VZCZCXRO4466
RR RUEHAG RUEHAST RUEHDA RUEHDBU RUEHDF RUEHFL RUEHIK RUEHKW RUEHLA
RUEHLN RUEHLZ RUEHNP RUEHPOD RUEHROV RUEHSL RUEHSR RUEHVK RUEHYG
DE RUEHSK #0228/01 1911513
ZNR UUUUU ZZH
R 101513Z JUL 09
FM AMEMBASSY MINSK
TO RUEHC/SECSTATE WASHDC 0360
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE
RUEHSK/AMEMBASSY MINSK 0366

UNCLAS SECTION 01 OF 03 MINSK 000228 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: PGOV PREL PHUM ECON BO
SUBJECT: BELARUS POL/ECON REPORT - JULY 10, 2009 
 
MINSK 00000228  001.2 OF 003 
 
 
¶1.  The following are brief items of interest compiled by 
Embassy Minsk. 
 
TABLE OF CONTENTS 
 
Civil Society 
------------- 
 
- Investigation Against Volkovysk Activists Extended 
 (para. 2) 
- Jailed Volkovysk Activist's Associate and Employer Detained 
(para. 3) 
- Opposition Youth Fined (para. 4) 
- Opposition Activists Fined (para.5) 
- Unification Church of Moon Activist Charged (para. 6) 
- Opposition Activist Fined (para.7) 
- Opposition Youth Fined (para.8) 
- Police Confiscate Opposition Communist Newspaper (para.9) 
- Convicted Malady Front Member Sentenced to a Year in Jail 
(para.10) 
 
Domestic Economy 
---------------- 
 
- Economy Ministry Posts 7.3 Percent Inflation Through June 
(para. 11) 
- Belarus' mid-year reserves down 13.5 percent (para. 12) 
- GOB Approached EU for Financial Support (para. 13) 
- GOB and European Commission Exchanged Texts of Energy 
Declaration (para. 14) 
- IMF Hails the Widening of Exchange Rate Band (para. 15) 
- IMF Increases Financial Support to Belarus (para. 16) 
 
Foreign Trade 
------------- 
 
- Belarus and Russia at Odds Over Payments for Natural Gas 
(para. 17) 
- Putin: Russia to Preserve Trade Preferences for Belarus (para. 
18) 
 
Quote of the Week (para. 19) 
--------------------------- 
 
------------- 
Civil Society 
------------- 
 
¶2. Investigation Against Volkovysk Activists Extended 
 
According to their defense lawyer, the period for the 
investigation into the criminal charges brought against 
Volkovysk activists Nikolay Avtukhovich, Yuriy Leonov, and 
Vladimir Osipenko was once again indefinitely extended starting 
July 3.  Avtukhovich, hunger striking in jail since April 16, 
2009, is reportedly suffering from ailing health. 
 
¶3. Jailed Volkovysk Activist's Associate and Employer Detained 
 
Riot police detained Lyudmila Parenskaya, Nikolay Avtukhovich's 
employer and small business owner, in Volkovysk on July 7.  In a 
separate incident July 7, law enforcement officers apprehended 
Avtukhovich's associate Konstantin Ulanov during a raid on his 
residence in Minsk.  Ulanov and Avtukhovich belong to the same 
Afghan war veterans association, and human rights advocates 
linked the arrest with the ongoing criminal investigation 
against Avtukhovich. 
 
¶4. Opposition Youth Fined 
 
A Vitebsk district court fined June 22 opposition youth Aleksey 
Pilevich and Konstantin Ivanov $250 for defying police orders. 
The two were apprehended before the "Chernobyl March" 
demonstration on April 26.  The youth dismissed the charges and 
called the fines "illegal". 
 
¶5. Opposition Activists Fined 
 
On June 25, a Gomel district court fined four local opposition 
activists $250 and sentenced "For Freedom" movement coordinator 
Vladimir Katsora to three days in jail.  All were charged with 
participating May 7 in an unsanctioned demonstration to 
commemorate the disappearance anniversary of former Interior 
Minister Yuriy Zakharenko.  Katsora announced a hunger strike to 
protest his confinement. 
 
¶6. Unification Church of Moon Activist Charged 
 
Independent media reported June 30 that the Minsk city 
prosecutor's office opened a criminal case against Unification 
Church of Moon activist Evgeniy Volkov for allegedly acting on 
behalf of an unregistered religious organization.  Human rights 
advocates expressed their serious concerns over criminal 
 
MINSK 00000228  002.2 OF 003 
 
 
persecution of members of unregistered religious groups. 
 
¶7. Opposition Activist Fined 
 
An Ostrovets town court fined opposition activist Ivan Kruk $250 
June 26 for alleged distribution of "illegal printed media". 
The charged stemmed from Kruk's neighbor reportedly borrowing a 
few copies of independent publications. 
 
¶8. Opposition Youth Fined 
 
A Minsk district court sentenced July 1 "European Belarus" civil 
campaign activists Maksim Vinyarskiy and Vladimir Kumets to a 
$125 fine each for posting a political banner.  Police 
apprehended the two June 30 and held them at prison facilities 
overnight.  In a separate incident, campaign activist Maksim 
Sergiyets was fined June 24 $305 on similar charges. 
 
¶9. Police Confiscate Opposition Communist Newspaper 
 
On July 9, police briefly detained two opposition communist 
party members in Gomel over distribution of their party's 
newspaper Tovarisch.  In two separate incidents July 8, law 
enforcement officers searched opposition activist Svetlana 
Mikhalchenko's residence in Svetlogorsk allegedly searching for 
the same newspaper and seized independent economic publications. 
 Also, they apprehended for three hours another opposition 
communist Vladimir Zhogla in Kalinkovichy and confiscated 300 
copies of the Tovarisch newspaper. 
 
¶10. Convicted Malady Front Member Sentenced to a Year in Jail 
 
An Osipovichy regional court sentenced July 7 Malady Front 
member Artyom Dubskiy, convicted in April 2008 over 
participating in unsanctioned entrepreneurs demonstrations, to 
one year in a low security jail for allegedly violating his 
partial house arrest regulations.  Dubskiy, recognized as "a 
prisoner of conscience" by Amnesty International, fled to 
Ukraine for political asylum in October 2008 and failed to 
timely report to the sheriff.  Police apprehended him upon 
arrival to Belarus in February 2009.  Dubskiy was taken into 
custody in the court room and will appeal his sentence to a 
higher court. 
 
---------------- 
Domestic Economy 
---------------- 
 
¶11. Economy Ministry Posts 7.3 Percent Inflation Through June 
 
Economy Minister Nikolai Zaichenko told reporters June 1 that 
the country's through June inflation was 7.3 percent.  He 
expects it to rise to 11 percent in the second half of the year 
-  still within the scheduled limits - and was reassuring that 
the government is doing its best to keep it under tight control. 
 
¶12. Belarus' mid-year reserves down 13.5 percent 
 
According to media reports, Belarus' gold and hard currency 
reserves dropped through June by 13.5 percent to $2.6 billion. 
The National Bank of Belarus (NBB) nevertheless still plans to 
increase the country's reserves to the equivalent of $10 billion 
by January 2011, the level that would equal the country's 
three-month volume of imports. 
 
 
¶13. GOB Approached EU for Financial Support 
 
According to the media, Finance Minister Andrei Kharkovets 
announced at a news conference June 24 that the GOB approached 
the EU for financial assistance and expects an interim reply 
within the next ten days.  He specified that Belarus is seeking 
to receive assistance under the EU mechanism for the provision 
of macroeconomic financing.  The amount of financing among other 
things depends on the volume of the IMF's operations in a 
requesting country. 
 
¶14. GOB and European Commission Exchanged Texts of Energy 
Declaration 
 
According to press reports, the visiting EU external relations 
commissioner Benita Ferrero-Waldner told journalists in Minsk 
June 22 that the GOB and the European Commission exchanged texts 
of an Energy Declaration, which, when signed, will become a 
framework document enabling  Belarus and the EU to discuss all 
energy issues.  In particular, both sides agreed that energy 
cooperation will include information exchange, energy sector 
reform, use of renewable energy sources and efforts to ensure 
safety of nuclear facilities and energy transit.  The parties 
allegedly established an expert-level early warning system, 
which will be activated in case of an energy supply problem 
and/or transit disruption.  The commissioner also announced the 
EU decision to allocate Euro 10 million to Belarus to heighten 
 
MINSK 00000228  003.2 OF 003 
 
 
its food safety standards. 
 
¶15. IMF Hails the Widening of Exchange Rate Band 
 
According to media reports, the National Bank (NB) issued a 
formal decision June 22 to widen from 15 percent to 110 percent 
the band of the Belarusian Ruble (BYR) exchange rate against the 
currency basket, which comprises in equal weights the U.S. 
dollar, the Euro and the Russian ruble.  The decision, supported 
on the same day by Mr. Chris Jarvis, Head of the International 
Monetary Fund (IMF) mission to Belarus, is expected to increase 
the flexibility of the exchange rate regime and thus help absorb 
the growing external shocks.  He also opined that the gradual 
depreciation of the exchange rate within the widened band will 
improve Belarus's balance of payments. According to the NB press 
release, at the moment the NB does not plan any sharp 
fluctuations of the national currency as the country's banking 
system operates steadily and the situation on the currency 
market is under control. 
 
¶16. IMF Increases Financial Support to Belarus 
According to media reports, the Executive Board of the 
International Monetary Fund (IMF) completed June 29 its first 
review of Belarus' performance under a Stand-By Arrangement 
(SBA) and increased the financial support to $3.52 billion. 
The decision enabled the disbursement of $679.2 million, 
bringing total disbursements so far to $1.48 billion.  The Board 
also granted a waiver of nonobservance of the end-of-March 
performance criteria on net international reserves, and approved 
a modification of the end-of-June performance criteria.  The 
arrangement was revised allegedly to help the GOB "contain the 
effects of a greater than expected impact from the global 
financial crisis".  IMF Deputy Managing Director and Acting 
Chair Mr. Takatoshi Kato, on the same day, hailed the GOB's 
measures to depreciate the Belarusian ruble (BYR), widen the 
exchange rate band and tighten monetary policy.  He opined that 
the GOB's strengthened adjustment strategy under the revised 
program will step up economic liberalization in the country and 
bolster growth prospects over the medium term.  He was hopeful 
Belarus will enact a privatization law, which would conform to 
best practices, increase the National Bank's independence and do 
other things to improve governance and the business climate. 
 
------------- 
Foreign Trade 
------------- 
 
¶17. Belarus and Russia at Odds Over Payments for Natural Gas 
 
Various media outlets carried reports June 22 of Beltransgaz 
General Director Vladimir Mayorov's firm assurances that Belarus 
has no debts to pay for Russian natural gas supplied through May 
as Beltransgaz has paid an average yearly price of $150 per one 
thousand cubic meters (tcm) in full conformity with the verbal 
agreement of the presidents of two countries and is committed to 
proceed with such payments throughout the year.  According to 
media reports last week, Russia's Gazprom sent a letter to 
Beltransgaz to require payment of $230 million in debt for gas 
supplied through April and to pay for May supplies before June 
¶23.  Gazprom referred to the contract with Beltransgaz under 
which the latter was expected to pay $210 per tcm in the first 
quarter and $158 in the second quarter.  The Presidential verbal 
agreement became a stumbling bloc as it was never put on paper. 
The dispute, viewed by many as a potential continuation of the 
"milk war", is not over and post will report accordingly. 
 
¶18. Putin: Russia to Preserve Trade Preferences for Belarus 
 
Various media carry reports of Russia's Prime Minister Vladimir 
Putin announcing at the meeting with Duma factions' leaders June 
29 that the Russian government intends to continue granting 
preferences to Belarus in mutual trade.  He opined that no other 
Russia's trade partner enjoys the benefit of oil and gas prices 
as low as granted to Belarus and stressed the GOR's ultimate 
goal is to charge its closest ally the world price though 
provided no timeline. 
 
----------------- 
Quote of the Week 
----------------- 
 
¶19. Answering the question of Austria's Die Presse daily July 6 
on what would be a priority for Belarus - Customs Union with 
Russia and Kazakhstan or a free trade zone with the European 
Union Lukashenka said: 
 
"Time is a priority for us.  We will never reject the Customs 
Union because it is highly beneficial to us.  We would also 
never say no to a free trade zone with the EU if we had a chance 
to join and make a good use of it." 
MILLER