BELARUS WEEKLY POL/ECON REPORT - SEPTEMBER 11, 2009

UNCLAS SECTION 01 OF 04 MINSK 000317

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: PGOV PREL PHUM ECON BO
SUBJECT: BELARUS WEEKLY POL/ECON REPORT - SEPTEMBER 11, 2009

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1. (U) The following are brief items of interest compiled by
Embassy Minsk.

TABLE OF CONTENTS

Civil Society
--------------

- GOB Continues to Use a Heavy Hand in Dispersing Opposition
Demonstrations, Big or Small (para. 2)
- GOB May No Longer Classify Unregistered NGOs and Political
Parties Activities as Criminal (para. 3)
- Artynom Dubskiy from the "Case of 14" Could be Released by the
End of the Year (para. 4)
- One Opposition Candidate for the Presidential Election Appears
to be Unlikely (para.5)

Economy
--------------
- Deputy Finance Ministry: Budget Cuts Inevitable (para. 6)
- Foreign Debt Up and International Reserves Down (para. 7)
- Sidorsky: Major Concerns Are Low Industrial Output, Trade
Deficit and Lax Retail Trade (para. 8)
- GOB Raised Gasoline and Diesel Prices (para. 9)
- Subsidies to Mozyr Oil Refinery Suspended (para. 10)
- IFC and WB Doing Business 2010 Report Notes Belarus' Progress
in Reforming Economy (para. 11)

Foreign Relations
--------------
- Russia-Belarus Step Up Preparations for Joint Military
Exercises (para. 12)
- Lukashenka and Chavez Met in Minsk to Invigorate Bilateral
Cooperation (para. 13)

Quote of the Week (para. 14)
--------------

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Civil Society
--------------


2. (U) GOB Continues to Use a Heavy Hand in Dispersing
Opposition Demonstrations, Big or Small

A Minsk court fined 17 opposition activists up to $320 for
participating on September 9 in an unsanctioned demonstration in
Minsk protesting against the ongoing Zapad-2009
Russian-Belarusian military exercises. In dispersing the rally,
officers aggressively manhandled protesters and forced others to
the ground before taking them away in buses. Zmitser
Dashkevich, head of Malady Front and small business activist
Aleksandr Makayev, and five other activists were apprehended
minutes before the protest. Journalists who were at the site
covering the event reported that police interfered and damaged a
camera of a Polish correspondent filming the demonstration.
Police later allegedly harassed, humiliated, and struck the
detainees at a precinct, where they were held overnight. In a
related demonstration, a Minsk district court fined Malady Front
activists Nikolay Demidenko $375 and Margarita Korol $62 for
staging an unsanctioned demonstration against Zapad 2009 on
September 8 in front of the Russian Embassy in Minsk. On
September 3, police in Vitebsk roughed up and detained for the
evening local activist Oleg Surgan when he tried to display an
opposition white-red-white flag.


3. (U) GOB May No Longer Classify Unregistered NGOs and
Political Parties Activities as Criminal Activity

In an unexpected step, Deputy Justice Minister Igor Tushynskiy
announced that the GOB plans to amend Article 193-1 of the
Criminal Code that criminalizes any political or social
activities on behalf of an unregistered political party, NGO,
association, or religious group. Under the proposed amendments
these activities hence FORCE would be subject to administrative
charges and not criminal charges. Belarus civil society has
long advocated for the abolishment of Article 193-1, and Yuriy
Chausov, a prominent human rights lawyer, expressed cautious
optimism that the GOB has recognized "the excessive harshness of
the penalty" [of up to two years in jail] . Seventeen civil
society and opposition members, according to Chusov, had been
convicted under Article 193-1 since it was introduce into
Belarus Criminal Code in December 2005.


4. (SBU) Artynom Dubskiy from the "Case of 14" Could be Released
by the End of the Year

On September 9, Tamara Sidorenko, the defense counsel for Artyom
Dubskiy, told the Charge that there were two ways Dubskiy could
avoid having to serve the one-year prison sentence he received
for violating the terms of his partial house arrest. The
original sentence was related to his participation unsanctioned

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entrepreneurs demonstrations in January 2008. Since Dubskiy
admitted he had violated the terms of partial house arrest, he
had the right to appeal to President Lukashenka for a pardon.
The President could pardon him once he had served six months of
the sentence. The other option was once Dubskiy had served six
months of his sentence, prison authorities could initiate a
process of early release for good behavior. His time in
pre-trial detention counts towards the six months, and if a
disputed 18-day period of his pre-trial detention is counted,
six months would be November 9. Under the pardon option it
could take affect November 10, if it is the second variant it
takes a month of processing putting Dubskiy's release in
mid-December. Dubskiy and his lawyer will pursue both options.
As for the remaining "Case of 14" participants, four have been
amnestied, one pardoned, two have paid their fines, one remains
under partial house arrest until September 2010, and two are
banned from leaving Belarus and must pay 15% of their salaries
to the state through September 2010, and three, who were
sentenced to partial house arrest, fled the country and are now
studying abroad in Europe.


5. (SBU) One Opposition Candidate for the Presidential Election
Appears to be Unlikely

Belarusian Popular Front (BPF) held its convention on September
5 and elected deputy Alyaksey Yanukevich its new Chairman.
Yanukevich stated that only "if regulations are amended to
ensure that election commissions at all levels have
representatives of the opposition, would participating in the
[presidential] elections make sense." (Note: Presidential
elections could be scheduled for either late 2010 or early 2011.
End note) Furthermore, Yanukevich stated that BDF will not
participate in the United Democratic Forces (UDF) primary to
choose one opposition candidate for the Presidential elections.
The BPF announced plans to leave the UDF and work with their
partners on establishing a center-rightist National Democratic
coalition. Milinkevich, leader of the For Freedom movement,
also publicly stated that he did not believe it was possible to
unify behind one person given the various UDF opposition
parties' ideologies. Belarusian Christian Democrats told the
Embassy they don't believe in the UDF single candidate approach
and thus have sided with Belarusian Front and Milinkevich. The
opposition Communist Party told us they continue to support the
idea of a primary and one opposition UDF candidate, but said
they are skeptical the three parties mentioned above will
support the one opposition candidate approach. Artur Finkevich,
chair of the independent youth movement "Young Belarus," also
told the Embassy that the days of one opposition candidate are
over as it is no longer a realistic approach given the different
political ideologies. Anatoly Lebedko, Head of the United Civic
Party, and key player in the UDF still believes it is critical
for the opposition to have a single candidate in the
Presidential election, and told the Charge he will proceed with
organizing the UDF primary and will lobby other UDF parties to
reverse their decisions not to participate.

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Economy
--------------


6. (U) Deputy Finance Ministry: Budget Cuts Inevitable

Speaking to chairpersons of Belarus' local councils at a session
in the Upper House on September 9 Deputy Finance Minister
Vladimir Amarin stated that the GOB expects "the budget
situation to worsen before the end of the 2009" due to
significant "revenues shortfall". He elaborated that revenues
collected by central and municipal budgets had reached only 57%
and 65% of the annual target set by the GOB. Under 2009 budget
law, Belarus need to have zero budget deficit. "We will have to
fund expenditures in tough terms, ensuring in the first place
social spending, paying wages, utility services, medicines -
i.e. secured expenditures."


7. (U) Foreign Debt Up and International Reserves Down

According to data posted by the Belarus' Finance Ministry on
September 7, the country's state foreign debt by August 1 had
increased 12.6 percent to $6.09 billion. The debt grew due to
the loans received in 2009 from Russia ($500 million) and the
IMF (approximately $1.5 billion). The country's international
reserves continued to shrink in August falling 4.4.% to $ 3.021
billion. Total foreign currency trading volume in Belarus
decreased in August by 42.7 percent.


8. (U) Sidorsky: Major Concerns Are Low Industrial Output, Trade
Deficit and Lax Retail Trade

According to the presidential press service, Prime Minister
Sergei Sidorsky told Lukashenka September 4 that Belarus' major
economic concerns through July were falling industrial output
(3.9 percent),a $3.1 billion deficit in foreign trade and a

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lower than expected 2.7 percent year-on-year growth in retail
trade. Sidorsky assured Lukashenka that all government agencies
were actively reducting their inventories of unsold products.
As of August 1, they had decreased overall inventories to 88.3
percent of the average monthly industrial output. The GOB also
instructed Belarusian embassies to intensify their promotional
efforts to sell Belarusian-made products.


9. (U) GOB Raised Gasoline and Diesel Prices

On September 8, an unnamed source in the GOB told Prime-TASS
news agency that the government had decided to raise prices on
gasoline and diesel fuel starting on September 10. The GOB
claims the 10 percent increase, opposed by the Transportation
and Agriculture Ministries, will help offset losses made by
suppliers of fuel to the domestic markets due to the growing
world oil price.


10. (U) Subsidies to Mozyr Oil Refinery Suspended

An unnamed source in the Finance Ministry told Prime-TASS news
agency on September 8 that the GOB did not defy its obligations
to pay subsidies to Mozyr oil refinery for the purpose of
ensuring its profitable operations. The day before a source at
Mozyr refinery told Prime TASS that the facility has not
received any subsidies over the last three months and will not
receive any in the near future because of the government's
budget constraints and the refinery's profitable operations of
late. The GOB decided to subsidize Belarusian oil refineries in
2007 to ensure steady and profitable supplies of crude oil to
Belarus.


11. (U) IFC and World Bank (WB) Doing Business 2010 Report Notes
Belarus' Progress in Reforming Economy

According to IFC and WB's Doing Business 2010 "Reforming through
Difficult Times" report presented in Moscow on September 9 and
in Minsk on September 11, Belarus improved its rankings from 82
to 58 on the overall ease of doing business, from 98 to 91 on
advancing "starting a business", and from 62 to 44 in "dealing
with construction permits." One of the report's authors stated
that Belarus among other countries "implemented reforms in
several areas for the third consecutive year," but despite
"considerable progress," he noted that "much work remains [to be
done] to create a favorable business environment that will lead
to increased investment in Belarus." Private investment and
innovation, improving enterprise entry and exit, reduction of
administrative barriers to business development remain
priorities on Belarus' economic agenda for recovery from the
global financial crisis.

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Foreign Relations
--------------


12. (U) Russia-Belarus Step Up Preparations for Joint Military
Exercises

A Defense Ministry's spokesperson told the press on September 9
that the first Russian units had arrived in Belarus for the
scheduled Zapad (West)-2009 Russian-Belarusian military
exercises. A source with the Belarus AIR and AIR Defense Forces
reported that six Belarusian MiG-29 aircrafts had deployed to
southern Russia on September 11 and that Russian warplanes were
expected to begin arriving in Belarus as September 16. Zapad
2009 will involve 12,500 servicemen and up to 200 military
vehicles and take place in Belarus and Russia simultaneously
from September 18-29. According to various media sources,
Russia and Belarus will be simulating an operation to liberate
Tskhinvali. The troops will practice river crossings and
parachute drops, and will land combat aircraft on highways.
Zapad-2009 is a second phase of a Collective Security Treaty
Organization exercise. The first phase took place in Moscow in
August 2009. Presidential Administration contacts told the
Embassy that Russian President Medvedev is expected to visit
Belarus on September 29 to view the exercise with President
Lukashenka.


13. (U) Lukashenka and Chavez Met in Minsk to Invigorate
Bilateral Cooperation

According to media reports, Lukashenka met in Minsk with the
visiting Venezuelan President Chavez on September 8 to discuss
progress in bilateral relations and to boost economic
cooperation. Lukashenka thanked Chavez, who was on his fourth
visit to Belarus, for Venezuela's financial support and noted
the first profits had already flowed from the two countries'
joint oil extracting company in Venezuela. Bilateral trade
through July had doubled year-on-year and totaled $132.5
million. Lukashenka is scheduled to visit Venezuela in January

2010.


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Quote of the Week
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14. (U) Meeting with the visiting Slovak Foreign Minister
Miroslav Laichak in Minsk on September 7 Lukashenka said: "It is
important to us to have close cooperation with you. That said,
we do not put forward any conditions , if we come to terms, we
strictly abide by our obligations. We have an ideal order in
that - something that in other countries is called dictatorship.
Business people hail such order - a word means a deal. They do
not like all sorts of pseudo democracy."
SCANLAN