UNION STATE PRESIDENCY NOT ON PUTIN'S AGENDA IN

C O N F I D E N T I A L SECTION 01 OF 02 MOSCOW 005794 SIPDIS SIPDIS E.O. 12958: DECL: 12/11/2017 TAGS: PREL ETRD MARR PARM BO RS SUBJECT: UNION STATE PRESIDENCY NOT ON PUTIN'S AGENDA IN MINSK REF: MOSCOW 4315 Classified By: M/C for Political Affairs Alice G. Wells for reasons 1.4 (b/d). ¶1. (C) Summary. The MFA strongly denied press rumors that Putin's December 13-14 trip to Minsk would create him president of a Russia-Belarus Union State, making it clear that Belarus had a long way to travel before it would be a partner for Russia. Putin's trip will focus on reviewing 2007's "difficult" bilateral relations and increasing economic integration. The MFA emphasized that differences between Russia and Belarus were the results of a complicated economic policy, and not political troubles, pointing to frequent ministerial meetings and an increased budget for the Union State. The MFA expects to finalize a common customs tariff on railroads and continue work on a common currency and customs union. Regarding military cooperation, the MFA discounted press reports about the sale of Iskander missiles to Belarus and noted that discussions on a possible joint air defense were preliminary. The MFA also noted that it was following Belarus closer economic ties with Venezuela, but was not overly worried. Putin Will Not Become Head of a Union State -------------- ¶2. (C) In a December 11 meeting, MFA Belarus Section Head Nikita Matkovskiy stated emphatically that Putin's December 13-14 trip to Belarus would not end with Putin assuming the office of president of a Russia-Belarus Union State. He told us that Putin and Lukashenko would discuss the Union and its next steps, but that political unification had been slowed by difficulties with economic integration. He noted that both sides had changed "tremendously" since the Union originated in 1996, and the relationship needed to be adjusted in accord with modern realities. Not until there was "fundamental economic harmonization" would political union even be considered, Matkovskiy said, but Russia would move in step with Belarus. A Hard Year, But a Good Relationship -------------- ¶3. (C) Matkovskiy told us Putin's trip to Minsk would consist of two separate events: bilateral consultations with Lukashenko and a plenary meeting of the Russia-Belarus Union. During the bilateral meeting Putin will focus on the current state of the relationship. Matkovskiy noted that 2007 "was not a good year." He told us that Russia's decision to shift to a "pragmatic, market-based approach" to Belarus obviously added tension to the bilateral relationship, but the GOR believed that the course was correct -- and profitable. In 2007, trade increased to $24 billion, a clear indicator of success. He emphasized that differences between the Russian and Belarusian governments this year were not political, but bumps in a complicated economic process, and Russia was pleased at Belarus's "modest steps" towards a market economy. ¶4. (C) During the Russia-Belarus Union session, Putin and Lukashenko will sign an agreement on a common customs tariff on railroads as part of continuing work on a common customs and currency policy. Putin and Lukashenko will announce the increase of the Union's budget by 10% in 2008s. Matkovskiy added that Putin and Lukashenko would discuss a planned Russian-built nuclear plant in Belarus, commenting that Russia is "sure" it will be built. Possible Iskander Missile Sales -------------- ¶5. (C) While not confirming recent press reports, Matkovskiy told us that any sale of SS-26 Iskander short-range ballistic missiles by Russia to Belarus complied with "all international agreements." He said that Iskander missiles, while still effective, were last generation technology, and their possible sale was not "new news." He also noted that Russia and Belarus had discussed the possibility of joint air defense, but any plans were still in the preliminary stage. (Note: There have been press reports recently that Russia planned to move ahead with the transfer of Iskander missiles to Belarus, as a response to the U.S. missile defense plans in Eastern Europe. MFA officials have denied the reports, while noting that Russia could transfer such missiles to Belarus if warranted. Defense experts have questioned the wisdom of placing Iskanders in Belarus. End Note.) Belarus and Venezuela: Watching Closely -------------- ¶6. (C) Matkovskiy noted that in the last year and a half, MOSCOW 00005794 002 OF 002 Belarus had taken steps to widen its international contacts. While Russia saw this as a positive step and encouraged Belarusian attempts to solve its economic problems through market solutions, the GOR was following Belarus's international contacts closely to see if they affected Russian interests. Regarding the announcement of a recent Belarusian-Venezuelan oil production joint venture, he said that although the GOR was concerned about Russian oil producers who had lost stakes in Belarusian oil refineries early in 2007, it was not overly worried about the increasingly active Lukashenko-Chavez relationship. The GOR felt that the two countries "were too remote" and that relations had reached their maximum capacity and would not continue to increase. Comment -------------- ¶7. (C) Matkovskiy consistently reinforced his message that troubles between Belarus and Russia were economic speedbumps, not core political differences. Although he suggested Russia has not abandoned the idea of a union state, neither Putin nor Lukashenko seem interested in the ten year old project. BURNS