VZCZCXRO8055
RR RUEHDBU RUEHFL RUEHLA RUEHMA RUEHMRE RUEHROV RUEHSR
DE RUEHSK #1075/01 2761127
ZNR UUUUU ZZH
R 031127Z OCT 06
FM AMEMBASSY MINSK
TO RUEHC/SECSTATE WASHDC 5168
INFO RUCNOSC/ORGANIZATION FOR SECURITY COOPERATION IN EUROPE
RHMFISS/HQ USEUCOM VAIHINGEN GE
RUFOADA/JAC MOLESWORTH RAF MOLESWORTH UK

UNCLAS SECTION 01 OF 03 MINSK 001075 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: PGOV PREL PHUM ECON EPET ENRG KTDB BO
SUBJECT: EMBASSY MINSK WEEKLY POL/ECON REPORT - OCTOBER 03, 
2006 
 
 
MINSK 00001075  001.2 OF 003 
 
 
¶1.  The following are brief items of interest compiled by 
Embassy Minsk. 
 
TABLE OF CONTENTS 
 
INTERNATIONAL RELATIONS 
----------------------- 
 
- Lukashenko Discusses Union State Agenda with Borodin (para. 2) 
- China's Ambassador Calls Belarus A Friend and Partner (para. 3) 
 
CIVIL SOCIETY 
------------- 
 
- Lukashenko to Reinforce BKGB (para. 4) 
- BPF Not Permitted to Hold Rallies Featuring Milinkevich (para. 5) 
- Lukashenko Creates New Socio-Political Think Tank (para. 6) 
 
TRADE AND INVESTMENT 
-------------------- 
 
- Belarus' Foreign Trade Exceeds USD 25 Billion (para. 7) 
- Russia, Germany, Poland and Belarus Plan Joint Rail (para. 8) 
- Belarus Contemplates Exporting Electricity to Russia (para. 9) 
 
DOMESTIC ECONOMICS 
------------------ 
 
- Cabinet Increases Pay of Industrial Giants' CEOs (para. 10) 
- Housing Construction Reportedly Rises 16.7 Percent (para. 11) 
 
- QUOTE OF THE WEEK (para. 12) 
 
----------------------- 
International Relations 
----------------------- 
 
¶2.  Lukashenko Discusses Union State Agenda with Borodin 
 
On September 28, President Lukashenko met Belarusian-Russian Union 
State Secretary of State Pavel Borodin in Minsk to discuss the 
agenda of the Supreme State Council's next meeting scheduled for 
later this year.  The talks focused on a common Belarusian-Russian 
currency, the Union State's legislative and executive agencies, and 
the Union State's draft Constitutional Act.  Lukashenko and Borodin 
also discussed proposed reforms of the Parliamentary Assembly, 
Council of Ministers, and supervising agencies of the Union State. 
Both agreed that the latter two should remain advisory bodies.  On 
the topic of Russian natural gas giant Gazprom's intention to raise 
the gas price for Belarus fourfold next year, Borodin advocated 
uniform gas prices.   The meetings also included discussion of a 
project to develop the transport route from Brest to Vladivostok. 
 
¶3.  China's Ambassador Calls Belarus A Friend and Partner 
 
On September 28, a commemoration in Minsk of the 57th anniversary 
of the proclamation of the People's Republic of China, Chinese 
Ambassador to Belarus Wu Hongbin described China and Belarus as 
"honest friends in the political sphere and reliable partners in 
the economic sphere."   Wu noted that China and Belarus would soon 
observe their 15th anniversary of diplomatic relations and voiced 
support for Belarus' foreign and domestic policies.  In particular, 
Wu praised Belarus' effort to form the Union State with Russia on 
the grounds that union advances "the well-being of the people in 
the two countries, stability in the region, and the improvement of 
the country's relations with European and American countries."  Wu 
also expressed China's gratitude to Belarus for its support on the 
issues of Taiwan and Tibet.  According to Wu, the Chinese embassy 
in Minsk had issued more than 2,200 visas by September, as many as 
in the entire previous year.  On September 21, Belarus's State 
Control Committee and the People's Bank of China signed a 
memorandum of understanding on combating money laundering. 
 
------------- 
Civil Society 
------------- 
 
¶4.  Lukashenko to Reinforce BKGB 
 
On September 28, while speaking to security service heads of the 
Commonwealth of Independent States (CIS), President Lukashenko 
announced his intentions to reinforce the BKGB.  According to 
Lukashenko, powerful security agencies are necessary to ensure the 
security of any state, even a nuclear power.  Lukashenko pledged 
increased support for the BKGB and called upon the agency to 
develop a robust action plan. 
 
¶5.  BPF Not Permitted to Hold Rallies Featuring Milinkevich 
 
On September 28, the Executive Committee of the northeastern region 
 
MINSK 00001075  002.2 OF 003 
 
 
of Vitebsk denied local opposition Belarusian Popular Front (BPF) 
activists permission to hold a rally featuring former opposition 
presidential candidate Aleksandr Milinkevich on September 29. 
According to Vitebsk BPF Chairman Konstantin Smolikov, the Regional 
Executive Committee's ideological department denied permission on 
the grounds that written authorization from the BPF Board was not 
attached to the application.  Smolikov's legal counsel described 
the requirement as both unprecedented and illegal.  Authorities 
also denied BPF activists in the eastern city of Orsha permission 
to hold a rally in which Mr. Milinkevich would have participated on 
September 30. 
 
¶6.  Lukashenko Creates New Socio-Political Think Tank 
 
On September 25, President Lukashenko issued a presidential edict 
transforming the Presidential Administration's Institute of Social 
and Political Studies (ISPS) into an Information and Analytical 
Center.  According to the edict, ISPS' new purpose will be to study 
"the electoral preferences of the population during electoral and 
other public and political campaigns, conducting systematic 
monitoring of the mass media, and studying ways of improving 
ideological work."  President Lukashenko himself will appoint the 
head of the center, which will have 76 staff members. 
 
-------------------- 
Trade and Investment 
-------------------- 
 
¶7.  Belarus' Foreign Trade Exceeds USD 25 Billion 
 
On September 23, the National Bank of Belarus reported that 
Belarus' foreign trade in goods and services in the first seven 
months amounted to USD 25 billion, a rise of 31.9 percent over the 
same period in 2005.  The export of goods increased by 26.6 percent 
to USD 11 billion, and imported goods rose by 40.8 percent to USD 
12 billion.  The export of services totaled USD 1.2 billion, an 
increase of 10.3 percent, as imports rose 16 percent to USD 777 
million.  GOB analysts attribute the high import surplus to a 31.3 
percent decrease in the export of potash fertilizers and to a jump 
in the import of crude oil, automobiles, petroleum products, 
ferrous metals, agricultural machinery, and natural gas. 
 
¶8.  Russia, Germany, Poland and Belarus Plan Joint Rail 
 
On October 1, independent media related that rail operators in 
Russia, Germany, Poland and Belarus plan to form a joint venture 
called EurasiaRailLogistics, which will be registered in Moscow 
before the end of 2006.  The joint venture will focus on rail 
shipments along European Transport Corridor II (Berlin-Warsaw-Minsk- 
Moscow-Nizhniy Novgorod), developing and selling logistical 
products, and offering cargo delivery services between Europe, 
Russia, and China.  Russian Railroads will hold 40.1 percent in the 
venture, while 34.9 percent is to belong to Germany's Railion 
Deutschland AG, 15 percent to Poland's PKP, and 10 percent to 
Belarusian Railroads. 
 
¶9.  Belarus Contemplates Exporting Electricity to Russia 
 
On September 28, Belenergo Director Pavel Yakubovich announced that 
Belarus might export electricity to Russia.  Although Belarus 
currently imports electricity from Russia and Ukraine, Yakubovich 
claimed that Russian officials raised the possibility of purchasing 
Belarusian electricity.  He added that Belarus does not need to 
import electricity, but such imports benefit Belarus for 
technological and economic reasons.  However, Belarusian Energy 
Ministry Department Head Vladimir Bobrov cautioned that future 
Belarusian imports and exports of electricity would depend on the 
creation of the Belarusian-Russian Union State.  Bobrov also noted 
that the price and the amount of electricity imports and exports 
would be linked to the price of natural gas. 
 
---------------- 
Domestic Economy 
---------------- 
 
¶10.  Cabinet Increases Pay of Industrial Giants' CEOs 
 
On September 23, independent media reported that the Belarusian 
Council of Ministers increased the multipliers used for calculating 
the pay of Belarus' top CEOs.  Starting October 1, a six-to-one 
ratio between the pay of the CEO and the average pay at the 
enterprise will determine compensation to the directors general of 
the Atlant refrigerator plant, the Minsk Automobile Plant (MAZ), 
the Minsk Tractor Works, the Belarusian Automobile Factory (BelAZ) 
in Zhodino, the Gomelmash farm equipment factory in Gomel, the 
Belarusian Steel Works in Zhlobin, and the Minsk Engine Plant, and 
a multiplier of five to the directors general of the Mogilev 
Metallurgical Plant, the Mogilev Elevator Plant, and the Minsk 
Wheeled Tractor Plant. 
 
 
MINSK 00001075  003.2 OF 003 
 
 
¶11.  Housing Construction Reportedly Rises 16.7 Percent 
 
On September 23, the Belarusian Ministry of Statistics and Analysis 
claimed that finished new housing construction totaled 2,441,000 
square meters during the first eight months of 2006, a 16.7 percent 
rise over the same period in 2005.  Authorities officially spent 
public funds on the construction of 102,000 square meters, 15.5 
percent less than during the same period of 2005, while enterprises 
used their own funds to construct 96,000 square meters, 12.4 
percent less.  Meanwhile, home construction financed by individuals 
and bank loans rose.  Housing built in rural areas totaled 835,000 
square meters, including 4,553 apartments and single-family houses. 
Rural housing construction totaled USD 191 million in fixed capital 
expenditures, 55.7 percent of the GOB's target.  The GOB's 
Chernobyl relief fund financed 113 apartments totaling 3,500 square 
meters and accounted for 23.3 percent of the 2005 target.  The 
government had projected that housing totaling 3,700,000 to 
4,200,000 square meters would be ready for use this year, including 
8,645 apartments and single-family houses in rural areas. 
 
----------------- 
Quote of the Week 
----------------- 
 
¶12.  During a three-hour press conference on September 29, 
President Lukashenko enumerated the following reasons why Russia's 
Gazprom should not raise prices on Belarus: 
 
"If tanks start rolling from there [the West] to Russia, we will be 
dying for Russia.  We give food and drink to Russians that are 
kicked out of Lithuania like dogs if they are deported for some 
reason.  The Chechens that were traveling to Poland via Brest were 
thrown out of the train cars.  Hundreds of people were there.  We 
received and accommodated them, gave them food and drink. They bore 
children there and named them after me." 
 
Stewart