BELARUS WEEKLY POL/ECON REPORT - October 10, 2008

UNCLAS SECTION 01 OF 02 VILNIUS 000854 SIPDIS AMEMBASSY MINSK SENDS E.O. 12958: N/A TAGS: PGOV PREL PHUM ECON ENRG BO SUBJECT: BELARUS WEEKLY POL/ECON REPORT - October 10, 2008 ¶1. The following are brief items of interest compiled by Embassy Minsk. TABLE OF CONTENTS Civil Society -------------- - Convictions for Assault against Opposition Activist (para. 2) - Foreign Students Protest Racist Attacks (para. 3) - Malady Front Splits (para. 4) - Independent Weekly Denied State Distribution (para. 5) Domestic Economy -------------- - Finland's Olvi Oy Buys 51 Percent of Belarus' Lidskoye Pivo Brewery (para. 6) - Lukashenka Committed to his Economic Approach (para. 7) - Lower House Approves 2009 Budget (para. 8) Foreign Trade -------------- - Belarus' Foreign Trade in Services up 35.4 Percent through July (para. 9) - Belarus and Russia Postpone Natural Gas Price Talks (para. 10) Quote of the Week (para. 11) -------------- -------------- Civil Society -------------- ¶2. Convictions for Assault against Opposition Activist On October 3, a Gomel district court sentenced two persons to two and one-half years of home detention or "khimiya" and USD 1,420 reimbursement of moral damages on severe hooliganism charges. The two attacked local opposition activist Igor Sluchiek on July 27. He reported a broken nose and other minor injuries to the police. Sluchiek welcomed the verdict but did not directly link it with his opposition political activities. ¶3. Foreign Students Protest Racist Attacks Over 200 Asian and African students of the Gomel State Medical University boycotted classes on October 6. They protested frequent hooligan attacks based on racial differences and insisted the police reinforce security measures at dormitories. Persons who stabbed a student from India in May are now facing criminal charges. ¶4. Malady Front Splits Youth movement "Malady Front" (MF) dismissed its deputy chair Artur Finkevich and two regional leaders for alleged "defamatory activities" at a council meeting on October 6. In the meantime, Finkevich and his 24 supporters within the MF announced the suspension of Chairman Zmitser Dashkevich on October 6 citing Dashkevich's "undemocratic behavior and conduct". They also established a new group called "Maladaya Belarus" (Young Belarus) to unite all the youth movements and groups prior to the 2011 presidential elections. Moreover, Finkevich urged to hold a convention to prevent further breakup of the MF. ¶5. Independent Weekly Denied State Distribution On October 6, the state-run printed press distributor Belsoyuzpechat denied yet again the independent weekly "Nasha Niva" a request for sales and distribution through its network of kiosks and stands across Belarus. The editorial called the ban that has been in place since 2006 "politically motivated" and "discriminatory". It announced it would apply again next year. -------------- Domestic Economy -------------- ¶6. Finland's Olvi Oy Buys 51 Percent of Belarus' Lidskoye Pivo Brewery According to press reports, Finland's Olvi Oy Corporation purchased a 51 percent stake in one of Belarus' largest breweries, Lidskoye Pivo (Lida Beer) based in the city of Lida, Grodno region. The Belarusian brewery has sought a strategic investor since May and had to issue more shares to this end. The USD 16 million deal was cleared by the GOB. ¶7. Lukashenka Committed to his Economic Approach According to the presidential press service, speaking to senior VILNIUS 00000854 002 OF 002 Belarusian KGB officers October 7 Lukashenka claimed his economic policies would help minimize the effects of the world financial crisis for Belarus. He admitted that although Belarusian stocks are not sold internationally, the country's exports may shrink or get jeopardized in some other way. Lukashenko failed to elaborate on how his government would deal with possible challenges alluding, though, to his fruitful practices of keeping the country's major stocks in government's hands and under its tight control. He also opined that Western governments will ultimately pursue the same economic policy. ¶8. Lower House Approves Belarus 2009 Budget According to the media, Belarus' Lower House approved the country's 2009 budget in the second reading on October 9 and sent it further up to the Upper House. The bill will most likely run smoothly through the parliament to be signed into law some time soon. 2009 budget provides for 1.8 percent deficit, 10 percent GDP, 9-11 percent inflation and natural gas price of USD 140 per one thousand cubic meters. The budget will subsidize two-thirds of households' energy and utility expenses. The budget also provides for 1.3 percent of the GDP reduction in tax load and introduction of a flat 12 percent income tax rate. -------------- Foreign Trade -------------- ¶9. Belarus' Foreign Trade in Services up 35.4 percent through July Belarus' Statistics Ministry reported October 3 that the country's on-the-year foreign trade in services grew through July by 35.4 percent. Belarus' services exports increased 37.4 percent to USD 2.4 billion, while imports were up 32.1 percent to USD 1.4 billion in the same time period. Foreign trade in transportation services was up 38.8 percent, travel services up 14 percent, communication services up 18.5 percent, construction services up 21.8 percent, and computer services up 70.8 percent. ¶10. Belarus and Russia Postpone Natural Gas Price Talks An unnamed source allegedly close to the GOB told Prime-TASS news agency that on October 6 Belarusian and Russian senior officials negotiated briefly natural gas prices that Belarus will have to pay in 2009. The Belarusian side refers to energy price estimates of Russia's Economic Development Ministry and still insists natural gas price should not be higher than USD 140 per one thousand cubic meters. Reportedly, the Russian side strongly disagreed referring to the bilateral agreement signed in December 2006. The issue is most likely to be discussed further in the end of the year. -------------- Quote of the Week -------------- ¶11. Meeting with Finnish Foreign Minister and OSCE Chairman-in-Office Alexander Stubb October 7 Alyaksandr Lukashenka said: "All these talks about the last dictator were conceived across the ocean and brought to Europe. Who is a dictator in the world? You can see [that] Lukashenka is not on the list." MOORE CLOUD