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PP RUEHDBU RUEHFL RUEHKW RUEHLA RUEHROV RUEHSR
DE RUEHRA #0056/01 0220655
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P 220655Z JAN 07
FM AMEMBASSY RIGA
TO RUEHC/SECSTATE WASHDC PRIORITY 3712
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE PRIORITY
RUEKJCS/SECDEF WASHDC PRIORITY

C O N F I D E N T I A L SECTION 01 OF 03 RIGA 000056 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: DECL: 01/18/2017 
TAGS: PREL PGOV KCRM ECON KPAO CVIS LG
SUBJECT: LATVIA IN 2007, KEEPING THE RELATIONSHIP STRONG 
 
REF: 06 RIGA 792 
 
Classified By: Ambassador Catherine Todd Bailey.  Reason: 1.4 (D) 
 
¶1. (C) Summary: As we begin 2007, Latvia is in a different 
place than last year.  The NATO summit, which kept Riga on 
allies' lips for a year, is over and President 
Vike-Freiberga, who almost single-handedly put Latvia back on 
the world map, is leaving office in July.  Yet, the US 
maintains important interests in Latvia, including: 
encouraging its active engagement as a NATO Ally, promoting a 
trans-Atlanticist voice in the EU, securing the freedom 
restored in 1991, supporting the spread of democracy in the 
region, and promoting the development of economic and 
commercial ties.  The Latvians are generally headed on the 
right path but to keep them there we need to continue or even 
increase bilateral contacts, encourage their self-confidence 
to be active in international fora, and highlight for 
American companies the value of doing business here.  End 
summary. 
 
¶2. (C) 2006 was an impressive year for US - Latvian 
relations.  President Bush visited for the second time in 18 
months, this time to attend the successful NATO summit in 
Riga.  In addition, Labor Secretary Chao, members of Congress 
and officials from State, DOD, and Treasury had successful 
visits to Latvia.  Latvian President Vike-Freiberga addressed 
a joint session of Congress.  The Latvian government took 
strong action to address deficiencies in the banking sector, 
albeit after we took action under the Patriot Act.  Latvian 
troops continued to serve effectively in Iraq and 
Afghanistan, as well as Kosovo.  A pan-Baltic trade and 
investment conference brought over 60 US companies to Riga to 
explore doing business in the Baltics.  With the summit over 
and Vike-Freiberga leaving office, we need to consider how to 
ensure the relationship continues to produce results for both 
countries and maintains a high international profile for 
Latvia. 
 
¶3. (C) The Latvia - US relationship remains based on a shared 
commitment to core values of democracy, market economy, and 
personal liberty.  As a NATO ally, Latvia is continuing to 
develop a modern, deployable military backed by a political 
system willing to commit blood and treasure to the war on 
terror.  In 2006, Latvia transitioned to an all volunteer 
military.  FMF funds are improving the military's 
capabilities -- during the NATO summit, Latvia had a complete 
regional air picture and the U.S. air security mission 
against renegade aircraft was run from a combat center that 
we helped fund.  IMET programs are producing officers and 
NCO's who are effective leaders of a modern military and 
reinforcing our shared values.  Latvia is committed to ISAF 
and will, during 2007, increase its commitment to that 
mission with uncaveated combat troops even as it draws down 
it troops in Iraq consistent with the changes in the Polish 
sector.  Our mil-mil relationship is strong and with 
continued funding for FMF and IMET, we are on a good path in 
this area. 
 
¶4. (C) Where we need Latvia to do more is on the political 
side.  Within NATO, Latvia could be a strong voice for closer 
relations with Ukraine and Georgia, developing global 
partnerships, ensuring that NATO commanders have the troops 
they need for missions with unneeded meddling by capitals, 
and for preserving the vital Article V guarantee at the heart 
of the alliance.  The same is true in the EU, where Latvia is 
a backer of the trans-Atlantic relationship, Turkish 
accession, action on Belarus, and improved EU relations with 
countries like Moldova, Georgia and Ukraine.  In both 
organizations, Latvia can be a voice for realistic 
relationships with Russia.  But too often, in both 
organizations, Latvia does not join the debate, fearing that 
the bigger states don't want to hear from them.  We need to 
reassure them that we do value what they have to say, even in 
those instances when we don't agree.  We need to build 
political common cause on issues, but early in the process, 
not waiting until one or two days before a meeting, when 
their positions are usually already set.  Overcoming both 
their natural shyness and a lingering Soviet legacy that 
initiative and outspokenness is bad will be a challenge, but 
the results would be worth it.  In order to get the Latvians 
more engaged in broader groupings, we need to keep up the 
high-level bilateral conversations in both Washington and 
Riga to encourage their efforts and urge more vocal 
engagement. 
 
¶5.  (U) We also need to reinforce the importance of the 
shared values at the heart of our relationship.  Today's 
Latvian youth are more connected with Europe, especially 
through culture and education, than their predecessors.  The 
significance of the US policy of non-recognition of the 
Soviet occupation diminishes over time.  Paraphrasing one 
 
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former diplomat, when the average Latvian thinks about 
foreign policy, eighty percent of their focus is on the EU, 
eighteen percent on Russia and two percent on the rest of the 
world, including the US.  To preserve Latvia's supportive 
foreign policy orientation over the medium to long term, we 
need to continue our robust public diplomacy program and 
expand people to people contacts, especially among students. 
We should also move forward with establishment of a 
binational Fulbright commission to place a strong structure 
around that program.  Latvians also place a high value on 
their culture and we need to find opportunities to weave 
cultural events into our PD activities.  In February, we will 
screen Mississippi Burning as part of our programming for 
Black History Month and in May we will, in cooperation with 
the Latvian Culture Ministry, bring Broadway writer/producer 
Steven Schwarz to put on a Broadway exhibition. 
 
¶6. (U) We will also continue to make aggressive use of our 
public diplomacy activities to advance the issue of tolerance 
for all people in Latvia.  While some small progress is being 
made in relations between ethnic Russians and ethnic 
Latvians, mainly by a younger generation which doesn't 
remember the USSR, serious problems remain for racial 
minorities and gays and lesbians in Latvia.  International 
pressure has helped keep the government focused on these 
issues and our outreach, combined with the EU, can help sow 
the seeds of change in society. 
 
¶7. (C) No discussion of our public diplomacy would be 
complete without mentioning Latvia's desire to join the visa 
waiver program - the element of American policy that most 
interests average Latvians and generates the greatest amount 
of media attention.  As the administration moves forward in 
developing its new strategy on VWP reform and we focus 
internally on interagency processes and Congressional 
discussions, we in the field will need to be armed with the 
latest guidance and American officials engaging with Latvians 
need to be prepared to hear about it.  No matter how much we 
try to explain otherwise, Latvians will not see themselves as 
full partners of the US until they are admitted to the VWP. 
With Latvian officials claiming that the President's remarks 
in Tallinn mean they will be in by the end of the year, we 
need to manage optimistic expectations. 
 
¶8. (C) Latvia has achieved remarkable things in the nearly 16 
years since the restoration of independence, yet the 
political system remains fragile.  In October, we highlighted 
ensuring continued progress on rule of law and the importance 
of the selection of the next president as the two issues most 
likely to be effected by Latvia's parliamentary elections 
(reftel).  While neither was determinative in the election, 
we continue to believe that they are among the most important 
issues for the current parliament's four year term.  It is 
too early to predict how the outcome of the presidential 
race, but it will be important for us to watch which figures 
emerge as strong candidates.  On rule of law, initial 
indications are not good.  In December, parliament approved 
the government's nominees for the Constitutional Court, 
Latvia's most powerful court, despite the fact that the legal 
affairs committee rejected them as unqualified.  Parliament 
has also failed to meet a deadline it set to establish an 
office of Ombudsman to monitor human rights issues.  While 
the Embassy will continue to make rule of law issues a core 
element its activities, we will need support from Washington 
to ensure the message is heard.   Justice Alito's planned 
participation in a seminar this summer focused on ethics and 
transparency in the judiciary will be very valuable, but we 
also need to reinforce this in other ways.  Latvians who meet 
with US officials and don't hear about the importance of this 
issue reportedly tell their colleagues back home that the 
Embassy places more emphasis on this issue than does 
Washington. 
 
¶9. (C) Another worrying trend is the increasing (or perhaps 
restored) influence of Latvia's oligarchs.  It is an open 
secret that the Greens and Farmers party, part of the 
 
SIPDIS 
governing coalition, will not take a position without 
consulting Mayor of Ventspils Aivars Lembergs, who remains 
under indictment for money laundering and abuse of office and 
against whom more criminal charges may be filed.  Similarly, 
Andris Skele, founder of the leading People's Party, has been 
playing a key role behind the scenes -- most notably by 
scuttling an agreement on restitution of heirless and 
communal Holocaust era Jewish property after months of 
painstaking negotiations between the government and Jewish 
community.  Skele could also face legal troubles this year 
for his involved in a failed scheme to bring digital TV to 
Latvia.  We need to be prepared to register our clear 
disappointment when we see unelected individuals exercising 
undue influence on national policy or if we find that 
Latvia's "big fish" are receiving privileged treatment in the 
legal system. 
 
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¶10. (C) In 2006, Latvia continued its impressive growth rates 
of recent years, although inflation is an increasingly 
serious issue.  Much of the growth, however, is based on 
speculation in real estate and will be difficult to sustain 
without significant investment in infrastructure and 
continued progress on transparency.  4.5 billion Euros in EU 
structural funds over seven years will help with the former, 
but the latter is more challenging.  In addition to our other 
rule of law activities, our efforts on the banking sector and 
the port of Riga in 2006 underscored our commitment to help 
Latvia improve its climate for legitimate business.  Now we 
need to help American companies see the progress that has 
been made, appreciate the value of Latvia's location and 
infrastructure links to Russia and elsewhere, and make use of 
the highly educated, multi-lingual workforce.  The small size 
of Latvia's market means many companies don't see the value 
of doing business here, but we are trying to show them the 
value of working from here, in the Baltics and the wider 
area.  In so doing, not only will we help American business, 
but we will underpin the political ties with economic ones 
and we will maintain the pressure for greater transparency 
that is essential for the operations of successful American 
companies.  Our planned energy conference in June will be 
another vehicle for promoting Latvia to American businesses. 
 
¶11. (U) We have had good success in integrating businesses 
into our policy and public diplomacy efforts, through 
public-private partnerships.  The Humana Foundation has 
recently announced a long-term commitment to nursing 
education in Latvia.  Nursing is one of the most critical 
shortfalls in the Latvain healthcare industry and our efforts 
to bring Humana here provide a project that has the potential 
to, over time, touch every resident of Latvia.  In 2006, we 
sponsored a visit by Ronald McDonald Children's Charities and 
will work with them this year, in conjuction with local 
businesses and the American Chamber of Commerce, to open a 
chapter an eventually a Ronald McDonald House in Latvia. 
Children's issues overall are of growing concern to average 
Latvians and we will continue to look for new opportunities 
in this area. 
 
¶12. (C) We believe that the steps we outlined here provide 
good building blocks for advancing the relationship and our 
key interests with Latvia in 2007. 
BAILEY