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UNCLAS SECTION 01 OF 03 VILNIUS 000447 
 
SIPDIS 
 
FOR CODEL KINGSTON FROM CHARGE D'AFFAIRES TOM KELLY 
 
STATE FOR EUR/NB, H AND RM/F/DFS/FO/AA/CAA 
 
E.O. 12958: N/A 
TAGS: PGOV OVIP LH
SUBJECT: SCENESETTER FOR CODEL KINGSTON 
 
REF: A. VILNIUS 432 
 
     ¶B. STATE 074071 
 
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Introduction 
------------ 
 
¶1. Your visit to Lithuania will provide an opportunity to 
thank Lithuania for its staunch and unwavering support in the 
U.S.-led Global War on Terror, including its recent decision 
to establish and lead a Provincial Reconstruction Team in 
Chaghcharan, Afghanistan, and to commend its leadership in 
promoting democratic initiatives in the region.  Planned 
meetings with President Adamkus and Speaker of Parliament 
Paulauskas will afford you the chance to celebrate and 
strengthen the already exceptionally friendly bilateral 
relations the United States shares with Lithuania. 
 
--------------------------- 
Lithuanian History in Brief 
--------------------------- 
 
¶2. The rich culture of Lithuania goes back more than two 
thousand years.  Lithuanians are a branch of the Balts, who 
probably settled in the region around 200 B.C.  Lithuanian is 
one of the oldest languages in Europe.  The first written 
mention of Lithuania was in the Annales Quedlinburgenses in 
1009 A.D. 
 
¶3. The Grand Duke Mindaugas established the first Lithuanian 
state in 1230.  He converted to Christianity briefly and was 
crowned king of Lithuania in 1252.  The Grand Duke Gediminas, 
who reigned from 1316 to 1341, is credited with founding 
Vilnius, at the confluence of the Neris and Vilnia rivers, 
and a dynasty that united Lithuania and Poland from 1386 
until 1795. 
 
¶4. Lithuania progressively entered European culture.  At the 
Union of Lublin in 1569, the Polish-Lithuanian kingdom was 
formally merged into a commonwealth headed by a monarch. 
This union came under threat from Prussia, Austria, and 
Russia at the end of the 18th century.  In 1795, Russia 
annexed most of Lithuania and tried to impose Russian culture. 
 
¶5. On February 16, 1918, Lithuania regained its independence 
and restored its statehood.  Lithuania remained free for only 
22 years.  In 1940, the Soviet Union occupied Lithuania; Nazi 
Germany overran the country the following year; and the 
Soviets returned in 1944.  Armed resistance against the 
Soviets continued for several years after the end of World 
War II.  For more than 50 years under the Soviets, 
Lithuanians held onto the goal of independence. 
 
¶6. In February 1990, the anti-Communist popular movement 
Sajudis won an overwhelming majority in free parliamentary 
elections.  That March, the Supreme Council, under the 
leadership of Prof. Vytautas Landsbergis, restored 
Lithuania's independence.  Lithuania became a member of the 
United Nations on September 17, 1991.  The last Soviet 
soldier left in August 1993.  In April 2004, Lithuania joined 
NATO.  In May 2004, Lithuania became a member of the European 
Union. 
 
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Background 
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¶7. Rapid economic growth and development characterize 
Lithuania,s trajectory from Soviet occupation to a maturing 
democracy and free-market economy.  Politically, Lithuania 
strives to deepen the transatlantic alliance and present 
itself as an active participant in international political 
fora.  Our coalition partner in Iraq, ally in the United 
Nations and NATO, and a leading exporter of democracy in a 
difficult neighborhood, Lithuania has risen to donor status 
farther afield in Iraq and Sudan.  Lithuania,s footprint 
goes far beyond what one would expect from a country of such 
small size (population 3.5 million) and with such a short 
time on the field.  On the home front, Lithuania last year 
weathered a turbulent presidential impeachment that put the 
young democracy under international scrutiny.  Closely 
adhering to transparent democratic principles and procedures, 
Lithuania returned a centrist, unifying figure to the 
presidency. 
 
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Growing Pains of a Maturing Democracy 
------------------------------------- 
 
¶8. Lithuania inaugurated Valdas Adamkus on July 12 as its 
fourth president since the restoration of independence in 
¶1991.  Adamkus, a former American citizen, previously served 
as president from 1997 to 2002, when he lost his bid for 
reelection to populist Rolandas Paksas.  Adamkus regained the 
presidency following Paksas' impeachment and removal from 
office earlier this year in proceedings that rocked the 
nation and tested the democratic institutions of the young 
republic, and left Lithuania the dubious distinction of being 
the only European democracy to have removed its head of 
state.  The process was bumpy, but largely transparent and 
democratic.  In the aftermath of the impeachment, Lithuania 
played out a highly charged contest for the presidency that 
pitted the centrist Adamkus against a candidate whose 
populist agenda promoted increased social spending, 
reconsideration of Lithuania's participation in Iraq, and, 
most notably, decreased U.S. influence in Europe.  Adamkus 
cast his victory in this contest as confirmation of a foreign 
policy agenda that highlights the importance of the U.S. 
presence in Lithuania and Europe. 
 
¶9. Lithuanian voters widely supported the country's entrance 
into the European Union and NATO in 2004.  These memberships 
are the first steps in Lithuania's long-term political 
strategy that envisions a leadership role in OSCE and ECOSOC, 
membership in OECD, and active participation in NATO and the 
EU. 
 
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Growing Economy 
--------------- 
 
¶10. Lithuania is one of the fastest growing economies in 
Europe.  The country,s robust economic growth continues, 
though it has slowed last year from 9.7 percent in 2003 to a 
still enviable 6.7 percent.  Analysts forecast annual average 
real GDP growth of 5.7 to 7 percent for 2005 and 2006. 
Domestic demand will continue to drive economic growth, as 
households benefit from wage increases, falling unemployment, 
and low lending rates, and Lithuania will look to attract 
foreign investment to sustain long-term growth.  Uncertainty 
about the future of the oil supply and management of 
Lithuania's Mazeikiu Nafta oil refinery, currently under 
management of the major shareholder Yukos, could slow growth. 
 Disruptions in the flow of oil or the sustainment of recent 
price hikes would most acutely affect the country's 
manufacturing sector, which constitutes some 20 percent of 
GDP.  Annual average inflation, which was 2.9 percent at the 
end of 2004, will rise in concert with electricity and gas 
prices and wage costs, whi 
le the trade deficit will widen as a result of the increasing 
trade imbalance with Russia and other trading partners. 
 
--------------------------------------------- 
An Enemy of the U.S. is an Enemy of Lithuania 
--------------------------------------------- 
 
¶11. Common values, a history of mutual support, and common 
goals for regional security bind Lithuania and the United 
States.  Lithuania continues to recognize a debt of gratitude 
to the United States for having maintained a policy of 
non-recognition of Baltic annexation throughout the years of 
Soviet occupation.  Following the restoration of Lithuania's 
independence, the U.S. cemented the friendship, providing 
political and financial support to Lithuania, welcoming the 
country into the transatlantic alliance, and supporting 
Lithuanian membership in NATO and the European Union. 
 
¶12. Lithuania already is a well-established transatlantic 
partner whom, although a new member of NATO, has proven to be 
one of our strongest allies in the transatlantic alliance. 
Lithuania currently has boots on the ground in Afghanistan in 
support of ISAF and will lead a Provincial Reconstruction 
Team in the Chagcharan region of Afghanistan.  In Iraq, 
Lithuanian soldiers serving under Danish and Polish command 
conduct patrols, assist in maintaining public order, and are 
involved with rebuilding and reconstruction efforts.  The 
British, Danish and Polish commanders have all commended 
Lithuanian soldiers' skills and professionalism.  The 
Lithuanian Parliament has committed to support this 
deployment through the end of 2005.  Lithuanian soldiers have 
also performed admirably as peacekeepers in the Balkans, 
where 100 soldiers are contributing to the increasing 
stability of this region. 
 
------------------------------------- 
Lithuania Active in the "Near Abroad" 
------------------------------------- 
 
¶13. Lithuania's accession to the European Union and NATO 
opened new opportunities for the GOL to engage with its 
neighbors to the east, most notably in the context of the 
EU's "New Neighborhood" policy.  Leveraging its historical 
experience as part of the Soviet Union, Lithuania seeks to 
assist former Soviet states transition to democracy and 
integrate into European institutions such as the EU and NATO. 
 In Belarus, Lithuanian governmental and non-governmental 
organizations work with nascent democratic forces both 
bilaterally and through regional organizations such as 
e-PINE.  President Adamkus was instrumental in mediating the 
election crisis in Ukraine, and Lithuania is one of the most 
vocal advocates for Ukraine's bid to become a member of the 
EU and NATO.  Lithuania supports Moldova's aspiration to join 
the EU and encourages the countries of the South Caucasus to 
pursue European integration. 
 
---------------------------- 
Lithuanian-Russian Relations 
---------------------------- 
 
¶14. Lithuania works hard to maintain good relations with 
Russia.  Though rumblings are sometimes heard from Moscow 
regarding NATO's air-policing mission and transit to 
Kaliningrad, Lithuania has engaged Russia both bilaterally 
and multilaterally to assuage Russian concerns across a 
myriad of issues.  Russian attempts to establish May 9 as an 
internationally recognized day to commemorate the end of 
World War II disturbed Lithuanians, since that date marked 
the beginning of the Soviet occupation of the Baltics. 
President Adamkus, after much deliberation, decided not to 
accept Russian President Vladimir Putin's invitation to 
participate in the May 9 celebrations in Moscow. 
 
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The Special Lithuanian-U.S. Relationship 
---------------------------------------- 
 
¶15. Starting in the 19th century, a flood of Lithuanians fled 
poverty and oppression in their homeland and immigrated to 
the United States.  These longstanding ties of family and 
culture remain strong.  After World War II, Lithuanians 
received decisive moral support from the United States, which 
refused to recognize the Soviet annexation of Lithuania. 
After regaining their independence, Lithuanians have 
continued to view the U.S. more favorably that most Western 
Europeans.  This reflects longstanding goodwill toward the 
United States as well as the widely held view that the United 
States is a necessary balance against lingering domination 
from the east. 
 
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Preview of Your Visit 
--------------------- 
 
¶16. We are working to confirm meetings with the President and 
Speaker of Parliament during your visit to Lithuania.  Both 
will be keen to discuss Lithuania's hopes to promote 
democracy throughout the region, as well as the 
Lithuanian-American relationship.  Ambassador Mull will host 
a reception in your honor on the evening of May 9.  All of us 
here at Embassy Vilnius very much look forward to your visit. 
Kelly