VZCZCXRO0629
RR RUEHIK
DE RUEHSK #0413/01 3521710
ZNR UUUUU ZZH
R 181710Z DEC 09
FM AMEMBASSY MINSK
TO RUEHC/SECSTATE WASHDC 0598
INFO RUEHZG/NATO EU COLLECTIVE
RUCNCIS/CIS COLLECTIVE
RUEHVEN/USMISSION USOSCE 0022
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RHEHAAA/NSC WASHINGTON DC
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SUBJECT: BELARUS BI-WEEKLY POL/ECON REPORT - DECEMBER 18, 2009 
 
MINSK 00000413  001.3 OF 004 
 
 
¶1.  The following are brief items of interest compiled by 
Embassy Minsk. 
 
TABLE OF CONTENTS 
 
Civil Society 
------------- 
 
- Christian Democracy Party Denied Registration, Members 
Harassed and Discredited (para. 2) 
- State TV Criticizes Opposition Activists over Abduction 
Allegations (para. 3) 
- President's Bill Amending Electoral Code, Passed by 
Parliament, Now Awaits President's Signature (para. 4) 
 
Domestic Economy 
---------------- 
 
- Russia's Sberbank buys Belarus' fourth largest bank and 
becomes a credit line for GOB and state industry (para. 5) 
- Belarus secures 2010 oil supplies on favorable terms; gas 
supply deal to be resolved  (para. 6) 
- Russia, Belarus and Kazakhstan introduce uniform non-tariff 
standards (para. 7) 
- WB increased the financial assistance limit for Belarus (para. 
8) 
- GOB projects 11-13 percent GDP growth in 2010 (para. 9) 
- NB likely to fall short of its IMF undertaking to restrict 
budget subsidies (para. 10) 
 
Quote of the Week (para. 11) 
--------------------------- 
 
------------- 
Civil Society 
------------- 
 
¶2. Christian Democracy Party Denied Registration, Members 
Harassed and Discredited 
 
On December 9, the Justice Ministry (MOJ) released an online 
statement that the Belarusian Christian Democracy (BCD) party 
had been denied its second registration application in 2009. 
The MOJ alleged the BCD had provided fraudulent information 
related to founding members ostensibly employed in Russia and 
not residing in Belarus.  The BCD called the MOJ's decision 
"predictable" and would appeal it to the Supreme Court.  The 
founders in question were reportedly pressured by the Belarusian 
KGB, employers, and local authorities to renounce their party 
membership.  Authorities continue to harass BCD members and 
discredit its leadership in TV programs and state newspaper 
articles, calling the BCD "a phantom" and "a fiasco."  According 
to Co-Chair Paval Sevyarynets, criticism from the EU prompted 
the MOJ to initiate another inquiry to justify its actions in 
connection with the BCD's October 31 founding conference. 
Sevyarynets also stated that an activist from Vitsyebsk, Ales 
Halavan, who had been subjected to harassment, decided not to 
return to Belarus after attending a seminar for young Christian 
Democrats in Riga. 
 
¶3. State TV Criticizes Opposition Activists over Abduction 
Allegations 
 
State-controlled First National TV aired a program December 13 
claiming the alleged kidnappings of a number of opposition youth 
leaders by security services were fabricated, labeling the 
allegations as "provocations" and "a travesty."  The TV station 
said its investigation showed the activists "masterminded" their 
abductions to attract "attention and foreign grants."  The 
activists dismissed these findings and stood by their account 
that the abductions took place and included "mock executions." 
Between November 27 and December 6 three opposition youths, 
including Malady Front leader Zmitser Dashkevich, claimed they 
were shoved into vehicles and released hours later in the woods 
outside of Minsk as part of an effort to deter them from 
engaging in political activities.  After Dashkevich filed a 
complaint to the prosecutor's office, police searched his 
apartment and confiscated printed materials.  In previous 
incidents, law enforcement agencies failed to investigate and 
punish perpetrators, including the alleged abduction of Young 
Belarus leader Artur Finkevich in December 2008 and March 2009, 
 
¶4. President's Bill Amending Electoral Code, Passed by 
 
MINSK 00000413  002.3 OF 004 
 
 
Parliament, Now Awaits President's Signature 
 
On December 17, the Council of the Republic, Belarus' upper 
parliamentary chamber, voted unanimously to approve a bill of 
amendments to the Electoral Code.  On December 11, the lower 
chamber of the parliament had adopted the bill without any 
substantive amendments (reftel Minsk 394).  President Lukashenka 
is expected to sign the bill into law before the end of the 
year.  In early December, spokesman for the OSCE Office for 
Democratic Institutions and Human Rights (ODIHR), Jens 
Eschenbaecher, stated that the agency had not received the 
amendments for review despite an earlier agreement with the GOB. 
 Central Election Commission (CEC) Chairwoman Lidziya Yarmoshyna 
defended GOB's refusal, saying that "if one wants to lay an idea 
to rest, one should not hold public discussions" and that 
submitting the edited draft for examination by international 
experts would be  "international humiliation."  She said that 
"90 percent" of the ODIHR recommendations are reflected in the 
bill of amendments.  In a conversation with the Chargi, CEC 
Secretary Mikalai Lazavik said that the GOB was "speeding up" 
adoption of the amendments in advance of local elections 
scheduled for April 2010.  When pressed, Lazavik acknowledged 
the GOB had backed away from an earlier understanding on 
accepting ODIHR input during the amendment process but echoed 
the CEC Chair's assertion that the amended bill had taken OSCE 
recommendations into account, and that in any event the outcome 
was more important than the process. He also tried to deflect 
criticism over the GOB's decision not to use transparent ballot 
boxes, saying that "equating that issue with the transparency of 
elections themselves distorts the notion of transparency."  In 
further reaction carried December 10 by First National TV, 
Presidential Chief of Staff Uladzimir Makey called the Western 
stance on Belarusian election campaigns "offensive."  Electoral 
experts are voicing skepticism regarding procedures in place for 
election observers and the vote count, but welcoming measures 
aimed at simplifying the candidate nomination and registration 
process. 
 
---------------- 
Domestic Economy 
---------------- 
 
¶5. Russia's Sberbank buys Belarus' fourth largest bank and 
becomes a credit line for GOB and state industry 
 
According to press reports, the GOB agreed on December 11 to 
sell a 93.3% stake in Belarus' BPS-Bank to Russia's 
government-controlled Sberbank for $280.8 million.  BPS-Bank, 
the country's fourth largest, is 95.9% GOB-owned.  Under the 
agreement, Sberbank will provide BPS-Bank with up to $2 billion 
for direct lending to industry, which is with rare exception 
state owned.  Part of the agreement calls for Belarus to give 
Sberbank a mandate to place $2 billion in Eurobonds and up to 15 
billion Russian rubles worth of GOB loans on the Russian market, 
according to Belarus First Deputy Prime Minister Vladimir 
Semashko.  Sberbank will also arrange syndicated loans for 
Belarus totaling $300 million and 5 billion Russian rubles.  The 
GOB and Sberbank also signed a joint action plan that empowered 
Sberbank to act as the GOB's privatization consultant from 2010 
to 2014. 
 
¶6. Belarus secures 2010 oil supplies on favorable terms; gas 
supply deal to be resolved 
 
According to media sources, Belarus will get 8-9 million tons of 
duty-free crude oil from Russia in 2010.  Belarus' Deputy Prime 
Minister Vladimir Semashko made the announcement December 11 
following Belarusian-Russian presidential talks in Moscow the 
previous day.  Belarus expects to import an additional 21 
million tons in 2010 "not subject to Russian export duties, but 
at a price to be determined later."  According to Semashko, the 
presidents instructed their governments to settle the issue of 
gas supplies by the end of 2009.  But, Union State Secretary 
Pavel Borodin said the same day that "the presidents of the two 
states gave instructions to have additional price coordination 
talks and leave gas and oil prices unchanged at the 2009 level." 
 According to Deputy PM Semashko, Belarus and Russia agree to 
reach a compromise on introducing "equal profit" prices 
(European price) for domestic consumers by 2014-2015. 
 
¶7. Russia, Belarus and Kazakhstan introduce uniform non-tariff 
standards 
 
 
MINSK 00000413  003.3 OF 004 
 
 
According to the media, Belarusian Prime Minister Syarhey 
Sidorski announced in St. Petersburg on December 12 that the 
Premiers of Russia, Belarus and Kazakhstan signed a package of 
documents for the introduction of uniform technical, sanitary 
and phyto-sanitary standards, and procedures to remove barriers 
to the free movement of goods within their common economic zone. 
 Kazakh Prime Minister Karim Masimov announced at a news 
conference on the same day that the three countries will 
establish a common economic zone no later than by January 1, 
¶2012.  Earlier reports had suggested the zone would be 
established some time in 2010. 
 
¶8. WB increased the financial assistance limit for Belarus 
 
According to press reports, Country Director for Belarus, 
Moldova and Ukraine, Martin Raiser, announced on December 4 that 
the World Bank (WB) had increased its financial assistance limit 
for Belarus to $250 million annually, up from $100 million. 
Announcement came during discussions about the WB's cooperation 
strategy for 2008-2011. On the question of  how much borrowing 
will be required, Belarus Finance Minister Andrey Kharkavets 
said on December 7 that the GOB will not need foreign loans to 
finance the state budget deficit in 2010 because there are 
"enough domestic sources, including funds that remain from 
previous years." 
 
¶9. GOB projects 11-13 percent GDP growth in 2010 
 
According to media reports, the GOB is optimistic about the 
economy's prospects in 2010.  The Lower House approved on 
December 9 the draft 2010 national budget, which Belarus' 
Finance Minister Andrey Kharkavets described as "balanced" and 
"capable of contributing to economic growth." The budget 
provides for the abolition of four taxes while increasing the 
VAT from 18 to 20 percent.  Prime Minister Syarhey Sidorski 
stated on December 7 that despite the expected economic 
difficulties, Belarus' GDP is projected to grow by 11 to 13 
percent in 2010.  "The targets we have set ourselves are very 
high and ambitious. But to achieve them is a matter of honor," 
Lukashenko state publicly on December 14. "We must understand 
that only by reaching the targets we will be able to make up for 
the setback brought about by the global crisis and restore the 
high expansion rates." He said the targets adopted by a 
presidential ordinance are considered a law in Belarus, and they 
must be performed, not discussed. Through November of 2009 the 
GDP decreased 0.4 percent year-on-year, despite original GOB 
plans to have 10-12 percent growth and the IMF's prediction of 
3.3 percent this fall.  IMF's projection for GDP growth in 
Belarus for 2010 ranges from 3-4%. 
 
¶10. NB likely to fall short of its IMF undertaking to restrict 
budget subsidies. 
 
According to press reports, Belarus' Finance Ministry and the 
National Bank (NB) are at variance over the needed increase in 
charter capital for the country's two largest banks, Belarusbank 
and Belagroprombank.  While the country's Finance Minister 
Andrey Kharkavets told reporters in the Lower House on December 
9 that it would not be expedient to provide state banks with 
public funds, Deputy National Bank (NB) Chairman Nikolai Luzgin 
said on December 10 that a total of $714 million needs to be 
injected from the state budget to fill a $6.86 billion gap 
between the banks' long-term assets and liabilities caused by 
the "involvement in preferential housing construction programs." 
Under the current SBA with the IMF, Belarus undertook to cease 
injections from the budget starting in 2010 and restrict 
injections in 2009 to $125 million, but the NB hopes to 
negotiate the issue with the IMF. 
 
----------------- 
Quote of the Week 
----------------- 
 
¶11.  During December 14 GOB meeting on topical issues of 
Belarus' social and economic development in 2010 Lukashenka 
harshly criticized the country's media, both print and 
electronic. He said: 
 
"Mass media do not work at all today.  As for the television, 
there is nothing to watch both here and, luckily for us, abroad. 
 Nobody listens to the radio in Belarus.  People, not even all 
of them, watch only music videos.  Amusement - that all is not 
interesting."  In that context, Lukashenka drew the attention of 
 
MINSK 00000413  004.3 OF 004 
 
 
the Head of his administration Uladzimir Makey to the 
insufficient ideological work in the entire country. 
SCANLAN