EMBASSY MINSK WEEKLY POL/ECON REPORT - September 28, 2007

UNCLAS SECTION 01 OF 03 MINSK 000825 SIPDIS SIPDIS E.O. 12958: N/A TAGS: PGOV PREL PHUM ECON ENRG BO SUBJECT: EMBASSY MINSK WEEKLY POL/ECON REPORT - September 28, 2007 MINSK 00000825 001.3 OF 003 ¶1. The following are brief items of interest compiled by Embassy Minsk. TABLE OF CONTENTS Civil Society -------------- - Leaflets against Edicts Seized at Market (para. 2) - Corruption Case Sent to Supreme Court (para. 3) - Activist Hospitalized After Arrest (para. 4) - Participants of Festival in Ukraine Harassed (para. 5) - Activist Accused of Destructive Activities (para. 6) - Youth Obscenities Case Sent for Revision (para. 7) - Belarus Ranked 150th in Corruption (para. 8) International Relations -------------- - Belarus Preparing for Peacekeeping Missions (para. 9) Domestic Economy -------------- - Tax Cuts - Only If Social Benefits Slashed (para. 10) - Belarus Delays Accounting Compliance (para. 11) - High Yield Ascribed to Rural Revival Program (para. 12) - Belarus to Upgrade Energy Generation (para. 13) International Trade -------------- - Russian Bank to Raise Loan Limit (para. 14) - Quote of the Week (para. 15) -------------- Civil Society -------------- ¶2. Leaflets against Edicts Seized At Market On September 26, police at the Zhdanovichi market in Minsk seized about 800 copies of a leaflet against Aleksandr Lukashenko's restrictive edicts on sole entrepreneur hiring. The leaflet invited market vendors to observe Entrepreneurs' Day on October 2 and to express their disapproval of a recent edict banning sole entrepreneurs from hiring workers other than three family members after January 1, 2008. Activists had just started passing out the leaflets when a police officer came to seize them. ¶3. Corruption Case Sent to Supreme Court The corruption case against Uladzimir Kholad, former first deputy head of the Presidential Administration's Main Ideology Office and head of the Ideological Work Coordination Office, has been sent to the Supreme Court of Belarus. Kholad, who is accused of large-scale fraud and solicitation of bribes, has been held in custody since June 30 when he was arrested while allegedly receiving a bribe of USD 35,000. ¶4. Activist Hospitalized After Arrest Authorities arrested 53-year-old Vasil Siliverst, a member of the opposition United Civic Party and a founding member of an association of Chernobyl cleanup veterans, in Rechytsa on September ¶22. There to attend the national harvest festival featuring Aleksandr Lukashenko, Siliverst was arrested and subsequently hospitalized. His violent arrest by seven plainclothes officers and emotional stress required a trip to the local hospital, where he was diagnosed with extremely high blood pressure. Siliverst staged a hunger strike in August to protest government doctors' refusal to recognize a link between his 80-day cleanup effort in Chernobyl and his numerous ailments. If doctors certified his service caused the ailments, Siliverst would receive a higher pension and more privileges. ¶5. Participants of Festival in Ukraine Harassed Belarusian police turned back spectators traveling by bus to a September 22 rock music festival in the Ukrainian city of Lutsk. The "The Right to Be Free" rock festival featured bands blacklisted in Belarus for their openly negative attitude toward the Lukashenko regime. Police stopped the buses on the pretext that they exceeded the speed limit. The passengers of the buses were put on another bus, which transported them back to Minsk under the escort of an armored paddy wagon. Belarusian musicians who were expected to play at the festival managed to reach the Ukrainian border but were allowed to cross it only after waiting six hours. MINSK 00000825 002.3 OF 003 ¶6. Activist Accused of Destructive Activities A KGB officer in Zhlobin, Gomel region, on September 21 accused 18-year-old activist Kiryl Atamanchyk of acting on behalf of an unregistered organization. The officer alleged that together with unidentified persons, Atamanchyk conducted destructive activities on behalf of Malady Front. In particular, they allegedly painted the organization's symbols and "inscriptions of destructive content" on the facades of buildings and other structures with a view to "popularizing the ideology of the Malady Front organization and creating an illusion among the public that there existed broad resistance to the present government." ¶7. Youth Obscenities Case Sent for Revision A judge in Minsk ruled on September 21 that the obscenities case against Aleksandra Klimovich, a member of the youth wing of the Belarusian Popular Front (BPF),should be revised. Police rounded up the girl and 15 other young BPF members, including four minors, while they were camping near the village of Kosava, Brest region. After a 10-minute hearing, the judge sent the case back to police for revision due to lack of evidence presented. The obscenities charge against another BPF youth, Ilya Bohdan, was heard on September 20. The judge suspended that trial until October 8 because of the absence of witnesses. ¶8. Belarus Ranked 150th in Corruption Transparency International (TI) ranked Belarus 150 out of 180 countries in its annual Corruption Perceptions Index (CPI) released on September 26. Of the former Soviet countries, TI ranked Estonia 28, followed by Latvia and Lithuania tied at 51, Georgia 79, Armenia 99, Moldova 111, Ukraine 118, and Russia 143. Belarus shared 150th place with Kazakhstan, Kyrgyzstan and Tajikistan. It was followed by Turkmenistan and Venezuela tied at 162 and Uzbekistan at 175. -------------- International Relations -------------- ¶9. Belarus Preparing for Peacekeeping Missions The peacekeeping company of the 120th Detached Mechanized Brigade is preparing for peacekeeping missions, said the Commander of Belarus' Land Forces General Aleksandr Nikitsin last week. During a briefing for journalists, Nikitsin said that participation in peacekeeping missions requires parliamentary approval, and that only contract soldiers who volunteer for missions are allowed to take part. The company has been training in 2007 and has held drills under supervision of foreign military experts. The unit was formed in 2004 after Belarus subscribed to the NATO Partnership for Peace Planning and Review Process. -------------- Domestic Economy -------------- ¶10. Tax Cuts - Only If Social Benefits Slashed Deputy Economy Minister Tatyana Starchenko stated that although the ministry sought to reduce the country's tax burden for 2008, it remains high due to ever increasing energy prices and the budget's high social expenses. Speaking at a roundtable on taxation on September 20, Starchenko also said that the ministry fully realizes the country's tax system should encourage business and assured it is prepared to act accordingly, but would only be able to do so by reducing access to free education, medical services, and subsidies to utility providers. ¶11. Belarus Delays Accounting Compliance On September 20, Belarusian Deputy Finance Minister Ivan Shunko told a roundtable on taxation that his ministry withdrew its requirement that all businesses in the country comply with International Accounting Standards (IAS) beginning in 2008. So far only 18 Belarusian businesses meet compliance guidelines. The Finance Ministry now plans to issue a new regulation, which encourages rather than obliges such compliance. A key divergence from standards is the valuation of assets -- Belarusian companies count social infrastructure as an asset, though under international standards it must be removed from balance sheets because it does not return profits. ¶12. High Yield Ascribed to Rural Revival Program Speaking at the annual harvest fair on September 22, President Aleksandr Lukashenko ascribed the record-high yield of grain and legumes to his rural revival program, which subsidizes largely inefficient Soviet-style farms in Belarus. Lukashenko stated that the good yield will protect the country from skyrocketing grain MINSK 00000825 003 OF 003 prices on the world market and will allow more Belarusian agricultural exports to neighboring countries. He also claimed farming in Belarus has become more efficient but admitted much of the USD 1.5 billion annually invested is spent unwisely, saying the subsidy policy will change soon to make sure only profitable projects receive assistance. ¶13. Belarus to Upgrade Energy Generation According to Belarus' Energy Minister Aleksandr Ozerets, the country plans to spend USD 9.9 billion to upgrade its energy generation facilities. Presenting a draft energy saving program to the Cabinet of Ministers on September 25, Ozerets said a three-year program will increase the country's power generating capacities, reduce generation costs, and increase energy efficiency in industrial production. Funding for the program will come from Energy Ministry's Innovation Fund, depreciation charges, business revenues, and borrowing. -------------- International Trade -------------- ¶14. Russian Bank to Raise Loan Limit Rosbank, one of Russia's largest financial institutions, plans to raise the limit on the amount of loans issued to Belarusian companies from USD 750 million to USD 1 billion and increase its lending for deals involving the supply of oil to Belarus. During his recent visit to Minsk, bank chairman Aleksandr Popov said that Rosbank would also double the authorized capital of its Belarus subsidiary, Belrosbank, within the next 18 months. -------------- ¶15. Quote of the Week -------------- Viktor Ivashkevich, Deputy Chairman of the Belarusian Popular Front and chief organizer of October's European March, after a judge sent his case of supporting an illegal demonstration back to the district police: "One hand does not know what the other is doing, and the head is not working at all." Stewart