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DE RUEHSK #0052/01 0191428
ZNR UUUUU ZZH(CCY AD6EAB66 MSI5278-695)
R 191428Z JAN 07
FM AMEMBASSY MINSK
TO RUEHC/SECSTATE WASHDC 5542
INFO RUCNOSC/ORGANIZATION FOR SECURITY COOPERATION IN EUROPE
RHMFISS/HQ USEUCOM VAIHINGEN GE
RUFOADA/JAC MOLESWORTH RAF MOLESWORTH UK

UNCLAS MINSK 000052 
 
SIPDIS 
 
SIPDIS 
 
C O R R E C T E D COPY SIGNATURE 
 
E.O. 12958: N/A 
TAGS: PGOV PREL PHUM ECON EPET ENRG BO
SUBJECT: EMBASSY MINSK WEEKLY POL/ECON REPORT - JANUARY 17, 2007 
 
 
¶1.  The following are brief items of interest compiled by Embassy 
Minsk.  This report covers events from January 8 to January 19. 
 
TABLE OF CONTENTS 
 
GOVERNMENT 
---------- 
 
- Lukashenko Appoints Son to Belarus' Security Council (para. 2) 
- Parliamentary Session on Election Commission (para. 3) 
 
CIVIL SOCIETY 
------------- 
 
- Opposition Activist Released from Prison (para. 4) 
- Police Detain Opposition Leader, Confiscate Leaflets (para. 5) 
- Independent Newspaper Evicted (para. 6) 
- Opposition Youths to Stage Valentine Day March (para. 7) 
 
INTERNATIONAL TRADE AND INVESTMENT 
---------------------------------- 
 
- Automaker Finishes 36 of 800 Iranian Samands (para. 8) 
- MMZ's Engine Exports Up 9.7 Percent in 2006 (para. 9) 
- GOB Reports Sugar Dispute with Russia Resolved (para. 10) 
 
DOMESTIC ECONOMY 
---------------- 
 
- Household Energy Rates to Rise 20 Percent (para. 11) 
- Debts to Social Security Fund Down 20 Percent (para. 12) 
- Individual Bank Deposits Rise 42 Percent (para. 13) 
 
INTERNATIONAL RELATIONS 
----------------------- 
 
- Lukashenko Eschews Border Troop Deployment (para. 14) 
- Minsk Is "Open for Dialogue" with PACE (para. 15) 
- Belarus and Italy Reach Orphan Agreement (para. 16) 
- Belarus to Sign Taxation Agreement with Sudan (para. 17) 
 
- QUOTE OF THE WEEK (para. 18) 
 
---------- 
GOVERNMENT 
---------- 
 
¶2.  Lukashenko Appoints Son to Belarus' Security Council 
 
On January 10, independent media reported that President 
Lukashenko appointed his son Viktor as a member of Belarus' 
Security Council through a January 5 presidential edict. 
Although Belarus' Civil Service Law bans immediate relatives from 
being appointed to a government position if this position is 
directly subordinated to another immediate relative, Prosecutor 
General Pyotr Miklashevich told reporters last year that he did 
not see any breach of laws in the appointment of Viktor 
Lukashenko as a presidential aide. 
 
¶3.  Parliamentary Session on Election Commission 
 
On January 15, President Lukashenko called a special session of 
the upper house of the Belarusian parliament to approve 
nominations to the Central Election Commission (CEC).  On 
December 26, 2006, Lukashenko reappointed Lidiya Yermoshina, 
Nadezhda Kiseleva, Marina Kozlovich, Nikolay Lozovik, Valeriy 
Matskevich and Vladimir Kholod as CEC members.  The upper house 
will elect another six members of the commission. 
 
------------- 
CIVIL SOCIETY 
------------- 
 
¶4.  Opposition Activist Released from Prison 
 
On January 10, authorities released opposition United Civic Party 
Activist Ivan Kruk, who served six months in jail for allegedly 
threatening the use of force against a police officer.  Kruk 
allegedly committed the crime during a raid of his home in the 
western Grodno region shortly before Belarus' March 2006 
presidential elections. 
 
¶5.  Authorities Detain Opposition Leader, Confiscate Leaflets 
 
On January 10, Minsk police detained opposition United Civic 
Party (UCP) Chair Anatoliy Lebedko for distributing political 
leaflets.  Authorities released Lebedko later that day but 
confiscated those leaflets detailing UCP's regional development 
program. 
¶6.  Independent Newspaper Evicted 
On January 11, Vitebsk Regional Economic Court judge Olga Gatilo 
ordered the local independent newspaper "Vitebsky Kuryer" to 
vacate its office.  The building's authority in December had 
given the newspaper notice to move out, but the editorial staff 
refused to vacate the three rooms, insisting that its contract is 
valid until August 31.  The landlord filed a lawsuit for eviction 
on January 5 on grounds that the rent contract with the paper was 
null and void because it had been concluded without the prior 
consent of the local government. 
 
¶7.  Opposition Youths to Stage Valentine Day March 
 
On January 18, Belarus' unregistered opposition youth group 
Malady Front (MF) applied to Minsk city authorities for 
permission to gather at Minsk's Liberty Square for a traditional 
march on St. Valentine's Day and plan to deliver Valentine Day 
messages to European embassies.  The Minsk City Executive 
Committee must reply to the application within 15 days.  However, 
according to organizer Anastasiya Polozhanko, MF will hold the 
event even if authorities deny permission. 
 
---------------------------------- 
INTERNATIONAL TRADE AND INVESTMENT 
---------------------------------- 
 
¶8.  Automaker Finishes 36 of 800 Iranian Samands 
 
On January 17, Belarus' automaker ZAO Yunison acknowledged 
suspending its production of Samand cars until its Iranian 
partner, Iran Khodro, approves its supply schedule and begins 
delivery of Samand kits to Belarus.  Yunison Financial Director 
Sergei Skomorokh related that Yunison has not imported any kits 
thus far in 2007 and that several customs issues remain 
unresolved.  Despite Yunison's plans to make 800 Samands in 2006, 
the company built only 36 by year's end.  Nevertheless, Yunison 
forecasts production of 6,000 units with 30 percent profitability 
in 2007. 
 
¶9.  MMZ's Engine Exports Up 9.7 Percent in 2006 
 
On January 12, Belarus' state-owned Minsk Motor Plant (MMZ) 
reported that exports of its engines increased by 9.7 percent on 
the year in 2006 to 48,900 units worth USD 103.4 million.  Russia 
accounted for 88.7 percent of all exports, up two percent on the 
year.  Meanwhile, overall sales of engines increased by 6.4 
percent to 106,400 units.  Top Russian customers included the 
truck manufacturer ZIL, a Tver-based excavator plant, a Pavlov- 
based bus plant, and Russia's second-largest car producer and 
truck maker GAZ. 
 
¶10.  GOB Reports Sugar Dispute with Russia Resolved 
 
On January 17, Belarusian independent media reported that Belarus 
has agreed to reduce sugar exports to Russia.  Belarus will 
reportedly supply 180,000 tons of sugar to Russia in 2007 and 
100,000 tons in 2008.  Belarus' sugar companies had previously 
contracted to export 350,000 tons of sugar during that period. 
Russia had suspended sugar imports from Belarus since December 29 
after Russian sugar refineries demanded Russian customs launch a 
probe into the chemical make-up of Belarusian sugar.  The 
resulting customs clearance backlog cost Belarusian sugar 
producers approximately USD 2 million and Belarusian railroad 
operators approximately USD 600,000. 
 
---------------- 
DOMESTIC ECONOMY 
---------------- 
¶11.  Household Energy Rates to Rise 20 Percent 
 
On January 18, Deputy Prime Minister Viktor Burya announced hikes 
of 20 percent on January household rates for gas and electricity 
and 12 percent on heat but pledged no additional increases this 
year, barring force majeure.  According to Burya, the monthly 
utility bill for a two-room apartment would increase by USD 5. 
Under a contract signed on December 31 between Belarus and 
Russia's gas monopolist Gazprom, Belarus has to pay USD 100 for 
1000 cubic meters in 2007 compared with USD 46.68 over the past 
two and a half years.  The gas price hike will raise household 
electricity costs by 55 percent to USD 0.11 per kilowatt hour. 
 
¶12.  Debt to Social Security Fund Down 20 Percent 
 
On January 12, an official with Belarus' Social Security Fund 
told independent media that Belarusian companies' overdue debt to 
the fund declined by 20.6 percent in real terms during 2006 to 
USD 40.5 million.  In December, overdue debt declined one 
percent, following a 0.5 percent drop in November.  As of January 
1, debt was 12.4 percent of the fund's monthly spending, down 
from 12.6 percent as of December 1, 2006 and 19.3 percent as of 
January 1, 2006.  Agricultural companies accounted for 88.4 
percent of total overdue debt as of January 1, down from 81 
percent on January 1, 2006.  Contributions to the fund account 
for 32 percent of state budget revenues. 
 
¶13.  Individual Bank Deposits Rise 42 Percent 
 
On January 15, the National Bank of Belarus (NBB) reported that 
individuals' deposits in national and foreign currencies with 
Belarusian banks rose by 41.7 percent, or nearly USD 1.1 billion, 
in 2006.  Individuals' ruble deposits reportedly rose by nearly 
USD 795 million, or 45.8 percent, in 2006, and deposits in 
foreign currencies by USD 295.3 million, or 34.2 percent.  The 
NBB attributes the rise to its interest rate policy that is aimed 
at safeguarding individuals' ruble savings against depreciation 
risks and guaranteeing the affordability of loans to individuals 
and enterprises in the real sector.  Moreover, interest rates for 
ruble deposits are still higher than the inflation rate and 
profit gained from deposits in foreign currencies. 
 
----------------------- 
INTERNATIONAL RELATIONS 
----------------------- 
 
¶14.  Lukashenko Eschews Border Troop Deployment 
 
On January 18, President Lukashenko said that Belarus' Border 
Troops would not be deployed on the Russian border despite 
Russia's recent deployment of 150 Russian border officers and the 
operation of 16 Russian customs clearance points for goods 
originating with third countries.  During consultations with 
President Lukashenko, State Border Troops Committee Head 
Aleksandr Pavlovskiy commented, "Despite the position that the 
Russian leadership has taken today, we will not introduce any 
border troops operations on the Belarusian-Russian border. We 
will not guard it." 
 
¶15.  Minsk Is "Open for Dialogue" with PACE 
 
On January 18, Belarusian House of Representatives Chairman 
Vladimir Konoplev told visiting Council of Europe Parliamentary 
Assembly (PACE) President Rene van der Linden that the GOB is 
open for a dialogue with Europe.  Konoplev indicated that 
Belarus' legislature does not need any additional reforms and 
that he has shown van der Linden the "true Belarus." Van der 
Linden stressed during his press conference with Belarusian 
journalists that he has held frank discussion with GOB officials 
and generally "prefers engagement over isolation."  The PACE 
suspended the Special Guest Status of the Belarusian national 
legislature in January 1997. 
 
¶16.  Belarus and Italy Reach Orphan Agreement 
 
On January 12, Belarus' Deputy Minister of Education Tatyana 
Kovaleva announced that the GOB has drafted an agreement between 
Belarus and Italy on the stay of Belarusian children in Italy. 
The draft reportedly stipulates that any Belarusian children 
staying in Italy remain Belarusian nationals and all matters 
concerning them should be settled according to Belarusian law or 
with the participation of the country's official representatives. 
The GOB has refused to allow orphans to stay with Italian 
families since an Italian couple blocked the return home of a 
visiting Belarusian orphan in September 2006 after claiming that 
she had been abused in her Minsk boarding school. 
 
¶17.  Belarus to Sign Taxation Agreement with Sudan 
 
On January 8, the GOB announced that President Lukashenko 
directed Belarus to sign an agreement with Sudan on the avoidance 
of double taxation and the prevention of income and property tax 
evasion.  The decree followed several December 19 trade 
agreements between the GOB and Khartoum signed during Sudanese 
Foreign Minister Lam Akol Ajawin's visit to Minsk. 
 
----------------- 
QUOTE OF THE WEEK 
----------------- 
 
¶18.  On January 7, while speaking at Holy Ghost Church on 
Orthodox Christmas, President Lukashenko denied any intention of 
giving up Belarusian sovereignty for a Union State with or 
without subsidized energy from Russia: 
 
"I have never said anywhere that we will surrender our country to 
anyone for tearing it to pieces.  I have never said anywhere that 
we will let Belarus be incorporated into another country. 
Sovereignty is too precious a thing to trade in.  Even I, a man 
of character, as the head of state, would never venture to do 
that because I know the consequences.  However hard it may be for 
us, we should learn to live on our small patch of land and take 
care of it." Stewart.