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RR RUEHIK
DE RUEHSK #0360/01 2991850
ZNR UUUUU ZZH
R 261850Z OCT 09
FM AMEMBASSY MINSK
TO RUEHC/SECSTATE WASHDC 0529
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUEHVEN/USMISSION USOSCE 0005
RUCNCIS/CIS COLLECTIVE
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE
RUEHSK/AMEMBASSY MINSK 0537

UNCLAS SECTION 01 OF 05 MINSK 000360 
 
SENSITIVE 
SIPDIS 
 
DEPT FOR EUR/UMB (JOE WANG) 
 
E.O. 12958: N/A 
TAGS: PGOV PREL PHUM ECON BO
SUBJECT: BELARUS BI-WEEKLY POL/ECON REPORT - OCTOBER 23, 2009 
 
MINSK 00000360  001.3 OF 005 
 
 
¶1. (U)  The following are brief items of interest compiled by 
Embassy Minsk. 
 
TABLE OF CONTENTS 
 
Elections 
--------- 
- "Honest" Presidential Elections to be Held in Early 2011, so 
Says the CEC (para. 2) 
 
Civil Society 
------------- 
- Opposition Parties Denied Registration, Evicted  (para. 3) 
- Police Forcefully Disperse "Solidarity Day" Demonstration, 
Arrest Activists (para. 4) 
- Gomel Activists Heavily Fined for "Plotting" a Demonstration 
(para. 5) 
- GOB Criticized for Not Holding Transparent Hearings on 
Proposed Nuclear Plant (para. 6) 
 
Domestic Economy 
---------------- 
- IMF Disburses Another SBA Tranche to Belarus, But GOB's 2009 
Financing Gap May Not Be Filled (para. 7) 
- Gazprom Expects Belarus to Meet its  Obligations and Pay 
European Gas Prices by 2011 (para. 8) 
- National Bank Chief:  Banking System Facing "Significant 
Threat" (para. 9) 
- NB Official: Bad Loans on the Rise? No Worries! My Boss is 
Wrong (para. 10) 
- Lukashenka Sets $7 Ceiling for 2010 Utility Rates Increase, 
thus Downplays the Actual Increase (para. 11) 
- Lukashenka Signs Edict to Streamline Auditing of Businesses 
(para. 12) 
- Belarus' Exports Continue to Fall Faster Than Imports Through 
August (para. 13) 
 
Security 
------- 
-  Collective Security Treaty Organization, Belarus is a Member, 
But Does it Matter  (para. 14) 
 
Quote of the Week (para. 15) 
---------------------------- 
 
--------- 
Elections 
--------- 
 
¶2. (SBU) "Honest" Presidential Elections to be Held in Early 
2011, so Says the CEC 
 
During his October 20 meeting with Lidiya Yermoshina, 
Chairperson of the Central Election Commission (CEC), Lukashenka 
announced that the presidential elections will be held in early 
2011 and that they will made "[more] honest" and that local 
elections will be scheduled separately in April 2010.  The CEC 
will submit to Lukashenka and the Parliament this fall 
amendments to be made to the electoral law.  In her October 22 
press interview, Yermoshina elaborated that "the amendments are 
the work to correct shortcomings as proposed by the OSCE."  The 
reasons for reforming the electoral code, she argued, is to 
advance "public relations" and change the "alignment of 
political forces."  She said the CEC is seeking to ensure 
broader electoral commission representation for the political 
parties and NGOs ("no less than a third of the seats") and to 
limit the number of seats for state officials.  CEC said 
presidential elections will include "thousands of observers," a 
simplified signature collection process for nominating 
candidates to avoid "technical" errors, and perhaps a somewhat 
more relaxed parameters on election observers.  The latter may 
be "allowed to monitor the vote counting" from a relevant 
distance whereas in the past, they could only observe the backs 
of the commission members ostensibly counting ballots.  As for 
the early voting, precinct commissions might be required to 
produce daily reports on the number of voters who cast early 
ballots.  As for the local elections, the CEC said it might 
abolish the 50 percent threshold since many voters, especially 
in large cities, opt not to vote in local elections.  In 
addition, the CEC might permit candidates to open individual 
election funds but they will still be banned from accepting 
money from foreign sources.  Despite the fanfare surrounding 
what ultimately could be "revolutionary" amendments, electoral 
lawyers, such as Vladimir Labkovich, expressed skepticism over 
Yermoshina's proposals, saying that "it is not what we have 
expected" and the announced changes "will not fundamentally 
eliminate falsification practices."  Belarusian Christian 
 
MINSK 00000360  002.3 OF 005 
 
 
Democracy Co-Chair Vital Rymasheuski echoed the critical remarks 
to EMBOFF, saying that even if the amendments are not 
"peripheral," the enforcement practices are more important than 
the actual legislature, especially due to the lack of a fair and 
transparent appeal procedures.  Belarus National Front Chairman 
Aleksey Yanukevich told Charge that at the moment everything is 
speculation.  He said there are many theories as to what the 
changes might be, but the reality is no one has seen them yet 
and were just commenting on general press accounts.  . 
 
------------- 
Civil Society 
------------- 
 
¶3. (U) Opposition Parties Denied Registration, Evicted 
 
On October 20, the Justice Ministry (MOJ) denied registration to 
the Belarusian Party of Working People (BPWP) for failing to 
meet membership requirements of 1,000 persons and providing 
false information, among other charges.  The BPWP leadership 
claimed that their founders were pressured to recant their 
membership and stated that they would appeal to the Supreme 
Court.  The BPWP is the successor of the Belarusian Party of 
Labor, which was shut down by authorities in 2004.  In a 
separate case, on October 15, the Minsk City Economic Court 
evicted the registered Belarusian Social Democratic Party 
Gramada from its offices for failing to come to terms with its 
landlord over a rent increase.  In order for the party to 
maintain its official registration, it must have a new "a legal 
address."  Gramada Chairperson Anatoliy Levkovich noted that it 
was most likely going to have to rent more affordable premises 
outside of Minsk. 
 
¶4. (SBU) Police Forcefully Disperse "Solidarity Day" 
Demonstration, Arrest Activists 
 
Police forcefully dispersed a "Solidarity Day" demonstration in 
downtown Minsk on October 16.  An EMBOFF observed that three 
minutes into the rally, police officers surrounded about 30 
opposition activists and manhandled them into awaiting buses. 
Although about 22 of the detained activists were released three 
hours later with no charge, United Civic Party Chair Anatoliy 
Lebedko reported that he was beaten in a police bus and abused 
while in custody.  Additionally, police prevented independent 
journalists from covering the demonstration.  The Belarusian 
Association of Journalists condemned the "direct ban on the 
journalists' professional activities" and called for a fair 
investigation into the incident.  On the eve of the rally, 
"European Belarus" campaigner Maksim Vinyarskiy was sentenced to 
two days of detention for the distribution of political 
leaflets.  His associate, Alesya Yasyuk, was released after a 
five-hour interrogation. 
 
¶5. (U) Gomel Activists Heavily Fined for "Plotting" a 
Demonstration 
 
On October 13, seven opposition activists were fined a total of 
$2,740 for merely attempting to stage a "Solidarity Day" 
demonstration in Gomel on September 16.  The court dismissed 
their arguments that they were only walking to the demonstration 
venue and were not carrying any images or banners.  Police 
officers stated otherwise. The court also fined two more 
activists $510 and $250 on October 15 and a local opposition 
leader $640 on October 19 in absentia on the same charges. 
Because the GOB continues to deny opposition requests for public 
rallies, democratic activists face multiple charges for 
participating in such events, including for purported violations 
of mass events regulations and alleged minor and severe 
hooliganism. 
 
¶6. (U) GOB Criticized for Not Holding Transparent Hearings on 
Proposed Nuclear Plant 
 
Independent experts and anti-nuclear campaigners publicly 
criticized the GOB for failing to hold open and transparent 
public hearings in Ostrovets on October 9 concerning GOB's 
interim Environmental Impact Assessment Report (EIAR) regarding 
the construction of a nuclear power plant (NPP) in Belarus. 
Police and security personnel denied access to a number of civil 
society and environmental specialists as well as journalists. 
At the same time inside the meeting hall, government moderators 
interrupted the presentations of the independent experts who 
sought to voice their critical evaluations.  United Civic Party 
Chair Anatoliy Lebedko was banned from the hearings, and police 
arrested Russian environmental expert and nuclear physicist 
Andrey Ozharovskiy and detained him for seven days on charges of 
minor hooliganism.  Police also confiscated copies of 
 
MINSK 00000360  003.3 OF 005 
 
 
Ozharovskiy's remarks about the GOB's EIAR. 
 
---------------- 
Domestic Economy 
---------------- 
 
¶7. (SBU) IMF Disburses Another SBA Tranche to Belarus, But GOB's 
2009 Financing Gap May Not Be Filled 
 
IMF Executive Board Completed Second Review Under Stand-By 
Arrangement (SBA) on October 21 and approved the disbursement of 
approx. $699.5 million, bringing total disbursements under the 
program so far to about $2.23 billion.  In its October 21 press 
release the Executive Board welcomed good progress that Belarus 
made in adjusting its policies to the global crisis despite a 
substantial decline in exports, but noted that excessive 
lending, unless reduced, would put pressure on the country's 
international reserves. The disbursement presupposed the GOB 
limiting lending under government programs for the remainder of 
¶2009.  The Board also praised the GOB for progress in improving 
the business climate and facilitating private sector 
development, but again it presupposed that privatization would 
proceed.  IMF press statement concluded with "securing 
sufficient financial resources from the international community 
is essential for Belarus' reform efforts. In this context, the 
authorities stand ready to implement contingency measures should 
a financing gap emerge."  The latter phrase refers to the 
continued uncertainty whether Russia will extend to Belarus the 
final $500 million tranche of funds it had proposed a year ago, 
either bilaterally, as the first $1.5 billion had been conveyed, 
or through the recently established Eurasian Economic Community 
(EURASEC)'s Anti-Crisis Fund.  The IMF's initial calculations on 
how GOB would close its $1 billion financing gap in 2009, 
presupposed Russia transferring a final $500 million tranche, 
according to the IMF Resident Representative. 
 
¶8. (U) Gazprom Expects Belarus to Meet its Contractual 
Obligations and Pay European Gas Prices in 2011 
 
The CEO of the Russian gas monopoly Gazprom, Aleksey Miller, yet 
again stated in his October 12 interview to Russian television 
that the natural gas price for Belarus will rise in accordance 
to the contract, which "we must honor."  He added that the GOB 
"signed the document, and it must meet its contractual 
obligations."  Belarus Energy Minister Aleksandr Ozerets told 
the media that a GOB delegation will negotiate with Gazprom to 
push back the timeline for the gradual increase in gas prices 
for Belarus to European prices from 2011 to 2014.  (Note:  Under 
a five-year contract, signed with Gazprom on December 31, 2006, 
the gas price for Belarus was to gradually increase to the 
European market level by 2011.  It was to be 67 percent of the 
level, excluding delivery costs, in 2008, 80 percent in 2009, 90 
percent in 2010, and 100 percent in 2011. End Note.) 
 
¶9. (U) National Bank Chief: Banking System Facing "Significant 
Threat" 
 
According to independent media reports published on October 12, 
the National Bank (NB) Chairperson Pyotr Prokopovich warns in 
his letter to the Council of Ministers that the Belarus banking 
system is facing a "significant threat" due to the rising number 
of troubled loans, up 3.3 times since January, and a 
deterioration of the state banks' liquidity.  The state banks 
increased 1.4 times y-o-y in January-September 2009 the volume 
of lending to finance GOB programs, primarily for agriculture 
initiatives and apartment construction.  Subsequently, large 
state-owned banks, including the Belarusbank, have delayed their 
tax payments.  Prokopovich urged the GOB to limit state bank's 
financing of the GOB programs and delegate these function to the 
State Development Agency as outlined in the IMF's Stand-By 
Arrangement (SBA). 
 
¶10. (SBU) NB Official:  Bad Loans on the Rise? No Worries! My 
Boss is Wrong 
 
The head of the NB's Information Department Anatoly Drozdov told 
the media on October 13 that, in January-August, the share of 
troubled loans in the total loan portfolio of Belarus' banking 
system went up 230%; however, it remains "insignificant" at 2.6% 
of the overall portfolios.  The NB has projected a 5%-limit for 
the troubled loans' share this year, and most of those account 
for funding provided under GOB programs.  The NB official also 
dismissed as "not objective" the letter to the Council of 
Ministers by his boss, NB Chairperson Pyotr Prokopovich.  (Note: 
 IMF Resident  Representative told Charge that the criteria the 
GOB uses to assess bad loans does not comport with international 
standards and thus under reports the figure.  End Note) 
 
MINSK 00000360  004.3 OF 005 
 
 
 
¶11. (SBU) Lukashenka Sets $7 Ceiling for 2010 Utility Rates 
Increase, thus Downplays the Actual Increase 
 
Lukashenka told Belarus' Energy Minister Aleksandr Ozerets on 
October 15 that gas and electricity rates for households will 
not be increased by more than seven USD in 2010, and increases 
can be imposed in increments no higher than $1/month as "the 
people can't pay more today."  He also opined that pensions and 
salaries should be raised prior to any utility rate hike. 
Nevertheless, "people should understand that if we ruin the 
power generation industry" [which receives heavy subsidies from 
the state and whose losses are also covered by the much higher 
energy prices paid by industrial enterprises], there will be "no 
payments at all," Lukashenka stressed, implying that the gradual 
increase of the utility rates will be eventually justified. 
(Note - IMF Resident Representative told Charge that increases 
utility rates was a precondition of the IMF's for releasing its 
latest tranche and thus the GOB had committed to instituting the 
price increase by November 1, 2010. End Note.) 
 
¶12. (SBU) Lukashenka Signs Edict to Streamline Auditing of 
Businesses 
 
Presidential press services reported on October 16 that 
Lukashenka signed an edict, which established uniform procedures 
for the GOB's control and supervision of enterprises and 
businesses.  The edict imposes a two-year moratorium on 
inspections of newly-created businesses and provides an 
exhaustive list of the controlling and supervision agencies and 
their powers.  According to the document, all economic entities 
will be divided into three groups depending on the potential 
risks, and the highest-risk group of businesses will be not  be 
inspected more than once a year.  The State Control Committee 
remains the main controlling agency, also in charge of 
coordinating inspections.  Some business leaders, who shared 
with Embassy their views on the edict, referred to the paper as 
"a progressive document" but noted that much will depend on its 
enforcement, as biased enforcement may eliminate any benefit. 
(Note:  World Bank Resident Representative told Charge that the 
edict was one of WB's preconditions for the release of its $200 
million Development Policy Loan). 
 
¶13. Belarus' Exports Continue to Fall Faster Than Imports 
Through August 
 
According to the data of the National Statistics Committee 
posted on October 19, through-August Belarus exports dropped 
44.5 percent year-on-year.  Imports fell 34.7 percent in the 
same time period. 
 
-------- 
Security 
-------- 
 
¶14. (U) Collective Security Treaty Organization, Belarus is a 
Member, But Does it Matter 
 
The Spokesperson for the Collective Security Treaty Organization 
(CSTO) Secretariat announced on October 20 that President 
Lukashenka had signed "a package of documents," including the 
CSTO's Rapid Response Forces (RRF) agreement.  Initially, 
Lukashenka boycotted the June 14 CSTO meeting that adopted the 
accords because of a dairy dispute with Russia.  Lukashenka's 
ultimate endorsement of the RRF commits Belarusian military 
forces to a Russian-based unified command with the ostensible 
purpose of countering "military aggression," international 
terrorism and extremism, transnational organized crime and drug 
trafficking as well as ensuring the CSTO's efficient 
participation in the maintenance of international peace and 
security.  The Russian daily Kommersant speculated on October 21 
that Belarus will "become a key RFF member-state" and has 
committed to deploying about 5,000 Belarusian servicemen.  A 
number of the Belarusian human rights advocates expressed 
concerns that the RFF may be used to suppress opposition 
demonstrations in CSTO member-states.  A Vilnius-based 
Belarusian Institute for Strategic Studies think-tanker 
suggested that because the Belarusian Constitution prohibits the 
stationing of troops beyond Belarus borders, this is merely a 
non-binding agreement meant to appease Russia. 
 
----------------- 
Quote of the Week 
----------------- 
 
¶15.  In his remarks made at the celebration of the presidential 
security service' 15th anniversary Lukashenka said: 
 
MINSK 00000360  005.3 OF 005 
 
 
 
"We cannot underestimate, as it often happened in the history of 
our Motherland, foreign policy aspects, which can influence the 
situation in Belarus in the worst possible way~ Now, in the 
first place, these are the consequences of the global economic 
crisis, which hit the USA and other major world nations. There 
are some people both inside and outside Belarus who are trying 
to use the existing difficulties to achieve their own unfair 
goals, make people lose trust in the government and sow the 
seeds of discord and unrest in the country. 
SCANLAN