry (up 3.5 percent). However, the output of electrical power
industry decreased (down 9.2 percent) as well as the output of the
food industry (down 4.2 percent). Profitability of goods sold also
decreased during the first five months of 2007, down to 12.6 percent
from 15.7 percent during the same period of 2006.


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International Trade
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10. GOB Fails To Meet Export Surplus Goals

On June 19, PM Sergey Sidorskiy, during a session of the Council of
Ministers, admitted a failure to reach an export surplus in Belarus,
despite individual targets for the development of international
trade set for each Ministry. Imports increased 22.1 percent to USD
8.2 billion while exports only grew 11.6 percent to USD 7.4 billion.
He blamed insufficient production of consumer goods in Belarus for
this failure and suggested that development of the canning industry
could increase Belarus' exports. Sidorskiy characterized an export
surplus as a precursor to economic reform and predicted that Belarus
would achieve an export balance of trade by the end of the year.
President Lukashenko has declared achievement of an export surplus
to be a primary goal.


11. GOB Reports Half-Billion Dollar Energy Trade Deficit

On June 19, Economic Minister Nikolay Zaychenko reported to the
Council of Ministers that Belarus imported USD 504.1 million more
than it exported in foreign energy during the first four months of

2007. During the same period of 2006, Belarus' exports in this
sector exceeded imports by USD 61.5 million. Contributing to this
discrepancy is the USD 205.1 million decline in petrochemical
exports between January-April 2006 and 2007, as well as USD 359
million increase in natural gas imports. Additionally, there were
no exports of Belarusian crude oil during the period. The minister
predicted an improvement in the foreign energy trade figures to come
with the establishment of the Belarusian Oil Company and efficiency
upgrades made by the petrochemical company Belneftekhim, as well as
when Belarusian refining of Russian crude oil resumes in June.

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Quote of the Week
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12. During an interview on June 20, outgoing British Ambassador to
Belarus Brian Bennett offered the following parting admonition to
the GOB:

"Eventually Belarus will be a democratic country like its neighbors,
and the only question is when that will happen. A sensible approach
would be to move towards this kind of society as quickly as
possible. People in the administration here should be thinking
about how history will judge them, and at the moment I would imagine
that the history's judgment would be rather harsh. But there's
still time, and I leave here optimistic."

STEWART