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
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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
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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
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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
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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
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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
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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

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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
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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