The EU Dilemma: What Kind of Dialogue with Belarus?

More Active Engagement with Society and Increased Pressure on the Regime

Report of the Working Group on Investments of the Committee on International Control over the Human Rights Situation in Belarus

May 2013

© Working Group on Investments of the Committee on International Control over the Human Rights Situation in Belarus, May 2013

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CONTENTS

Introduction 5

Executive Summary 7

1. Human Rights and Civil Society in Continued Decline 1.1 Overall picture: As bad as it was, and getting worse 11 1.2. Increased pressure on political prisoners 11 1.3. Harassment of human rights defenders and NGOs 12 1.4. The state of fear 13 1.5. The regime’s lack of cooperation with international organisations 14 1.6. Proponents of “dialogue” 14 1.7. The attitude of Belarusians to the authorities, the EU and Russia 15

2. Politics and Economics: Lukashenka Continues to Successfully Deceive Both the West and Russia 2.1. European Union sanctions: Why haven’t they been fully effective? 17 2.2. Growing revenue through Belarus’ trade in European markets 19 2.3. Lukashenka and Russia: A game of cat and mouse on the Eastern front 21 2.4. The China option: No such thing as a free lunch 24 2.5. What to expect in 2013: A new round of “partnership” with the West? 24 2.6. The dialogue game: Will the EU elect Lukashenka for a new term? 27

3. Strategy Recommendations for the International Community 3.1. Overcome “European fatigue” 29 3.2. Principles that should underlie the international community's strategies 29 1. Strategies should be driven by the goal of attaining systemic change 2. Strategies must be truly long-term and consistent 3. The international community must be proactive 4. The members of the European Union must take a unified stance 3.3. Actively engage Belarusian society: Promote the “European choice” 30 1. Develop and implement an effective communications strategy 2. Expand opportunities for Belarusians to travel to the EU 3. Increase support to independent civil society 4. Increase financial support for persecuted activists and their families 3.4. Increase pressure on the regime: Act consistently and smartly 31

Annexes 1. The Justas Paleckis report: commentaries on the potential positive and negative consequences 33 of its recommendations 2. Sanctions and the various sectors and actors of the Belarusian economy 37  Banks and sanctions  Oligarch Yuri Chizh gets his business out from under sanctions  Oligarch Anatoly Ternavsky has been barred from seeking redress through EU Courts in resolving corporate disputes 3. The most profitable companies established with Belarusian capital 39 4. Oligarch Mikhail Gutseriev: Lukashenka’s best “British” friend 41 5. Oligarch Nikolay Vorobey: Lukashenka’s new “wallet” 45 6. Public opinion surveys measuring Belarusians’ attitudes toward the government, the EU, and Russia 47 7. Statistical graphs showing Belarus' foreign trade 51

Bibliography 55

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INTRODUCTION

This report has been prepared by the Working Group on Investments of the Committee on International Control over the Human Rights Situation in Belarus based on a study of open sources, official documents, analytical studies, and interviews with Belarusian and international experts in economics and the social sciences, and civil society activists between July 2012 and May 2013. The report aims to inform stakeholders and decision-makers on the current political, economic, social, and human rights situation in Belarus and offer the international community recommendations for action that may facilitate improvement of the human rights situation and pave the way toward a democratic transition in Belarus.

The Committee on International Control was set up within days of the violent dispersal in Minsk of a peaceful protest against the rigged presidential election on 19 December 2010. Currently, the Committee has a membership of more than 50 nongovernmental organisations from more than 15 countries worldwide. For a long time after the December 2010 events, the Committee was the only international human rights group with a permanent presence in Belarus, represented by its International Observation Mission. The Committee conducts monitoring of the situation with fundamental human rights and the situation of nongovernmental organisations, human rights defenders, journalists, and lawyers in Belarus. It also prepares and circulates reports and makes recommendations to civil society, governments, and the international community with the ultimate goal of aligning the situation in Belarus with the country's international obligations.

The Working Group on Investments of the Committee on International Control conducts analysis of the economic and political situation in Belarus in the context of human rights and the rule of law, develops recommendations on the application of legal, economic and political instruments to influence the situation in the country, and interacts with civil society organisations, research institutes, governments, and international organisations, including the UN, the OSCE, the Council of Europe and the EU. This report summing up the developments in and around Belarus in 2012 and the first quarter of 2013 represents a follow up to two previous reports by the Working Group, released in September 2011 and January 2012.

The authors would like to thank the International Federation of Human Rights (FIDH) for many years of partnership and highly appreciated support in the production of this report. The Civic Solidarity Platform has provided key support and inspiration for our work for which we are very grateful. We extend our sincere gratitude to our colleagues on the Committee for International Control as well as many partners and interlocutors in international organisations and last, but not least, courageous Belarusian democratic and civic activists and human rights defenders, journalists, and researchers for their ideas, stimulating discussions, and their inspiring struggles for a better future for their country.

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EXECUTIVE SUMMARY

The current situation with human rights and civil society in Belarus is not merely continuing to be as bad as it was in 2011: it continues to steadily deteriorate. Belarus still incarcerates a dozen political prisoners, including a former presidential candidate, the leader of a human rights movement and a youth leader. In late 2012 and early 2013, the regime dramatically increased physical and psychological pressure on the political prisoners, attempting to force them to acknowledge their guilt and ask for presidential pardons. Limited access to lawyers, with meetings taking place in the presence of guards, denies these prisoners the ability to safely transmit information about their harassment to the outside world.

Torture in the prison system; harassment of civic activists, journalists and lawyers; arbitrary detention and beatings of protesters by uniformed and plain-clothed police; the impunity of law enforcement officers who commit human rights abuses; the systemic restriction of the freedoms of assembly, association and expression, including internet freedom, and much more are all routine practice in Belarus today. All this has created a prevailing atmosphere of fear in the country. One should not forget that Belarus remains the only European country that continues to execute people – a practice that it continued to pursue in 2012.

Belarusian government's attitude toward cooperation with international organisations in the area of human rights is revealing. Throughout 2012 the Belarusian Foreign Ministry repeatedly stressed that Belarus would not communicate with the UN Human Rights Committee on individual complaints of Belarusian citizens. Not a single Human Rights Committee opinion on individual complaints from Belarus has been implemented by the authorities. The non-cooperation of Minsk with the UN was further sharply exhibited upon the creation of the special rapporteur on Belarus by the Human Rights Council resolution of 5 July 2012. In response to this resolution, Minsk stated that it did not recognize the mandate of the UN Special Rapporteur.

Nothing has been done by the regime to investigate or rectify the repression perpetrated on Minsk Square on 19 December 2010 and afterwards. None of the recommendations made by the UN Human Rights Council, the UN High Commissioner on Human Rights report, UN treaty bodies, or the OSCE Moscow Mechanism Report – addressing both the systemic, long-term human rights problems in Belarus and post- presidential election crackdown – have been implemented in 2012 or early 2013.

In March 2012 the EU adopted targeted restrictive economic measures against a number of companies belonging to businessmen close to Lukashenka. There is no doubt that the sanctions, combined with the threat that they could be expanded, led directly to the release of two prominent political prisoners: former presidential candidate Andrei Sannikov and his close associate Dmitri Bondarenko.

In 2012 the EU had the opportunity to achieve the release of all political prisoners. This was possible only if the international community did not fall for Lukashenka's vague promises of cooperation in the future and continued its pressure on the regime, expanding sensible economic sanctions targeted at oligarchs close to the government, thus undermining Lukashenka's ability to sustain repression and weakening his economic base. Unfortunately, these opportunities were missed in 2012 for two reasons.

First of all, from the start, the economic sanctions were extremely limited and therefore ineffective. In the spring of 2012, Lukashenka's lobbyists in Europe were able to arrange to exclude from the EU sanction list a few key companies involved in the petroleum trade belonging to one of the key “wallets” of Lukashenka, oligarch Yuri Chizh. As a result, throughout 2012 the regime continued to make good money by selling petroleum products to the EU and even increased its earnings from foreign trade. 7

Second, in 2012 the regime succeeded in implementing a profitable scheme involving petrol and oil products purchased at a discount from Russia. Oil products were then resold to the EU labelled as solvents and thinners after paying Russia low customs duties. Revenues from this contraband totalling US $2 billion gave the regime room to manoeuvre and allowed it to take a more intractable position in dealing both with the EU and Russia. However, during the second half of the year, Russia forced Lukashenka to halt this contraband business. This is the main reason behind the scheme to swing the "geopolitical pendulum" toward the West during the latter half of the year. It would be fair to say that by excluding some of the key oil trading companies belonging to Yuri Chizh from its sanctions list, the EU has given a huge gift to the Lukashenka regime, saving it from financial crisis much more effectively than Russian loans. In 2012, overall exports from Belarus to EU countries totalled US $17.586 billion. The country's trade surplus with the EU totalled US $8.284 billion (up from a US $7 billion surplus in 2011). This is the amount the regime received from Europe to fund its apparatus of suppression and continue repression.

However, growing income from trade with the EU and loans from Russia are still not sufficient to cover budgetary needs and pay back old loans from 2008-2010, and Lukashenka now badly needs new loans. Therefore, he is turning to the West in search of these loans and has worked hard to prevent the expansion of sanctions or, better yet, to have them completely lifted.

Vague promises by Lukashenka about release of political prisoners at some future point coupled with active pressure on the EU by his lobbyists and complete with talk about the "Russian threat" to the regime indeed kept expansions of the EU sanctions in check during the autumn of 2012. Now, nobody in Brussels is even talking about expanding sanctions, despite the fact that nothing in Belarus has changed for the better.

Once the remaining political prisoners have been rendered harmless within the country by forcing them to admit their guilt, Lukashenka plans to “sell” their release to the West in exchange for new loans. These new loans, together with revenues from thriving and growing trade with the EU, are intended, under Lukashenka's strategy, to help him stay in the saddle until the 2015 presidential elections and hold on to power for a long time thereafter, consolidating his hold without changing anything in the country. This is the dictator's plan, and for now, the EU is accepting these unstated rules of the game.

As predicted, in 2012 Russian increased pressure on the Lukashenka regime. This was expressed in the repeated demand that key Belarusian assets be sold to Russian companies, the halting of duty-free sales of Russian oil that enabled the trade scheme of reselling petroleum products to the West, and the demand that Belarus uphold its commitment to supply petrol to the Russian market that had not been forthcoming due to the profitability of sales to the West, as well as new quarterly agreements on deliveries of oil from Russia instead of a guarantee of deliveries for an entire year, as in the past.

The Belarusian ruler is increasingly worried about Russia’s economic claims. The only card Lukashenka still holds is his outspoken support of Putin's desired Eurasian integration, which in actuality would be dangerous for Lukashenka. For now, Moscow seems to be satisfied with declarations of devotion to the idea of Eurasian integration and has not gone on the offensive, still providing Minsk with credit. But the Kremlin is keeping Lukashenka on the hook and seems to be taking preparatory steps toward decisive action. Lukashenka understands this and is doing everything he can to delay any decision to transfer key assets to Russian control. For Lukashenka, losing control of these assets means losing power.

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The regime’s main task for now is ensuring a flow of money from the West that does not come with the onerous obligations to sell key assets put forth by Russia. Clearly, Lukashenka’s only option for getting new infusions of cash and retaining power is a change of direction of the “geopolitical pendulum” toward the West. This could already be seen in the first half of 2013, including in the lead-up to the summit of the Eastern Partnership in Vilnius in November. It is also attested to by the dictator’s sudden interest in the Dialogue on Modernisation with the EU. An attempt to have sanctions lifted from the recently appointed foreign minister and experienced negotiator Vladimir Makei and earn himself a personal spot at the Vilnius summit were only Lukashenka’s first trial balloons to test whether the atmosphere in the West favours restarting a dialogue about new loans without preconditions.

The current picture – at least the one the state media are showing to Belarusian society – is not flattering to the EU. It features a dramatic spike in contacts between representatives of the regime and Western democracies, and these contacts are conducted at all levels, right up to the EU commissioner for the Enlargement and European Neighbourhood Policy Štefan Füle. Most commentators point to the fact that the subject of freeing political prisoners has noticeably moved lower down the EU priority list. The emphasis is placed on the need to “begin dialogue aimed at reaching an agreement”. We do not know whether this really is the EU’s intention, but this situation is a blow to the advancement of democratic values in Belarus and demonstrates to Belarusians the emphasis the EU places on economic and geopolitical interests. In terms of values, the appeal of the European choice for Belarusian public could be seriously diminished.

For the international community, devising a Belarus strategy is no easy task. There is a certain “fatigue” in the EU when it comes to the “Belarusian question”, since the approaches being used since 2011 have yet to yield significant results. No politician likes failure, and everyone prefers to see results in the short term.

There is also growing pressure on the EU from Lukashenka regime lobbyists to renew “dialogue” with the regime – from lobbyists representing European business, from pragmatically oriented European politicians, and from some representatives of the Belarusian opposition, civil society, and think tanks that have chosen or been coerced into furthering Lukashenka’s interests.

Furthermore, many European actors simply have too many other problems on their mind to care about Belarus, given the Euro crisis and the weakening of European integration.

It is therefore very tempting to pretend that achieving the release of political prisoners after a new round of dialogue, promises, and Western loans would represent a “success”. The mood among European diplomats is now moving in this direction, despite warnings by experts and appeals by political prisoners, both former and current, that this strategy is ruinous for Belarus.

Renewing dialogue and lending the regime legitimacy despite the absence of systemic changes will only serve to strengthen Lukashenka’s power, preserve the authoritarian regime, and reinforce the usual pattern of bargaining. In a year or two, the familiar cycle will start all over again: the dictator will burn through the new loans and round up another group of hostages to be traded for a fresh infusion of cash from the West.

We believe that European policy in regard to Belarus should be based on certain strategic principles and include two parallel and mutually reinforcing strategies for interaction: active engagement with Belarusian society and increased pressure on the Lukashenka regime.

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We believe that the international community should approach Belarus with a strategy that is not ad-hoc and reactive but rather based on principles, in particular: 1. Strategies should be driven by the goal of attaining systemic change; 2. Strategies must be truly long-term and consistent; 3. The international community must be proactive; 4. The members of the European Union must take a unified stance.

A full-scale dialogue with Belarus is truly necessary, but with Belarusian society, not with the illegitimate dictator. Experts rightly point out that Belarus cannot be moved toward democracy and the upholding of human rights through external efforts alone. There has to be domestic demand for these values and actions by society in moving toward a future built on these values. However, international actors can and must support those who promote these values and enable the emergence of internal demand for democracy.

We suggest several strategic elements for EU engagement with Belarusian society: 1. Develop and implement an effective communications strategy; 2. Expand opportunities for Belarusians to travel to the EU; 3. Increase support to independent civil society; 4. Increase financial support for persecuted activists and their families.

Instead of renewing dialogue with the regime without preconditions or in exchange for vague promises, and instead of agreeing to lift sanctions in exchange for the release of hostages, it is essential that pressure on the regime be intensified, guided by the goals outlined above and exploiting the regime’s need for cash.

At a minimum, the “gaping holes” in economic sanctions must be plugged and this very year some key Belarusian companies must be added to the EU sanctions list: oil traders owned by the oligarchs close to Lukashenka that were blocked by Latvia during the spring of 2012. A number of prominent civic and political activists are demanding that steps go even further and that sanctions be placed on companies that deal in potash fertilizers, the regime’s second major source of foreign trade revenue.

There are certain steps that must not be taken under any circumstances. Dialogue with the regime must not be renewed unless political prisoners are freed and rehabilitated. The EU does not have the right to exchange sanctions for improved diplomatic relations while people in prison are being tortured and their health is being imperilled. Furthermore, an equally important precondition for renewing dialogue must be the immediate cessation of pressure on civil society and repression of the public at large.

The release of political prisoners must by no means mark the end of demands placed before the regime. The dialogue that follows the release of prisoners must be conducted in several steps. These steps must be based on the fulfilment of specific demands in the area of the rule of law, the upholding of international human rights obligations, and the restoration of democratic institutions. The best instrument for this is a “roadmap to change” with actions that are measurable and subject to evaluation. The principles that would underpin such a roadmap are contained in the “European Union’s Interim Paper” and proposals by international civil society.

The holding of free and fair elections and resulting restoration of governmental legitimacy should be the final stage along this path, not the first. Without free media, an independent judiciary, and guarantees of unfettered activities by civil society and the political opposition, any election will again revert to farce.

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1. HUMAN RIGHTS AND CIVIL SOCIETY IN CONTINUED DECLINE1

1.1. Overall picture: As bad as it was, and getting worse

External observers sometimes suggest that the human rights crisis in Belarus no longer exists: no mass detentions like those of 19 December 2010 are taking place; there are no political show trials like those of spring 2011; no regular dispersal of protest demonstrations like those during the summer of 2011 are being reported; most political prisoners have been released and the regime is hinting that those remaining may be released sometime soon.

However, the reality on the ground tells a different story. Although the international media no longer publishes disturbing news from Belarus as often as it did a year or two ago, the situation vis-à-vis human rights and civil society in the country in 2012 and the first half of 2013 is not merely as bad as it was in 2011: it continues to steadily deteriorate. “Europe’s last dictator”, Alexander Lukashenka’s nickname in the West, is not just a catchy phrase but an accurate description of reality.

Belarus continues to incarcerate a dozen political prisoners, including a former presidential candidate, the leader of a human rights movement and a youth leader. Torture in the prison system; intimidation and harassment of civic activists, journalists and lawyers; arbitrary detention and beatings of protesters by uniformed and plain-clothed police; the impunity of law enforcement officers who commit human rights abuses; the systemic restriction of the freedoms of assembly, association and expression, including internet freedom, and much more are all routine practice in Belarus today. One should not forget that Belarus remains the only European country that continues to execute people – a practice that it still pursued in 2012.

Nothing has been done by the regime to investigate or rectify the repression perpetrated on Minsk Square on 19 December 2010 and afterwards. None of the recommendations made by the UN Human Rights Council, the UN High Commissioner on Human Rights report, UN treaty bodies or the OSCE Moscow Mechanism Report – addressing the systemic, long-term human rights problems in Belarus and the December 2010 post-presidential election crackdown – have been implemented in 2012 or early 2013.

1.2. Increased pressure on political prisoners

In late 2012 and early 2013, the regime dramatically increased pressure on its remaining political prisoners, attempting to force them to acknowledge criminal guilt and ask for presidential pardons. Eleven individuals identified by human rights organisations as political prisoners in Belarus suffer regular punishments that sharply exacerbate the already difficult conditions of their detention by restricting their means of support and the quality of their food and medical care. Isolation is central to the pressure applied by the authorities: political prisoners are often punished by solitary confinement, deprived of meetings with relatives and subjected to limits on correspondence. Other inmates are penalised even for talking to them. The psychological ordeal of these prisoners is compounded by their physical hardships, qualifying their detention conditions as inhuman and degrading treatment, prohibited under Articles 7 and 10 of the International Covenant on Civil and Political Rights and Article 16 of the Convention against Torture and Other Cruel, Inhuman or Degrading Treatment or Punishment. Meanwhile, limited access to lawyers, with meetings taking place in the presence of guards, denies these prisoners the ability to transmit information about their harassment to the outside world in safety.

Nobel Peace Prize nominee and human rights defender, Ales Bialiatski, continues to languish in a penal colony. We have reliable information that his health is rapidly deteriorating – he is losing his eyesight and

1 Most of the information in this chapter is based on reports of a leading Belarusian human rights organisation, Human Rights Centre “Viasna”, its partner, the International Federation of Human Rights (FIDH), and the Committee for International Control over the Human Rights Situation in Belarus.

11 teeth. Bialiatski’s wife is no longer allowed to visit him until August. Meanwhile, their son is in self-imposed exile in Poland where he recently started his university studies.

In addition to the imprisoned activists, at least forty Belarusian citizens are currently being subjected to severe restrictions of their civil and political rights as part of their prosecution in politically motivated criminal trials in 2011-2012.

The convictions of 25 political prisoners pardoned or released in 2011 and 2012 have not been expunged. This deprives them of fundamental civil and political rights, including the right to run in elections or work as government employees. Their names remain on “preventive watch” lists maintained by law enforcement agencies, making them the subject of regular police visits. If summoned on administrative charges three times a year, they face “preventative supervision”. Such supervision carries more serious restrictions and makes another criminal prosecution and deprivation of freedom possible, as occurred in the case of Vasily Parfenkau in 2012.

1.3. Harassment of human rights defenders and NGOs

During 2012 and early 2013, the already difficult situation facing nongovernmental organisations significantly deteriorated. The practice of revoking the registration of NGOs that criticize the government continues, and no efforts to restore it have been successful. Criticizing the government has essentially been outlawed, insofar as any public oral or written expressions of criticism fall under the criminal prohibition against "knowingly handing over to foreign states or international organisations false information discrediting the Belarusian state or its authorities".2

Activities by unregistered nongovernmental organisations or by NGOs whose registration has been revoked continue to be a criminal offense. Laws adopted during the autumn of 2011 also criminalised the receipt of financial support from abroad by NGOs for most of their activities.

Other repressive laws adopted in late 2011 and early 2012 have put severe constraints on peaceful assembly, including by significantly increasing organisers' financial liability for any material damages to state or private property during the event. Not only action, but "mass inaction" is now considered illegal in the aftermath of the "silent demonstrations" that took place during the summer of 2011. Pressure, intimidation, and short-term detention of the most well-known activists are systematically practiced on the eve of any protest action. No events expressing solidarity with political prisoners, including the head of the Viasna Human Rights Centre, Ales Bialiatski, which were planned by human rights activists across the country, were authorized in 2012.

Various forms of harassment of human rights defenders and NGOs have been used in 2012. These include: forceful abduction and arbitrary detention (Alena Krasouskaya-Kaspiarovich), summoning to KGB offices (Tatsiana Reviaka), preventive supervision by the KGB (Andrei Bandarenka), administrative proceedings (Aleh Volchak), the closure of organisations (Platform), financial review by the tax inspection (Tatsiana Reviaka, Leanid Sudalenka, Aleh Volchak), and unlawful restrictions on foreign travel (Andrei Bandarenka, Aleh Hulak, Hary Pahaniaila, Valiantsin Stefanovich and Aleh Volchak). In November 2012, the apartment in which the central office of the Viasna Human Rights Centre had operated for 12 years was confiscated following a court verdict in criminal proceedings against Ales Bialiatski. Even in such extreme and difficult conditions Belarusian human rights defenders have continued their courageous activities, including at the international level, maximizing the use of available international mechanisms to protect human rights.

2 Defamation of the Republic of Belarus is a criminal offence in the country as defined by article 369-1 of the Criminal Code, adopted in 1999. “Knowingly handing over to foreign states and foreign or international organisations false information concerning the political, economic, social, military or international situation in the Republic of Belarus, the legal situation of citizens of the Republic of Belarus, discrediting the Belarusian state or its authorities” is punishable by up to two years of imprisonment. 12

1.4. The state of fear

The regime is losing its legitimacy, and this has forced it to step up efforts to intimidate the population, especially its most active members. In 2012, the authorities deployed a new form of pressure on opposition politicians, human rights activists and lawyers, as well as representatives of the independent media: prohibitions on leaving the Republic of Belarus. We have information about 17 surnames on an unofficial “black list”; among them are seven politicians, five human rights defenders and three journalists.

One example of such intimidation is the February 2012 statement by Belarus' Prosecutor General proclaiming that calling for economic and visa sanctions "against the Republic of Belarus" will lead to criminal prosecution. Such charges were the basis of a lawsuit brought by a worker at the Naftan oil refinery against Viktar Ivashkevich, an active member of the opposition and advocate of foreign sanctions, and the ensuing show trial over the summer. Furthermore, in 2012 rumours spread across Belarus that those who actively talk about the country's poor economic state on social networks or on the telephone were being arrested. Our sources presume that these rumours were intentionally spread by the KGB to force "free- thinkers" into silence.

In 2012 it became dangerous to be photographed in public with teddy bears and portraits of political prisoners. After the "teddy bear airdrop" by a Swedish PR company in the summer of 2012, a significant number of people were fined for being photographed with stuffed bears with a political subtext and putting the photographs on social networking sites. Formal detentions were conducted for "unsanctioned acts". Activists were also subjected to detention and punishment for "unsanctioned acts" when they had their pictures taken with a portrait of Ales Bialiatski and the Universal Declaration of Human Rights.

The generous application of previously existing and new repressive laws (adopted in 2011 and early 2012), the systematic suppression of protests, the persecution of activists and nongovernmental organisations, restrictions on the internet, and the demonstrative pressure placed on political prisoners have all created a prevailing atmosphere of fear in the country. As a result, fewer people want to go out into city squares and risk facing the truncheon or winding up behind bars; journalists are engaging in more and more self- censorship, and lawyers are afraid of taking on cases of political activists. More and more young people see emigration as the most viable life strategy. On the surface, it looks as if the government has successfully established control of the situation after the crisis of late 2010-2011. However, a high level of dissatisfaction in society persists, and the regime is constantly compelled to use new repressive measures in order to maintain fear and "stability".

The demonstrative spring 2012 executions of Uladzislau Kavaliou and Dzmitry Kanavalau, found guilty of terrorist acts after an investigation and trial that were fraught with irregularities and offered extremely flimsy evidence, were obviously designed to show the public the regime's firm hand in punishing the "guilty" before the first anniversary of the Minsk metro attack. This was a striking example of disregard for the international obligations of Belarus. Despite the UN Human Rights Committee’s demand that Belarus suspend the execution of Mr. Kavaliou’s death sentence whilst his individual petition was pending before the Committee, both convicts were executed. On 16 March 2012 their relatives were officially informed of this by the Supreme Court. Belarus does not comply with UN Human Rights Committee decisions mandating that the bodies of the executed be given to their relatives for burial. Such treatment of the families was recognized by the Committee as a violation of Article 17 of the International Covenant on Civil and Political Rights amounting to torture, cruel and inhuman treatment.

1.5. The regime’s lack of cooperation with international organisations

Whenever the question arises as to whether or not there exist grounds for renewing full-scale dialogue between the international community and the Lukashenka regime or whether it truly wants a genuine dialogue, we suggest examining Belarus' performance in fulfilling its international obligations in the area of human rights – not some abstract demands by the "hostile West”, but the obligations that Belarus took upon itself voluntarily. 13

In this regard, the Belarusian government's attitude toward cooperation with international organisations in the area of human rights is revealing. Throughout 2012 the Belarusian Foreign Ministry repeatedly stressed in its comments on the individual complaints of Belarusian citizens to the UN Human Rights Committee that Belarus would not communicate with the Committee about such complaints. Not a single Human Rights Committee opinion on individual complaints by citizens of Belarus has been implemented by the authorities. The government thereby deprives its citizens of effective remedies and redress, which directly contradicts provisions of the First Optional Protocol to the International Covenant on Civil and Political Rights, ratified by Belarus.

The non-cooperation of Minsk with the UN was further sharply exhibited upon the creation of the special rapporteur on Belarus by a Human Rights Council resolution of 5 July 2012. The resolution called upon the Belarusian authorities to “immediately and unconditionally release all political prisoners”, to conduct “a full and transparent investigation into all allegations of torture and ill-treatment of political prisoners”, “immediately stop the practice of administrative detention of the opposition, civil society, journalists and human rights and not interfere with their free movement, including travel outside the country”. Minsk was also called upon to implement all recommendations contained in the report of the UN High Commissioner for Human Rights on the situation in Belarus, presented at a Human Rights Council session on 27-28 June 2012. In response to this resolution, Minsk stated that it did not recognize the mandate of the UN Special Rapporteur. The Permanent Representative of Belarus to the UN in Geneva, Mikhail Khvastou, accused the European Union, which had initiated the establishment of the mandate of the Special Rapporteur, of being politically motivated in doing so, saying: “The motives of the EU initiative are in no way related to human rights. This is how the EU promotes its political agenda in the Council and makes the High Commissioner act for that purpose. The EU’s primary objective in initiating this mandate is deliberate anti-government activities in Belarus under the guise of the United Nations”.

In the same spirit, the government of Belarus has repeatedly stated that it does not recognise the mandate of the OSCE Moscow Mechanism rapporteur on the situation in Belarus and refuses to discuss his report submitted to the OSCE Permanent Council in June 2012. Not surprisingly, Belarusian authorities did not allow the author of the report, OSCE rapporteur Dr. Emmanuel Decaux, to visit Belarus. The government of Belarus has systematically applied the same policy of non-cooperation with the Working Group on Belarus of the OSCE Parliamentary Assembly.3

1.6. Proponents of “dialogue”

An important factor in interactions between the international community and Belarus over the past year has been the increasing outspokenness of “advocates of dialogue”. Many such advocates dominate discussion forums and increasingly drown out the voices of independent civic activists, experts, and opposition members. It is important to understand who exactly is advocating for dialogue, especially considering that in recent times European officials increasingly voice opinions such as: “Belarusian society itself is demanding that sanctions be repealed and dialogue between Europe and Lukashenka renewed without waiting for the release of political prisoners; this is why it is hard for us to maintain a firm stance”.

Advocates of dialogue can be divided into several categories. First, there are the Europeans. Some of them are good, honest, but somewhat naive politicians and experts concerned that economic sanctions “will harm the Belarusian people” without altering Lukashenka's policies. They also claim that sanctions simply do not work and are an ineffective and inhumane foreign policy tool. From our perspective, this humanism

3 These are only few examples of Belarus’ non-cooperation with international organisations; many more can be found in a joint report of the Belarusian Human Rights House and the Human Rights House Foundation, Belarus is putting itself aside of the international community, http://humanrightshouse.org/noop/file.php?id=18204, as well as in a recent statement of Human Rights Centre “Viasna” in connection with the failure of the Belarusian government to implement the decision of the UN Working Group on Arbitrary Detention on Ales Bialiatski’s case, “Human rights defenders remind MFA about implementation of international treaties by state bodies”, http://spring96.org/en/news/63265. 14 is false, since the Belarusian people has already been suffering from the Lukashenka dictatorship, and so long as we are seeking effective levels to influence the regime, this suffering is bound to intensify. What people should be (and are) talking about is not a total trade embargo, but well-designed sanctions targeted at the companies belonging to oligarchs close to Lukashenka, the so-called “regime's wallets”, who provide the dictatorship the means to maintain a repressive apparatus. Such sanctions will not cause any more suffering among ordinary people than they are already enduring.

The second category of people in favour of “dialogue” without preconditions consists of pragmatic businesspeople and the politicians who represent their interests. Some of them have a personal stake in the development of trade with Belarus, and some see their role as defending the economic interests of their country. Others have been bought outright by Lukashenka and are profiting from their lobbying efforts. The problem is that these business interests are given greater weight than the values and principles on which the European Union was founded. In our view, this situation – lobbyists for the Lukashenka regime having greater influence than politicians and civic activists who consistently stand for European values – is intolerable.

However, for Lukashenka, the support of European allies is not enough. In connection with its recent reorientation toward Europe, the regime requires the services of “moderate” modernisers and advocates of “dialogue” without preconditions within Belarus able to speak out on the European stage and lend legitimacy to such demands. To this end, he has successfully recruited advocates of dialogue among Belarusian nongovernmental organisations and think tanks. The methods used for this sort of recruitment are often quite unsavoury, and people are forced to cooperate against their will. They include classic secret police methods. There are threats to revoke an organisation's registration, sometimes undoing the work of a lifetime, or to incapacitate it through inspections and official warnings. In some cases, family members are used as a means of exerting pressure. In others, all avenues of funding are cut off unless the organisation agrees to cooperate, in which case funding is guaranteed. Sometimes individuals are offered promising careers. And there are always those who, without any pressure, see in cooperation opportunities for themselves and their organisation or party. Essentially every one of them has a personal KGB “curator”.

We do not know what other unsavoury weapons from the dictator's classical arsenal are being used to force or lure people into cooperation, but it is important for international actors to clearly understand: statements and initiatives by Belarusian advocates of dialogue are, as a rule, not sincere or voluntary. Just as a confession extracted under torture is not admissible as evidence in court, so too arguments for renewing dialogue with Lukashenka without preconditions should not be taken as the true voice of Belarusian society.

1.7. Belarusians’ attitudes toward the authorities, the EU, and Russia4

In Belarus, an impediment has been placed in the way of conducting independent sociological surveys. Ever since the 2011 release of polling results showing Lukashenka's fall in the ratings, the authorities have prohibited surveys by unaccredited organisations. Furthermore, since nongovernmental organisations have a variety of political orientations, their studies cannot be considered entirely unbiased. Sometimes the figures measuring the response to one and the same question asked by different researchers will differ by an order of magnitude. In our view, such differences attest to fracturing within the democratic component of society. Therefore, in the final analysis, no single survey can be considered genuine. Nevertheless, certain insights can be gained by comparing various survey results.

People are dissatisfied with the country's economic and political situation. The public is sick and tired of Lukashenka, but is afraid of taking action. This stems not only from fear, but also from a sense of futility (the crushing of hopes in 2010). Only 36.5% of Belarusians believe that Alexander Lukashenka should run for president in 2015. His electoral rating is 33.4%.

4 Details of sociological surveys can be found in Annex 5: Public opinion surveys measuring Belarusians’ attitudes toward the government, the EU, and Russia. 15

A total of 74.8% of citizens believe that Belarus needs change. People are disengaged from politics and are afraid. And while three quarters of people are for change, even more – 75.9% – state that they are definitely or probably not ready to play a more active personal role in politics. There is an exceptionally high level of mistrust among people, not only toward social institutions. For example, in response to the question "Can most people be trusted or must one be very cautious in dealing with people?", 70% stated that one has to be very cautious in relations with people and only 23.1% said that most people can be trusted.

Russia is becoming less attractive for Belarusians as an integration centre, and the EU is, at least, maintaining its position. However, the sustained appeal of the EU probably has to do with a generational change: the EU is the choice of younger and more educated people. This has nothing to do with communication on the part of the EU – people are poorly informed about EU initiatives and would like to know more about Europe.

Belarusians understand that Europe is where new technologies can be found, but the picture is clouded by queues for visas. According to 2012 figures from the Belarusian Institute for Strategic Studies, 6000 Belarusians were denied Schengen visas that year, denials primarily based on applicants' poor finances. This evokes a stereotype that has been carefully cultivated by the regime: “Europe has no need for us”. For now, Russia remains the unloved “bird in the hand” in contrast with Europe's two in the bush.

One example we can offer is the public attitude toward the European Dialogue on Modernisation with Belarus measured in September 2012 by the Belarusian Analytical Centre. People have doubts about the need to (or possibility of) realizing this program. The researchers feel that two factors are involved here – a shortage of information about the essence of proposed reforms and a lack of understanding of the EU's motives. Official propaganda uses various approaches to cultivate doubts about the EU's sincerity.

The findings of a BISS study of why Belarusians think the EU has introduced sanctions are interesting: Belarus is pursuing independent policies — 40.1% Belarus violates human rights — 36.8% Falsification of presidential election results — 14.3% The EU wants to change the government in Belarus — 13.4% Sanctions were instituted in response to demands by the opposition — 5.1%.

Belarusians’ primary interest in Europe is economic. This can be explained by their disappointment after 2010 and the overall deterioration of the situation in the country. A close look at respondents' answers shows that democratic values and freedoms are also important for a significant proportion of them; however, they do not see a direct link between the realisation of these values in Belarus and the actions of the European Union. People want independent information, and they use the internet for this. Today, 52.5% of Belarusians regularly (daily or several times per week) use the internet, including social networks (up from fewer than 40% in December 2010).

Overall, Belarusian society is fractured. A study of media preferences among Belarusians in 2012 shows two parallel societies – those who obtain their information through state media and those who rely on independent media sources. Today, Belarusians get most of their news from television, the internet, and one another. Readers of independent media are better educated, better off financially, and younger. These are people capable of moving Belarus toward the European choice.

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2. POLITICS AND ECONOMICS: LUKASHENKA CONTINUES TO SUCCESSFULLY DECEIVE BOTH THE WEST AND RUSSIA

2.1. European Union sanctions: Why haven’t they been fully effective?

It should be remembered that in March 2012 the European Union adopted restrictive economic measures against a number of companies belonging to businessmen close to Lukashenka – Yuri Chizh and Anatoly Ternavsky – in addition to previously instituted sanctions against oligarch-favourite Vladimir Peftiev.

For the regime, these sanctions signalled the seriousness of the EU's intentions. There is no doubt that they, combined with the threat that they could be expanded, led directly to the release of two prominent political prisoners: former presidential candidate Andrei Sannikov and his close associate Dmitri Bondarenko.

According to our sources, these restrictive measures not only caused trouble for these particular businessmen, but also sparked a discussion throughout Belarus' business circles, making entrepreneurs reconsider their strategies. The last important development related to this was Cyprus' refusal in early 2013 to hear Anatoly Ternavsky's lawsuit involving commercial disputes specifically because he was under EU sanctions. We see this as an important precedent.

We can see that, here, the introduction of sanctions brought about specific political and human consequences (the release of two important political prisoners). What were the economic and systemic political consequences?

In our previous reports and articles we wrote that in 2012 the democratic community – the European Union first and foremost – had the opportunity to successfully put pressure on the Lukashenka regime and achieve the release of all political prisoners. This was possible only if the democratic community did not fall for Lukashenka's vague promises of cooperation in the future and continued its pressure on the regime, expanding sensible economic sanctions targeted at oligarchs close to the government – the “regime's wallets” – thus undermining Lukashenka's ability to sustain repression and weakening his economic base. Unfortunately, these opportunities were missed in 2012 for two reasons.

First of all, from the start, the economic sanctions were extremely limited and therefore ineffective. In the spring of 2012, Lukashenka's lobbyists were able to arrange to have key companies involved in the petroleum trade excluded from the EU sanction list, including those involved in the “solvents scheme”. Thanks to efforts by Latvia, Yuri Chizh's companies – major suppliers of petroleum products to the West – were removed from the list when it was being finalized. It should be noted that two of Chizh's key companies – Triple and Belneftegaz – were among the top ten taxpayers in Minsk Oblast in 2012 for the first time in three years.

It is interesting that some advocates of dialogue with the regime without preconditions cite this circumstance, arguing that the European Union's business interests render it incapable of sustaining economic restrictions sufficient to deal a real blow to the regime.

As a result, throughout 2012 the regime continued to make good money by selling petroleum products to the West and even increased its earnings from foreign trade despite the sanctions. However, growing income from trade with the EU and loans from Russia are still not sufficient to cover budgetary expenditures and pay back old loans from 2008-2010. Lukashenka is now badly in need of new loans. Therefore, he has turned to the West in search of these loans and has tried to prevent the expansion of sanctions or, better yet, to have them completely lifted.

Vague promises by Lukashenka about the possible release of political prisoners at some future point coupled with active pressure on the EU by his lobbyists and complete with the talk about the "Russian threat" to the regime indeed kept expansions of EU sanctions in check during the autumn of 2012. Now, in

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Brussels and other European capitals, nobody is even talking about expanding sanctions, despite the fact that nothing in Belarus has changed for the better. Indeed, the human rights situation remains very difficult, pressure on civil society has intensified, and the health of political prisoners continues to deteriorate as they are subjected to brutal physical and psychological treatment. In an attempt to “break” them, beatings are used to compel them to write confessions of guilt and repent before television cameras in order to show the country that they are guilty and have surrendered. Then, once they have been rendered harmless within the country, Lukashenka’s plan would be to “sell” their release to the West in exchange for financial assistance in the form of new loans.

These new loans, together with revenues from thriving and growing trade with the EU, are intended, under Lukashenka's strategy, to help him stay in the saddle until the 2015 presidential elections and hold on to power for a long time thereafter, consolidating his hold without changing anything in the country. This is the dictator's plan, and for now, the EU is accepting these unstated rules of the game.

Second, in 2012 the regime succeeded in implementing a profitable scheme involving petrol and oil products purchased at a discount from Russia. Oil products were resold to the EU labelled as solvents and thinners after paying Russia low customs duties. Revenues from this contraband totalling at least US $2 billion gave the regime room to manoeuvre and allowed it to take a more intractable position in dealing both with the EU and Russia. During this period the dictator's main objective was to avoid the expansion of EU sanctions and boost exports to the West as much as possible.

However, during the second half of the year, Russia forced Lukashenka to halt this contraband business, despite the dictator's claims that it was legal. This is the main reason behind the scheme to swing the "geopolitical pendulum" toward the West during the latter half of the year.

Unfortunately, by not introducing full-blown restrictions on Chizh's companies and keeping the main sellers of oil products off the list, Europe put itself in a very ambiguous position. On the one hand, sanctions were in place, but on the other, they were poorly designed. Most of the European public, including parliamentarians and politicians, lacking sufficient knowledge of the real situation, failed to see the gaping holes undermining the sanctions' effectiveness.

Now, one year later, a chorus of "moderate" voices is claiming that sanctions “have not worked”, but this is a distortion. First, it took a clear demonstration of the EU's initially serious intentions to gain the release of two important political prisoners. Second, caving in to pressure from lobbyists, the EU itself pulled the rug out from under a good beginning and essentially started to play by the dictator's rules when it continued to purchase Belarusian goods, thereby enriching the regime with billions of dollars of profits.

The European Union was the only purchaser of these "innovative products" (thinners and solvents, as well as “biodiesel”), the guise under which, in 2012, Belarus exported cheap Russian oil as well as petrol and diesel derived from it, the duty for which (and thereby payments to Russia) were much lower than for petroleum and fuel.

Statistical data shows that before Russia put an end to this scheme, much of Belarus’ US $8 billion trade surplus with the EU between January and July 2012 resulted from lucrative sales of organic solvents and thinners to EU countries. A large proportion of these products were indeed produced and sold to the EU by companies belonging to Yuri Chizh. Sales of solvents and thinners contributed to more than 80% of Belarusian export growth in 2012, according to the Belarusian Ministry of Economics.

Most of these products were transported to European markets through ports in Latvia, Lithuania and Estonia. When this scheme was functioning, Belarusian exports to Latvia in January-July 2012 reached US $2.9 million, a stunning 79% increase over the same period in 2011. According to reliable sources, 3.2 million tonnes of goods were transported to Latvia via Belarusian railways in January-March of 2012, which was 73% more than in the same period of 2011. Growth in the supply of oil products to sea ports in Latvia

18 was especially high. The Minsk-based Triple company (owned by Yuri Chizh) and Novopolotsk-based Interservice (owned by another oligarch, Nikolay Vorobey – see Annex 4) have become the largest private Belarusian oil traders on the Baltic markets in 2012.

It would be fair to say that by excluding some of the key oil trading companies belonging to Yuri Chizh, such as Belneftegaz, from its sanctions list, the EU has given a huge gift to the Lukashenka regime, saving it from financial crisis much more effectively than Russian loans provided through the EurAsEC Fund.

2.2. Growing revenue through Belarus’ trade in European markets

Throughout 2012, Lukashenka continued to successfully deceive the EU with vague hints that political prisoners could be freed and even more successfully sell contraband petroleum products to the EU. Talk of possible sanctions in January 2012 made the regime nervous and forced some concessions. After the European Union introduced new restrictions in March and in following months the addition of further sanctions was discussed, Andrei Sannikov and Dmitri Bondarenko were released from prison. The regime's next objective was to avoid the expansion of sanctions (especially against those businesses responsible for the flow of hard currency) and hold on to a supply of political prisoners for as long as possible, keeping them till the time was right for an advantageous deal. The regime reached these objectives very successfully: hints that political prisoners might be released allowed the regime to continue its illegal trade with the EU – until Russia itself closed down the contraband thinner and solvent business.

In 2012, overall exports from Belarus to the countries of the EU totalled US $17.586 billion. The country's trade surplus with EU countries totalled US $8.284 billion (up from US $7 billion surplus in 2011). This is the amount the regime received from Europe to fund its apparatus of suppression and continue repression. It should be remembered that Belarus leads Europe in the number of people employed by law enforcement per capita. Their salaries are several times higher than those of the population at large. Maintaining this police force and buying its loyalty demands ever-growing financial resources. These resources are, in essence, being supplied by the West as it continues to buy increasing volumes of Belarusian exports.

Of Belarus’ total 2012 exports, 35.4% went to Russia, 16.1% to other CIS countries, 38.2% to the EU, and 10.3% to other countries.

Among European purchasers of Belarusian goods, the three leaders for 2012 were: The Netherlands – 16.5% (more than US $7.587 billion); Latvia – 7.1% (almost US $3.280 billion); Germany – 3.8% (more than US $1.737 billion).

One aspect of these statistics is important to note. As far as we know, the Dutch do not consider themselves to be the EU's main importer from Belarus, since most of what they buy is resold to end-users in other countries.

In fact, a closer look at these figures reveals that in 2011 Latvia, for example, imported US $3.2 billion worth of goods from Belarus, according to Belstat (the Belarusian statistics ministry). Latvia's figures, however, show imports from the republic as being four times lower, a mere US $800 million dollars. Evidently, this represents the share of imports that remained in the country. One does indeed wonder what Latvia would do with such a quantity of solvents.

The same can be said of the Netherlands, home to Rotterdam, Europe's largest port. According to Dutch figures, in 2011 the Netherlands imported US $109 million from Belarus. Belstat, on the other hand, reports a figure of US $6.158 billion. Quite a difference: 60-fold!

According to a study of the Belarusian economy commissioned in 2012 by the European Parliament, the Netherlands is the second largest importer from Belarus after Russia. The biggest customers for Belarusian

19 products in the Netherlands are the companies Glencore, Trafigura, and Vitol. The latter two firms do not enjoy a good reputation; both have been cited for skirting Iranian oil sanctions and caught up in other scandals. These companies, in importing Belarusian petroleum products into the Netherlands, do not just make money on resale, but also provide revenue for the Netherlands by paying taxes and port fees. Most important, the goods wind up being "laundered”, no longer tied to the Belarusian dictatorship, and can be further resold untainted, such as to United States companies that cannot buy goods directly from Belarus because of American sanctions against the regime.

Even if a country is not an end-user of petroleum products, as an intermediary, it can make money on Belarusian through-traffic. While it would not be a major blow to the Netherlands if Belarusian products ceased to come through its terminals, for Latvia, by various estimates, Belarusian shipments through the country account for approximately one third of all revenue from through-traffic.

The following survey result attests to Belarusian influence within the Latvian province of Latgale, which borders on Belarus: children in this province believe that the president of Latvia is named Lukashenka.

The Latvian company Mamas D which produces biodiesel and until December 2012 belonged to Yuri Chizh, has become one of Latvia's fastest growing companies and is one of the largest companies operating in Latvia with Belarusian capital. Latvian lobbyists have been working for years to ensure that a significant portion of Belarus' exports pass through the port of Ventspils, rather than Lithuania's Klaipėda or Estonia's Muuga Harbour. Furthermore, it was recently disclosed that the port of Riga has invited Belarus to play a role in the port's development.

A few words should be said about major foreign investors. In 2012, the largest share of investment in Belarus came from Russia (46.7%), followed by Great Britain (25.2%) and Cyprus (6.4%). The figures for this last country probably also represent companies that are either Russian or controlled by Belarusian businesses with offshore subsidiaries in Cyprus. Austria's share in the investment piggy bank (4%) has fallen as compared with the previous year, but this country is a key investor in the industrial sector of the Belarusian economy.

On closer inspection, it turns out that the largest "British" investor in Belarus is the Russian entrepreneur Mikhail Gutseriev. Gutseriev's friendship with the Lukashenka regime dates back to a time when, during the oil conflict between Moscow and Minsk, RussNeft company owner Gutseriev “shared” the oil loading rack in the Russian city of Bryansk with Lukashenka.

Without any tendering process, in 2011 Mikhail Gutseriev was granted a concession to develop a very promising Starobin potassium deposit in Belarus. In October 2011 his company, Slavkaliy, was registered. It will implement the project, which plans to create the capacity to produce 1.8 million tonnes of potassium chloride per year. He has invested in a number of other development projects as well. In December 2011 his company, Slavneftekhim, restored operations at the Mozyr Refinery and the supply of petroleum products for export. This is the third project launched by Gutseriev in Belarus.

Slavneftekhim, which represents the interests of Gutseriev's RussNeft in Belarus, is sixth among the top ten largest taxpayers in the capital of Belarus based on figures for January-February 2013 (see Annex 3).

Since the "innovative scheme" to export contraband petroleum products made from cheap Russian oil fell apart, potash fertilizers have supplied an extremely important revenue stream for the regime. For the potassium industry in Belarus, 2012 was not the best year. A plan envisioning hard currency receipts of US $3.2 billion by the end of the year did not materialize because no deals were concluded with China. In 2013, however, the situation has begun to change, insofar as the necessary contracts with China, India, and Indonesia have been signed. Experts believe that in 2013, the potassium market will return to 2011 volumes. In 2011, the volume of potassium chloride consumed throughout the world totalled approximately 54 million tonnes, and in 2012 this figure went down to 50 million tonnes. Expectations are that in 2013 the

20 market will fully recover and it is currently estimated that annual consumption of potassium chloride will reach 55 million tonnes. Belarus premier Mikhail Myasnikovich has pledged that in 2013, hard currency revenues from the sale of potassium chloride will reach 2011 levels. That year, the country earned US $3.2 billion (compared with US $2.7 billion in 2012) from international sales of potash fertilizers. The signing of a contract with China and India has led to a significant growth in the physical volume of potash fertilizer exports in early 2013 and has helped to compensate for lower prices. In monetary terms, fertilizer shipments (including nitrogen fertilizers) grew by 38.4% or US $132.2 million in January-February 2013 over the same period in 2012. Based on sales for two months in 2013, potash fertilizers have seen the greatest growth among all goods exported from Belarus.

In 2012, two new large-scale projects involving Austrian companies were announced: one to manufacture building materials and introduce new construction techniques and another to create an electronic payment system for toll roads. They are among the largest investment projects carried out by Austrian companies in the Belarusian economy in recent years.

The Austrian company Kapsch TrafficCom has attracted particular attention. In early 2012 this company signed an investment agreement with Belarus whereby it would create a national electronic system to collect payments on the country's toll roads. Documents spelled out a plan to cover the network of roads with a new system. The contract was for 267 million Euros. Earlier in 2012, the company had been at the centre of a scandal involving Hubert Gorbach’s lobbying activities. Shortly after the presidential elections and brutal suppression of protests in Minsk in December 2010, Gorbach, Austria's former vice chancellor, gave an interview in which he stated that the Belarusian elections had been carried out in accordance with Western democratic standards. As the media learned, Gorbach had been invited to Minsk by the head of the Belarusian Ministry of Internal Affairs Siarhei Martynau as an election observer and an “honorary figure”. After leaving his official post, Gorbach had created a consulting firm. According to information that has become public, since September 2007, Gorbach, among other ventures, had a contract with Kapsch TrafficCom, which paid him 3000 Euros per month.

2.3. Lukashenka and Russia: A game of cat and mouse on the Eastern front

For the Lukashenka regime, 2012 could be described as a successful year of cat and mouse with Russia. The year featured the notorious solvent, thinner, and biodiesel sales; manoeuvrings around announced but never begun privatisation; foot-dragging in regard to deals with Russian companies promised to Putin; attempts to extract new loans; and personnel shakeups. Lukashenka's strategy in dealing with Moscow could be described as “take as much as you can before you get your hand slapped”, as well as “don't give an inch” – so long as you can get away with it.

Despite some political setbacks vis-à-vis the West, 2012 was also a year when trade with the West once again helped the dictator out of a bind and gave him a more than US $8 billion trade surplus, as described above. Prospects for 2013 are nonetheless gloomy. The growing income from trade with the West is still not enough to pay off old debts and support the "Belarusian model" of the social state, which requires artificially high salaries (in relation to low labour productivity) and pensions in order to buy the public's loyalty to their ruler. The regime cannot survive without financial support from its “big brother”, and Lukashenka keeps going back to the Kremlin (or Sochi) to hold talks with Vladimir Putin.

Naturally, Moscow is attempting to use this leverage to its political and economic advantage. As we predicted, Russia has increased pressure on the Lukashenka regime. This was openly expressed in the repeated demands that key Belarusian assets be sold to Russian companies, the halting of duty-free sales of Russian oil that enabled the trade scheme of reselling petroleum products made from Russian oil to the West, and the demand that Belarus uphold its commitment to supply petrol to the Russian market that had not been forthcoming due to the profitability of selling to the West, as well as new quarterly agreements on deliveries of subsidized oil from Russia instead of a guarantee of deliveries for an entire year, as in the past.

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For now, any other forms of pressure are exerted behind closed doors. However, a number of moves by the regime attest to the fact that Lukashenka is increasingly worried about Russia’s economic claims. The only card the Belarusian ruler still holds is his outspoken support of Putin's desired Eurasian integration, which in actuality would be dangerous for Lukashenka. For now, Moscow seems to be satisfied with declarations of Lukashenka's devotion to the idea of Eurasian integration and has not gone on the offensive, still more or less regularly providing Minsk with credit. But the Kremlin is keeping Lukashenka on the hook and seems to be taking preparatory steps toward decisive action. Lukashenka understands this and is doing everything he can to delay any decision to transfer key assets to Russian control.

In 2012, Lukashenka did everything possible to prevent Belarusian assets from coming under the control of Russian businesses. The intrigue involving attempts by Russians to gain control of two “family jewels” – MAZ [Minsk Automobile Factory] and Belaruskaliy [Belarus Potassium] – continues. Throughout the year, news items appeared reporting that a merger agreement between Belarusian MAZ and the Russian Kamaz to create RosBelavto [Russia-Belarus Auto] had almost been reached, but these reports were always followed by the news that differences were still being resolved.

A similar scenario is playing out with Belaruskaliy and the possible creation of a Swiss-registered joint Russ, Soyuzkaliy. It is possible that earlier in the year, when EU sanctions seemed more likely, the creation of Soyuzkaliy may have looked like a sort of insurance policy, but now that trade with the West is yielding nice profits, the regime feels confident enough to draw out the process and haggle endlessly with Russia.

The same situation is taking shape with other assets of interest to Russia. Various mergers or joint ventures are announced, but then various complications and obstacles arise. It is becoming clear that Lukashenka will not deny himself a controlling share in key companies so long as no force majeure gets in the way.

Opponents of Western sanctions claim that if the EU puts in place more stringent restrictions on Belarusian petroleum and potassium producers, Russia will serve as an alternative export market. However, Russia has its own producers in both these areas that will defend their market. An illustrative comic situation arose in early April: Belarus, in keeping with bilateral agreements, sold a certain amount of fuel in the Russian market. Russian producers objected that these sales undercut prices on the Russian market and demanded that the sale of Belarusian petrol in Russia be cut.

Even this brief overview clearly shows the groundlessness of assertions that EU economic sanctions (assuming they are seriously enforced) can be evaded with the help of and/or using the territory of Russia, especially through the sale of contraband Russian petroleum products.

This does not mean that there are no Russian businesses in Belarus. A number of businesses, including Lukoil, Alfa Group, and a few others, have managed to come to terms with Lukashenka and his family. However, they do not control real productive assets. Perhaps the greatest penetration of Russian capital has taken place in the banking system; however, the affiliates of foreign banks are not registered in Belarus (they register as Belarusian banks and parent company control is exercised through ownership of the bank's capital). This creates a situation whereby capital can be taken out of the country without government control. It appears that the authorities in principle control the banking sphere and that all processes take place with its knowledge. It is possible, however, that Sberbank's purchase of one of Belarus' leading banks several years ago was a political concession to Russia.

Analysts agree that in Russia, the “siloviki fraction” (Kremlin insiders tied to security services) has completed a process enabling their control of all sectors of the Russian economy, including all large and mid-sized structures – both financial and industrial. This system has been constructed in such a way that nobody is indispensable, and in this sense Putin is “all-seeing”, but not necessarily “all-controlling”. The controlling circle is much broader. In Belarus a similar system has been constructed (or is still being built), but there are differences. All control traces back to the “boss”.

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The group that controls the Russian economy has an interest in expanding its influence and acquiring new assets in the West, and in this sense Belarus is a convenient bridgehead with several extremely interesting assets.

However, for Lukashenka, losing control of these assets means losing power, and it is doubtful that his associates or the oligarchs close to him labour under any illusions about their fates in this regard.

This is why Russian businesses under the control of the siloviki – which have had relatively little trouble infiltrating the Baltic countries, many former Eastern bloc countries, and even Germany – encounter strong resistance from “Europe’s last dictator”. Russian business has not been (and, by all appearances, will not be) let in on Belarusian privatisation.

This fear of Russian siloviki buying or orchestrating takeovers of Belarusian assets explains the processes taking place in Belarus in the area of privatisation. Without a doubt, one of the most sensational stories in this regard was the virtual nationalisation of the Kommunarka and Spartak confectionary factories. From our perspective, this story served as an interesting foreshadowing of the legislative initiative that essentially introduced state control over all joint stock companies, even those in which the government had no share.

A bill put before parliament in late 2012 would give the government the right to represent the interests of minority shareholders, to issue additional shares in order to obtain a controlling stake, and simply to intervene in cases where such intervention “proves warranted”. Parliament is expected to pass the law in 2013. Furthermore, as part of a set of measures to defend key assets from passing into the control of foreign purchasers, in December 2012 there appeared new lists of enterprises subject to privatisation, for which state agencies have priority in the purchase of shares.

It is doubtful that these measures are motivated by economic considerations. More likely, they are designed to preserve the government’s control of important assets under any circumstances, including takeover attempts by Russian raiders.

Another aspect of this effort were shakeups among the directors of a number of key enterprises over the autumn and winter of 2012-2013, including MAZ, MTZ, Gomselmash, Vityaz, and the Bellegprom concern. Reshuffling top personnel is one of Lukashenka’s preferred methods for preventing the emergence of an elite cohort of directors with their own connections and interests. In essence, this is an effort to prevent the appearance of independent contracting agents to negotiate with potential buyers. Here, he is also guided by what happened in Russia in the past.

News of major shakeups in security cadres has also trickled out. We believe that the return of Viktor Sheiman into the inner circle (in the role of the president’s right hand man) probably marks the completion of this stage of the operation, which was designed to protect the current government in uncertain times.

Experts believe that pressure from Russia in regard to privatisation will only increase in 2013. As we stated above, 2013 will mark the peak of payments on old loans, and there seems to be no prospect of a bail-out from a scheme like the one with solvents and thinners. Past windfalls have probably already been used up – including by a populist move to raise salaries to US $500.

From our perspective, recent statements suggesting that privatisation lists for Russian business will be drawn up primarily serve propaganda purposes. Such statements represent both a promise to Russia and a hint to the West: if there is no dialogue with the EU, we’ll sell ourselves to Russia. However, if any Russians are allowed to get their hands on shares, they will be those with a special relationship to the regime, such as Mikhail Gutseriev or the suddenly prominent Dmitri Mazepin (who was born in Belarus, is co-owner of the Russian company Uralkhim, and has been named as the manager of Lukashenka’s assets on Cyprus).

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Considering Lukashenka’s understandable concerns about Russian control through economic expansion, we can safely predict that the dictator will turn once again to the West, including by hopping on the European Union’s Eastern Partnership train. In fact, this reorientation is already taking place. Admittedly, given Lukashenka’s talent for evading agreements, the negotiation process in the West can be broken off at any stage – unless it proves to be the only way for him to escape Putin’s clutches. The question is, what conditions will the West set for a renaissance in relations?

2.4. The China option: No such thing as a free lunch

The China option in Belarusian politics and economics has been a topic of discussion in media and expert circles for some time. Nobody talks about it more than Lukashenka himself, who loudly proclaims any agreement or loan he manages to arrange. But nothing has really changed. The Chinese, as in the past, are offering only targeted loans intended to develop their own production facilities or for the purchase of Chinese equipment.

Loan agreements are currently in place for the purchase of Chinese industrial equipment. According to Belarusian State Customs Committee data, sales of Chinese equipment has already led to a 48.9% increase in imports from China for the first two months of 2013, despite an overall 5.6% decline in imports as compare with the same people in 2012. China is the third largest supplier of goods to Belarus. As a rule, financial resources are spent only on purchases of Chinese equipment. The deadlines for completing modernisation of cement factories in which Chinese cement production lines have been installed have been repeatedly pushed back. There are a number of questions concerning the quality of the industrial products that have been delivered and of equipment supplied for Belarus’ energy system.

The most talked-about project is the China-Belarus Industrial Park, rumoured to cost $30 billion. The project itself is not transparent and raises a multitude of questions. It is not clear, for example, how this poorly regulated (by design) Chinese enclave will work in combination with the Customs Union of Belarus, Kazakhstan and Russia.

China is participating in a number of power generation and construction projects within Belarus. It is well known that China may be interested in opening a bank in Belarus using Chinese capital. For Belarus’ part, it needs China’s support to sell Belarusian bonds in Asian-Pacific region markets.

Undoubtedly, the Belarusian leadership is currently trying to hold China up as a possible alternative to partnership with both Russia and Europe. The problem is that on its own, divorced of connections with Russia or the EU, Belarus is of little interest to China (except as a seller of potassium). It is therefore unlikely that China will supplant the EU or Russia in the Belarusian market anytime soon.

Furthermore, China will not put up with a number of political games the regime is accustomed to playing with the EU and Russia – taking as much as possible as quickly as possible while fulfilling as few promises as possible. China has no interest in political declarations. It is not in any hurry and is guided solely by pragmatism. Lukashenka will not be finding a free lunch there.

2.5. What to expect in 2013: A new round of “partnership” with the West?

The year 2013 marks the halfway point in Lukashenka’s current term. Usually at this point in a presidential term, the dictator tries to somehow make friends with the West in order to obtain credit. To this end, he is prepared to make minor steps toward temporarily reducing repression, but only such steps that do not threaten his power, such as releasing political prisoners in exchange for financial assistance. Such was the case last time, when halfway through his previous term another group of political prisoners was released and a “thaw” in relations with the EU followed, accompanied by large Western loans. As we and other experts have noted, after the new wave of repression in 2011-2012, having rounded up a new batch of political prisoners, Belarus’ ruler launched the latest round in his beloved game of trading hostages for new loans. 24

With an US $8 billion trade surplus with the EU in 2012, Lukashenka was able to again trick everyone and drag his feet on delivering such gifts to Europe until the autumn parliamentary “elections” and not release political prisoners or move toward meeting other Western demands. Only after the “elections”, when it again became clear that a crisis was looming, that hard currency was again growing scarce in the country, and that Russia was closing the spigot for contraband petroleum products and by winter would put forth harsh conditions – only then two hostages were released from prison and the West heard a mixture of demands and concessions from Belarus.

But this time the situation was more complicated than during the “thaw” of 2009-2010. Now, Belarus had not yet recovered from the shock of the 2011 financial crisis, when the national currency was devalued by 65%. There were no more revenues from Russian gas transit, since Belarus had been forced to sell its gas transport system to Russia. There was still a high rate of inflation, GDP was growing slowly, and no structural economic reforms were being introduced. Internal consumption remained low due to low incomes. Privatisation had come to a halt without ever really starting. There were thus no internal conditions for an improvement to the economic situation. As before, the Belarusian budget remained entirely dependent on money from abroad – foreign loans, the sale of government bonds, and income from the export of oil, petrochemical products, potash fertilizers, and heavy equipment.

Furthermore, in 2013, big payments are coming due on old debts. Lukashenka will have to pay out approximately US $3.5 billion, including to the IMF. He is urgently seeking ways to refinance this debt. Experts also report that gold and foreign currency reserves are down. A number of experts are already talking about a return to the situation seen before the crisis in 2010 and during it in 2011.

On top of that, experts say that Belarus is threatened by a bursting of the bank deposit “bubble”. The National Bank of Belarus reported in early April 2013 that the country’s average rate paid to individual Belarusian rouble bank depositors for the last three months of 2012 increased by 13.6% to reach 42.6% per annum. By comparison, it was 31.6% in September 2012. Analysts assume that the main reason rates on deposits are going up is a lack of liquidity. Fifteen years ago in Russia this ended with a government debt default, the collapse of banks, a dramatic fall in rouble exchange rates, a change in the government and, somewhat later, in the president.

The national budget is already under strain from the artificial increase in salaries to US $500 on Lukashenka’s whim, but now there is talk of an increase to US $600 by the end of the year. The amount needed to modernisation industry is reaching US $4-5 billion, according to official sources.

It is obvious that the current round in the game of “geopolitical pendulum”, with a swing toward Russia to gain support, is beginning to break down: the Kremlin no longer wants to give away oil and gas simply in exchange for expressions of loyalty. Furthermore, the money Lukashenka is requesting for “modernisation” will not be forthcoming unless Russia gets something in return.

This year Belarus will get the final and smallest portion of the Russian stabilisation loan from the EurAsEC Fund. It may also turn out to be the year of the strongest pressure from Russia on privatisation commitments. For example, while Lukashenka was “vacationing” in Sochi in February, hoping (in vain) to again meet with Putin, Russian deputy Prime Minister Arkady Dvorkovich came to Belarus to inspect assets of interest to Russian companies for privatisation and purchase. The privatisation scenario Russia would most like to see is the worst possible one for Lukashenka. It would literally mean a loss of power for him.

In order to protect himself, Lukashenka has already pushed through a series of legislative measures limiting privatisation and managerial options and is conducting a “purge of cadres” and openly warning businesses about the dangers of taking part in “political games”.

The year 2013 may also mark a change for the worse in various segments of the Belarusian public’s attitude toward the regime, since all the benefits enjoyed by the populace in accordance with the “Belarusian model” of a social state are under attack, including health, education, and housing. Since there is no money, 25 the government has been forced to take unpopular measures that undercut the myth of a “socialist paradise”. This has to do with medicine, preschool education, and higher payments for communal services. Deterioration in the situation with worker rights has also been observed.

For now, the government has been trying to cover this up with a mandated salary increase; however, that will only work for a while. If money for populist measures suddenly disappears, the populace’s support of the government will decline further. The only question is whether or not a mood of protest will take hold given the atmosphere of repression and fear.

The regime’s main task for now is ensuring a flow of money from the West that does not come with the onerous obligations to sell key assets put forth by Russia. Clearly, Lukashenka’s only option for getting new infusions of cash and retaining power is a change of direction of the “geopolitical pendulum” toward the West. This turn toward the West, which has been anticipated by us and other experts, can already be seen in the first half of 2013, including in the lead-up to the summit of the Eastern Partnership in Vilnius in November. It is also attested to by the dictator’s sudden interest in the Dialogue on Modernisation with the EU. An attempt to have sanctions lifted from the recently appointed foreign minister and experienced negotiator Vladimir Makei and earn himself a personal spot at the Vilnius summit were only Lukashenka’s first trial balloons to test whether the atmosphere is favourable in the West for restarting a dialogue about new loans free of preconditions.

The state media have been trying to outdo one another reporting contacts with Western partners at various levels. The tone of reports has also changed, from denying that the release of political prisoners is a precondition for dialogue to simply remaining silent on this topic. Naturally, all this has at least two propaganda objectives. One is to show Russia Belarus’ ability to manoeuvre and another has to do with the domestic audience. “Dialogue with the West” as it is portrayed in the media should reduce expectations by this audience in regard to possible actions and positions of Western democracies advancing a “pragmatic” approach to politics.

A strategy like this is aimed at demoralizing those still hoping to avoid the traditional sequence: elections – new political prisoners – need for money – bargaining with the West – release of political prisoners – new Western loans.

Moderate experts can be heard in the media voicing the opinion that promises and proposals by the West are not sufficiently “alluring”, and this is why political prisoners have yet to be released. Obviously, the only proposals that would be alluring enough would be new loans.

A return to the Eastern Partnership is also important for the regime right now as a means of weakening the pressure from Russian businesses in regard to privatisation and enhancing its own legitimacy with support from partners from among former Soviet countries. By no means all of the countries within the Eastern Partnership are following a democratic path, and some of them openly support Lukashenka and openly oppose putting international pressure on him.

The current picture – at least the one the state media are showing to Belarusian society – is not flattering to the EU. It features a dramatic spike in contacts between representatives of the regime and Western democracies, and these contacts are conducted at all levels, right up to the EU commissioner for the Enlargement and European Neighbourhood Policy Štefan Füle. Most commentators point to the fact that the subject of freeing political prisoners has noticeably moved lower down the EU priority list. The emphasis is placed on the need to “begin dialogue aimed at reaching an agreement”.

We do not know whether this really is the EU’s intention, but this situation is a blow to the advancement of democratic values in Belarus and demonstrates to Belarusians the emphasis the EU places on economic and geopolitical interests. In terms of these values, the European choice of Belarus seems to be under threat.

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At the same time, in preparation for bargaining with the West, a fresh batch of “live merchandise” is being prepared: pressure is being put on remaining political prisoners by cutting them off from the outside world and putting them in punishment cells in order to extract confessions of guilt and pleas for mercy.

2.6. The dialogue game: Will the EU elect Lukashenka for a new term?

Let us examine the position of those who support “dialogue” with the regime. Their main arguments are: sanctions do not work, while dialogue will improve the internal political situation in Belarus and modernisation it. Sanctions, as they see it, push Belarus into Russia’s sphere of influence, while dialogue supposedly brings Belarus closer to Europe.

In reality, during the last period of so-called “thaw” and “dialogue” in 2009-2010, there was no movement whatsoever toward real democratisation of the political system, and the opposition and civil society existed in a “ghetto” set up for them by the regime as it worked to create a facade of democratic changes. Meanwhile, any actual influence on decision-making was out of the question (as in 2012, the parliament elected in 2008 included no members of the opposition). This facade permitted the regime to gain additional resources for the consolidation of power.

As we have written many times, for Lukashenka, governmental (i.e., his personal) management of the economy is a guarantee that his power system will remain stable. All money and resources received from the West for “modernisation” will be used to preserve and strengthen an authoritarian system of one-man rule. Loans and investment will support not only the operation of unprofitable enterprises, but the repressive governmental apparatus. Lukashenka’s treatment of past loans from the IMF and the EurAsEC suggests that the system is ready to hand out promises and create a semblance of reform, but not to undertake the slightest real transformation.

Launching another round of “dialogue” with the West is no guarantee that repression and pressure on civil society will be stopped. In an article, “Dialogue to Conserve Belarus”5, Pavel Usov of the Belarusian Analytical Centre offers the following facts about the previous “thaw” cycle:

“Repression takes other forms that are just as brutal. For example, opponents of the government continue to be subjected to physical and psychological attacks and can be threatened or beaten. In Belarus, during a period of thaw (2009), the Salihorsk human rights activist Yan Polyakov was driven to suicide, and in 2010 the founder of Charter 97, Oleg Bebenin, died under mysterious circumstances. The offices of independent newspapers and opposition parties also came under attack and politically disloyal students were expelled from universities (this is when a so-called political military draft was underway, sweeping up large numbers of young activists); teachers, office personnel, and workers were fired for violating workplace discipline”.

Finally, “dialogue” is no guarantee of Belarus’ independence from Russia. Despite the gas wars between Belarus and Russia, periods of “thaws on the Western front”, and entry into the Eastern Partnership, Belarus has remained a member of Eurasian integration associations: the Union of Russia and Belarus, the Collective Security Treaty Organisation, the CIS, and EurAsEC.

Pavel Usov offers the following facts: “Furthermore, the ‘Autumn–2008’ and the 2009 ‘West’ (the name says it all) military exercises were conducted jointly with Russia. That same year an agreement to jointly protect the international boarder of the Union of Russia and Belarus and create a Unified Regional Air Defence System was signed and ratified. In 2010 agreements to create a customs union were also signed and ratified. During the period of “dialogue” (and having been granted an IMF loan), the first 50% of shares in Beltransgaz were sold by the Belarusian authorities [to Russia] and a final decision was made to build a nuclear power plant – not with the EU, but with Russia”.

5 Pavel Usov, “Dialogue To Conserve Belarus,” 11.04.2013, http://charter97.org/ru/news/2013/4/11/67804/ 27

As in the past, “dialogue” with Europe continues to serve only one purpose: to buy one more presidential term. Two mechanisms are at play here: increasing public support through populist measures to increase pay salaries and pensions using money from the West, and the political legitimisation of the regime within the “civilized” world through the renewal of dialogue. The question remains: Will the European Union elect Lukashenka for a new term?

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3. STRATEGY RECOMMENDATIONS FOR THE INTERNATIONAL COMMUNITY

3.1. Overcome “European fatigue”

For the international community, devising a Belarus strategy is no easy task. We recognize that the environment in which the European Union is making new decisions on its efforts to effectively improve the human rights situation and promote the rule of law in Belarus is not favourable.

There is a certain “fatigue” in the EU when it comes to the “Belarusian question”, since the approaches being used since early 2011 have yet to yield significant results. No politician likes failure, and everyone prefers to see results in the short term.

There is growing pressure on the EU from Lukashenka regime lobbyists to renew “dialogue” with the regime – from lobbyists representing European business and pragmatically oriented European politicians and from some representatives of the Belarusian opposition, civil society, and think tanks that have chosen (based on their own interests) or been coerced (by the regime) into furthering Lukashenka’s interests.

Furthermore, many European actors simply have too many other problems on their mind to care about Belarus, given the Euro crisis and the weakening of European integration.

It is therefore extremely tempting to pretend that achieving the release of political prisoners after a new round of dialogue, promises, and Western loans would represent a “success”. The mood among European diplomats is now moving in this direction, despite warnings by experts and appeals by political prisoners, both former and current, that this strategy is ruinous for Belarus.

Needless to say, everyone would welcome the release of political prisoners, but renewing full-scale dialogue with the dictator and lending the regime legitimacy despite the absence of systemic changes in the areas of rule of law and democratic institutions will only serve to strengthen Lukashenka’s power, preserve the authoritarian regime, and reinforce the usual pattern of bargaining over hostages. In a year or two, the familiar cycle will start all over again: the dictator will burn through the new loans and round up another group of political prisoners to be traded for a fresh infusion of cash from the West.

How can we escape this vicious cycle and overcome “European fatigue”?

We believe that European policy in regard to Belarus should be based on certain strategic principles and include two parallel and mutually reinforcing strategies for interaction: active engagement with Belarusian society and increased pressure on the Lukashenka regime.

3.2. Principles that should underlie the international community's strategies

We believe that the international community's strategy toward Belarus should not be ad-hoc and reactive but rather based on principles, in particular:

1. Strategies should be driven by the goal of attaining systemic change Any strategy pursued by the international community in regard to Belarus must be geared toward reaching the following long-term goals: systemic changes in the area of rule of law, observance of the country’s international human rights obligations, and the restoration of democratic institutions, including free and fair elections. These changes must be founded on the provisions of resolutions and recommendations on Belarus in the reports of international organisations, including documents of the UN and OSCE.

2. Strategies must be truly long-term and consistent No strategy can be successfully realized in the short term. They all need time. Adjustments and tactical changes can be introduced, but not 180 degree about-faces after a short period of actions that seem to

29 bring no results. Now, less than just two years after high-level interactions with the Lukashenka regime were halted by the EU and limited economic sanctions were introduced, we witness increasing calls for the renewal of dialogue and the repealing of sanctions. We strongly believe that any political strategy must remain in effect for at least an entire election cycle – in this case, until the election of 2015.

3. The international community must be proactive Too often, EU policies are shaped by reaction to actions by the Lukashenka regime. As a result, the EU winds up playing by his rules.

4. The members of the European Union must take a unified stance If a decision is made, it must be thoroughly implemented. The example of the current economic sanctions shows that certain countries – those most interested in trade with Lukashenka – can be “weak links” and seriously undermine the strategy of putting pressure on the dictator and essentially render the sanctions ineffective, both by removing key oil traders from the EU sanctions list and by exercising weak oversight of compliance with sanction at the national level, such as in the area of bank transactions and accounts.

3.3. Actively engage Belarusian society: Promote the European choice

A full-scale dialogue with Belarus is truly necessary, but with Belarusian society, not with the illegitimate dictator.

Experts rightly point out that Belarus (or any other country, for that matter) cannot be moved toward democracy and the upholding of human rights through external efforts alone. There has to be domestic demand for these values and actions by society in moving toward a future built on these values and principles. However, international actors can and must support those who promote these values and enable the emergence of a more broad-based internal demand for democracy. It is not a matter of having the State Department “buy protesters” as the Russian authorities famously alleged after demonstrations in their country, but of supporting and defending courageous activists, on the one hand, and, on the other, stimulating the growth of domestic demand for democracy among broad segments of the population. It is a matter, in essence, of working with Belarusian society on the “European choice” so that the people of Belarus better understand it.

We suggest several strategic elements for the EU engagement with Belarusian society.

1. Develop and implement an effective communications strategy Today, the vast majority of Belarusians do not understand the goals of the European Union in regards of Belarus. The EU’s message in Belarus is weak or simply non-existent. Under conditions of total governmental control of the media space and powerful propagandistic brainwashing, most information about the intentions, goals, and actions of the European Union is gleaned by Belarusians from television programs and Lukashenka’s speeches. Many Belarusians do not like Lukashenka, and they do not like the idea of Putin gaining greater control in their country, but they do not see an alternative.

In order to overcome this artificial lack of informational balance, Belarusians need, first of all, information about the position of the European Union in regard to Belarus and, second, a clear understanding that the EU considers Belarus to be a part of Europe and that it cares about the future of this country. This can be achieved through concrete actions.

The European Union needs to develop a clear and effective communications strategy involving active dialogue with Belarusian society, and, working with Belarusian activists and experts, to put together a plan to implement this communications strategy and allocate necessary resources. It is important to consider the various communications channels available, substantially increase support to existing independent media produced both inside Belarus and in the neighbouring countries, support the development of new communications channels, and be consistent in realizing this strategy.

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2. Expand opportunities for Belarusians to travel to the EU Of course, another efficient way to demonstrate the advantages of the European choice is to further expand opportunities for Belarusians to travel to the countries of the EU. All Belarusian actors, whether their sympathies lie with the opposition or the Lukashenka regime, are united in calling on the EU to liberalise the visa regime for Belarusians and provide stipends for students. The fact, pointed to by European officials, that the Belarusian government does not agree to bilateral steps to facilitate the visa regime is irrelevant. In light of the political crisis, citing this concern sounds hypocritical to ordinary Belarusians. Obviously, visa requirements cannot be abolished overnight, but it is a realistic goal to rather quickly undertake a number of unilateral steps, including a sharp reduction or elimination of fees for visas for several categories or all Belarusians, as well as significant simplification of the document requirements for visa applications and a major expansion in the number of multiple entry visas for short trips. These changes would show Belarusians that the EU does indeed care about them and that it is ready to meet the Belarusian people halfway.

3. Increase support to independent civil society Preservation and expansion of support for independent institutions of civil society also naturally falls under the “dialogue with society” category. This involves both practical financial support and political support, including helping to defend activists and organisations subjected to persecution and pressure. A recent proposal made by the EU Institute for Security Studies to reduce the status of interactions with Belarusian civil society and shift them from Brussels to the various national capitals “to avoid irritating the Belarusian authorities”6 must be absolutely rejected. The goal of EU policy must not be to appease the authorities, but to choose those actions that are most effective in bringing about change in the country. Supporting Belarusian civil society at the highest level and increasing its visibility, including with the help of meetings with the top EU leadership, should be a central element of this strategy. Such meetings also provide activists much-needed protection against persecution.

4. Increase financial support for persecuted activists and their families Finally, the EU’s efforts to reach out to Belarusian society must include increased financial support for persecuted civil society activists, lawyers and journalists, and their families. Challenging the repressive regime requires courage and almost always leads to long- or short-term imprisonment, cruel and degrading treatment in detention, pressure on family members, the revocation of lawyers’ licences, banning out-of- favour journalists from practicing their profession, and the resulting loss of job and income. These courageous people should not be left undefended. Human rights groups and activists are punished for collecting money and distributing it to the families, as in the case of Ales Bialiatsky. The EU should demonstrate that it cares about courageous activists, journalists, lawyers, and their families by increasing financial support for them.

3.4. Increase pressure on the regime: Act consistently and smartly

Instead of renewing dialogue with the regime without preconditions or in exchange for vague promises, and instead of agreeing to lift sanctions in exchange for the release of hostages, it is essential that pressure on the regime be intensified, guided by the fundamental goals outlined above and exploiting the regime’s need for foreign resources.

At a minimum, the “gaping holes” in economic sanctions must be plugged and this very year some key Belarusian companies must be added to the EU sanctions list: oil traders from among the oligarchs close to Lukashenka that were blocked by Latvia during the spring of 2012.

A number of prominent civic activists and opposition members are demanding that steps go even further and that sanctions be placed on companies that deal in potash fertilizers, the regime’s second major source

6 “Good cop or bad cop? Sanctioning Belarus”, Ondrej Ditrych, Briefs, No14, the European Union Institute for Security Studies, 4 March 2013, http://www.iss.europa.eu/publications/detail/article/good-cop-or-bad-cop-sanctioning- belarus/. 31 of foreign trade revenue. Among those making such demands is the courageous politician and former presidential candidate, Nikolai Statkevich, who has been subjected to brutal physical and psychological pressure in prison.

There are certain steps that must not be taken under any circumstances. Dialogue with the regime must not be renewed unless political prisoners are freed and rehabilitated. The topic of the release of hostages must never be taken off the negotiating table. If the regime wants greater opportunities for contacts and to improve prospects for a return to dialogue, the first step is the release and rehabilitation of political prisoners.

If the EU now tries to “play soft” and hand out advance payments, lifting sanctions against Vladimir Makei in order for him to be able to travel to Europe for negotiations and participate in the Eastern Partnership summit in November without freeing any political prisoners, this is the worst thing that could be done to them (except, of course, lifting sanctions and renewing full-scale dialogue without preconditions). This action would show the regime that the West is incapable of sticking to its own positions and would severely damage civil society in Belarus – both from the standpoint of Belarusians’ attitudes toward Western democracies and from the standpoint of civil society’s ability to function safely. Given the situation, the EU does not have the right to exchange sanctions for improved diplomatic relations while people in prison are being harassed and tortured and their health is being imperilled.

Furthermore, an equally important precondition for renewing dialogue must be the immediate cessation of pressure on civil society and repression toward the public at large.

The release and rehabilitation of all political prisoners must by no means mark the end of demands placed before the Lukashenka regime. The dialogue that follows the release of prisoners must be conducted in several steps. For the EU, these steps must be based on the Belarusian authorities’ fulfilment of specific demands in the area of the rule of law and the upholding of international commitments in the area of human rights and the restoration of democratic institutions. The best instrument for this is a “roadmap to change” that contains actions that are measurable and subject to evaluation. Principles of such a roadmap are contained in the “European Union’s Interim Paper” and in proposals by international civil society, including in our earlier reports.

The holding of free and fair elections and resulting restoration of governmental legitimacy should be the final stage along this path, not the first. Without free media, an independent judiciary, and guarantees of unfettered activities by civil society and the political opposition any election will again revert to farce and imitation.

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Annex 1. The Justas Paleckis report: Commentaries on the potential positive and negative consequences of its recommendations

As this report was being finalized, a draft report by Justas Paleckis, a member of the European Parliament International Affairs Committee, was released7. Despite the fact that our report provides detailed information on many issues covered in Mr. Paleckis' report, we decided to briefly comment on the specific points of this document, in light of the upcoming discussion in the European Parliament of the draft report's recommendations on the European Union's policies toward Belarus.

From our standpoint, the Paleckis report contains both important positive proposals and proposals that could potentially perpetuate the authoritarian regime.

For our readers' convenience, we will address these on a paragraph-by- paragraph basis.

Items that we consider questionable:

Paragraph c We are not sure whether the proposal to lift visa restrictions imposed on key Belarusian officials in order to promote communication with the EU relates to the Minister of Foreign Affairs Mr. Makei alone or also has to do with other officials. In any case, such a concession to the regime would be a serious mistake. The regime has never reciprocated such concessions. Such a step would most probably damage the situation facing political prisoners, insofar as after these visa sanctions are lifted "for free", the regime will turn around and use political prisoner exchanges to extract financial benefits in the form of credits, meaning that pressure on political prisoners will only intensify. Meanwhile, the regime will interpret the concession as further proof that the EU is weak and incapable of sticking to its positions and will conclude that it is free to continue the same brazen violations of human rights and disregard for international norms.

Paragraph d While in principle we support and encourage the idea of a "roadmap" for change, we believe that a roadmap should not wind up functioning as something that obliges the EU to automatically make concessions to the Lukashenka regime when it takes some formal steps devoid of real change like it was in 2009-2010. Likewise, a “roadmap” should not be adopted just for the sake of checking items off a list. We believe that progress in accordance with the roadmap should be measurable and have specific criteria and progress indicators. The clearest demands and criteria are contained in the UN Human Rights Council documents and the OSCE Moscow Mechanisms Report. Absent these specific demands and criteria, we will be faced with a rerun of the 2009-2010 run-up to elections, which featured a facade of democratisation devoid of essential changes to the system. We understand the desire to achieve rapid progress in the Belarus situation, however continuing the cycle of pseudo-thaws in relations with the EU will only make matters worse for people and permit Lukashenka to approach the 2015 elections unhindered.

In regard to the recommendation in the same paragraph to enhance interparliamentary relations, both bilaterally and within the Euronest Parliamentary Assembly, we suggest reading reports by civil society

7 Draft Recommendations to the Council, the Commission and the European External Action Service on EU Policy towards Belarus. Report by the European Parliament Committee on Foreign Affairs. Rapporteur: Justas Vincas Paleckis. 05.06.2013. (2013/2036(INI)). http://www.europarl.europa.eu/sides/getDoc.do?pubRef=- %2f%2fEP%2f%2fNONSGML%2bCOMPARL%2bPE-506.234%2b01%2bDOC%2bPDF%2bV0%2f%2fEN 33 election observers in Belarus8 and their reports on the situation in the lead-up to elections, as well as reports by OSCE election observers9. The elections did not provide a level playing field and were rife with vote-rigging and brazen violations of international norms. Expanding contacts with this “parliament” would mean encouraging the regime to commit further electoral fraud and would represent a slap in the face of society, which did not elect this “parliament”. The fact that legislators are not elected, but "appointed" on high is common knowledge. These “parliamentarians” represent the authoritarian regime, not the people of Belarus. Finally, the European Parliament adopted a strong resolution on the parliamentary elections in Belarus very recently, in October 2012, where it clearly said that it “will continue its policy of not recognising [the parliament of Belarus], both in its bilateral relations with Belarus and within the framework of the Euronest Parliamentary Assembly”10. Doing a U-turn just a few months later in the absence of any progress in Belarus would be inconsistent and undermine the European Parliament’s credibility.

Paragraphs f and g Increasing contacts with officials and ensuring full participation of the Belarusian authorities in the EU Dialogue on Modernisation will not, at this stage of relations, lead to anything positive. Instead, it will give the regime more ammunition for domestic propaganda and for extorting subsidised oil from Russia, using its classic trick of threatening Moscow with Belarus’ departure for the West. Official Minsk sees modernisation only in terms of capital investment in new equipment for those enterprises that it controls and that bring it profit. Perhaps enterprise management could manage to keep up a façade of "modernisation", but laws that have been adopted over the past year indicate that total state control will continue to be exercised over all spheres of the economy.

Paragraph i This very important paragraph, containing recommendations on key demands in human rights and rule of law, is way too general and only once cites OSCE commitments. Instead, it should refer specifically to relevant provisions of the UN Human Rights Council documents on Belarus and the OSCE Moscow Mechanisms report on Belarus and recommendations they provide on what concrete steps should be made and which laws, institutions and practices must be repealed, corrected or adopted.

Paragraph j This paragraph makes little sense in its current wording, given the current situation in Belarus’ economy which is characterised by the lack of any preconditions for structural reforms and the absence of the rule of law. For now, everything possible is being done by the Lukashenka regime to ensure full state control in the economy, even over those enterprises in which the government does not have a share. Any promises of reforms by the government cannot be taken at their face value because each and every decision is taken personally by Lukashenka. Survival of his regime of personal power entirely depends on his control over the economy.

8 Election to the Chamber of Representatives of the National Assembly of Belarus of the Fifth Convocation: Final Report. The “Human Rights Defenders for Free Elections” campaign, 24.09.2012, http://spring96.org/en/news/57895 9 Republic of Belarus Parliamentary Elections, 23 September 2012. OSCE/ODIHR Election Observation Mission Final Report. OSCE/ODIHR, 14.12.2012, http://www.osce.org/odihr/elections/98146 10 European Parliament resolution on the situation in Belarus after the parliamentary elections of 23 September 2012 (2012/2815(RSP)). 26.10.2012, http://www.europarl.europa.eu/sides/getDoc.do?type=TA&language=EN&reference=P7-TA-2012-410 34

The same could be said of Paragraph l: if it involves financial assistance, the money would be used to consolidate and perpetuate the existing system by implementing bureaucratic privatisation where assets will be given under control of persons directly appointed by Lukashenka.

Paragraph k This paragraph must address not only economic reforms but badly needed reforms of the legal system as a condition for European investments and international loans as well as the negotiations for WTO accession.

Paragraph р This paragraph offers the regime an opportunity to increase revenues from foreign trade. It is important to understand that a significant portion of Belarus' "export miracle" in 2012 came from "private" enterprises that serve as Lukashenka's "wallets" in various countries.

Paragraph s This paragraph envisions direct financial assistance to the regime to strengthen its apparatus of repression, including by more effectively realizing a policy of blacklisting foreign civic activists, politicians, representatives of international organisations and journalists from entering Belarus as well as preventing "undesirables" from among Belarusian citizens from crossing the border to leave the country.

Paragraph z Under current conditions, this recommendation would be used by the pro-Lukashenka academic nomenklatura for EU-funded tourism. Unfortunately, institutions of higher learning are entirely controlled by the regime. Teachers and students out of favour with the regime are fired and expelled.

Recommendations that we consider important and beneficial:

Paragraph а We welcome the demand for the unconditional release and rehabilitation of all political prisoners. We consider this to be the bare minimum requirement for the renewal of any high-level dialogue with the regime. However, without systemic changes there will inevitably be new political prisoners; we therefore feel it would be premature to make any advance concessions to the regime.

Paragraph е We agree that it is important for all EU member states to unconditionally support the overall EU position in regard to the introduction of restrictive measures. Lobbyist efforts by two EU countries to remove a number of companies close to Lukashenka from the EU sanction list yielded the regime US $2.5-3 billion in additional foreign trade revenue in 2012. This is why the regime has been so intractable and political prisoners continue to languish in prison.

Paragraph h We tentatively support this point so long as the process is representative and open. Not only those living in Belarus, but those forced to leave the country after 2010 out of concerns for their safety must be able to participate in the process.

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Paragraph о Recommendations concerning a green economy and renewable energy are important and beneficial for freeing the Belarusian economy from dependence on deliveries of gas and oil from its neighbour, however it should be remembered that this alone will not save Belarus from depending on petroleum-related exports, since goods tied to energy resources make up as much as 50% of the country's exports.

Paragraph u We welcome recognition of the need to improve the EU's information strategy and of the importance of transmitting to Belarusians information about the EU policies and advantages of the European choice. We believe that representatives of Belarusian civil society must be involved in the design and implementation of this strategy – both those working within the country and those who have been forced to leave since 2010.

Paragraph v The paragraph concerning the increase of EU support for civil society and independent elicits our support. We also recommend calling on the European Commission to simplify procedures for receiving assistance as well as simplification of reporting requirements and improved security for recipients. We believe that such assistance must go directly to civil society organisations in Belarus and in emigration as much as possible and not wind up in the pockets of intermediaries. The independent media must be given particular support.

Paragraph w We believe that the recommendation concerning the unilateral facilitation of the visa regime by the EU and the reduction or waiver of fees for Schengen visas is one of the most important proposals for promoting the European choice among Belarusians.

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Annex 2. Sanctions and the Various Sectors and Actors of the Belarusian Economy

Banks and Sanctions

As we predicted, the threat of sanctions had an impact on the banking sector.

We are not certain why, but Société Générale, through Rosbank, adopted a decision to sell Belrosbank to Russian Alfa-Bank, part of Mikhail Fridman’s Alfa-Group. Fridman and Lukashenka have a long history. The Alfa-Bank group includes Alfa-Bank Russia, one of Russia’s largest private banks, as well as Alfa-Bank Ukraine, one of the ten largest banks in Ukraine. The Alfa-Bank group includes banks in the Netherlands, Belarus, and Kazakhstan, and has offices on Cyprus and in the U.S. and U.K.

Of greater interest is the sale of two banks that have attracted attention in connection with suspicions of money laundering and ties to Iran. In May 2012, Trust Bank and CredexBank were listed in Section 311 of the U.S. Patriot Act as financial institutions “of primary money laundering concern”. Evidently for this reason, Germany’s Commerzbank decided to cease cooperating with Trust Bank. Trust Bank accounts will be closed as of 1 February 2013. The Belarusian bank was informed of this through the SWIFT system on 20 December.

After the U.S. Treasury Department publicly suspected it of money laundering, CredexBank was sold and changed its name. In December 2012, new shareholders appeared, the Russian Alyans Ipoteka [Mortgage Alliance], with a 79.8% share, and Russian ZAO Starbank, with a share of 19.72%. The company Vicpart Holding is no longer a shareholder in the bank. After it was acquired by new shareholders, the bank was renamed ZAO [Closed Joint Stock Company] InterPayBank.

One hundred percent of the statutory fund of ZAO HonorBank, which is under U.S. sanctions, was sold in January in four transactions. The transactions were registered by the Belarus Currency and Stock Exchange (BCSE) on 22 January. Fifteen million shares of HonorBank were sold for 5.1 million Euros. According to the BCSE, the buyer paid 25.9% more for the bank’s stock than its nominal value. Now, 94% of shares have been sold to a resident of Germany, H. M. Tankh, and the remainder will be owned by East Trade Company, which is controlled by a resident of Turkmenistan, Ya. Amatun.

ZAO HonorBank was formed in October 2009 with 100% foreign capital. The bank’s shareholders were three Iranian banks – Bank Refah Kargaran, Bank Saderat Iran, and Bank Toseeh Saderat Iran/Export Development Bank of Iran. The bank specialized in Iranian investment projects within Belarus and interbank transactions.

And while the transaction with CredexBank raises few questions (the Swiss probably simply got rid of the “laundry machine”), the transaction with HonorBank does raise quite a few.

Experts believe that this is how the Belarusian banking sector gets rid of banks that raise questions. The official reason was a change to the Republic of Belarus’ Banking Code having to do with capital requirements.

In January 2012, the U.S. also expanded sanctions to cover Trade Capital Bank because it is a subsidiary of Iranian Bank Tejarat. Then, in early August, the National Bank of Belarus suspended Trade Capital Bank’s license to perform a number of banking operations for one year. The bank’s main purpose was servicing export-import operations between the two countries.

Experts believe it is possible that, although Trade Capital Bank is fulfilling its capital requirements, pressure is being put on the bank’s owners in order to achieve a change of ownership. If this were to occur, the U.S. authorities would have no official cause for complaints against any of Belarus’ banks.

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Oligarch Yuri Chizh Gets His Business Out from Under Sanctions

On 14 December 2012 it became known that officially, one of Chizh’s companies, Neonafta, no longer owned assets in Latvia – the Mamas D factory – although it should be mentioned that Mamas D, as of the end of 2011, was one of the fastest growing companies in Latvia in terms of sales.

The new owners of a portion of the capital of Mamas D, a Daugavpils producer of biofuels that used to belong to Neonafta, are two residents of Belarus: Dmitry Aleksin (40% share) and Inna Aleksina (40% share). Their co-owner is the well-known Daugavpils businessman Aleksandr Grakhovsky (20%). According to available information, the Aleksins (mother and son) run (or did until recently) the Syabry resort, which also is part of Triple.

Oligarch Anatoly Ternavsky Has Been Barred from Seeking Redress through EU Courts in Resolving Corporate Disputes

The Belarusian oligarch, Anatoly Ternavsky, cannot resolve a conflict over selling Krasnodar-based oil transporting company Naftatrans in the Supreme Court of Cyprus due to EU sanctions.

On 22 March 2013, the Supreme Court of Cyprus lifted a temporary ban issued by a lower court prohibiting the directors of Rayhill Limited Company from exercising their authority. The ban had been put in place at the request of oligarch Anatoly Ternavsky, a close friend of Lukashenka, who beneficially owns a 40% stake in Rayhill Limited through his company Prime, which is registered in the British Virgin Islands.

The ruling in favour of Ternavsky’s Prime had been issued on 23 November 2012 by the Limassol District Court. The dispute involved a claim against another shareholder in Rayhill Limited, Erin company. According to a report published by the Regnum news agency, the court had banned Rayhill Limited directors from taking any decisions relating the activities of the company,

This injunction was issued in response to actions by, Erin, which is owned by Russian, Anatoly Loktionov. Loktionov held a general meeting of Rayhill Limited, where a decision was taken to appoint new company directors. Although Prime, in accordance with Cypriot law, had been invited to the meeting, it did not send a representative. Erin nevertheless received permission from the Cypriot authorities to hold the meeting without Prime representatives present.

Displeased with the meeting’s outcome, Prime's Anatoly Ternavsky sought an injunction from the Cypriot authorities against registering the new board of Rayhill Limited. The registrar found Ternavsky's request to be without grounds, leading Prime to apply to Limassol District Court.

The Supreme Court of Cyprus found that Limassol District Court, in granting Ternavsky’s request that Rayhill’s directors be barred from carrying out their duties, did not take into account the fact that its ruling allowed Anatoly Ternavsky to bypass restrictions imposed on him by the EU due to his close relations with the Lukashenka regime. In seeking redress in regard to his commercial interests, Ternavsky was, in essence, conducting business on the territory of the European Union, which is categorically prohibited by EU rulings in regard to black-listed Belarusian businesses.

Rayhill Limited owns 50% of the shares in another Cypriot company, Glidefern Limited, which, for its part, holds 100% of the shares in Naftatrans, a company dealing with oil transportation in Krasnodar Krai.

The Supreme Court of Cyprus’ decision has deprived Anatoly Ternavsky of influence over Naftatrans. Moreover, the decision sets a precedent, in accordance with which Belarusians subject to EU sanctions cannot seek satisfaction from the courts of EU member states in commercial disputes without special waivers from the authorities.

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Annex 3. The most profitable companies established with Belarusian capital 11

Belarus According to Belarus Ministry of Finance figures, in 2011, net profit for Belaruskaliy totalled 676.544 million Euros (calculated based on the 1 January 2012 Rouble-Euro exchange rate of 10,800:1). Overall, the Belarusian enterprise reached 10th place in 2011 in Central and Eastern Europe. Another public company in Belarus, BelAZ, was also high on the list. Net profits for this manufacturer of heavy-duty trucks in 2011 totalled 192.899 million Euros. The company was among the region’s 50 most profitable enterprises, taking 43rd place.

Latvia Late last year, the Delfi internet portal published its list of the top Latvian companies, the “Top 501”, based on 2011 earnings figures. No. 67 and one of the fastest growing companies in the Latvian economy was the Daugavpils producer of biofuels, Mamas D. Its earnings totalled the equivalent of US $90 million. Until last year, an 80% share of Mamas D was owned by Neonafta, controlled by the Belarusian businessman Yuri Chizh. In 2012 it became known that Neonafta had sold its shares. The new owner, with an 80% share, was also a Belarusian – Dmitry Aleksin.

There were two other Belarusian companies among the Top 501: No. 306, Oil Logistic & Trading (earning approximately $30 million) and No. 405, Oil Logistic (approximately $20 million). Both companies were founded by the state concern Belneftekhim and its enterprises and are engaged in the international transport of products of the Belarusian oil processing and chemical industry.

Lithuania In early 2013, the Lithuanian business publication Verslo zinios published a list of the country’s top 500 companies. The rating, which reflects nine months of 2012, lists only one major Belarusian business, ZAO BMZ-Baltija, which was No. 74 (last year it was No. 86). The company, which was founded in 2008 to market the Zhlobin region factory’s metal production to Poland and the Baltic states, was listed as earning approximately US $90 million. Over nine months of 2011, this figure totalled approximately US $70 million.

Russia Russia’s Expert 400 rating for 2012 listed one company headquartered in Minsk, the Atlant-M automobile holding company. It is owned by Belarusians Oleg Khusaenov and Sergey Savitsky and by Russian Igor Malgin. For 2011, the year on which the rating was based, Atlant-M was No. 165 with earnings of US $1.35 billion. Forbes-Russia’s list of top privately held companies in Russia put Atlant-M at No. 65.

Poland Last summer, Gazeta Finansowa published the Top 1000 list of Polish companies. No. 213 was ASBISc Enterprises PLC, a major shareholder of which is Sergei Kostevich. In 2012, the company earned approximately US $470 million. ASBIS Group sells IT products on the Polish market, as well as company shares, which are listed on the Warsaw stock exchange.

11 Based on information from a publication “Belaruskaliy has joined top 10 profitable companies of Central and Eastern Europe («Беларуськалий» вошел в топ-10 прибыльных компаний Центральной и Восточной Европы), Ezhednevnik, 02.04.2013, http://www.ej.by/news/companies/2013/04/02/belarus_kaliy_voshel_v_top- 10_pribyl_nyh_kompaniy_tsentral_noy_i_vostochnoy_evropy.html. 39

Annex 4. Oligarch Mikhail Gutseriev: Lukashenka’s Best “British” Friend

Gutseriev’s Business in Belarus

1. Potassium

On 5 October 2011, Mikhail Gutseriev’s company, GCM Global Energy, which is registered in Great Britain, signed an investment agreement with the government of Belarus. Under the agreement, the company will create a potash fertilizer production facility using raw materials from the Nezhinsky section (the eastern part), as well as the Smolovsky and Lyubansky sections of the Starobin potassium salts deposit. The new company goes by the name Slavkaliy.

In March 2013, Gutseriev’s company will begin construction of a potassium complex in Belarus designed to produce 1.8 million tonnes of potassium a year. According to Mr. Gutseriev, it will take three years to construct the mines. Sberbank is also an investor in the project.

According to the investment plan, the new potassium works should be constructed before 2017. Gutseriev feels it should be completed earlier, before 2015. (This may have to do with the upcoming presidential “elections” in Belarus.)

The works will sell its output on foreign markets through ZAO Belarusian Potassium Company. But if this company declines to handle sales, the new company has the right to work with another partner or independently. If the company is sold, right of first refusal goes to the Belarusian government.

The terms of the agreement granting Mikhail Gutseriev the right to develop the Starobin deposit, which was already being developed by Belaruskali, are unknown. The details of the contract have not been disclosed. It is known that the Belarusian authorities did not seek competitive bids.

Why was JMC Global Energy given the right to develop this attractive deposit and build a potassium works without a tender process? In early 2011, a detailed exploration of the Nezhinsky section of the Starobin potassium salt deposit was conducted. Confirmed reserves of industrial-grade potassium salt totalled 311.3 million tonnes. It was estimated that these reserves would yield a planned mine at least 5 million tonnes of crude ore per year. The Starobin deposit is one of the world’s largest potassium salt deposits.

Meanwhile, considering world food market trends, the demand for potash fertilizers will continue to grow. In the past, Lukashenka stated that there were enough proposals from investors and Belarus was ready to accept bids to select an investor to mine new potassium deposits. The only explanation for the Belarusian authorities’ decision to dispense with a tender process is Gutseriev’s long history with the regime. This history extends back 13 years, to 2001, when Gutseriev openly supported Lukashenka’s election.

2. Real Estate and Construction

In addition to his development of potash fertilizers, the Russian billionaire Mikhail Gutseriev has been granted sites for the construction of hotels and other real estate within Belarus.

The businessman has entered this market in partnership with his nephew, Mikail Shishkhanov, co-owner of Mospromstroi, one of the largest owners of Moscow real estate and fashionable hotels.

A subsidiary of the Mospromstroi concern in Belarus, IZAO Mospromstroi-Otel, was registered by the Minsk Municipal Executive Committee back in mid-September. At approximately the same time that Gutseriev signed the contract for the potassium project in Minsk, the company’s official website reported that two companies in Belarus, IZAO Mospromstroi-Otel and OOO TUKS Inzhiniring, had joined the Mospromstroi group.

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3. Petrochemistry

In December 2011, the Slavneftekhim company renewed processing operations at the Mozyr Refinery and deliveries of petroleum products for export. This is the third project launched by Mikhail Gutseriev in Belarus. According to available information, the Slavneftekhim company, which in 2003 became part of RussNeft, last December offered heating oil processed at the Mozyr Refinery to foreign buyers. For now, sales volumes are relatively low, but RussNeft is the first major Russian company to renew deliveries of oil to Belarus, process it, and export the product to the West.

In the past, petrol and fuel oil refined from Russian oil was sold primarily through trading companies in the Netherlands and Great Britain.

IP Slavneftekhim, which represents the interests of Mikhail Gutseriev’s RussNeft in Belarus, was No. 6 among the top 10 taxpayers in the Belarusian capital, based on figures from January-February 2013.

Gutseriev is co-owner of RussNeft and partner of Vladimr Yevtushenkov. In 2011, Yevtushenkov signed a US $4.36 billion contract with Yuri Chizh to export petroleum products through his Triple company. Now RussNeft and Bashneft – among eight Russian companies – supply oil to Belarus via pipeline.

Mikhail Gutseriev: A Brief History of His Friendship with the Regime

It was not by mere chance that RussNeft, whose president is Mikhail Gutseriev, became active in Belarus. The Russian businessman has enjoyed warm relations with official Minsk since he headed the joint Russian- Belarusian company, SlavNeft (2000-2002).

Gutseriev lobbied on behalf of Belarusian oil production in the Russian north and openly supported Lukashenka’s candidacy for president in 2001.

Starting with a number of small assets, the Russian businessman built the sixth largest oil company in Russia, RussNeft. In addition to his active participation in the company and schemes involving the export of petroleum products from Belarus using Russian oil, Gutseriev has tried several times to reach agreement with Minsk on selling him or at least allowing him to manage the government’s stake in the Mozyr Refinery.

As a gesture of good faith, in 2006 he even gave the Belarusian government a 25% stake in the RussNeft- Bryansk oil loading terminal. These shares have been kept on Belorusneft’s balance sheet.

In 2005, another of Gutseriev’s companies, Russkiy ugol [Russian Coal] bought a 50% share in a coal project in Kemerovo Oblast from BelAZA (Razrez Belorusskiy [Belarusian open-pit mine]).

When he was forced to flee Russia in 2007, he flew from Minsk to London on a private jet with Belarusian blessings.

In London, Mikhail Gutseriev created the GCM Global Energy investment company. Through it, he invested US $1 billion in oil extraction in Azerbaijan and another US $600 million in this same industry in Mauritania. Another billion dollars went toward the purchase of pomegranate and orange plantations in Turkey, a hotel business in that country, and commercial real estate in London and Kiev, as well as a new oil project in Kazakhstan.

In May 2010, Gutseriev returned to Russia, after the Ministry of Internal Affairs’ Investigative Committee announced it was dropping the criminal case against him (he had been accused of illegal business activities). In June 2010 he was again elected president of RussNeft. He is no longer the company’s sole owner, since 49% of shares are now owned by AFK Sistema (which belongs to Vladimir Yevtushenkov, who is also the owner of Bashneft) and another 2% belongs to Russia’s Sberbank. 42

Nevertheless, he does control the company’s operations, since Sberbank gave one of their two places on RussNeft’s board of directors to Gutseriev’s representatives.

In October 2011, GCM Global Energy (also controlled by Gutseriev) signed an agreement with the government of Belarus on the construction of an potash ore-dressing works to produce potash fertilizer involving at least US $1.5 billion that is designed to produce at least 1.1 million tonnes of potassium chloride per year. Mine construction is slated to begin in early 2013 and investment may reach US $1.8 to US $2 billion.

In addition to the potassium project, Gutseriev and his nephew, Mikail Shishkhanov, are building a hotel in the centre of Minsk. Some of the funds for this project come from the Eurasian Development Bank. As stated above, Gutseriev is also implementing petroleum projects.

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Annex 5. Oligarch Nikolay Vorobey: Lukashenka’s New “Wallet”

A few other businessmen close to Lukashenka have also become major players on the European oil market. Oil production and trading company Interservice is one of them. Belarusian businessman Nikolay Vorobey is the company’s founder and owner. Interservice is one of the largest Belarusian oil traders. According to one of the participants of the tolling-based oil refining business, in recent years the company has refined 40,000- 80,000 tonnes of oil per month at the Naftan oil refinery. Interservice has been working in the field of tolling-based operations at Belarusian refineries, mainly Naftan, for about 20 years. The company carries out wholesale of oil products (gasoline, diesel fuel, mazut fuel, and bitumen) to the markets of post-Soviet states and the EU. The lion's share of its products is transported to customers via the sea ports of Latvia. Interservice is the largest private tax-payer in the city of Novopolotsk.

Today Interservice is one of the main producers of organic solvents and thinning agents refined from subsidized Russian oil. Interservice gets these products from Tatbelnefteproduct, a subsidiary of the Russian national oil corporation, Tatneft. Diesel fuel and other products are exported to the Baltic countries, often disguised as organic solvents of T mark and L mark, allowing the company to avoid paying customs duties to Russia because solvents are currently exempt from Russian customs duties under a Russian-Belarusian agreement within the Customs Union. For the same reason, mazut fuel is often exported as an “anti- corrosive mixture”. In the first five months of 2012, total export of these products from Belarus exceeded 2 million tonnes and approximately US $2.2 billion.

Most of these products are transported to European markets through ports in Latvia, Lithuania and Estonia. Belarusian exports to Latvia for January-July 2012 reached US $2.9 million, a 79% increase over the same period in 2011. According to reliable sources, 3.2 million tonnes of goods were transported to Latvia via Belarusian railways in January-March of 2012, which was 73% more than in the same period of 2011. The growth of oil products shipped via Latvian sea ports was especially high. Minsk-based Triple company (Yuri Chizh) and Novopolotsk-based Interservice (Nikolay Vorobey) have become the largest private Belarusian oil traders on the Baltic markets.

It was also reported that in 2012 Belarusian diesel oil was illegally sold from Latvia and Lithuania to Poland without paying VAT. The diesel had come from Belarusian oil refineries in Mozyr and Novopolotsk.

Experts believe that the Lukashenka regime actively uses Interservice for two reasons: it is a private company-intermediary and therefore he can claim to Russia that he is not to be blamed for the company’s evasion of Russian customs duties; and it is not on the EU sanctions list.

Carrying out the “innovative scheme” of selling oil products to European markets disguised as solvents and thinners through private intermediaries, including Interservice, has helped Lukashenka to dramatically improve the welfare of his “family” by avoiding paying customs duties to Russia. It allows the regime to earn US $220-260 on every tonne of exported oil products. This scheme has also lead to a fictitious growth of Belarusian GDP in the first half of 2012.

While Nikolay Vorobey is one of the founders of Interservice Ltd., sources in the oil sector assert that the real owner of this oil-trading company is a former speaker of the Belarusian parliament, Vladimir Konopliov, who is very close to Lukashenka. According to these knowledgeable sources, a few other influential persons in Belarusian politics and business are also directly involved in various Interservice projects. The name of Alexander Shakutin, one of the key members of Lukashenka’s “bagmen circle”, a senator and a majority shareholder of the Amkodor company, one of the largest CIS and European producers of machines used in road building, public utilities, snow removal, forestry and agriculture, is mentioned most frequently.

Moreover, Interservice’s connection with leading Belarusian oligarch, Yuri Chizh, and his Triple business empire is well-known. Yuri Chizh and a number of his companies, including parts of his Triple empire, were included in the EU sanctions list in March 2012. The fact that Nikolay Vorobey’s Interservice and Yuri Chizh’s Belneftegaz are now the largest Belarusian oil exporters is no coincidence: It has a lot to do with their close 45 partnership. Evidence of this can be found in screenshots from Polotsk and Vitsebsk customs reports below (see pictures 3 and 4). Belneftegaz, a major oil trader of Yuri Chizh, was not included in the March 2012 EU list, apparently as a result of lobbying by one member state, and it continues to bring hundreds of millions of US dollars to Yuri Chizh every month, and through him – to Lukashenka.

In 2012 Interservice received a gift from the regime: a new asset, Novopolotsk Protein and Vitamin Concentrates Plant. It was given to Nikolay Vorobey free of charge. Its balance value was around US $7 million. This was announced in presidential decree No. 226, signed by Lukashenka and issued on 7 May 2012. The decree defines conditions of the transaction, according to which Interservice is obliged to create by 1 January 2021 an innovation enterprise on the basis of the Protein and Vitamin Concentrates Plant for refining oil and other hydrocarbonic raw materials. The new refinery has been designed to produce 1.5 million tonnes of oil per year. A system for storage and shipment of oil products must also be created. Interservice and the new enterprise are required to invest US $270 million in implementing the project. A new enterprise, Novopolotsk Oil Refinery, was registered in late June 2012.

In June 2012 Interservice became the new owner of the largest bitumen producer in Belarus, the Vioska- Emulbit plant. Interservice has replaced a Moscow company, Nafta-stroi, which had been the owner of this plant since October 2011. Nafta-stroi paid at that time about US $30 million for the Vioska-Emulbit plant at an auction. After Nafta-stroi decided to pull out of this deal, the Minsk Executive Committee (city government) did not hold a new auction (at least, there was no information to this effect in the media) and struck a deal with Interservice directly. Interservice plans to invest US $10 million in the Vioska-Emulbit plant within two years. Its income target is approximately US $50 million.

This acquisition of a major lucrative asset by Interservice without a tender, along with the free transfer of the Novopolotsk Protein and Vitamin Concentrates Plant to Interservice by presidential decree, is clear evidence of Nikolay Vorobey’s warm relations with the regime.

An interesting turn of events took place in December 2012 and January 2013. In December it was learned that Amkodor Management Holding Company was issuing additional shares of stock. In January it became known that as a result of the sale of additional shares, Amkodor had sold a controlling stake totalling 562,457 shares (53.64%). The controlling interest was acquired by Interservice.

It should be remembered that the chairman of Amkodor’s board is Alexander Shakutin, for whom we have already submitted a dossier, and he is also a shareholder in Amkodor. Furthermore, Shakutin’s name has been tied to Interservice for some time. Perhaps this secret has now come out into the open.

The head of the Ministry of Industry’s state property department, Ludmila Belousova, told Biznes-novosti that Amkodor’s offer of additional shares was cleared by the ministry.

Until now, Amkodor’s largest shareholder has been UP Spamash, which owned 31.5% of shares and is Amkodor and Amkodor-Pinsk’s official dealer for Russia’s Volga and Siberia Federal Districts. A total of 15.8% of shares belong to the Cypriot company Vaska Ventures Limited. Another 15.3% belong to the Republic of Belarus and 7.8% and 7.3% respectively belong to ZVAO Sintez-MM and Melridge Investments Limited (Jersey).

Perhaps here we are dealing with a transfer of a controlling stake to a trusted oligarch and the pushing of Russians to the periphery.

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Annex 6. Public Opinion Surveys Measuring Belarusians’ Attitudes toward the Government, the EU, and Russia

Data of the Independent Institute for Socio-Economic and Political Studies

1513 respondents

The sociologists who conducted the most recent national survey in March note deterioration in respondents’ sense of economic well-being.

Only 36.5% of Belarusians believe that Alexander Lukashenka should take part in the 2015 presidential elections.

His electoral rating is 33.4%.

74.8% of citizens feel that Belarus is in need of change.

People are depoliticized and afraid. While three-quarters of respondents favour change, a slightly larger number, 75.9%, state that they are definitely or probably not prepared to personally play an active role in politics. There is an exceptionally high level of mistrust among people – not only toward social institutions. For example, in response to the question "Can most people be trusted or must one be very cautious in dealing with people?" 70% stated that one has to be very cautious in relations with people and only 23.1% said that most people can be trusted.

Today, 52.5% of Belarusians regularly (daily or several times per week) use the internet, including social networks (up from fewer than 40% in December 2010).

Attitudes toward the EU

1500 respondents

In December 2012, Belarusians preferred entry into the EU over unification with Russia. The Russian option was favoured by 37.7% and the European option by 43.4% of respondents.

In December 2011, 35.9% stated that they would vote in favour of entry into the EU in a hypothetical referendum and 36.9% were against. 29% favoured unification with the RF and 42.9% were against. In December 2012, these ratios were 38.9% versus 37.6% and 28.7% versus 47.5% respectively.

In regard to the European Union’s new program Dialogue on Modernisation with Belarus, a small number of people know something about or have heard about it, but that number is gradually growing. For example, while in the autumn of 2012, 20.9% replied in the affirmative, by December that number was 25.3%. And while during the previous survey 40.3% believed that such a program was needed for Belarus, today 48% feel that way.

The Europeanisation of public opinion is probably driven more by pragmatism than values. In response to the question, “What type of modernisation assistance, in your opinion, could the European Union provide to Belarus?” Belarusians primarily mention “the transfer of modern technology” and “by providing loans” (42.2% and 36% respectively), and not “consulting assistance and the introduction of reform” (28.4%).

Today, 37.7% are aware of the local border traffic issue and liberalised local cross-border movement is supported by almost half of respondents (most of whom are prepared to actively support such movement). In response to the question, “What is your opinion on why the agreement on local border traffic with 47

Lithuania and Poland has not yet entered into force?” the most common answer (given by 22.7%) is that “the Belarusian side is preventing it,” while only 13% see the fault as lying with other parties (“the Polish and Lithuanian sides are preventing it”).

BISS Data

1352 respondents

Significant growth in the number of those in favour of the development of Belarus outside integration projects (from 20.4% in 2010 to 30.9% in 2013) comes in conjunction with a simultaneous decline in the attractiveness of Russia as an integration centre from 30.2% to 23.3% respectively. The number of those in favour of the Europe option had held steady at 17%.

Forced to choose between the two alternatives (Russia and the European Union), 46.1% of respondents favoured Russia while 28.1% preferred the EU.

The largest number of respondents chose the option of living in an independent Belarus without joining any unions (30.9%).

At the same time, if a referendum was held tomorrow to determine whether Belarus should join the EU, more votes would be cast in favour than against: For – 38.2% Against – 31.2%

This incongruity shows that a significant proportion of those who favour Russia are not firm in this conviction, and their choice could change depending on the circumstances.

Pragmatism is the strongest force shaping the geopolitical preferences of the Belarusian public. In choosing allies, 72.9% of Belarusians believe that the main factor should be improving the economic situation. The only other noteworthy dominant idea is the question of security, chosen by 10.6%. “Ideological” considerations (issues of democracy and human rights, the preservation of culture and unique identity, the preservation of the customary way of life, the restoration of the USSR, etc.) are rather marginal.

Since 2010, when this question was first asked, pragmatism has only increased among Belarusians (from 55% to almost 73%). [The crushing of hopes in 2010 – author’s comment.]

Against the backdrop of an increase in economic motivations, the importance of the security factor has dropped by 7%.

Among ”Euro-optimists”, the percentage of those motivated by economics is even higher (85.7%) than the average across the study sample (72.9%).

Young people are mostly in favour of European integration, while the older generation favours union with Russia. If this trend continues, with time those in favour of the EU will increase and those oriented toward union with Russia will decline. The population’s overall orientation will then largely depend on the mood that takes shape among the youth of tomorrow. People aged 30 to 60 make up approximately 60% in all orientation groups, except those oriented toward the EU (where it comprises 50%), which again confirms that the desire to live in the EU is a youth-dominant orientation.

Adherents of total independence, although they demonstrate a strongly expressed paternalistic outlook, nevertheless are not unequivocal supporters of the political line being followed by the Belarusian government, as might have been assumed. For example, only 40% of them agree with the statement that

48 the state’s assurance of civic calm and political stability justifies the limitation of democracy and freedom of speech. This figure among those in favour of union with Russia is 55%.

Interestingly, “pure” supporters of the EU also include 40% who agree with limitations of their rights in exchange for stability. This again confirms that this choice is motivated by pragmatism and Belarusian foreign policy choices are not driven by values.

Half of respondents believe that Belarus has the right to enter the EU, and 15.7% replied in the affirmative to the question, “Is Belarus a member of the Council of Europe?” The share of “unsure” responses to these questions was more than 40%. Only 13.7% of respondents know about the EU’s Eastern Partnership program. Furthermore, one quarter of them were unsure whether or not Belarus participates in it. Since 2010, the percentage of those informed of the Eastern Partnership has shrunk from 21% to 13.7%.

Only 4.6% of respondents know about the European Dialogue on Modernisation.

45.6% of respondents stated that they would like to receive more information about the EU.

Responses to the question of why sanctions were introduced:

Belarus violates human rights — 36.8% Belarus follows an independent policy — 40.1 % Presidential elections were falsified — 14.3 % The EU wants to change the government of Belarus — 13.4% In response to demands by the opposition — 5.1 %

Andrei Vardomatski’s Belarusian Analytical Centre

2012 Results (December 2012)

It is better for Belarusians to live in a union with Russia — 52.3% It is better for Belarusians to live in a union with the European Union — 26.7% Uncertain — 21%

The survey’s authors believes that these figures are dictated less by a common past and love of Russia, than a sense of realism: Russia currently offers more opportunities, economic first and foremost, not least of which are visa-free travel opportunities.

Belarusians understand perfectly well that Europe is where new technologies can be found, but the picture is clouded by queues for visas. (According to a BISS study, in 2012, 6000 Belarusians were denied Schengen visas, primarily because of considerations surrounding the applicants finances.) This evokes a stereotype that has been carefully cultivated by the regime: "Europe has no need for us".

Furthermore, 47.7% believe that it is important to restore relations with the EU. Essentially the same number of people who noted the importance of integration with Russia have pointed to the need to cooperate with the EU for modernisation.

Dialogue on Modernisation (September 2012)

In September 2012, the Belarusian Analytical Centre conducted a series of qualitative remote focus group studies examining public attitudes toward a modernisation package for Belarus. People harbour doubts about the need to carry out this program and the possibility of doing so. The researchers see two factors influencing this attitude: a lack of information about the nature of proposed reforms and insufficient 49 understanding of the EU’s motives. The issue of the EU’s motives has been the subject of official propaganda. And while in June 2012 people may not have known about the initiative, by September they were already interested in the specifics. Previously, doubts about the modernisation program’s success were driven by the fact that the government did not want it. By September, respondents were emphasizing their doubts that it would be possible to bring together the government and the public.

A study of media preferences among Belarusians in 2012 shows two parallel societies – those who obtain their information through state media and those who rely on independent media sources. The latter are better educated, better off financially, and younger. Today, Belarusians get most of their news from television, the internet, and one another.

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Annex 7. Statistical graphs showing Belarus' foreign trade

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53

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Приватизация выбирает тишину. Наше мнение, 03.04.2012, http://nmnby.eu/news/express/4790.html

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Лукашенко обойдется без Москвы. На европейском фронте. Александр Класковский, Навины, 05.04.2012, http://naviny.by/rubrics/politic/2012/04/05/ic_articles_112_177425/

Грозит ли Беларуси номенклатурная приватизация? Андрей Сакович, Завтра твоей страны, 04.04.2012, http://www.zautra.by/art.php?sn_nid=10381&sn_cat=18

Поставлять нефть в Беларусь будут только избранные. Андрей Кожемякин, Навины, 08.04.2012 http://naviny.by/rubrics/economic/2012/04/08/ic_articles_113_177446/

Кто наполняет белорусскую казну деньгами. Дмитрий Заяц, Навины, 10.04.2012, http://naviny.by/rubrics/finance/2012/04/10/ic_articles_114_177466/

Нефтяная отрасль Беларуси в шоколаде. Остальные недовольны. Дмитрий Заяц, Навины, 16.04.2012, http://naviny.by/rubrics/economic/2012/04/16/ic_articles_113_177538/

Belarusian oligarch earn on smuggling. Charter-97, 13.04.2012, http://www.charter97.org/en/news/2012/4/13/50775/

Белорусская рулетка: как вылетают из обоймы олигархов. Хартия-97, 18.04.2012, http://www.charter97.org/ru/news/2012/4/18/50981/

Лукашенко грозится вернуть Санникова и Бондаренко в тюрьму. Хартия-97, 21.04.2012, http://www.charter97.org/ru/news/2012/4/21/51174/

Экспорт белорусских нефтепродуктов растет, а калийных удобрений – падает. Регнум-Беларусь, 03.05.2012, http://belarus.regnum.ru/news/1527040.html

Топ-7 тайн о «Восточном партнёрстве» и Беларуси из «Wikileaks». Андрей Елисеев, Новая Европа, 08.05.2012, http://n-europe.eu/article/2012/05/08/top_7_tain_o_vostochnom_partnerstve_i_belarusi_iz_wikileaks

Лукашенко не торопится с приватизацией МАЗа. Ежедневник, 08.05.2012, http://www.ej.by/news/companies/2012/05/08/lukashenko_ne_toropitsya_s_privatizatsiey_maza.html

Россия хочет контрольный пакет акций холдинга МАЗа и КамАЗа. Ежедневник, 07.05.2012, http://www.avto.ej.by/authoritatively/2012/05/07/rossiya_hochet_kontrol_nyy_paket_aktsiy_holdinga_maza_i_kamaza.html

На долю «Белнефтехима» приходится около половины экспорта и треть ВВП страны. Олег Харламов, Ежедневник, 07.05.2012, http://www.region.ej.by/gomel/2012/05/07/na_dolyu___belneftehima___prihoditsya_okolo_poloviny_exporta_i_tret_ _vvp_strany_.html

Белорусской экономике ослабят удавку, но цепь не укоротят. Андрей Кожемякин, Навины, 08.05.2012, http://naviny.by/rubrics/economic/2012/05/08/ic_articles_113_177779/

Лукашенко приватизирует по мелочи. Александр Лукашенко сформулировал постулаты новой экономической политики. Денис Лавникевич, Газета.ру, 10.05.12, http://www.gazeta.ru/financial/2012/05/10/4578253.shtml

Экспортное чудо Беларуси: на трех китах. Дмитрий Заяц, Навины, 18.05.2012, http://naviny.by/rubrics/economic/2012/05/18/ic_articles_113_177879/

Белоруссия готовится к "распродаже" в прежнем режиме. 31.05.2012, Регнум-Беларусь, belarus.regnum.ru/news/1537223.html

Инновационный бизнес «3814». Наше мнение, 05.06.2012, http://nmnby.eu/news/analytics/4842.html

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Белорусский калийный экспорт переходит под швейцарский флаг. Андрей Кожемякин, Навины, 04.06.2012, http://naviny.by/rubrics/economic/2012/06/04/ic_articles_113_178052/

Представители немецкого бизнеса заинтересованы в том, чтобы инвестировать в белорусскую деревообработку. Ежедневник, 13.07.2012, http://www.ej.by/news/economy/2012/07/13/nemetskomu_biznesu_interesna_belorusskaya_derevoobrabatyvayuscha ya_otrasl_.html

Дилемма четвертого срока. Алексей Медвецкий, Агентство Политической Экспертизы, 13.07.2012, http://nmnby.eu/news/analytics/4883.html

Третий НПЗ в Беларуси – подарок ЕЭП. Татьяна Маненок, Наше мнение, 28.05.2012, http://nmnby.eu/news/analytics/4834.html

Новополоцкий бизнесмен Николай Воробей получил в собственность имущественный комплекс Новополоцкого завода белково-витаминных концентратов. Беларусь и Бизнес, 02.06.2012, http://belarusbiznes.ru/index.php?option=com_content&view=article&id=55:-q-q-&catid=39:2012-07-02-18-45-03

Москва усилит кулуарное давление на Минск. Ежедневник,17.07.2012, http://www.ej.by/news/politics/2012/07/17/moskva_usilit_kuluarnoe_davlenie_na_minsk.html

Казино станут «дойными коровами» для бюджета Беларуси. Владельцы казино и игровых автоматов пополнят казну, выплатив налоги по увеличенным ставкам. Ежедневник, 17.07.2012, http://www.rest.ej.by/competent/2012/07/17/kazino_stanut___doynymi_korovami___dlya_byudzheta_belarusi_.html

Более пятой части белорусского экспорта в ЕС приходится на растворители и разбавители. Агентство финансовых новостей, 17.07.2012, http://afn.by/news/i/169688

В сотрудничестве с МВФ Беларуси нравится только «день получки». Ирина Левшина, Навины, 21.07.2012, http://naviny.by/rubrics/finance/2012/07/21/ic_articles_114_178542/

Нацбанк на год лишил лицензии иранский «ТК Банк». Хартия-97, 06.08.2012, http://charter97.org/ru/news/2012/8/6/56390/

Нацбанку РБ не нравится происхождение собственников ТК Банка. Агентство финансовых новостей, 07.08.2012, http://afn.by/news/i/170553

Меняется оператор по поставкам белорусского биодизеля в Украину. Ежедневник, 06.08.2012, http://www.ej.by/news/companies/2012/08/06/menyaetsya__operator_po_postavkam_belorusskogo_biodizelya_v_ukr ainu_.html

Чиж и Воробей преуспели в поставках белорусских нефтепродуктов в порты Латвии.Tut.by, 04.04.2012, http://news.tut.by/economics/282679.html

Тернавский пытается скрыть свои нефтяные активы. Хартия-97, 14.08.2012, http://www.charter97.org/ru/news/2012/8/14/56813/

«Исчезнувшая» компания «Белнефтегаз» вошла в топ-10 крупнейших налогоплательщиков Минска. Ежедневник, 20.08.2012, http://www.ej.by/news/companies/2012/08/20/__ischeznuvshaya___kompaniya___belneftegaz____voshla_v_top- 10_krupneyshih_nalogoplatel_schikov_minska.html

«Союзкалий» под вопросом. Хартия-97, 22.08.2012, http://www.charter97.org/ru/news/2012/8/22/57237/

Рейтинг российских инвесторов в недвижимость Беларуси. Товарищ, 22.08.2012, http://camarade.biz/node/3507

Первые олигархи отступают перед номенклатурной приватизацией? Алексей Тополько, Завтра твоей страны, 30.07.2012, http://www.zautra.by/art.php?sn_nid=11030&sn_cat=18

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Белорусский экспорт нефтепродуктов: новая лазейка. Андрей Кожемякин, Навины, 29.08.2012, http://naviny.by/rubrics/economic/2012/08/29/ic_articles_113_179008/

Создание «Союзкалия»: реализация проекта может затянуться. Андрей Кожемякин, Навины, 01.09.2012, http://naviny.by/rubrics/economic/2012/09/01/ic_articles_113_179043/ Перспективы внешней торговли Беларуси и ЕС. Александр Муха, Наше мнение, 19.09.2012, http://nmnby.eu/news/analytics/4947.html

В топ-20 крупнейших потребителей белорусской продукции вошли Афганистан и Норвегия. «Бизнес-Новости», 01.10.2012, http://doingbusiness.by/top-20-osnovnih-stran--torgovih-partnerov-belarusi

Конец года может стать кошмаром для белорусского нефтяного оффшора. Агентство финансовых новостей, 26.09.2012, http://afn.by/news/i/172522

Беларусь в 2013 году будет активно искать внешнее финансирование для погашения имеющейся задолженности. Блог Дмитрия Ивановича, 01.10.2012, http://iva-dim.livejournal.com/721991.html

«Стерильный» парламент для «сейфовой» приватизации. Сергей Пульша, Навины, 05.10.2012, http://naviny.by/rubrics/politic/2012/10/05/ic_articles_112_179456/

Лукашенко обещает Европе «ответить взаимностью». Навины, 05.10.2012, http://naviny.by/rubrics/politic/2012/10/05/ic_articles_112_179455/

Новые схемы экспорта нефтепродуктов. Кто выиграет? Владимир Артюгин, Беларуский бизнес, 01.10.2012, http://economics.bel.biz/articles/novye_shemy_eksporta_nefteproduktov_kto_vyigraet/

На долю малого бизнеса приходится более 30% белорусского экспорта. Бизнес-Новости, 11.10.2012, http://doingbusiness.by/subekti-malogo-predprinimatelstva-vo-vneshnei-torgovle-belarusi

Есть ли в белорусской властной элите «партия модернизаторов»? Артем Шрайбман, Навины, 22.10.2012, http://naviny.by/rubrics/politic/2012/10/22/ic_articles_112_179649/

25—26 октября в Молодечно состоятся белорусско-латвийские переговоры. Навины, 25.10.2012, http://naviny.by/rubrics/politic/2012/10/25/ic_news_112_404272/

О 8-м заседании Белорусско-Латвийской Межправительственной комиссии по экономическому и научно- техническому сотрудничеству. Сайт Министерства иностранных дел Республики Беларусь, 25.10.2012, http://mfa.gov.by/press/news_mfa/de9cff8f6bc55aa6.html

Federal Court Dismisses Suit Against Hizballah's Alleged Bank. IPT News , 26.01.2010, http://www.investigativeproject.org/1752/federal-court-dismisses-suit-against-hizballahs

Wikileaks: Сидорский и Гайдукевич отмывали деньги через своих дочерей, Белорусский партизан, 21.09.2011, http://udf.by/news/main_news/47403-wikileaks-sidorskiy-i-gaydukevich-otmyvali-dengi-cherez-svoih-docherey.html

Источник: 'Трайпл' консолидирует пакеты акций МЗИВа, приобретенные во время 'народного' IPO. Бизнес- Новости, 28.11.2012, http://doingbusiness.by/istochnik-traipl-konsolidiruet-paketi-akcii-mziva-priobretennie-vo- vremya-narodnogo-ipo

Олигарх Чиж скупает Беларусь. Хартия-97, 29.11.2012, http://www.charter97.org/ru/news/2012/11/29/62100/

Вилюмс: латгальские дети думают, что Лукашенко — президент Латвии. DELFI, 11.12.2012, http://rus.delfi.lv/news/daily/politics/vilyums-latgalskie-deti-dumayut-chto-lukashenko-prezident- latvii.d?id=42897522

Беларусь не хочет уступать контрольный пакет в создаваемом холдинге 'Росбелавто'. Бизнес-Новости, 13.12.2012, http://doingbusiness.by/belarus-ne-hochet-ustupat-kontrolnii-paket-v-sozdavaemom-holdinge-rosbelavto

ГКИ предлагает 'Белнефтехиму' включить в перечень предприятий на приватизацию 'Нафтан' и 'Беларуськалий'. 61

Бизнес-Новости, 13.12.2012, http://doingbusiness.by/gki-predlagaet-koncernu-belneftehimu-vklyuchit-v-perechen- predpriyatii-na-privatizaciyu-v-2013-godu-naftan-i-belaruskalii

Перечень АО, на покупку акций которых преимущественное право имеет Гродненский облисполком, увеличен c 18 до 29. Бизнес-Новости, 12.12.2012, http://doingbusiness.by/oao-grodno-azot-oao-bellakt-i-grodnenskaya- tabachnaya-fabrika-neman-isklyucheni-iz-spiska-predpriyatii-na-preimushestvennoe-priobretenie-akcii-kotorih-imeet- pravo-grodnenskii-oblispolkom

В Минской области в перечень предприятий, на покупку акций которых преимущественное право имеет облисполком, вошли 30 АО, в Могилевской – 4. Бизнес-Новости, 13.12.2012, http://doingbusiness.by/v-perechne- predpriyatii-s-preimushestvennim-pravom-oblispolkomov-na-pokupku-akcii-v-minskoi-oblasti--30-mogilevskoi--4- vitebskoi--ni-odnogo-akcionernogo-obshestva

Перечень АО, на покупку акций которых имеет преимущественное право Мингорисполком, расширен до 42. Бизнес-Новости, 12.12.2012, http://doingbusiness.by/v-novii-perechen-ao-na-pokupku-akcii-kotorih-imeet- preimushestvennoe-pravo-mingorispolkom-rasshiren-do-42-predpriyatiya

На акции 18 предприятий Гомельской области больше не распространяется преимущественное право покупки государством. Бизнес-Новости, 12.12.2012, http://doingbusiness.by/na-akcii-18-predpriyatii-gomelskoi-oblasti- bolshe-ne-rasprostranyaetsya-preimushestvennoe-pravo-pokupki-gosudarstvom

Брестский облисполком опубликовал перечень ОАО, на приобретение акций которых распространяется преимущественное право государства. Бизнес-Новости, 12.12.2012, http://doingbusiness.by/brestskii-oblispolkom- opublikoval-perechen-oao-na-priobretenie-akcii-kotorih-rasprostranyaetsya-preimushestvennoe-pravo-gosudarstva

OOO 'Табак-инвест' вернулось в перечень специмпортеров алкогольной продукции. Бизнес-новости, 07.12.2012, http://doingbusiness.by/ooo-tabak-invest-vernulos-v-perechen-specimporterov-alkogolnoi-produkcii

Изменения в закон о приватизации позволят государству увеличивать свою долю в акционерных обществах через суд. Бизнес-новости, 07.12.2012, http://doingbusiness.by/gosudarstvo-budet-ispolzovat-dopemissiyu-akcii- dlya-uvelicheniya-svoei-doli-akcionernih-obshestvah-sozdannih-v-rezultate-preobrazovaniya

Государство намерено отказаться от наблюдательных советов в АО с госдолей более 50%. Бизнес-новости, 06.12.2012, http://doingbusiness.by/gosudarstvo-namereno-ne-sozdavat-nablyudatelnie-soveti-v-ao-s-kontrolnim- paketom-gosudarstva-sozdannih-v-processe-preobrazovaniya

Представители государства могут получить право голосовать за миноритарных акционеров. Бизнес-новости, 06.12.2012, http://doingbusiness.by/gosudarstvennie-predstaviteli-mogut-poluchit-pravo-golosovat-za-minoritarnih- akcionerov

'Альфа-Банк' объявил о покупке 'Белросбанка' (дополнено). Бизнес-новости, 26.11.2012, http://doingbusiness.by/alfa-bank-priobretaet-belrosbank

Семашко: IPO БелАЗа может пройти в 2013 году на Франкфуртской фондовой бирже. Бизнес-новости, 16.11.2012, http://doingbusiness.by/semashko-ipo-belaza-mozhet-proiti-v-sleduyushem-godu-na-frankfurtskoi- fondovoi-birzhe

Чиж перевел нефтянку «сябрам». Tut.by, 16.12.2012, http://news.tut.by/economics/325326.html

В Беларуси определены компании, которые сложно будет купить. Ежедневник, 12.12.2012, http://www.ej.by/news/companies/2012/12/12/v_belarusi_opredeleny_kompanii__kotorye_slozhno_budet_kupit_.html

Лукашенко кинул Россию в совместном экспорте калия. Агентство финансовых новостей, 27.12.2012, http://afn.by/news/i/175722

Керимов срочно прибыл в Минск для лечения калийной болезни Лукашенко. Агентство финансовых новостей, 28.12.2012, http://afn.by/news/i/175790

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Экономические итоги-2012: как мы всех обошли мозгами. Дмитрий Заяц, Навины, 29.12.2012, http://naviny.by/rubrics/economic/2012/12/29/ic_articles_113_180359/

Обвиненный в отмывании денег белорусский банк сменил название. Лента.ру, 23.01.2013, http://lenta.ru/news/2013/01/23/bank/

Иран избавляется от проблемных банков в Беларуси. Хартия-97, 22.01.2013, http://www.charter97.org/ru/news/2013/1/22/64268/

Нефтедоллары в действии: "Интерсервис" стал крупнейшим акционером "Амкодора". Александр Заяц, Навины, 25.01.2013, http://news.tut.by/economics/331828.html

Покупателем контрольного пакета акций ОАО 'Амкодор' – управляющая компания холдинга' выступило ООО 'Интерсервис'. Бизнес-Новости, 25.01.2013, http://doingbusiness.by/pokupatelem-kontrolnogo-paketa-akcii-oao- amkodor--upravlyayushaya-kompaniya-holdinga-vistupilo-ooo-interservis

Холдинг 'Амкодор' намерен открыть предприятия в Венесуэле и Сербии. Бизнес-Новости, 24.01.2013, http://doingbusiness.by/holding-amkodor-nameren-otkrit-predpriyatiya-v-venesuele-serbii-i-odnoi-iz-afrikanskih-stran

Белорусам предлагают участие в логистике Рижского морского порта. Ежедневник, 25.01.2013, http://www.ej.by/news/economy/2013/01/25/belorusam_predlagayut_uchastie_v_logistike_rizhskogo_morskogo_porta__.html

Самые щедрые столичные доноры госбюджета. Алексей Тополько, Завтра твоей страны, 21.01.2013, http://zautra.by/art.php?sn_nid=12060&sn_cat=6

Цель официального Минска – получить предоплату от Кремля и тянуть резину. Салідарнасць, 29.01.2013, http://gazetaby.com/cont/art.php?sn_nid=53209

Лукашенко открыл новый политический сезон торговли с Западом. Агентство финансовых новостей, 31.01.2013, http://afn.by/news/i/176703

Лукашенко экономит на спичках. Независимая газета, 08.02.2013, http://www.ng.ru/cis/2013-02- 08/7_lukashenko.html

Топ-7 крупнейших российских покупок в Беларуси. Алексей Тополько, Завтра твоей страны, 04.02.2013, http://news.tut.by/economics/333092.html

Жертвы новых санкций США: кто есть кто? Хартия-97, 11.02.2013, http://www.charter97.org/ru/news/2013/2/11/65185/

Власти РБ и ЕС думают, как вывести Макея из-под санкций. Агентство финансовых новостей, 12.02.2013, http://afn.by/news/i/177083

Спецоперация по отмыванию Макея от санкций ЕС вышла на новый уровень. Агентство финансовых новостей, 13.02.2013, http://afn.by/news/i/177119

Беларусь стоит на пороге большого «дербана»: места интересам обычных людей в нем не предусмотрено. Товарищ, 14.02.2013, http://www.camarade.biz/node/6241

Диктатор шантажирует Латвию из-за санкций. Хартия-97, 20.02.2013, http://www.charter97.org/ru/news/2013/2/20/65597/

Белорусской приватизации приходит конец. Дмитрий Заяц, Навины, 20.02.2013, http://naviny.by/rubrics/economic/2013/02/20/ic_articles_113_180902/

На предприятиях Беларуси финансы запели романсы. Дмитрий Заяц, Навины, 18.02.2013, http://naviny.by/rubrics/finance/2013/02/18/ic_articles_114_180877/

Макей в поисках $2 миллиардов, Хартия-97, 23.02.2013, http://www.charter97.org/ru/news/2013/2/23/65777/ 63

«Онербанк» заметает следы. Хартия-97, 05.02.2013, http://www.charter97.org/ru/news/2013/2/25/65845/

Топ-5 основных белорусских приватизаторов. Алексей Тополько, Завтра твоей страны, 28.02.2013, http://www.zautra.by/art.php?sn_nid=12316&sn_cat=18

Переговоры по нефти зашли в тупик, Хартия-97, 28.02.2013, http://www.charter97.org/ru/news/2013/2/28/66008/

КГБ вербует белорусскую диаспору в Латвии. Хартия-97, 06.03.2013, http://www.charter97.org/ru/news/2013/3/6/66255/

Начало года сигнализирует о провале правительственных планов. Дмитрий Заяц, Навины, 07.03.2013, http://naviny.by/rubrics/economic/2013/03/07/ic_articles_113_181051/

Эксперт: Лукашенко попросит у Путина $5 млрд для спасения "зайчика". Росбалт, 14.03.2013, http://www.rosbalt.ru/exussr/2013/03/14/1105839.html

Юстас – Алексу, или некоторые неконкретные обещания. Александр Отрощенков, Хартия-97, 21.03.2013, http://charter97.org/ru/news/2013/3/21/66911/

Компания Гуцериева вошла в число крупнейших налогоплательщиков Минска. Ежедневник, 24.03.2013, http://www.region.ej.by/minsk/2013/03/24/kompaniya_gutserieva_voshla_v_chislo_krupneyshih_nalogoplatel_schikov _minska.html

Лукашенко готовит политзаключенных к сближению. Не получив от Москвы кредита, руководство Белоруссии взялось налаживать испорченные отношения с Западом, снижая давление на оппозицию. Денис Лавникевич, Газета.ру, 19.03.2013, http://www.gazeta.ru/politics/2013/03/18_a_5106657.shtml

Миссию Палецкиса в Минске поняли неправильно? Сергей Веселкин, Товарищ, 21.03.2013, http://www.camarade.biz/node/6988

Беларусь готова выполнять требования МВФ. Петр Лавров,Товарищ, 28.03.2013, http://www.camarade.biz/node/7118

Беларуськалий» вошел в топ-10 прибыльных компаний Центральной и Восточной Европы. Михаил Радкевич, Ежедневник, 02.04.2013, http://www.ej.by/news/companies/2013/04/02/belarus_kaliy_voshel_v_top- 10_pribyl_nyh_kompaniy_tsentral_noy_i_vostochnoy_evropy.html

“Good cop or bad cop? Sanctioning Belarus”, Ondrej Ditrych, Briefs, N 14, the European Union Institute for Security Studies, 4 March 2013, http://www.iss.europa.eu/publications/detail/article/good-cop-or-bad-cop-sanctioning-belarus/

Диалог для консервации Беларуси. Павел Усов, Хартия-97, 11.04.2013, http://charter97.org/ru/news/2013/4/11/67804/

Draft Recommendations to the Council, the Commission and the European External Action Service on EU Policy towards Belarus. Report by the European Parliament Committee on Foreign Affairs. Rapporteur: Justas Vincas Paleckis. 05.06.2013. (2013/2036(INI)). http://www.europarl.europa.eu/sides/getDoc.do?pubRef=- //EP//NONSGML+COMPARL+PE-506.234+1+DOC+PDF+V0%//EN

Election to the Chamber of Representatives of the National Assembly of Belarus of the Fifth Convocation: Final Report. The “Human Rights Defenders for Free Elections” campaign, 24.09.2012, http://spring96.org/en/news/57895

Republic of Belarus Parliamentary Elections, 23 September 2012. OSCE/ODIHR Election Observation Mission Final Report. OSCE/ODIHR, 14.12.2012, http://www.osce.org/odihr/elections/98146

European Parliament resolution on the situation in Belarus after the parliamentary elections of 23 September 2012 (2012/2815(RSP)). 26.10.2012, http://www.europarl.europa.eu/sides/getDoc.do?type=TA&language=EN&reference=P7-TA-2012-410

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