US embassy cable - 05MINSK1355

UNCLAS SECTION 01 OF 03 MINSK 001355 
 
SIPDIS 
 
SENSITIVE 
 
SIPDIS 
 
PASS USTR FOR ALLGEIER AND DWOSKIN 
EB/OT FOR CRAFT 
USDOC FOR ITA/JACOBS 
 
E.O. 12958: N/A 
TAGS: ECON, ETRD, PGOV, WTRO, BO 
SUBJECT: Minsk Fails to Defend Confiscation Record 
 
Refs: (A) Minsk 492, (B) 04 Minsk 296 
 
1. (SBU) Summary: On October 25, State Customs Committee (SCC) 
officials attempted to defend their government's confiscation 
practices to Econoff.  Their main arguments were that the SCC used 
to confiscate much more, even though current levels remain high, 
and that confiscations `were not their idea.'  The officials 
clearly seemed uncomfortable defending this practice, and stressed 
they are trying to improve the situation.  However, it is likely 
only Lukashenko could end confiscations.  Econoff raised two recent 
confiscation cases against American firms.  In one instance the 
firm received its goods back after fighting in court for two 
months.  The other cargo was lost.  In recent weeks Dutch and 
Kazakh diplomats have commented their businessmen continue to also 
face significant problems with confiscations in Belarus.  End 
summary. 
 
 
Customs' Lackluster Defense 
--------------------------- 
 
2. (SBU) After the U.S. Department of Commerce warned U.S. 
businesses in August not to transit goods through Belarus for risk 
of confiscation, Belarus' State Customs Committee (SCC) told the 
press they were ready to "tell the Americans the truth."  Post rose 
to this challenge and requested a meeting, which the SCC finally 
granted in late October. 
 
3. (SBU) On October 25, Econoff met with Vladimir Garifov, Head of 
the SCC's Enforcement and Investigation Department, and three of 
his underlings.  Garifov expressed surprise that the USG made such 
a statement this year, as "We confiscated much more from you in 
previous years."  To back up this claim, Garifov said in 2003 the 
SCC confiscated 184 American-owned cargos; in 2004, 133 American- 
owned cargos; but in the first nine months on 2005 the SCC has only 
seized 22 American-owned cargos.  He further qualified this by 
saying some of those 22 were simply fined, not fully confiscated. 
 
4. (SBU) Garifov agreed that perhaps Belarusian law is too strict, 
leading to disproportionate punishments.  As an example he said 
Belarusian law mandates the SCC seize a bus if one of the 
passengers is smuggling cigarettes.  The SCC exists to promote 
transit through Belarus, thereby earning revenue, so it is drafting 
new, less stringent laws.  However, Garifov stressed that if the 
documents presented by a shipper do not comply with Belarusian law, 
the cargo is seized and the case goes to court for final 
confiscation. 
 
 
SCC Ready to Help 
----------------- 
 
5. (SBU) Garifov also complained that the USG would issue such a 
statement after the SCC helped prevent the smuggling of cars stolen 
in the U.S. to Kazakhstan.  [Note: He was referring to 16 cars 
Apollo Motors, a Chicago chop shop closed by police, shipped in 
early 2003.]  Econoff thanked Garifov for this effort, but then 
asked if the GOB had made any effort to return these stolen cars to 
their rightful owners.  As Garifov squirmed, his deputy outlined 
the lengthy bureaucratic process needed to learn the fate of 
confiscated goods. 
 
 
How to Verify Non-existence? 
---------------------------- 
 
6. (SBU) One of the main pretexts used by the SCC to confiscate 
goods is to claim either the sending or receiving company does not 
exist.  Post has helped a few American companies try to prove their 
existence to the SCC, sometimes even successfully.  Econoff asked 
how the GOB could verify whether an American firm exists.  Garifov 
replied Belarus has a responsibility to safeguard Russia, as there 
is no customs check on the Belarusian-Russian border.  He claimed 
the SCC has the Belarusian Embassy in Washington DC check on the 
existence of companies, and sometimes the SCC checks through 
Interpol or searches on the internet.  He asked if there was any 
way to check directly with the USG, and added the SCC would like to 
cooperate with U.S. Customs on a range of issues.  Having direct 
contact with U.S. Customs would also greatly cut down the amount of 
 
MINSK 00001355  002 OF 003 
 
 
time American cargos are held at the border (now up to ten days) as 
they are being checked. 
 
 
SCC Not at Fault? 
----------------- 
 
7. (SBU) Econoff laid out the reasoning behind the USG warning 
(reports of U.S. confiscations, the Russian Embassy publicly 
complaining of having USD 100 million in goods confiscated a year, 
problems reported by many other embassies, the existence of a 
budget line for USD 84 million in projected confiscation revenue in 
FY05, and the existence of a network of shops selling confiscated 
goods; ref A).  All four instantly said some variation of, "Those 
shops were not our idea!"  Garifov also said that the Russian MFA 
and Customs recently, "changed their minds," that Belarus 
confiscates too much.  He added the SCC is meeting with foreign 
transporters to get advice on how to improve procedures, strives to 
work openly and transparently, and stated, "things are getting 
better." 
 
 
Two Recent American Cases; One Victory? 
--------------------------------------- 
 
8. (SBU) On July 26, Belarusian customs at the Berestovitsa-2 
crossing point on the Polish border seized an American owned cargo. 
Emerson Process Management (EPM), based in St. Louis, MO, was 
shipping a hydraulic pumping unit from the Czech Republic to 
Moscow.  The invoice listed the value of the pumping unit at USD 
23,552.  When the goods left Poland, Polish customs listed their 
value as USD 25,356, adding the price of shipping to the value of 
the good.  [Note: Post has been told the Poles routinely add the 
cost of shipping to the value of a good.]  Knowing this could cause 
problems, Polish customs included a notarized statement of 
explanation, in Russian, for Belarusian customs.  Regardless, 
Belarusian customs cited this discrepancy as the reason they seized 
the pumping unit. 
 
9. (SBU) Belarusian customs placed the unit in a warehouse and 
referred the case to a Grodno court.  In many previous cases the 
courts ruled to confiscate goods within days of their seizure.  EPM 
immediately hired local lawyers, sent a representative from Moscow, 
and contacted the Embassy for help.  Post contacted customs, the 
MFA and the Ministry of Justice on EPM's behalf, and arranged for 
the Polish Consulate on Grodno to provide supporting documents. 
After more than two months, the court ruled the goods were seized 
by mistake and released the pumping unit to EPM.  However, under 
the terms of its Moscow contract, EPM reported it lost more than 
the value of the unit in fines for late completion of the project. 
 
10. (SBU) In another recent case, on August 5 Belarusian press 
reported customs seized USD 8,200 worth of sheetrock and other 
construction materials headed to Russia.  Although no one 
approached the Embassy in this case, Grodno customs officials told 
Emboff the goods were owned by an American firm, Cartwright 
Trading, Ltd.  The GOB claimed it learned from Interpol that 
Cartwright had gone out of business in 2001.  On August 15 a local 
court ruled to confiscate this cargo. 
 
 
Other Countries Still Face Confiscations 
---------------------------------------- 
 
11. (SBU) On October 27, Econoff met with Dutch Economic and 
Commercial Counselor Frank ter Borg, covering Belarus from the 
Dutch Embassy in Warsaw.  Borg began the meeting by thanking the 
USG for issuing the public warning to American businesses to avoid 
transiting goods through Belarus because of the risk of 
confiscation.  He said Dutch businesses continue to lose goods and 
vehicles to confiscation by the GOB.  Not having an embassy in 
Minsk, Borg said he did not know other countries were also having 
such problems, and that such a warning coming from the USG is more 
effective than from a small country like the Netherlands. 
Therefore, Borg has taken to giving the USG warning to Dutch 
businesspeople. 
 
12. (SBU) In a chance encounter on October 24, Kazakhstan's 
Economic Counselor also thanked Econoff for the USG warning, and 
 
MINSK 00001355  003 OF 003 
 
 
said in the past year Kazakh businesses have had roughly USD 60 
million worth of goods confiscated by the GOB in transit. 
 
 
GOB Attacks Customs 
------------------- 
 
13. (U) At a government meeting on October 20, Lukashenko and a 
number of ministers lashed out at the State Customs Committee. 
Lukashenko complained of red tape, incompetence and harmful 
personnel practices, and ordered the SCC to search only two or 
three vehicles out of 1,000.  Regarding confiscations, Gennady 
Nevyglas, head of the Security Council, stated, "Among foreign 
carriers there is a deeply entrenched opinion that Belarus should 
be bypassed.  There are contracts that directly indicate, `Passage 
via Belarus is strictly prohibited.'"  Foreign Minister Sergey 
Martynov added, "There is not a single interlocutor at talks in 
Europe who does not touch on the issue that your customs is an 
obstacle to transit." 
 
 
SCC Probably Not at Fault 
------------------------- 
 
14. (SBU) Comment: The meeting with SCC officials reinforced the 
view that Belarusian customs officials would like to improve the 
situation, but is hamstrung by higher ups.  These customs officials 
are professionals who were clearly uncomfortable defending a 
practice they do not agree with; witness the weakness of their 
arguments.  They would like to improve their practices and their 
country's image, but the SCC is also being pressured from above to 
make money for the state.  In this system, confiscations will 
probably continue until the Presidential Administration orders them 
to stop.  Given the success of this cash cow for the Belarusian 
budget and for off-budget funds, the Presidential Administration is 
unlikely to issue such a directive soon, even though the practice 
imperils Belarus' efforts to join the WTO. 
 
KROL