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C O N F I D E N T I A L RIGA 000945 
 
SIPDIS 
 
SIPDIS 
 
FOR SECRETARY RICE FROM AMBASSADOR BAILEY 
 
E.O. 12958: DECL: 11/20/2016 
TAGS: PREL OVIP SECRETARY RICE LG
SUBJECT: SCENESETTER FOR SECRETARY RICE'S PARTICIPATION IN 
NATO SUMMIT 
 
Classified By: Ambassador Catherine Todd Bailey for Reason 1.4(d) 
 
¶1. (C) Madame Secretary, we are extremely honored that you 
will visit us November 28-29.  Over two years into NATO and 
European Union membership, Latvia has emerged as a 
significant international player, despite its modest 
population and resource base.  Latvia stands out as a 
successful post-Soviet society that has become a respected 
voice in the international community.  Strong memories of 
occupation and oppression strengthen Latvia's resolve to 
reach out to countries near and far striving to join the 
forward march of freedom.  Latvia has troops on the ground in 
Iraq and Afghanistan, and remains solidly Transatlanticist in 
its orientation.  The country remains one of the fastest 
growing economies in the European Union, and this economic 
growth provides the resources Latvia will need to implement 
its program to promote freedom and democracy abroad.  Its 
geographic position offers great potential as a 
stepping-stone for U.S. exports and investors.  Embassy Riga 
daily makes it a priority to expand bilateral trade and 
investment.  Latvia's support for pro-market, pro-free trade 
policies is important to the U.S., especially in European and 
international organizations.  Your visit to Latvia for the 
NATO Riga Summit provides an excellent opportunity to 
reinforce our partnership with Latvia in projecting freedom, 
democracy, and market-based prosperity. 
 
President Vike-Freiberga 
------------------------ 
 
¶2. (C) Latvia's hosting of the summit is a real capstone for 
President Vaira Vike-Freiberga and what she will add to her 
legacy.  It is indicative of the high personal regard in 
which she is held within the alliance that a country of 
Latvia's small size would host the summit.  But her excellent 
reputation extends beyond Europe.  Her candidacy for 
Secretary General of the United Nations, with an emphasis 
 
SIPDIS 
that selection of this important post should be based on 
merit rather than a regional rotation, that it was time for a 
female Secretary General, and the need for reform at the UN, 
was short but she rapidly moved into third place--even though 
some candidates had been in the race for nearly two years. 
Her performance in the race will likely open doors for her as 
she considers her options after her term in office ends next 
July. 
 
Foreign Minister Pabriks 
------------------------ 
 
¶3. (C) As foreign minister, Artis Pabriks has been a firm 
transatlantic voice in EU circles and a strong voice to the 
Latvian public in articulating the importance of the 
relationship with the U.S.  Pabriks, an academic by 
background, is not a politician in the manner of his 
fellow-party member, Prime Minister Kalvitis.  He has no 
major power base in the People's Party, but is nonetheless 
widely recognized as a person of integrity, intelligence, and 
vision.  He has proven to be a solid partner to Embassy Riga 
during his tenure as foreign minister.  In a meeting with the 
Latvian press on November 9, Pabriks flagged concluding the 
Latvia-Russia border treaty and pursuing Latvia's accession 
to the OECD as two foreign policy priorities for the second 
Kalvitis government. 
 
Elections 
------------ 
 
¶4. (SBU) Latvia's October 7 parliamentary elections, the 5th 
since independence was restored in 1991, provided a vote of 
confidence in the incumbent minority government of Prime 
Minister Aigars Kalvitis.  Kalvitis' government has focused 
on low taxes and creating a pro-business environment, while 
building good relations with the US and Europe and 
simultaneously working to improve the strained relationship 
with Russia.  Kalvitis will continue as PM and little change 
in policy is expected as a result of the election.  The big 
surprise in the election was the unexpected success of the 
center-left, Russian-oriented Harmony Center party which 
bested its more strident competitor, a party named For Human 
Rights in a United Latvia (PCTVL). 
 
Democracy Promotion 
------------------- 
 
¶5. (SBU) Latvia has demonstrated sustained support for 
international military operations that further the freedom 
agenda.  With 120 soldiers in Iraq, 30 in Afghanistan, and 
others in Kosovo, on a per capita basis Latvia is one of the 
 
largest contributors to these operations.  Latvia is shifting 
from being a recipient of foreign aid to being a donor.  Its 
recently published development cooperation policy plan for 
2007 envisions a four-fold increase in development 
assistance--focused on Georgia and Moldova, with additional 
assistance to Ukraine, Belarus, Afghanistan, and Kosovo. 
Although Latvia's assistance funding remains modest, the plan 
is evidence that Latvia is beginning to develop a foreign 
policy commensurate with its EU and NATO membership.  The 
country sees a particular niche for Latvia to use its own 
post-Soviet experience to help countries in the neighborhood 
move closer to Europe.  Latvia has an Embassy in Georgia and 
hopes to open one in Moldova as well.  Moldova opened an 
embassy in Riga at the end of 2005. 
 
Expanding Bilateral Trade and Investment 
---------------------------------------- 
 
¶6. (U) Latvia's open, agile and expanding market-oriented 
economy provides U.S. companies a promising export and 
investment destination in a newly-enlarged EU.  The country 
has created a very business friendly environment that is 
attractive to foreign companies, and the country is 
experiencing explosive GDP growth (10.2 percent in 2005).  In 
May of this year, Embassy Riga and the Government of Latvia 
staged an extremely successful Pan-Baltic Trade and 
Investment Conference focused on American business. President 
Vike-Freiberga opened the conference (with the Prime Minister 
in attendance) to an audience of approximately 150 business 
people from the U.S. and the Baltic states.  She also held 
private meetings on the margins with a number of the U.S. 
businesses--to thank them and encourage further trade and 
investment.  In many ways, Latvia is still a land of 
discovery for Americans and American companies, and 
strengthening economic ties between Latvia and the United 
States is a top priority for this Embassy. 
 
¶7. (SBU) American companies have invested more than 350 
million dollars in Foreign Direct Investment in Latvia during 
the last decade.  The financial sector is expanding rapidly, 
and GE Money is taking full advantage of these opportunities. 
 The company entered the Latvian market in 2004 and has grown 
extremely quickly.  GE Money is in the process of acquiring a 
local bank so that it can further expand its presence in 
Latvia and become a full service bank.  There are excellent 
prospects in manufacturing as well.  Earlier this year, 
American door and window manufacturer Jeld-Wen opened a wood 
fiber plant near to town of Aizkraukle.  This represented a 
60 million dollar investment, and is the single largest 
foreign investment in the manufacturing sector in Latvia in 
the past decade.  In October, U.S. firm New Century Holdings 
began construction of a new glass manufacturing facility 
called Groglass.  This facility will use cutting edge 
technology to produce a special type of glass that has 
increased transparency (allows more light to pass through). 
The amount of the investment in this new facility is expected 
to be around 30 million dollars.  Another sector presenting 
opportunities to American firms is infrastructure.  We expect 
a major American hotel chain to open in Riga by 2010. 
 
Energy Security 
--------------- 
 
¶8. (C) Like other countries in the region, Latvia is focused 
on energy security and the threat that Russia will use its 
control of oil and gas resources as means of political 
coercion.  In 2002, Russia ceased sending oil through a 
pipeline network to the Latvian port city of Ventspils, a 
significant economic blow.  (Note: Some oil still transits 
through Ventspils, but it is brought in by railcar.)  Energy 
security took on increased urgency after Russia briefly 
suspended natural gas supplies to Ukraine in January of this 
year.  In particular, Latvia is heavily dependent on Russia 
for natural gas.  To address this issue, the GOL wants to see 
the Baltic electricity grid linked up with the Nordic grid. 
It also wants to see the EU become more involved in 
protecting the energy interests of its newest members.  To 
help diversify energy supplies, the GOL is considering a 
joint project with the other Baltic countries to use private 
financing to replace the aging Ignalina nuclear facility 
located just across the border in Lithuania.  Latvia remains 
uneasy about the proposed Russian-German pipeline project. 
 
Latvian-Russian Relations 
------------------------- 
 
¶9. (SBU) Latvian-Russian relations have been strained in 
recent years.  However, there have been some recent, positive 
 
steps towards improving the relationship.  In October, Latvia 
and Russia signed two bilateral agreements: one established 
an intergovernmental commission, and the other focused on 
economic cooperation.  In addition, the recently reelected 
coalition government in Latvia hopes to make progress on the 
long-stalled Latvia-Russia Border Treaty. 
 
Tolerance 
--------- 
 
¶10. (C) One political theme that I hope you can touch on 
during your discussions with Latvian counterparts is 
tolerance, inclusion and respect for others.  One of the 
legacies of Soviet rule is a distrust of differences and a 
tendency to focus on the past rather than looking forward. 
This manifests itself in a variety of ways.  Attacks on 
individuals of color, including an Embassy family member, 
attributable to racism are too often chalked up to 
"hooliganism."  Attempts by Riga's small gay community to 
hold a pride march were met by violence and the interior 
minister said that securing the event would be a bigger 
security challenge than the NATO Summit.  These attacks 
violate basic human rights.  In addition, there is still 
tension between ethnic Latvians and the sizable ethnic 
Russian population, particularly over language issues. 
 
Visa Waiver 
----------- 
 
¶11. (C) Latvia has long advocated entry into the Visa Waiver 
Program (VWP), and the Latvians assiduously raise this issue 
at every opportunity with U.S. Government officials who visit 
the country.  To most Latvians, admission to the VWP would 
symbolize that Latvia is fully accepted in the community of 
Western nations and that the US fully recognizes Latvian's 
contributions.  Latvia has taken a number of steps to become 
compliant with VWP criteria.  For example, the country will 
soon begin issuing biometric passports that include digital 
facial recognition.  While the non-immigrant visa refusal 
rate for Latvians has dropped in recent years, it still 
remains substantially higher than the 3 percent permissible 
under VWP legislation. 
 
¶12. (SBU) My Embassy team and I believe that your visit will 
highlight to the Latvians the strength of our bilateral 
relationship and continue discussions on some of the economic 
and social issues that are crucial to Latvia's future 
success.  It is an honor to have you visit twice in 18 months 
a country as you well know that serves as a very strong 
partner. 
BAILEY