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ABOUT
THE REPUBLIC OF BELARUS


June 20, 1998

Report made by Energibevægelsen OOA in co-operation with
Youth Ecological Movement Belaya Rus with the support of Plum s Økologifond

OOA, Ryesgade 19
2200 Copenhagen N, Denmark
Tel: (45) 35 35 55 07, Fax: (45) 35 35 65 45
E-mail:ooa@email.dk
WWW: http://www.ooa.dk
YEM Belaya Rus, P.B 53
220027 Minsk, Belarus
Tel (375) 172 39 92 49, Fax (375) 172 31 30 49
E-mail: natasha@ecodept.unibel.by

 


Table of Contents

 


Preface

Where is the Republic of Belarus? What's going on there....

The Republic of Belarus has common borders with Poland, the Ukraine, Lithuania, and Russia. It numbers 11 millions inhabitants.

Because of the election of president Lukashenka in 1994, the country hasn't followed the same path as other newly independent states of the former Soviet block; The regime is seen as totalitarian-populist- and the economical and political situation is worsening day after day. Every week, new presidential decrees are issued yhat have the result of further closing the country and attempting to control all sectors of the economy. The standards of living is dramatically deteriorating, and the tight control over the media by the government makes it more and more difficult for the people to be informed on what is going on.

People's most basic rights are threatened.

In such a context the people of Energibevægelsen OOA and the people of Youth Ecological Movement Belaya Rus felt there was a need to provide the people of Belarus and the international community with an overview of the situation based on independent and relialable informations.

For this purpose we met with a number of international and European representation in Minsk as well as with some national and Russian representations from May 15 to June 15 (1)

We were just in time....

Just in time before the "Drozdy crisis"(2) and the departure of all the western diplomats (EU countries, the USA and Japan) in mission in Belarus.




Introduction

The purpose of this report is to show:

  • the trends of international assistance to Belarus since 1992 -which countries/inter governmental organisation has been involved , in which areas, what amount of money have been spend- in order to determine who are the actors in the Republic;
  • the increasing isolation of the country on the political, economical and social level; This is based on official position of foreign countries and private business when information were available;
  • evidences that there is a proposal of building a nuclear power plant in Belarus and that the decision process has already started;

The research are the results of an investigation to find out who are the international actors promoting this project (banks, enterprises, country). To complete the picture, a press review Signs of Repression has been included; It gives an idea of the level of repression in the Republic and shows that anyone who attempts to oppose the construction of the nuclear power plant would see his freedom dangerously threatened...




International Assistance to Belarus

from 1992 to 1998(3).

----International Institutions - Assistance to Belarus ----
from 1992 to 1998
Total :US$ 590 mln

TACIS (Technical Assistance to CIS countries(4))

The TACIS programme is Belarus largest multilateral donor, accounting for 70% of the total aid provided by multilateral donors.

Areas of focus are restructuring and privatisation of enterprises, production, processing and distribution of foodstuffs, agricultural development, energy, transport, telecommunications, development of small and medium sized enterprises, conversion of military industries, education, civil society, consultant in politics and laws.

No more project signed for 1998 and further, only national project signed in 1995 are continuing until the end of 1998.

Total: US$ 56 mln. from 1992-1997.

EBRD (European Bank for Reconstruction and Development)

Belarus became a member of the bank in 1992 and remains an active creditor to the Republic.

7 main projects have been implemented and supported by loan agreements since 1992:

  • Financing of telecommunication facilities: US$ 38,8 mln.
  • Modernisation of Orsha, power plant: US$ 41 mln.
  • Minsk whole sale market: US$ 6,32 mln.
  • Highway Brest-Minsk-Russian border improvement: US$ 41 mln.
  • Equity investment in Belarus Priorbank aiming to promote the independent banking sector of Belarus: US$ 3,025 mln.
  • Modernisation of a glass factory, private sector (Elizovo a joint-venture Canada-Belarus): loan of US$ 7,7 mln +equity investment : US$ 1 mln, total: US$ 8,7 mln.
  • A credit line has been opened in 1994 to fund of small/medium sized enterprises: US$ 30 mln. By October 1997, the equivalent of USS 16,5 mln. had been committed to 21 projects in the private sector.

Total: US$ 185,34 mln.

OECD (Organisation for Economic Co-operation and Development)
Total US$ 453.000

United Nations Organisation from 1992 to 1996:

The World Bank (The International Bank for Reconstruction and development)

  • US$ 672.000 from 1992-1996 for technical assistance
  • US$ 120 mln ,a rehabilitation loan

Total: US$ 120.672.000

WHO (World Health Organisation)
Total:US$ 8,5 mln.

IMF (International Monetary Fund)
Loan for the restoration of the balance of payment and governmental reforms. Loan goes directly to the Belarusian government, the IMF doesn't monitor the expenses made with the money.
From July 1st 1998, no more resident mission of IMF in Belarus.
Total: US$ 200 mln.

IAEA (International Atomic Energy Agency)
Rehabilitation projects in Chernobyl contaminated areas and research to develop nuclear power
Total: US$ 525.500

Other UN organisations

UNDP, UNESCO, UNDCP, UNICEF, ILO UNCTAD,UNIDO, UNHCR, UNAIDS, UNEP, UNFPA
Total: US$ 2,86 mln.

United Nations Organisation (All the UN organisation together) from 1997 to 1998:
Total: US$ 1,5 mln. spend in 17 projects; poverty prevention, forestry management, postal services, Technopark, media, centre for studies, small business development, credit union, security market in Belarus etc.

NGOs (Non-Governmental Organisations)
NGOs have received grants from Soros Foundation, The Eurasia Foundation and other western founders.
Total: US$ 8,43 mln. from 1992-96


-----Bilateral Donors to Belarus-----

USA
Until 1996 , the USA were the largest donor to Belarus:

  • US$ 57 mln. for technical assistance from 1992 to 1996; Nothing since 1996;
  • US$ 46 mln. for the Nunn-Lugar programme (It aims to destroy nuclear SS25 warheads. programme started to be implemented but stopped in 1996);

Total: US$ 103 mln.

GERMANY
Technical assistance programme "Transform":

  • Total: US$ 28 mln. from 1992-96 (gap 1997, no number available);
  • Total :US$ 3,05 mln. for 1998;

Areas: providing consultant to help to the government of Belarus, foreign economic relations, construction, developing the social sector, the agrarian sector,, professional training and retraining, developing a quality control system, business and enterprise, consultant on organising production.
Present: Technical assistance programme still going on and private business developing.
Total:US$ 31,05 mln.

UNITED KINGDOM
Technical assistance the British Know-How Fund program:

  • total: US$ 3,05 mln. from 1992-96;
  • total: US$ 1,24 mln .for 1997;
  • total: US$ 930.000 for 1998;

Total: US$ 5,22 mln. from 1992-98

CZECH & SLOVAK REPUBLICS

  • US$ 100.000 for humanitarian aid (5) from 1992-96;
  • US$ 100.000 for HA; In May 1998, the Czech government issued to Belarus this grant to buy medicine and medical equipment for contaminated areas;

Total: US$ 200.000 from 1992 to 98 with a gap in 1997 (no information available).

ITALY
Italy provides with HA but has no commercial contact, no credit line, no technical assistance with Belarus.
Total: US$ 5,85 mln. from 1992-96 for HA

JAPAN

  • US$ 2,15 mln. from 1992-96 , most of it was to promote co-operation under the Nuclear-Arms Non Proliferation Treaty.

1998:

  • US$ 200.000 granted for 8 projects in 1997 for NGOs working for the children of Chernobyl.
  • US$ 2 mln., for Humanitarian Aid in 1998.

Others are not revealed (credit line ?)
Total:US$ 4,35 mln.

DENMARK
13 environmental assistance projects from 1992-Oct.1997
Total: US$ 4,14 mln.

 

SWITZERLAND US$ 2,37 mln  
CANADA US$ 135.600 from 1992-96
AUSTRIA US$ 5,37 mln from 1992-96
THE NETHERLANDS US$ 1,77 mln from 1992-96
FINLAND US$ 882.000 from 1992-96
SWEDEN US$ 785.000 from 1992-96
FRANCE US$ 139.000 from 1992-96
AUSTRALIA US$ 260.000 from 1992-96
LUXEMBOURG US$130.625 from 1992-96
BELGIUM US$ 100.456 from 1992-96
INDIA US$ 28.000 from 1992-96
SOUTH KOREA US$ 4.500 from 1992-96
RUSSIA (no figure available)  


-----International Assistance to projects in the -----

Energy sector in Belarus
from 1992 to 1998.
(realised with the Belarusian Ministry of Energy)
Total spend :US$ 50 mln

EBRD

  • US$ 882.000, is the total amount spend in several small projects for: Energy conservation, Energy supply;
  • US$ 41 mln, Modernisation of Orsha power plant;

 

The Commission of the European Union

  • US$ 3,125 mln, Co-operation in the establishment of the Minsk energy centre (to evaluate method of energy saving),1993-96;
  • US$ 312.500, Energy audit power generation plant (proposal of modifications to improve energy efficiency, 1994-95;
  • US$ 1.125.000, Global energy strategy,
  • US$ 60.000, Introduction to energy metering, 1993-95;
  • US$ 1.055.000, others;

TACIS
2 projects of the TACIS national programme started in 1995, extended to the end of 1998, are:

  • US$ 1,65 mln, Restructuring of power generation;
  • US$ 1,65 mln, Energy saving in buildings (project will be extended until end 1998;

The World Bank

  • US$ 35.000 Energy sector, training for workers (1993-95);
  • US$ 497.000 Working out the reforms in the energy sector. (1993-95);
  • US$ 150.000 Preparation of project "Energy Saving in social sphere" (1993-95);
  • US$1 mln to draft the project "Energy Saving in social sphere" (April 1998);
  • US$ 20 mln Implementation of the project "Energy Saving in social sphere" next year (1999)? -not included in the general total above-];


Why do they fail ?
The general opinion about that and the main reasons are:

  • there is no follow up by other actors when the international financing is over;
  • the re-investment in the project is very low (ex: in efficiency programme);
  • there is no transferring of know-how;
  • there is a certain reluctance of the people (if people can't measure how much money and energy is saved after upgrading a building for example, they won't be motivated to keep doing actions in this way);
  • the dependence of the Russians (with the privatisation process going on);
  • the national energy policy which isn't really looking for solutions;

Sources:
United Nations Development programme, Ledger of Approved Project Budgets for the month of May 1998. Tableau de Bord, Poste d'Expansion Economique pres l'Ambassade de France a Minsk, Juil. 97.EBRD headquarters in London. International Technical Assistance to the Republic of Belarus, 1992-96 .UNDP.Minsk News, May-June 1998, The World Bank, Belarus resident mission, newsletter. April 1998.


The Republic of Belarus isolated ?

During the year 1996, some countries have stopped commercial relations (6), loans and technical assistance to Belarus. Because the situation has been worsening since, day after day, some international institutions and countries have taken a less active part in Belarus, and some have left when others are still active and sometimes co-operating with the Belarusian government.

Due to failing reforms, donors leave

-----International assistance -----

IMF
Since 1992, the IMF has given to Belarus US$ 200 mln for governmental reforms over a period of 3 years. Since 1995, there has been no IMF program and no money to Belarus. On July 1998, the IMF will close its representation in Minsk; IMF's experts say that they are " concerned about tight state control over prices and currency-exchange rates an ever increasing number of barter deals" and worried about "a draft presidential decree stipulating the subordination of the National Bank to the government". They say " the economic policy is unstable and unsustainable."(7) No more IMF activities in Belarus except the "Article 4 mission"; which applies to every country who's member of IMF: IMF will co-operate to make a governmental statistical report of the economic of Belarus.

The World Bank
In a press conference on May 18, P. Siegelbaum, Executive director criticises Belarus for "distorted rubble exchange"
and declared that "corruption is a significant problem in Belarus: "it comes from unnecessary regulation in the country ; there are too many unnecessary tax, which will make the foreign exchange to surrender". The lack of progress is because of failing reforms. The situation for a financial earthquake is building".

The WB will maintain its representation in Belarus but will only implement an educational programme and an energy saving project.No more rehabilitation loan.Belarus is at the bottom list of the banks priority.

UNDP (United Nations Development Programme )
The UNDP say they "are the only stable sources of money for Belarus as well as a neutral organisation", they work with the Priorbank and provide only technical assistance. They say to have good and well developed relations with the Belarusian Authorities. They will try not to decrease the number of project in the country and to maintain the same trace as in the previous years. Three possible actors can manage/execute a UNDP project: the National Belarusian Authorities, the UN itself, the NGO's.
The future tendency will be to give execution of projects to NGOs

SOROS OPEN SOCIETY FOUNDATION
The Foundation has spend more than US$13mln until 1996 to support nongovernmental organisations.The Foundation was forced out (8)of the country for the Belarusian Authorities considered billionaire Soros and the supported activities as a threat for the regime
No more support to NGOs from Soros.

-----European Institutions-----

On feb.16 1998, following a European council declaration of Sept. 1997, the European Parliament passed a resolution on arbitrary arrests in Belarus: "Calling on the Belarusian authorities to restore international human rights standards"

The European Parliament concerned at frequent reports of human rights violations, the criminalization of non-governmental organisations and intimidation against journalists, actors in civil society and political opponents which demonstrate that President Lukashenko is unwilling to restore democratic standards, thus widening the gap between Belarus and the democratic world,

Calls the Belarus authorities to restore international standards in the fields of human rights, freedom

(...)

5. Stresses again that no further co-operation between the European Union and Belarus may be undertaken until clear steps towards respect for human rights and democratic and legal reforms are taken by the Belarus Government;

7. emphasis the need to continue financial support for further assistance programmes for enhancement of civil society in Belarus and to assess the possibilities for training opportunities for students abroad (..).(9)

Impact of the EU resolution

TACIS
Since 1996, Tacis Co-ordination in Belarus is no longer subordinated to the Council of Ministers but to the Ministry of Economy. In 1998,Tacis will still be implementing 2 national programmes in Belarus which started in 1995, until the end of 1998. The 2 projects, worth ECU 1,5 mln each are: "Restructuring of power generation" and "Energy saving in buildings". No more assistance have been planned in 1997 for the coming years. The Tacis delegation in Brussels is currently negotiating with the Belarusian government the acceptation of a "Civil society development programme" of ECU 5 mln.

The future of Tacis in Belarus will depend on the acceptance or rejection of this project. In case of a "no" Tacis will probably leave the country.

EBRD
Belarus became shareholder of the bank in 1992.The Ministry of Economic and Foreign Affairs in Belarus sees the EBRD as the most active creditor to the Republic(10) with a total credit agreement of US$ 540 mln. The EBRD, in 1995, opened a credit line for US$ 30 mln which will provide money to Belarus until 2002 to develop small and medium sized enterprises in the private sector.
On Dec. 1997, the EBRD has financed the first private industrial project in Belarus aiming to modernise a glass factory with a joint-venture (Canada/Belarus): US$ 8,7 mln (loan: US$ 7,7 mln+ investment US$ 1 mln) .
On Dec. 1997, the EBRD has made the first investment in Belarusian bank, the Priorbank, Belarus fifth largest bank and universal bank: US$ 3,025 mln.
No changes in the EBRD activities in Belarus since the European Resolution.

The European Union System
Has set up last year a triparty working group (mediation with Lukashenka), which was unsuccessful. On a regular basis, EU official meets Belarusian opposition delegates. On June 3rd 1998, the EU-Belarus group of the European Parliament considered human rights situation and intended to develop a special strategy in relations with Belarus.(11)

-----European Countries-----

It is difficult to evaluate Western investments as companies don't have to report their activities to their respective embassies in Belarus. Our sources of knowledge based on embassies figures most of the time, publication of the UNDP and news agency press releases. When there is no official representation of a given country in Belarus (some are closed)it is very likely that there is very little co-operation with Belarus. Western investments are not very important and were mostly contracted before 1996 (1996: US$ 123,9 mln; 1995: US$ 157,3 mln) according to the EBRD. The trend of co-operation is decreasing with few exceptions, Germany and Austria.

ITALY
Private sector, only few small and medium sized companies. Don't report to the embassy, so no number available.
Humanitarian aid:

  • 1000t rice/ 500t sugar in 1998.
  • The children of Chernobyl: every year Italy host 32.000 children for a period of 1-3 months. The biggest humanitarian assistance made to Belarus in this area.

An intergovernmental credit line of US$57 mln, has been blocked 2 years ago, no more credit today.

DENMARK (no Scandinavian representation in Belarus )

  • Few Danish companies have representative offices in Minsk for trade purpose. One major direct investment is made by Belcare Plast Ltd.
  • 3 projects have been developed between 1992 and 1997 by the Danish Environmental Protection Agency, for a total of US$ 4,4 mln.

No more project signed since Sept. 1997. The relations are kept at a minimum with Belarus.

UNITED KINGDOM
There is no governmental credit line with Belarus.There is the least private business in Belarus from the UK as the situation is not favourable and there is no export credit insurance by the UK government.

  • In 1997, ordinary commercial business totalled US$ 23mln and total British investment were US$ 8,8 mln on Jan.1998.
  • The technical assistance, British Know-How Fund will support for US$ 930.000 for 1998 but could increase if new projects come. "It depends also if the Europe official position would be reviewed. In the future there is no plan to modify the Know-How Fund in Belarus"says official of the UK embassy.

The position of the British delegation is to keep a low profile, no meeting on the Ministerial level with Belarusian authorities.

FRANCE
There is no governmental investment from France.

  • FASEP (Assistance Fund for Eastern Countries) does no longer exist but it has financed US$1,3 mln project on telecommunication (France/Telecom + Belarus/Beltelecom) for a period of 3 years, ending this year;
  • Future: investment will increase every year if French companies get new markets;
  • French GEC-Alsthom(12) is involved at Vitebsk,modernasing Orsha thermic plant. It's nearly finished. If it is a success, then France will develop new thermic plants. France makes 1 % of the total direct investment in Belarus;


SPAIN
In May 1998, the Spanish Bank, Sabadel has approved a US$ 25 mln credit line for Belarus to finance Spanish exports to Belarus. An agreement in this regard has been signed by Sabadel and Belarus Belvneshekonombank. The credit line has been opened against the Belarusian government's guarantee. No more information available(13)..

THE CZECH REPUBLIC
Czech government has just issued US$100,000 to Belarus as humanitarian aid to purchase medicine and medical equipment for the areas contaminated by Chernobyl.(14) Plus donation of computers to Charter'97.

POLAND:
The country is an important trade partner of the Republic but no information were available.

GERMANY
Tied connections with Belarusian authorities on the ministerial level.
" Horst Winkelmann, the German Ambassador to Belarus presented its credentials to president Lukashenka and meet with Belorussian foreign Minister to discuss political trade and economic relations between the two countries and other issues of mutual interest" reported the News Paper Minsk News, June 2-8 1998.

Promoting business
Outside of the CIS, Belarus'main commercial partner is Germany making 17,3% of the total trade turnover.The exchange of good stood at US$ 908,2 mln in 1997.(15)

On May 11-13,1998 took place in Minsk the 4th meeting of Belarusian and German businessmen organised by the German and Belarus Ministry of Economy and Chamber of Commerce of both countries. Business co-operation is so good that there are negotiation to set up an Association of Belarusian businessmen in Germany and discussion with the Belarusian government to financially support this bilateral project have started.

More than 200 businessmen have negotiated during the meeting and the trade figure was expected to reach US$1 billion in 1998(16).

The German technical assistance programme "Transform" amounts : US$ 3,05 mln for 1998 totalled 36 projects and operates in 3 main sectors:

  • private sector support (business advice centre, consultant training for Belorusians with German staff. Areas: textile, construction, quality management system.)
  • small and medium enterprise, help for development.
  • training democracy and civil society, according the EU Parliament's resolution of Feb.1998.

"The "Transfrom" programme doesn't touch at all the energy sector for it would become too political."

There is 2 credit lines from Germany:

  • An export credit insurance (credit line ) has been reopened again this year 98(17). (no number yet) made by private German bank.
  • A credit line financed by private German banks, which have made 3 major investments in Belarus (a hotel complexe,the Minsk international airport, a wood processing plant)

Only 2 German private banks, the Commerzbank and the Dresdner bank are doing business in Belarus.

KSW is a half private/half governmental German bank involved in the country.

Other aids:
Germany also provides with humanitarian aid (clothes, food to the victims of Chernobyl), sponsoring of Belarusian enterprise to take part in trade fairs.

"Promoting" civil society
"A German military delegation led by the commander of the 52nd Mechanised Infantry Battalion has visited Minsk as part of a co-operation program between the Belarussian Armed Forces and the German Defence Ministry. The Delegation visited military educational institutions and met with Major-General Grygory Svirko, chief of the Military Academy."reported Minsk News on June 2-8 1998.

AUSTRIA
The country has provided Belarus with US$ 5,4 mln technical help between 1992 and 1996. Austria has developed a large number of projects in the social and medical sphere for the children of Chernobyl.

Austria is the one of the major trade partners among non-CIS states. The Austrian-Belarusian business deals and turnover have been increasing since 1996; There is a total of 27 joint ventures with Belarusian shareholders with a total capital of US$ 7,5 mln (Austria has US$ 5,2 mln) and 8 Austrian companies with 100% Austrian shareholding (the largest is Robert Bosh with a capital of US$ 720.000). An export credit line totalling US$ 500 mln(18) was utilised between 1992-97 following an intergovernmental agreement. Acting as a governmental agent on the credit line, Belvnesheconombank concluded major interbanks agreements with 4 Austrian banks: Kreditanschtalt-Bankverein, Landerbank-Bank Austria, Raifaisen Zentral-bank and Bank fur Oberosterreich.

More loans: The First vice Premier to Austria visited Belarus in January 1998 and had signed new loans from Austrian banks to finance two projects (metallurgical and meat factory).

Future tendency: In late April 98, a delegation of businessmen headed by the President of the Federal Chamber of Economy of Austria visited Belarus and concluded agreements worth US$ 800 mln." Austria could soon oustrip Germany in investment in the Belarusian economy" said the Belarusian Minister of Foreign and Economic Affairs.(19)

-----Others-----

RUSSIA
(no figure, no information were available from the Embassy of Russia in Minsk).

THE UNITED STATES
The USA have reacted to authoritarism of the regime in 1996 and cancelled all the ExImpBank credits. The economical co-operation with Belarus is at the lowest level. There is no credit line USA/Belarus any longer.
The NUUN-LUGAR funding (US$ 383 mln) was suspended in 1996; Its aim was to help Belarus to destroy SS25 warheads. This credit would be reopened if the situation would get better, and an earth decontamination program(20) would be implemented also.

INDIA
There is no assistance at all, only minor trade import/export India/Belarus at the own risk of the entrepreneur.

JAPAN
Except the humanitarian help, no other information were available from the Japanese representation. "It's too political" said the Embassy.

CANADA
There is no governmental assistance programme and no government to government program. No major trade reported.

CIS countries are let apart.


First step in the decision making process about building a nuclear power plant in the Republic of Belarus

About the Republic of Belarus
Belarus became an independent republic on July 27, 1991. Since the election of President Lukashenka in July 1994 followed by a referendum in May 1995, the main question is not about co-operation with occident but about co-operation with Russia.In April 1996, the Union of Belarus and Russia was signed.

President Lukashenka is a populist-authoritarian country leader, known for its nostalgia of old Soviet time; nostalgia which he shares with the rural population and the elders.

Reforms are very slow when they are not failing, suspended sometimes, and in any cases depend on the good will of the President.

Belarus and Chernobyl
Chernobyl NPP is located in Ukraine, 15 kilometres from the border with Belarus.70% of the radionucleide emitted at the time of the Chernobyl accident feld down on the territory of Belarus; More than 23% of the territory of Belarus with acontamination by caesium-137 of more than 37kBq/m2; It means that these areas are not suitable for living permanentely on, but more than 1,8 million people including 500.000 children live in those contaminated areas. Belarus forwards about 20% of the yearly national budget to overcome the consequences of the accident. However the scale of the disaster is huge (the national damage for the years 1986-2015 are 270 mlrd US$, this equals 32 national budgets of Belarus in 1985).Due to the hard economic conditions Belarus is not able to issue the necessary financial resources to overcome sufficiently the consequences of the nuclear catastrophe.

Belarus energy situation
The Belarusian energy system is in common with Russia, Ukraine and the Baltic States. It enables Belarus to import gas, oil and energy from these countries at reduced prices.
by very cheep way.
The Belarusian energy system is able to produce about 43 bill kWh per year. The energy consumption in 1996 was: 32.2 bill kWh; 23.6 bill kWh were produced in Belarus and 8.6 bill kWh were imported from Russia and Latvia. So in 1996 the Belarusian energy system produced only 53% of its capacity

The supplying of energy is crucial for the country who has limited non-renewable indigenous energy resources; Belarus' oil production covers only 20% of its needs; In 1995,it had to import 12 mln tons of oil, 1,2 mln tons of coal and, in 1997, the energy bill represented US$ 1,5 billions worth in exported goods.
Belarus thus relies almost exclusively on imported fuels to cover its energy needs and Russia remains the sole supplier of imported gas and oil.

  • Belarus will never have the natural resources to be fully independent in its energy production and will always rely on importation;
  • conventional electricity plants are ageing and in terrible condition.
  • the importation of gas from Russia, and the dependence of Russian good leave Belarus in a tricky situation;
  • Belarus has a hard time to pay its energy bill to Russia; The country can only pay partially and with long delays; In April 1998, the Belarusian unpaid bill for gas totalled US$ 225 mln. Recently , Russian Gasprom accepted a barter deal for its gas of 70% goods/ 30% cash money to relieve the Belarusian government from its debts;

A Nuclear Power Plant in Belarus, soon ?

Background
The idea of building an NPP (Nuclear Power Plant) in Belarus was developed in the beginning of 1983 by the Soviet Authorities when Belarus was part of the Soviet Empire. The project was to produce 6 million GWh out of nuclear energy and 2 million GWh out of conventional energy by the year 2010 to Belarus energy needs.

After April 1986, as a result of the world's worst nuclear accident at Chernobyl NPP which has highly contaminated 23% of the territory of Belarus and caused severe damaged to Belarusian population, no one would have dared to raise the idea of an NPP in Belarus any longer.

But 12 years after the Chernobyl catastrophe, the idea is coming back on the forefront .

Evidences
In 1997, Rysland Ignatichev, member of the Chamber of Representative(21) mentioned the facts showing that there is a project to construct an NPP in Belarus and big effort to realise it.(22)

* During a parliament hearing, V.V Gerasimov, Minister of Fuel and Energy (23) said: "there is no other alternative to nuclear power". According to the order of the former Council of Ministers, the research work for the localisation of the construction are going on and potential sites for an NPP: Bechov, Shklov, Dubrovno. (24)
To questions relating to finance, V.V Gerasimov said that 1 billion RB (25) had been spend to find a potential site.
Also, this hearing showed that the main supporters to develop nuclear power in Belarus are the members correspondent of the National Academy of Science.
A.A Michalevich, from the Institute of Energy problems, said : "The characteristics of optimal construction for the Belarusian construction would be 4 units/ 600.000 kW capacity or 2 units/ 1.200.000 kW and it would cost approximately US$ 4 to 5 billions." V.V Gerasimov said: " we need to ask for credits" but he was unable to clarify how Belarus could pay back the credit to the provider.

* A legislation draft on the use of nuclear energy as energy source has been written and will be discussed in the parliament by the end of the year 1998". said Mrs. Akopov co-ordinator for the IAEA (among others) in the Ministry for Foreign and Economic Relations.

* On March 31, 1998 Prime Minister Serguei Ling ordered the creation of a Committee of 34 members to assess reasons to develop a nuclear power plant in Belarus(26).
The creation of this committee and the discussion on building the NPP have been confirmed by foreign officials working in Belarus such as the American Embassy: "It is true, there are some talks about it among experts of the Academy of Science..." representatives of the TACIS programme:" The idea of an NPP is not excluded" , the United Nation's representation in Minsk, BelEnergo, the local population and the Head of the Belarusian Green Party. The committee's report is due by January 1st, 1999.

* Since 1993, the IAEA (International Atomic Energy Agency) has developed 7 large projects in Belarus , spending a total amount of : US$ 450.000.
Some of the projects aim to ' analyse the role of nuclear power as the energy supply of the future" , "..to raise public awareness of potential risks and benefits of nuclear technology" and to "develop a comprehensive system of accreditation and certification consistent with international recommendations."

* Preparing the ground to make the population accept the idea by:

  • minimising the consequences of the accident of Chernobyl about people's health;
  • let people live in contaminated areas, and let people re-settle in evacuated contaminated areas;
  • abandoning the monitoring of some contaminated areas and the indicators of them as "Dangerous radioactive areas";
  • promoting research with the help of the IAEA to assure rapid rehabilitation of agricultural & farming land and woods;
  • promoting research with the help of the IAEA to make local food suitable to consumption;

Pr. Nesterenko(27) says:"Because of the different reasons during last two years on the radio, TV and in the mass media there can be observed a tendency to diminish the danger of high Cs-137 level of accumulation in the children bodies. There are the attempts to explain this increasing pathology by the economic crisis, low life standards, chemicals and other harmful substances influence."

In short to make people forget about the Chernobyl accident by denying it.

Russia/Belarus tied connections

The Union of Belarus and Russia and the present situation show tied connections between Belarus and Russia, as well as a mutual interest in such project.

  • Among CIS countries Belarus is the one the most integrated into the Ex-USSR economical group; the CIS/inhabitant exchange ratio is high. Russia represents 80% of its CIS importation and 90% of its CIS exportations. But more and more good-against-good exchange (barter deal) is being developed (food against energy);
  • The economical influence of Russia is increasing in many areas (Customs Union, Anti fraud).The Russian FIGs (Financial and Industrial Groups) are literally controlling entire sectors of industrial activities such as the energy sector;

To counterweight the supplies of gas and oil, Lukoil and Slavneft (RU) took shares (majority) in Belarusian refineries (including the Novopolostsk refinery) , in Brestgasapparat as well as in the distribution.
Sometimes Russian companies implement their threats of cutting energy supplies to Belarus if bills remained unpaid.

Mutual interests

  • Russia needs the Belarusian territory as a transit zone for almost all import/exports goods (natural corridor from the European Community to Russia ) and for the exportation of natural gas to neighbour countries- 4 Russian pipelines are going through Belarus- . Since 1997, a gas pipeline is operating from the Yamal region to Western Europe, longing Ukraine. Poland and Ukraine are well independent and tax highly any transit of Russian goods/fuel through their territories when Belarus has no trade barrier with Russia.
  • Russia has a nuclear industry starving for new orders and a great amount of nuclear engineers searching for work.
  • Russia with its nuclear industry can offer know how, technical assistance and human resources.

Belarus has rising debt with Russia and faces a position of "owning favour" to Russia.

Funding sources ?

  • Russia is known as the banker of Belarus; there is tied a co-operation Belarus/Russia through the Central Bank of Russia; the Belarus Central Bank is in a very critical situation at the moment.
  • The funding could come from a foreign private bank associated with a Belarusian government deal or foreign government/Belarusian government deal.
  • Note that the Belarusian banking sector (banks and Stock Exchange) capital can be frozen by governmental decree and used for governmental purpose.

The latest example can be found with the Stock exchange shake-up... During the first week of May, the Belorusskaya Delovaya Gazetta reported "...Belarusian Stock Exchange's future is highly questionable since the Belarusian president is about to decree a merger of the BSE with the ICE (Interbank Currency Exchange),a department in the national bank. The BSE stockholders share in the new Belarusian currency and Stock Exchange is likely to be dissolved in the capital of the National Bank department, but shareholder's don't have much of a choice. In case they don't agree with the president's decision, the BSE will operate for a bout a year until corresponding amendments have been introduced to the law on securities and stock exchanges which might strip it of its legal status."

Technology

According to an Executive of BelEnergo, member of the Committee to assess possibilities for developing an NPP, the reactor would be of Russian design.
Besides this, questions put to various international institutions and foreign country representatives in Minsk, have not yet revealed any future involvement of western companies in the project. (yet?)


Conclusion

For the past 6 years , Belarus has received US$590 million of international assistance with all the same leitmotiv: "promoting democracy and market economy" sometimes to " support the consequences of Chernobyl" but democracy remains a far away dream.
Today, due to a no reform policy, donors are leaving and the Republic is more and more isolated. The European parliament resolution stresses that no co-operation may be undertaken until clear steps toward respect for human rights and legal reforms are taken.It has been taken into consideration by most of the EU countries except by Germany and Austria who are clearly increasing their co-operation with Belarusian authorities (on the official level and on a private business base). As for the American position, it is clear since 1996 and emphasises support to environmental activities and to non-governmental organisations.

The energy policy:
USS 50 mln from international funding have been spend the last 6 years to improve the energy sector (restructuring, training staff, legislation) to which it should be added a certain amount (unknown) provided by the Belarusian government itself. These projects are often failing for there is no follow up, no new investment made once the international funding is over, and the local regulation isn't adapted to make things getting better.

According to a representative of Tacis(28), "there is no real energy policy which deserve that name in Belarus."
Nevertheless, the main directions of the " Energy Plan until 2010" adopted in 1996 by the Cabinet of Ministers, carries out recommendations discussed in parliamentary hearings;
It emphasises the use of natural gas, a better energy efficiency system, the development of renewable energy sources, the use of local and cheap energy sources,, the development of a technical-science programme to solve the consumption of energy in the lightning system, high effective heating-gas technology. So if in the future, the situation would come to change in Belarus, existing proposals in the "Energy Plan until 2010", would be implemented.

The idea to solve the energy problem is to build a nuclear power plant regardless of the consequences of Chernobyl and the disastrous economical situation of the country. This would leave the country in the same dependence as experienced nowadays: Belarus would still need to import a technology and nuclear fuel which it doesn't have. Not mentioning the very high expenses and long term planning energy policy in which such a choice would caught the country.
By December 1998, the parliament will discuss the legislation draft on the use of nuclear power.
By January 1st, 1999, the committee of experts to assess reasons to develop nuclear power will give its report back to the Authorities.
In spite of the heavy consequences of the Chernobyl accident the country is planning to build a nuclear power plant. Within 6 months, a decision will be taken.

Eleven million people are experiencing everyday's dictatorship and many different form of repression(29). Political culture and public participation process are two elements unknown for the Belarusian people. In such a context who is going to launch a public debate about Belarus taking the nuclear path ?


Recommendations

In this section we try to specify our recommendations to different target groups.

Recommendations to investors:
Risks exist for all investors in the Belarusian economy of seeing their capital frozen as a result of a governmental decree, any day. Investors and donors should avoid any direct transfer of fund to Belarus banking system to prevent any undesired consequences to take place such as funds been withdrawn from their original purpose and reallocated;
In particular attention should be brought to recent western investment/loan to Belarusian banks:

  • Spanish Bank, Sabadel just approved a US$ 25 mln credit line for Belarus to finance Spanish exports to Belarus. An agreement in this regard has been signed by Sabadel and Belarus'Belvneshekonombank. The credit line has been opened against the Belarusian government's guarantee.(30).;
  • In Dec. 1998,the EBRD has made the first equity investment of US$ 3,025 mln in the Priorbank, Belarus' fifth-largest bank "aiming to develop the banking system."(31);

Recommendations to the European Union and to European countries:
The European Union system and European countries;

  • should keep the pressure on the Belarusian government as long as respects for human rights and legal reforms aren't undertaken;
  • should change partners and co-operate more with individuals, groups, schools and less with governmental institutions;
  • should develop and extend their co-operation with non-governmental organisation and with free mass media (radio/newspaper);
  • should set up and finance university and schools exchange programme between EU countries and Belarus aiming to develop political awareness;
  • should keep inviting on a regular basis opponent to the regime to testify on the situation and broaden the sphere of invited people;

 

Recommendations to other foreign foundations outside the European Union:

  • To not decrease their support to independent groups in Belarus and to even increase it;

Recommendations to foreign mass media:

  • should give more attention to what is going on in Belarus;
  • should develop co-operation with Belarusian independent media by;
    -inviting journalists abroad;
    -going to Belarus;
    -providing them with independent information(32).

For the beginning of a civil society:

Recently the Aarhus convention on Public access to information, public participation in decision-making and access to justice on all matters affecting peoples environment was opened for signature. Efforts should be made to have Belarus signing the convention (outside and inside the country). Financing should be provided to implement it and to make it known to the Belarusian citizens.

Recommendations to Belarusian independent organisations:

  • should maintain and increase their efforts to develop international contacts;
  • should improve their skills in information dissemination to the rest of the population;
  • should unify and develop a common strategy to launch an information campaign on the building of a nuclear power plant in Belarus and should promote the use of renewable energy sources;

 

Recommendations to everyone:

Everyone should have for a common goal to NOT let Belarus
become the most forgotten country in Europe.



Appendix

 


Order of the Prime Minister of the Republic of Belarus
to create a committee to assess reasons
to develop nuclear energy in Belarus.
March 31, 1998(33)

Researching reasons from different points of view, for the development of nuclear energy in Belarus. For he purpose of creating a committee made up of the following members(34) .

In accordance with the situation in Belarus, the Committee should:
Analyse and assess

  • data about the development of nuclear power in the world
  • possibilities of providing Belarus with alternative energy and fuel resources based on efficient use (and possibilities) of using them in Belarus)
  • possibilities for using up to date steam-gas technologies and traditional energy sources.

Present to the Council of Ministers of Belarus by January 1, 1999 material containing

  • arguments for the development of nuclear power in Belarus including sociological, economical and other economical and other significant factors
  • resolutions to the problem of safe operation, shut-down, and decommissioning of nuclear power plants
  • the monitoring and storage of radioactive waste and all other factors.

All organisational and technical facilities are provided by the Academic Technical Science Complex "SOSNY" National Academy of Science of Belarus.

Prime Minister of the Republic of Belarus,
Serguei Ling.


Drozdy crisis, analysis

Extracted from Minsk-News, June 23-29. By Sam Glebov.

Lukashenka' tactics: "political hooliganism"

The behaviour of the Belarusian Authorities over the embassy crisis (Diplomatic residences Drozny crisis, end of June 1998) is truly unheard-of. There is probably no other country in the entire world that has so blatanly violated the 1961 Vienna Convention whereby every state must respect the peace and quiet of foreign diplomats. Because the Belarusian government had broken the established rules so openly, that the western governments weren't even sure how to react. the world has had to deal with many variations of Zhrinovsky-style(35) political hooliganism before, but this is the first time it has seen something like this.

It still remain uncertain, why the Belarusian authorities needed a confrontation over a relatively minor issue. There is no definite answer to this question, although some signs in the behaviour of the Belarusian authorities and some Russian politicians suggest that Lukashenka may have needed to challenge the West to appear tough and strong in the eyes of the Russian electorate, where he still hopes to run for the presidency of the Belarusian-Russian Union.[...]

The efforts to achieve the international recognition of the 1996 constitution and the Lukshenka parliament have brought no result. The position of the West isn't likely to change, and the international isolation of Belarus will continue to deepen.In these conditions the Belarusian leadership doesn't perceive the political losses resulting from the diplomatic scandal as being very high. It may even think that its benefits may substantially exceed losses.[...]

Without openly supporting President Lukashenka, the Russian leadership seems to have decided to allow Lukashenka to reap the benefits of its confrontation with the West. The reaction of dignity of the Russian Federation has been downplayed. Russian Foreign Minister Yevgeney Primakov promised a reaction in the middle of last week, but it still hasn't come. Absence of a clear response from the Russian government leaves the Russian people free to think that Lukashenka's behaviour toward the diplomatic missions was in fact acceptable.

In a country where political culture is low, political hooliganism isn't just tolerated but even welcome. If Zhirinovsky can stage a brawl in the Russian parliament, and doesn't just go unpunished but also increases his popularity with masses, why cannot Lukashenka do the same ?

 


NOTES:

1. List of sources: Interfax, the biggest non- governmental information agency. They provide political; ecocnomical, financial and general news about the CIS and Belarus. Contact: Interfax. Karla Marxa 13 a room 4, tel : (375) 17 22206896, e-mail: interfax@interfax.belapan.minsk.bye; "Minsk News" an 8 page English newspaper publishing weekly articles translated from Belarusian daily papers.Minsk News e-mail: mecpaper@mecpaper.belpak.minsk.by -Tableau de Bord, Poste d'Expansion Economique prés l'Ambassade de France à Minsk, Juil. 97.EBRD headquarters in London. International Technical Assistance to the Republic of Belarus, 1992-96 .UNDP.Minsk News, May-June 1998.
-Meetings with the TACIS Delegation in Belarus, British Embassy, French Embassy, US Embassy, German Embassy, Embassy of Russia, the World Bank, the EBRD, the United Nations Development programmes.
-Telephone conversations with the Embassy of Italy, Embassy of Japan, Embassy of Denmark in Russia, Embassy of India, the International Monetary Fund, Executive of BelEnergy

2. Drozdy Crisis, analysis p....

3. Sources: United Nations Development programme, Ledger of Approved Project Budgets for the month of May 1998. Tableau de Bord, Poste d'Expansion Economique pres l'Ambassade de France a Minsk, Juil. 97.EBRD headquarters in London. International Technical Assistance to the Republic of Belarus, 1992-96 .UNDP.Minsk News, May-June 1998, The World Bank, Belarus resident mission, newsletter. April 1998.

4. CIS; Commonwealth of Independent States

5. humanitarian aid - will be mention as HA further

6. apart from CIS countries

7. Press-release BelAPAN.

8. After a long crisis between the president Lukashenka and the Foundation (from March 97 to September) the Belarusian government froze 2 bank accounts and confiscated property belonging to the foundation worth US$ 3000) Sources: Belarusian Soros Foundation web-site.

9. BelaPAN News Agency Bulletin N 19, 20 Feb. 1998. See appendix.

10. : Market Opportunities to Invest in Belarus. Ministry of Economic and Foreign Affairs. Minsk 1996.

11. BelAPAN

12. GEC-Alsthom is a consortium UK-FR business,which main activity is heavy engineering in the nuclear indusrty.

13. BelAPAN

14. Minsk News. May 5-11 1998

15. Minsk News-June 2-8 1998.

16. Minsk News 19-25, 1998.

17. Rem: it is an insurance for the German business coming to Belarus, if they fail, this bank will pay back the bankruptcy of the project; It creates a security for German companies and encourage them to invest in Belarus; the UK have closed this export credit insurance and in general other countries too.

18. : Market Opportunities to Invest in Belarus. Ministry of Economic and Foreign Affairs. Minsk 1996.

19. Sources: Belorusskaya Gazeta, May 1998.

20. bacteria in the ground to destroy radioactivity

21. sometimes called: parliament

22. Brochure published in 1997 by R. Ignatichev, Chamber of Representative of the National Assembly of Belarus- "Energy & Exports problems."

23. this Ministry doesn't exist any longer. Today, it's known as : BelEnergo( means :Belarus Energy Concern)

24. See map in appendix

25. The currency rate is so irregular that it is impossible to convert into other currency.

26. Appendix 1

27. Director of the Belarusian Institute of Radiation Safety 'Belrad'; "Impact of radiation on the health of children in Belarus".

28. Sources: Tacis representation in Minsk

29. See press Review.

30. BelaPAN

31. EBRD press-release, Dec.18 1997

32. Most of the Belarusian newspapers cannot afford to send their journalists abroad to cover international events.

33. This is a non-professional translation.

34. The Committee is made of 34 members. They include members from the Ministry of the Environment, the Ministry of Health, the Ministry of Industry, the ministry of Economy, the Ministry of Labour, the Academy of Science, the Institute of Geology, the Institute of Radiation Safety, BelEnergo and six other institutions. Translator's note:this gives a ratio of 28 unpartial or pronuclear groups to 6 opposing groups.

35. Zhrinovsky is an authoritarian Russian politician


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