VZCZCXRO9223
RR RUEHAG RUEHAST RUEHDA RUEHDF RUEHFL RUEHIK RUEHKW RUEHLA RUEHLN
RUEHLZ RUEHNP RUEHPOD RUEHROV RUEHSR RUEHVK RUEHYG
DE RUEHSK #0022/01 0161721
ZNR UUUUU ZZH
R 161721Z JAN 09
FM AMEMBASSY MINSK
TO RUEHC/SECSTATE WASHDC 0068
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE
RUEHSK/AMEMBASSY MINSK 0069

UNCLAS SECTION 01 OF 04 MINSK 000022 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: PGOV PREL PHUM ECON ENRG BO
SUBJECT: BELARUS BI-WEEKLY POL/ECON REPORT - JANUARY 16, 2009 
 
MINSK 00000022  001.2 OF 004 
 
 
¶1. The following are brief items of interest compiled by Embassy 
Minsk. 
 
TABLE OF CONTENTS 
 
Civil Society 
------------- 
 
- Independent Newspaper Denied Print, Distribution, then Fined 
(para. 2) 
- Grodno Activists Detained and Searched (para. 3) 
- Brest Activists Detained (para. 4) 
- Local Independent Trade Union Office Registered (para. 5) 
- New Life Church Denied Confiscation Appeal (para. 6) 
- Kurapaty Vandalism Case Closed (para. 7) 
- Opposition Youth Briefly Detained over Flash Mob (para. 8) 
- Christian Democrat Expelled (para. 9) 
- Neo-Nazi Activist Sentenced to Jail (para. 10) 
- Court Dismissed Opposition Youth Activist's Appeal (para. 11) 
- Malady Front Leader Forcibly Drafted (para. 12) 
- Malady Front Activist Wanted for Draft Evasion (para. 13) 
 
Domestic Economy 
---------------- 
 
- Hard Currency Reserves Down 26.8 Percent in 2008 (para. 14) 
- National Bank Increases Refinance Rate from 12 to 14 Percent 
(para. 15) 
- Retail Prices on Most Imported Products up 20 Percent (para. 
16) 
- National Bank Dismisses Redenomination and Other Rumors (para. 
17) 
- Belaruskaliy Urges Workers to Take Partially Paid Leave (para. 
18) 
- Lukashenka claims Venezuela issued USD 0.5 billion loan to 
Belarus (para. 19) 
- GOB GDP Forecasts Differ From IMF Estimates (para. 20) 
 
Foreign Trade 
------------- 
 
- Natural Gas Transit Facilities Operate at Full Capacity (para. 
21) 
- Lukashenka and Gazprom Optimistic About Natural Gas Price in 
2009 (para. 22) 
 
Quote of the Week (para. 23) 
---------------------------- 
 
------------- 
Civil Society 
------------- 
 
¶2. Independent Newspaper Denied Print, Distribution, then Fined 
 
On January 3, a Minsk-based private publishing company 
unilaterally terminated an agreement to print the independent 
newspaper Borisovskiye Novosti, allegedly because of the global 
financial crisis.  Borisov local authorities also revoked the 
newspaper's license for retail trade on December 30.  The 
editors will also be unable to distribute the newspaper since it 
has been long banned from state-owned subscription and sales 
networks.  Chief editor Anatoliy Bukas filed a lawsuit to 
challenge what he called "an ungrounded ban." 
 
The Minsk Oblast Economic Court fined Bukas USD 18,000 on 
January 13.  The administrative charges of "illegal business 
activities" stemmed from a December tax inspection report citing 
retail trade violations.  Bukas said that he will appeal the 
"politically motivated" fine to a higher court. 
 
¶3. Grodno Activists Detained and Searched 
 
Border guards briefly detained and thoroughly searched human 
rights activist Viktor Sazonov and independent journalist 
Vladimir Khilmanovich at the Grodno train station on January 5. 
Law enforcers explained that the two activists are on "a special 
BKGB list."  Sazonov called prolonged searches "a provocation" 
and linked them with the activists' professional activities. 
 
¶4. Brest Activists Detained 
 
Police detained Malady Front (MF) activists Yury Bakura and 
Roman Kislyak for two hours as they distributed news bulletins 
in central Brest on December 31.  Police seized all copies of 
the bulletin and released the two without charge. 
 
¶5. Local Independent Trade Union Office Registered 
 
Viktor Kozlov, a representative of the Rechitsa-based office of 
the Independent Radio and Electronics Industry Workers Trade 
Union, informed the media on January 7 that Rechitsa city 
authorities officially registered the office in late December. 
 
MINSK 00000022  002.2 OF 004 
 
 
They had previously turned down two registration applications, 
citing various reasons, and the court had dismissed the trade 
unionists' appeals. 
 
¶6. New Life Church Denied Confiscation Appeal 
 
On January 13, the Supreme Economic Court dismissed the New Life 
Church's appeal challenging Minsk city authorities' confiscation 
and scant reimbursement for its land and prayer house.  The 
Court had suspended the case hearings for over 18 months, and 
the Church plans to appeal the recent verdict yet again. 
 
¶7. Kurapaty Vandalism Case Closed 
 
Police closed January 12 a criminal case against two youth 
detained for vandalism at the Stalin-era mass murder Kurapaty 
site on November 1, 2008, due to "lack of evidence."  Meanwhile, 
the investigation, launched on November 11, 2008, of the 
demolition of memorial crosses at the site, continues.  No 
suspects have yet been identified. 
 
¶8. Opposition Youth Briefly Detained over Flash Mob 
 
Police detained for two hours three European Belarus campaign 
activists for holding a flash mob and handing out buckwheat in 
central Minsk on January 12.  The activists were protesting 
GOB's "irresponsible" policies in tackling the global financial 
crisis and were "providing fellow residents with nutritious 
food."  Police confiscated about 15 kilograms of buckwheat and 
released the activists without charge. 
 
¶9. Christian Democrat Expelled 
 
Rechitsa-based Belarusian Christian Democracy coordinator 
Aleksey Zmushko informed the media on January 13 that he was 
expelled from a university in the town of Gorki on December 24, 
¶2008.  The university administration alleged "academic failures" 
as the reason for his expulsion and implied that he was a member 
of "the wrong party."  Zmushko linked his expulsion with his 
political activities. 
 
¶10. Neo-Nazi Activist Sentenced to Jail 
 
A Gomel district court sentenced January 8 an alleged neo-Nazi 
to four years and a month in a medium security jail for stabbing 
an ultra-nationalist Russian National Unity activist in July 
¶2008.  The convict reportedly denied his membership in the 
neo-Nazi group though he has a criminal record of severe 
hooliganism and illegal possession of weapons. 
 
¶11. Court Dismissed Opposition Youth Activist's Appeal 
 
The Minsk city court dismissed January 13 an appeal by 
opposition youth Alyaksandr Barazenka, who was convicted for 
participating in the unsanctioned entrepreneurs' demonstration 
on January 10, 2008.  Barazenka was sentenced on December 9, 
2008, to a year of "restricted freedom" a form of "khimiya" 
served at home. 
 
¶12. Malady Front Leader Forcibly Drafted 
 
On January 12, Soligorsk-based Malady Front Deputy Chairman Ivan 
Shylo was forcibly transported to a local draft office, examined 
by doctors, and conscripted into the army.  A television crew 
captured the event on camera.  Shylo linked his forced drafting 
with his political activities and said he is expecting to start 
military service on January 18. 
 
¶13. Malady Front Activist Wanted for Draft Evasion 
 
Human rights portals reported January 15 that the police have 
opened a criminal case against MF activist Sergey Guminskiy on 
alleged draft evasion charges.  Guminskiy, currently a student 
in Poland, is now on the wanted list and could be tried in court 
if arrested. 
 
---------------- 
Domestic Economy 
---------------- 
 
¶14. Hard Currency Reserves Down 26.8 Percent in 2008 
 
The National Statistics Committee and the National Bank reported 
on January 6 that Belarus' hard currency reserves calculated by 
IMF standards decreased in December 2009 by USD 714 million.  As 
of January 1, 2009, total reserves were USD 3.1 billion 
including the stabilization loan of USD 1 billion issued by 
Russia in November 2008.  The reserves were USD 4.2 billion on 
January 1, 2008. 
 
¶15. National Bank Devalues Ruble, Raises Refinance Rate 
 
The National Bank issued a press release on January 1 announcing 
 
MINSK 00000022  003.2 OF 004 
 
 
a 20.5 percent devaluation of the Belarusian ruble (BR) against 
the USD effective January 2 and a 2 percent increase in the 
refinance rate effective January 8.  The latter move is 
reportedly aimed at increasing the BR's stability and the 
profitability of saving deposits in BR.  Many Belarusians 
expressed their skepticism by lining up at banks to convert 
deposits in BR to hard currencies.  The refinance rate is the 
National Bank's interest on loans issued to domestic banks. 
 
¶16. Retail Prices on Most Imported Products up 20 Percent 
 
Various Belarusian media reports and anecdotal evidence suggest 
that retail prices on the majority of imported products, 
particularly those sold by market vendors, have increased 20 
percent since late December 2008.  Prices for Belarusian-made 
products remain the same while demand, especially on high-tech 
products, has grown immensely.  Both retail and wholesale 
businesses are expected to increase prices in BR soon to offset 
the 20.5 percent depreciation of the national currency as well 
as potential risks, such as further depreciation. 
 
¶17. National Bank Dismisses Redenomination and Other Rumors 
 
Chairman of the Board of the National Bank Pyotr Prokopovich 
dismissed rumors on January 12 of plans for redenomination of 
the Belarusian ruble (BYR), another sharp devaluation, freezing 
savings accounts and a  transition to the Russian ruble (RYR). 
He admitted that some Belarusians trusted these rumors, which 
were spread by people "who would like to destabilize the 
situation."  He said that both redenomination and transition to 
RYR would take a long time and cannot be performed overnight. 
Prokopovich urged Belarusians, who, according to various 
estimates, possess 2-20 billion in cash in various hard 
currencies, to open savings accounts in Belarusian banks.  He 
expressed confidence that the country's banking system is strong 
and stable.  Speaking to journalists on January 13, Lukashenka 
also dismissed redenomination and devaluation rumors though said 
nothing about the potential freezing of accounts or a transition 
to the RYR. 
 
¶18. Belaruskaliy Urges Workers to Take Partially-Paid Leave 
 
According to news reports, Belarus' manufacturer of potassium 
fertilizers and the country's largest source of export revenues 
Belaruskaliy urged its workers take partially-paid leave for 
varying periods of time because three of the factory's four 
divisions have suspended operations due to falling demand.  The 
Independent Union of Miners maintains that none of the factory's 
twenty thousand workers have been forced to stop working and 
those who choose to take leave are paid two-thirds of their 
monthly wage.  Anecdotally, post has heard of many other 
Belarusian businesses that sent their workers on unpaid leave of 
several weeks over the holiday season. 
 
¶19. Lukashenka claims Venezuela issued USD 0.5 billion loan to 
Belarus 
Speaking to journalists at a trolleybus and tramway production 
facility in Minsk on January 13, President Lukashenka said that 
Venezuela has issued a loan of USD 0.5 billion to Belarus.  He 
did not specify the terms or timeline of the loan but opined 
that together with Russia's USD 2 billion loan and the IMF's USD 
2.46 billion Stand-By Agreement (SBA), this loan will help to 
strengthen the national currency and support industry. 
Lukashenka believes the IMF's SBA will send the right message to 
other potential international lenders. 
 
¶21. GOB GDP Forecasts Differ From IMF Estimates 
 
Belarus' National Statistic Committee reported on January 13 
that the country's GDP in 2008 grew 10 percent on the year to an 
equivalent of USD 48.6 billion.  The GOB foresees 4 to 5 percent 
GDP growth in the first three months of 2009 and expects it to 
increase to 10 to 12 by the end of the year.  According to IMF 
assessments, Belarus' GDP growth will be 1.4 percent in 2009 and 
2.3 percent in 2010.  The Statistics Committee reported 
industrial growth of 10.8 percent and agricultural growth of 8.9 
percent in 2008. 
 
------------- 
Foreign Trade 
------------- 
 
¶22. Natural Gas Transit Facilities Operate at Full Capacity 
 
According to media reports, Gazprom's Chairman of the Board 
Alexei Miller told Russian PM Vladimir Putin on January 6 that 
natural gas transit facilities in Belarus and Poland are 
currently operating at full capacity.  This partially  makes up 
for natural gas supplies which consumers in Central and Western 
Europe expected but failed to receive via Ukraine since the 
start of the year. 
 
¶23. Lukashenka and Gazprom Optimistic About Natural Gas Price in 
 
MINSK 00000022  004.2 OF 004 
 
 
2009 
 
Speaking to regional government officials in Mogilev on December 
31, Lukashenka reiterated that Belarus will pay a reasonable 
price for Russian natural gas in 2009.  He believes the price 
will be high in the first quarter but will fall three-fold by 
the end of the year, resulting in an average that is acceptable 
to Belarus.  Gazprom's Deputy Chairman Alexander Medvedev said 
at a news conference the same day that relations with Belarus, 
particularly in the context of problems with Ukraine, are quite 
good.  Belarus and Gazprom allegedly still have time to discuss 
the new price formula as the parties have a working mechanism to 
secure retroactive payments. 
 
----------------- 
Quote of the Week 
----------------- 
 
¶24. Speaking at Russian Orthodox Christmas festivities in Minsk 
on January 7 Lukashenka said: 
 
"There is no crisis in this country.  Everything depends on us, 
and we will do everything to become strong and wealthy ...[The 
authorities] have done a lot, and now everything depends on the 
people...We will not deceive you and, above all, I will not do 
so.  We will tell you the bitter truth even if it is bitter~ If 
hard times are ahead of us, we will let you know...The current 
situation gives us no reason to panic." 
MILLER