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PP RUEHAST
DE RUEHRA #0836/01 2861410
ZNR UUUUU ZZH
P 131410Z OCT 06
FM AMEMBASSY RIGA
TO RUEHC/SECSTATE WASHDC PRIORITY 3429
RUEHC/DEPT OF LABOR WASHDC PRIORITY
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE PRIORITY

UNCLAS RIGA 000836 
 
SIPDIS 
 
SENSITIVE 
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E.O. 12958: N/A 
TAGS: PREL PGOV ELAB ECON MARR CVIS OVIP CHAO ELAINE RU
LG 
SUBJECT: SECRETARY CHAO'S MEETINGS WITH GOL OFFICIALS 
¶1. (SBU) Summary: Secretary of Labor Elaine L. Chao's visit to 
Latvia provided an opportunity to discuss economic growth and job 
creation, relations with Russia and the recent Latvian elections 
 
with senior governmental officials.  All interlocutors noted the 
challenge for Latvia of the out migration of workers to Ireland, the 
UK and Sweden, especially nurses and people in the construction 
trade.  All believed that Latvian-Russian relations were slowly 
improving, although President Vike-Freiberga expressed great concern 
over the current tensions between Russia and Georgia.  The Prime 
Minister and President both said the election results were a sign of 
political stability in Latvia, although the President said she would 
consult with party leaders the week of October 16 before deciding to 
whom she would offer the opportunity to form government.  Comment: 
While protecting her constitutional prerogatives, we heard nothing 
from the President to indicate that she would not tap PM Kalvitis to 
remain in office.  End summary and comment. 
 
 
¶2. (U) Secretary of Labor Elaine L. Chao visited Latvia October 10 - 
¶13.  On October 11, she held meetings with senior GOL officials 
including President Vaira Vike-Freiberga, Prime Minister Aigars 
Kalvitis, and Speaker of Parliament Ingrida Udre.  The Prime 
Minister also hosted a lunch which included Defense Minister Atis 
Slakteris, Culture Minister Helena Demakova, and Economics Minister 
Aigars Stokenbergs.  Latvian Ambassador to the United States Maris 
Riekstins joined all meetings.  Ambassador Bailey, DOL Associate 
Deputy Secretary Laura Genero and DOL A/S for Public Affairs Randy 
Clerihue joined for all meetings.  Pol./econ officers served as 
notetakers.  IN all of her meetings, the Secretary reflected on the 
large amount of positive change in Latvia since her visit in 1992 to 
sign the Peace Corps country agreement. 
 
Speaker of Parliament Ingrida Udre 
------------------------------------------- 
 
¶3. (U) Secretary Chao's meeting with Speaker Udre and other guests 
from the Saiema (parliament) included discussion of job creation and 
social policy; and Latvian-Russian relations.  Chairperson of the 
Parliamentary Committee for Social and Employment Affairs Yevgenia 
Stalidzane mentioned that there were a number of social problems in 
Latvia resulting from the transition from socialism to capitalism, 
such as the difficult economic situation faced by pensioners and the 
disabled, as well as the lack of quality care in the health care 
system.  Speaker Udre explained that pensioners are unhappy because 
reforms have introduced a uniform pension amount, irrespective of 
the number of years a worker has worked.  However, pensions are 
raised on a regular basis, indexed according to the rate of 
inflation. 
 
¶4. (U) Secretary Chao asked about Latvia's labor market, and how it 
was dealing with outflow of workers to other EU countries.  Speaker 
Udre mentioned that most Latvian worker emigrants have gone to 
Ireland, the UK and Sweden.  They are not only working in 
low-skilled jobs; some have found work in highly skilled fields as 
well.  Udre said the best solution to labor emigration was to raise 
wages and salaries in Latvia, reduce personal income tax rates, and 
in general, adopt policies that will increase the standard of 
living.  She was confident that most Latvians will return to Latvia 
if these conditions are met.  Unemployment remains a problem in 
Latvia, with much higher rates outside of Riga.  The main problem is 
lack of training and education.  People do not have the skills 
necessary for obtaining employment in a rapidly changing economy. 
Government employment policy should focus on providing youth and 
other persons with practical job skills.  EU funds will greatly 
assist Latvia in meeting these goals.  Speaker Udre also mentioned a 
new government policy, "People in the Center of Life," which will 
focus on building a knowledge-based economy and society. 
 
¶5. (U) Commenting on Latvian-Russian relations, Udre said that they 
are becoming more constructive and pragmatic.  Russia is potentially 
a huge market for Latvian goods and services.  But it is also 
apparent that Russia still seeks to maintain control over the former 
Soviet Republics, and that it has never fully accepted the fact of 
the Baltic States' independence.  Nevertheless, Speaker Udre felt 
that Latvia is a natural partner for Russia, due to a common history 
and Latvian's knowledge of the Russian language.  She hoped that the 
border treaty could be concluded once the new Latvian government has 
been confirmed by a parliamentary vote-of-confidence. 
 
Prime Minister Aigars Kalvitis 
------------------------------------- 
 
¶6. (U) The Secretary stressed President Bush's respect for Latvia 
and its people, and our country's gratitude for Latvia's support in 
the war on terror.  The President looks forward to expressing his 
personal thanks when he visits in November for the NATO summit.  The 
PM expressed appreciation for the recent allocation of additional 
FMF funds for Latvia and for US assistance with the Riga Freeport. 
He underscored the importance of the bilateral relationship, noting 
that the economics minister had recently had a very successful visit 
to the US.  On military deployments, he reported that the parliament 
had recently extended the mandate for Latvian troops in ISAF in 
Afghanistan for one year and he said he expected no problems with 
the December vote to extend the mandate for Latvian troops in Iraq. 
The Latvian people, he explained, understand the need for collective 
security.  Latvia's hosting of the NATO summit will put in on the 
world stage for a few days, he added. 
 
¶7. (U) PM Kalvitis turned to the issue of visas, saying that getting 
into the visa waiver program (VWP) was "key" for Latvia and that he 
hoped they could ender the program in "the next couple of years," 
adding that this was important for the people of Latvia.  The 
Secretary, noting that the U.S. is a nation of immigrants, stressed 
 
SIPDIS 
President Bush's interest to address the situation through use of 
the roadmap.  Acknowledging the Latvian's patience on this issue, 
stressed the Embassy's active engagement with the roadmap process. 
The PM underscored that Latvians are not looking to immigrate -- 
they are needed here -- but said that they do like to travel and the 
US is a preferred destination. 
 
¶8. (U) The PM noted that Latvia wants to share its success in making 
political and economic reforms with countries like Moldova, Georgia 
and Ukraine.  Latvia feels a responsibility and hopes to work 
closely with both the EU and the US in these areas.  The secretary 
asked about the state of Latvian-Russian relations and the PM 
reported that he was focused on building constructive relations to 
overcome a "difficult history" and noted the two agreements on 
economic and political cooperation to be signed October 13 in Moscow 
as a sign that Latvia was ready to "move forward" on the bilateral 
relationship.  Noting difficulties in Georgia, Moldova, and Ukraine 
with Russia, Kalvitis said he believed Moscow understood that the 
Baltic states were out of its control or influence.  Internally in 
Russia, the PM thought that Putin has "forced control" on the 
country but wondered whether it could last past his term in office. 
The Russian economy is not competitive in a global market, the 
government pays little or no attention to infrastructure and social 
issues and many of the best and brightest are leaving. 
 
¶9. (U) Returning to the issue of the Riga freeport, the Secretary 
urged the PM to implement the recommendation in the USG assessment 
of the port.  The PM expressed his appreciation to the US for the 
report and TDA grant for technical assistance and said the port was 
one of the issues on which there was "some work left to do" after 
elections.  He stressed his belief that the port needed to be 
developed in a way that transparently contributes to economic 
development in Latvia. 
 
Lunch w/PM and Ministers 
--------------------------------- 
 
¶10. (SBU) Over lunch, the Secretary, PM and other ministers talked 
about the recent elections.  Secretary Chao noted that Latvia's 
elections were a model for other emerging democracies.  All of the 
Latvian officials were members of the People's Party, which won the 
largest number of seats in the new parliament.  The PM explained 
that because of Latvia's strict campaign spending limits for 
parties, a number of "NGO's" had sprung up to advocate for parties. 
He fully acknowledged that People's Party had benefited from such 
organizations, but stressed that these were not direct campaign ads 
and fully legal under Latvia's campaign finance laws.  Kalvitis said 
that the new parliament should reconsider the campaign financing 
laws to eliminate spending caps but instead focus on trabsparency in 
contributions.  Secretary Chao noted that these are many of the same 
issues the US faces in addressing campaign financing. 
 
¶11. (SBU) Asked about the campaign, PM said it was amore muted 
campaign, due in large part to the spending restrictions.  Econ 
ministers Stokenbergs noted that although People's Party only has 
about 5000 members, they received over 177000 votes, the most by any 
one party.  The ministers all attributed the party's success to 
being seen as a party that governs fairly and delivers results.  MOD 
Slakteris, who is also chairman of the party, said their leaders are 
viewed as being smart and having vision for the country.  The PM 
stressed that the party had not lost touch with the people, saying, 
"People know I can meet at NATO or deal with Putin, but I can also 
still milk a cow -- they know we are regular people." 
 
¶12. (U) Asked about the change to an all volunteer military force, 
Slakteris said it was an important break from the conscription of 
Soviet times and that they were doing well in recruiting people for 
the military.  He said service in missions like Afghanistan and Iraq 
was sought out by the troops because there is a perception in the 
military that those who have not gone are "not real soldiers."  At 
the same time, he acknowledged the difficult situation on the ground 
in Iraq, but said he liked the new defense minister.  Slaketris did 
not think that the Iraq deployment had been an issue in the 
elections. 
 
President Vike-Freiberga 
------------------------------ 
¶13. (U) The Secretary congratulated the President on her strong 
showing in the race for UN Secretary General, especially given that 
some of the candidates had been in the race for nearly two years. 
It helped put Latvia on the map and highlighted the very positive 
story Latvia has to tell the world.  The President said she was 
proud of what she had achieved, especially given that Russia and 
China were so committed to the idea of it being "Asia's turn."  She 
added that a longer, more intensive campaign would have required her 
to shirk some of her presidential duties, which she was unwilling to 
do. 
 
¶14. (SBU) The President, while carefully guarding her role in 
choosing the next Prime Minister, was upbeat about the elections ni 
that they showed political stability in Latvia.  She drew a contrast 
to difficulties in Poland and the Czech Republic, and wide swings in 
government policy following elections in Slovakia and Sweden.  The 
president said she would begin consultation with the parties the 
week of October 16 before offering someone the opportunity to form 
government, but she said, "there is likely to be real continuity." 
 
¶15. (SBU) Turning to foreign policy, the President reported that 
there had been a meeting of the Latvian national security council 
earlier in the day and that she was satisfied that Latvia was ready 
for the security challenges of hosting the NATO summit.  She 
expressed great concern about recent Russian actions toward Georgia, 
saying she hoped the EU would issue a strong statement at the 
October 16 - 17 GAERC on the issue.  While noting that the Georgians 
probably went too far with the arrests of the Russian officers, the 
Russians had completely overreacted and she hoped the EU statement 
would reflect that.  She called the registration of Georgian 
students in Russian schools "pure racism" and drew a direct parallel 
between deportations of Georgians to Soviet deportations of Latvians 
to the Gulag. 
 
¶16. (U) On social and economic issues, the President expressed great 
concern for people who "unfairly pay the cost of our transition", 
mainly artists and scientists who were well treated in Soviet days 
but haven't done as well in a market economy.  She expressed a hope 
that the government would raise the pension rates for these people 
and other retirees.  The President also spoke about efforts to build 
on the 2004 Riga Women's Business Leaders' summit by noting that an 
informal mentoring network has developed among women business 
leaders in Latvia.  The President also noted the challenges of 
retraining older members of the work force to be competitive in the 
modern economy.  Her husband, who joined for dinner, explained his 
involvement with a group that provides eight hours of basic computer 
and internet training for free, noting that the oldest graduate was 
¶91.  The Secretary applauded all these initiatives. 
 
¶17. (U) The Secretary's party cleared this cable. 
 
Bailey