LUKASHENKO POSTURES IN MOSCOW

C O N F I D E N T I A L SECTION 01 OF 02 MOSCOW 003742 SIPDIS E.O. 12958: DECL: 12/23/2018 TAGS: PREL PGOV MARR MCAP BO RS SUBJECT: LUKASHENKO POSTURES IN MOSCOW REF: MOSCOW 3581 Classified By: Pol MC Alice Wells for reasons 1.4 (b) and (d). Summary -------------- ¶1. (C) In a December 22 visit, Belarusian President Aleksandr Lukashenko and President Medvedev concluded an unspecified agreement on gas prices and a new date for the signature of an air defense agreement to unify the two countries' air defense networks. Lukashenko, in a belligerent public performance that included boasts that he had not come begging, also requested an additional USD 3.5 billion loan in addition to the USD 2 billion loan granted in October. Russia again failed to secure Belarusian recognition of Abkhazia and South Ossetia. While Lukashenko continues to play Russia and the West against one another in a bid for greater economic support, the Belarus president's public posturing and the scope of Russia's own economic woes will only exacerbate the prickly nature of this bilateral relationship. End summary. Lots to discuss -------------- ¶2. (C) After the abrupt cancellation of the December 1 Union State Supreme State Council, Belarusian president Lukashenko arrived in Moscow December 22 to meet with Medvedev, and walked away with an unspecified deal for natural gas and started negotiations for an additional USD 3.5 billion loan. The GoR remained quiet on the host of outstanding issues in the bilateral relationship: signature of the outstanding mutual air defense agreement, potential Russian phyto-sanitary measures against Belarus, adoption of a Union State Constitutional Act, plans for holding the long-delayed Union State Supreme State Council, and Belarusian recognition of Abkhazia and South Ossetia (reftel). Gas prices -------------- ¶3. (U) In statements to the press following the meeting, both Kremlin and Belarusian sources stated that the two sides had come to a "fair price." A formula for pricing was reportedly discussed, but not wholly agreed to, with press reports quoting prices from USD 140 to USD 200 per 1,000 cubic meters of gas. Not begging -------------- ¶4. (U) Lukashenko did his best to dismiss views that Belarus had "come crawling down on its knees to the Kremlin to beg for something." In a belligerent performance before the cameras at the Kremlin, Lukashenko also cautioned that "if you stop the economy in Belarus, 10 million or more will be partially or completely unemployed in Russia," due to the parts Belarus supplies to Russian manufacturers. Just before the meeting, however, Russian Deputy Finance Minister Dmitry Pankin told reporters that Belarus requested a USD 3.5 billion loan; a request the Belarusians justified as necessary to shift the form of payments for gas and oil from dollars to Russian rubles. This loan request comes on the heels of USD 2 billion loan approved in October, for which the first USD 1 billion was issued in November and the next tranche is expected in February of next year. Lukashenko told the press on December 24 that the long-delayed meeting of the Union State Supreme Council will be held at the end of January. Recognition: A principled stand or bargaining chip -------------- -------------- ¶5. (C) Russian analysts speculate Russia applied extreme pressure on Belarus to recognize South Ossetia and Abkhazia. Reported prior efforts to tie terms for the USD 2 billion loan to recognition also failed, leaving it an open question of whether Belarus is standing on principle, waiting for Russia to meet its price, or keeping the issue open as a bargaining chip. Belarusian House of Representatives International Affairs Committee Chairman Syarhei Maskevich stated the Belarusian National Assembly would take up the issue of recognition sometime in the spring. Air Defense Pact -------------- ¶6. (U) Lukashenko announced that Russia and Belarus would sign the unified air defense agreement in January. This agreement would integrate Russian and Belarusian air defense systems into one network and would include the deployment of MOSCOW 00003742 002 OF 002 Russian personnel and systems in Belarus. The agreement was completed on August 19, but despite a series of meetings between Lukashenko and Medvedev, the heads of state have yet to sign it. Comment -------------- ¶7. (C) Some analysts credit Lukashenko for playing the West off Russia in order to gain more financial assistance, but others speculate that Lukashenko may be running out of rope as the scope of the economic crisis grows and Russian patience wears. Lukashenko's strutting before the cameras can only have deepened the distaste (and condescension) with which the Belarusian leader is greeted here. RUBIN