Identifier
Created
Classification
Origin
08VILNIUS905
2008-10-24 09:12:00
UNCLASSIFIED
Embassy Vilnius
Cable title:
BELARUS WEEKLY POL/ECON REPORT - October 24, 2008
how-toVZCZCXRO3119 RR RUEHAG RUEHAST RUEHDA RUEHDF RUEHFL RUEHIK RUEHKW RUEHLA RUEHLN RUEHLZ RUEHPOD RUEHROV RUEHSR RUEHVK RUEHYG DE RUEHVL #0905/01 2980912 ZNR UUUUU ZZH R 240912Z OCT 08 FM AMEMBASSY VILNIUS TO RUEHC/SECSTATE WASHDC 2994 INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE
UNCLAS SECTION 01 OF 02 VILNIUS 000905
AMEMBASSY MINSK SENDS
SIPDIS
E.O. 12958: N/A
TAGS: PGOV PREL PHUM ECON ENRG BO
SUBJECT: BELARUS WEEKLY POL/ECON REPORT - October 24, 2008
UNCLAS SECTION 01 OF 02 VILNIUS 000905
AMEMBASSY MINSK SENDS
SIPDIS
E.O. 12958: N/A
TAGS: PGOV PREL PHUM ECON ENRG BO
SUBJECT: BELARUS WEEKLY POL/ECON REPORT - October 24, 2008
1. The following are brief items of interest compiled by EMBASSY
Minsk.
TABLE OF CONTENTS
Civil Society
--------------
- Popular Front Celebrates 20th Anniversary (para. 2)
- Democratic Seniors Denied Registration (para. 3)
- Independent Election Observer Fined (para. 4)
- Opposition Youth Leader Detained/Interrogated (para. 5)
Domestic Economy
--------------
- Lukashenko Wants to Make Belarusian Banks Attractive to Foreigners
(para. 6)
- National Bank Optimistic about Foreign Investment in Belarusian
Banks (para. 7)
- Russian EMBASSY Skeptical about Large Russian Investment in
Belarus (para. 8)
- Large Banking Investments Postponed Indefinitely (para. 9)
- Russia to Issue Stabilization Loan to Belarus (para. 10)
- Belarus Requests Financial Assistance from the IMF (para. 11)
Quote of the Week (para. 12)
--------------
--------------
Civil Society
--------------
2. Popular Front Celebrates 20th Anniversary
On October 18, the Belarusian Popular Front held a commemorative
event at its headquarters to mark the 20th anniversary of its
founding. The Minsk city authorities and the Presidential
Administration's Property Management department denied the party
rental of any large premises in town on October 16. BPF members
reported that vandals broke its office's windows the night of
October 18 and posted a sticker with the emblem of the unregistered
Russian National Bolshevik Party on the door. The party did not
reported the attack to police after five unsuccessful appeals to
investigate similar vandal attacks.
3. Democratic Seniors Denied Registration
The Justice Ministry denied yet again registration to the
association of democratic seniors, Our Generation, on October 20.
Following elevated pressure and numerous interrogations of
association members, the Ministry alleged that the submitted
registration application contained fraudulent information regarding
its founders and the venue of the founding convention. The group
was established on August 17 to defend the rights of retirees and
advocate social security reforms.
4. Independent Election Observer Fined
On October 10, a Yelsk district court fined in absentia United Civil
Party member and parliamentary elections independent observer Denis
Ryabenok USD 500 for allegedly violating electoral law. Ryabenok
received official notification of court evasion and was fined on
October 20. The local prosecutor's office questioned the observer
before the elections and charged him with illegally collecting
signatures in support of an opposition hopeful.
5. Opposition Youth Leader Detained and Interrogated
On October 17, Russian border guards and secret service detained and
interrogated Belarusian Popular Front youth branch leader Franak
Vyachorka at a Moscow airport. Warsaw-bound Vyachorka, banned from
leaving Belarus for alleged draft evasion, was questioned for over
an hour and released without charges. Vyachorka asserted he would
appeal to Russian and Belarusian law enforcement agencies to
investigate the legal grounds for his detention.
--------------
Domestic Economy
--------------
6. Lukashenko Wants to Make Belarusian Banks Attractive to
Foreigners
The Presidential press service reported that Lukashenka instructed
National Bank Chairman Pyotr Prokopovich on October 17 to draft
promptly a decree, which would guarantee all deposits in Belarusian
banks regardless of their size. This decree will allow unlimited
and undeclared deposits in Belarusian banks by foreign citizens.
Lukashenko requested that the Chairman also urgently draft
regulations to launch Belarus onto the list of the world's top
VILNIUS 00000905 002 OF 002
thirty economies based on securing the most favorable loan
conditions.
7. National Bank Optimistic about Foreign Investment in Belarusian
Banks
The National Bank reported on October 17 that the share of foreign
capital in the USD 2.5 billion aggregate charter fund of the
country's thirty banks was 22.5 percent as of October 1 compared
with 9.8 percent on January 1, 2008. The share is expected to grow
to 30 percent by the end of the year, which is still below the
authorized limit of 50 percent. Currently, twenty-four Belarusian
banks have foreign investors, of which nineteen are more than 50
percent foreign-owned. Seven banks are one hundred percent
foreign-owned.
8. Russian EMBASSY Skeptical about Large Russian Investment in
Belarus
The Economic Counselor of the Russian EMBASSY in Minsk Andrei
Kuznetsov told the Prime-Tass news agency on October 20 that the
global financial crisis complicates discussions of large investment
projects in Belarus. He stated that Russian investors have other
priorities, as they lack sufficient funding. Lower demand makes
Belarusian industrial assets cheaper, and the Counselor opined that
now is not the optimal time to privatize them. Some independent
Belarusian economic analysts nevertheless believe Russians and the
corrupt Belarusian elite will attempt to sell the assets at bargain
prices.
9. Large Banking Investments Postponed Indefinitely
Chairman of the Board of Directors of Belarus' leading auditing and
investment company UNITER Vladimir Vasilevsky told Prime-Tass news
agency on October 20 that large foreign investment banks, including
Barclays, UniCredit, and Goldman Sachs, have indefinitely postponed
plans to invest in Belarus. He said the global financial crisis
made highly unlikely the purchases of stocks in Belarus' five
leading banks by strategic investors from the world's top
twenty-five banks in the near future.
10. Russia to Issue Stabilization Loan to Belarus
Russia's Finance Minister Alexei Kudrin announced on October 21 that
his government will issue USD 2 billion stabilization loan to
Belarus. The first portion of USD 1 billion will be transferred
before the end of this year, and another part is to be transferred
next year. The Finance Minister declined to comment on the terms of
the loan. In 2007, Russia granted a 15-year, 1.5 billion loan to
Belarus under very beneficial terms.
11. Belarus Requests Financial Assistance from the IMF
The GOB approached the International Monetary Fund (IMF) on October
17 with a request to provide USD 2 billion in financial assistance
under a program that could be supported by a Stand-By Arrangement
(SBA). IMF Managing Director Dominique Strauss-Kahn issued a
statement on October 22 that acknowledges that the global financial
crisis has adversely affected the Belarusian economy and its access
to external finance. Changing conditions in trade have negatively
affected the country's balance of payments. Belarus' National Bank
officials claim the country has no crisis-related problems but need
the SBA to prevent such problems. IMF will send a mission before
the end of October to discuss such a program with authorities. The
amount of financing has yet to be determined.
--------------
Quote of the Week
--------------
12. Answering journalists' questions at the Yama Memorial during an
event to commemorate the 65th anniversary of the extermination of
the Minsk ghetto, Lukashenka said:
"Nothing impedes our cooperation with Israel. We can and will
expand this cooperation. Nothing impeded our cooperation with the
Arab world either. Our friendship with Arabs is not against Jews,
and our friendship with Jews is not against Arabs. This is not the
kind of policy we would pursue, and that is why we succeed in all we
do."
MILLER
LEADER
AMEMBASSY MINSK SENDS
SIPDIS
E.O. 12958: N/A
TAGS: PGOV PREL PHUM ECON ENRG BO
SUBJECT: BELARUS WEEKLY POL/ECON REPORT - October 24, 2008
1. The following are brief items of interest compiled by EMBASSY
Minsk.
TABLE OF CONTENTS
Civil Society
--------------
- Popular Front Celebrates 20th Anniversary (para. 2)
- Democratic Seniors Denied Registration (para. 3)
- Independent Election Observer Fined (para. 4)
- Opposition Youth Leader Detained/Interrogated (para. 5)
Domestic Economy
--------------
- Lukashenko Wants to Make Belarusian Banks Attractive to Foreigners
(para. 6)
- National Bank Optimistic about Foreign Investment in Belarusian
Banks (para. 7)
- Russian EMBASSY Skeptical about Large Russian Investment in
Belarus (para. 8)
- Large Banking Investments Postponed Indefinitely (para. 9)
- Russia to Issue Stabilization Loan to Belarus (para. 10)
- Belarus Requests Financial Assistance from the IMF (para. 11)
Quote of the Week (para. 12)
--------------
--------------
Civil Society
--------------
2. Popular Front Celebrates 20th Anniversary
On October 18, the Belarusian Popular Front held a commemorative
event at its headquarters to mark the 20th anniversary of its
founding. The Minsk city authorities and the Presidential
Administration's Property Management department denied the party
rental of any large premises in town on October 16. BPF members
reported that vandals broke its office's windows the night of
October 18 and posted a sticker with the emblem of the unregistered
Russian National Bolshevik Party on the door. The party did not
reported the attack to police after five unsuccessful appeals to
investigate similar vandal attacks.
3. Democratic Seniors Denied Registration
The Justice Ministry denied yet again registration to the
association of democratic seniors, Our Generation, on October 20.
Following elevated pressure and numerous interrogations of
association members, the Ministry alleged that the submitted
registration application contained fraudulent information regarding
its founders and the venue of the founding convention. The group
was established on August 17 to defend the rights of retirees and
advocate social security reforms.
4. Independent Election Observer Fined
On October 10, a Yelsk district court fined in absentia United Civil
Party member and parliamentary elections independent observer Denis
Ryabenok USD 500 for allegedly violating electoral law. Ryabenok
received official notification of court evasion and was fined on
October 20. The local prosecutor's office questioned the observer
before the elections and charged him with illegally collecting
signatures in support of an opposition hopeful.
5. Opposition Youth Leader Detained and Interrogated
On October 17, Russian border guards and secret service detained and
interrogated Belarusian Popular Front youth branch leader Franak
Vyachorka at a Moscow airport. Warsaw-bound Vyachorka, banned from
leaving Belarus for alleged draft evasion, was questioned for over
an hour and released without charges. Vyachorka asserted he would
appeal to Russian and Belarusian law enforcement agencies to
investigate the legal grounds for his detention.
--------------
Domestic Economy
--------------
6. Lukashenko Wants to Make Belarusian Banks Attractive to
Foreigners
The Presidential press service reported that Lukashenka instructed
National Bank Chairman Pyotr Prokopovich on October 17 to draft
promptly a decree, which would guarantee all deposits in Belarusian
banks regardless of their size. This decree will allow unlimited
and undeclared deposits in Belarusian banks by foreign citizens.
Lukashenko requested that the Chairman also urgently draft
regulations to launch Belarus onto the list of the world's top
VILNIUS 00000905 002 OF 002
thirty economies based on securing the most favorable loan
conditions.
7. National Bank Optimistic about Foreign Investment in Belarusian
Banks
The National Bank reported on October 17 that the share of foreign
capital in the USD 2.5 billion aggregate charter fund of the
country's thirty banks was 22.5 percent as of October 1 compared
with 9.8 percent on January 1, 2008. The share is expected to grow
to 30 percent by the end of the year, which is still below the
authorized limit of 50 percent. Currently, twenty-four Belarusian
banks have foreign investors, of which nineteen are more than 50
percent foreign-owned. Seven banks are one hundred percent
foreign-owned.
8. Russian EMBASSY Skeptical about Large Russian Investment in
Belarus
The Economic Counselor of the Russian EMBASSY in Minsk Andrei
Kuznetsov told the Prime-Tass news agency on October 20 that the
global financial crisis complicates discussions of large investment
projects in Belarus. He stated that Russian investors have other
priorities, as they lack sufficient funding. Lower demand makes
Belarusian industrial assets cheaper, and the Counselor opined that
now is not the optimal time to privatize them. Some independent
Belarusian economic analysts nevertheless believe Russians and the
corrupt Belarusian elite will attempt to sell the assets at bargain
prices.
9. Large Banking Investments Postponed Indefinitely
Chairman of the Board of Directors of Belarus' leading auditing and
investment company UNITER Vladimir Vasilevsky told Prime-Tass news
agency on October 20 that large foreign investment banks, including
Barclays, UniCredit, and Goldman Sachs, have indefinitely postponed
plans to invest in Belarus. He said the global financial crisis
made highly unlikely the purchases of stocks in Belarus' five
leading banks by strategic investors from the world's top
twenty-five banks in the near future.
10. Russia to Issue Stabilization Loan to Belarus
Russia's Finance Minister Alexei Kudrin announced on October 21 that
his government will issue USD 2 billion stabilization loan to
Belarus. The first portion of USD 1 billion will be transferred
before the end of this year, and another part is to be transferred
next year. The Finance Minister declined to comment on the terms of
the loan. In 2007, Russia granted a 15-year, 1.5 billion loan to
Belarus under very beneficial terms.
11. Belarus Requests Financial Assistance from the IMF
The GOB approached the International Monetary Fund (IMF) on October
17 with a request to provide USD 2 billion in financial assistance
under a program that could be supported by a Stand-By Arrangement
(SBA). IMF Managing Director Dominique Strauss-Kahn issued a
statement on October 22 that acknowledges that the global financial
crisis has adversely affected the Belarusian economy and its access
to external finance. Changing conditions in trade have negatively
affected the country's balance of payments. Belarus' National Bank
officials claim the country has no crisis-related problems but need
the SBA to prevent such problems. IMF will send a mission before
the end of October to discuss such a program with authorities. The
amount of financing has yet to be determined.
--------------
Quote of the Week
--------------
12. Answering journalists' questions at the Yama Memorial during an
event to commemorate the 65th anniversary of the extermination of
the Minsk ghetto, Lukashenka said:
"Nothing impedes our cooperation with Israel. We can and will
expand this cooperation. Nothing impeded our cooperation with the
Arab world either. Our friendship with Arabs is not against Jews,
and our friendship with Jews is not against Arabs. This is not the
kind of policy we would pursue, and that is why we succeed in all we
do."
MILLER
LEADER