VZCZCXRO5860
PP RUEHSK
DE RUEHVL #0340/01 1731456
ZNR UUUUU ZZH
P 221456Z JUN 09
FM AMEMBASSY VILNIUS
TO RUEHC/SECSTATE WASHDC PRIORITY 3577
INFO RUEHSK/AMEMBASSY MINSK PRIORITY
RUEHRA/AMEMBASSY RIGA PRIORITY 3610
RUEHVJ/AMEMBASSY SARAJEVO PRIORITY 0004
RUEHTI/AMEMBASSY TIRANA PRIORITY 0051
RUEHVEN/USMISSION USOSCE VIENNA AU PRIORITY

UNCLAS SECTION 01 OF 03 VILNIUS 000340 
 
SIPDIS 
 
PLEASE PASS TO H FOR CODEL CARDIN FROM AMBASSADOR JOHN CLOUD 
 
E.O. 12958: N/A 
TAGS: PREL PGOV ECON ENRG OREP LH
SUBJECT: LITHUANIA: SCENESETTER FOR VISIT OF CODEL CARDIN 
 
REF: SECSTATE 63892 
 
¶1.  Welcome to Lithuania!  We look forward to your visit, 
which coincides with a number of local celebrations.  This 
year marks the fifth anniversary of Lithuania's membership in 
NATO.  Lithuania is also celebrating the 1,000-year 
anniversary of the first reference to the country in 
historical texts, and Vilnius is one of Europe's 2009 
Capitals of Culture.  The United States and Lithuania enjoy a 
friendly and productive bilateral relationship based on a 
century of immigration, as well as our non-recognition of the 
forcible incorporation of Lithuania into the Soviet Union. 
Lithuania was delighted to join the Visa Waiver Program late 
last year, allowing easier travel to the United States. 
Lithuania has been a staunch U.S. partner, sending troops to 
Kosovo and Afghanistan.  The Government of Lithuania (GOL) 
and all mainstream political parties value the friendship 
with the United States, as evidenced by the fact that you 
will meet with the President, the Foreign Minister and the 
parliamentary Speaker, and have received requests for more 
meetings than you can accommodate. 
 
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Preview of Your Visit 
--------------------- 
¶2.  I look forward to  greeting your delegation upon arrival 
at the Vilnius airport on Sunday, and to welcoming you to my 
residence on Thursday for a celebration of the 233rd 
anniversary of America's independence.  Leaders of the Jewish 
Community of Lithuania are eager to speak with you on Monday. 
 After your trip to Belarus on Tuesday, you will meet 
Wednesday with Seimas Speaker Arunas Valinskas and Foreign 
Minister Vygaudas Usackas, and with President Valdas Adamkus 
the following day.  And every day of your visit will be busy 
with meetings and other business of the Organization for 
Security and Cooperation in Europe (OSCE) Parliamentary 
Assembly (PA). 
 
--------------------- 
Relations with Russia 
--------------------- 
¶3.  Lithuanian-Russian relations are complicated, and 
historically have been characterized by occupation and 
repression.  In the last century, the Russian Empire and the 
Soviet Union occupied Lithuania from 1900-1918, 1940-1941 and 
then again from 1944-1991.  In 1990, Lithuania became the 
first republic to proclaim independence from the Soviet 
Union.  Today Lithuania's relations with Russia remain 
difficult.  Even average Lithuanians were concerned about 
Russian aggression in Georgia last August, but there are 
clearly mixed feelings about whether the best path is to 
engage Russia or try to isolate it. 
 
¶4.  In the economic field, Lithuania is fully dependent on 
Russia for its natural gas supply and largely dependent on 
Russia for oil imports.  Looking ahead,  Lithuania's Ignalina 
Nuclear Power Plant (a Chernobyl-style Soviet-era facility) 
will close on December 31, 2009, under the terms of its EU 
accession agreement.  Lithuania presently has no replacement 
ready and has no option to replace this electrical power 
other than increased reliance on Russian resources. 
Lithuania is uncomfortable with Russia maintaining so much 
leverage but developing alternative energy sources will take 
time.  Russia is also Lithuania's largest trading partner. 
 
¶5.  Lithuania has a small (five percent) Russian minority, 
which plays no significant role in domestic politics.  When 
Lithuania regained its independence, ethnic Russians living 
here were able to apply for Lithuanian citizenship, which has 
allowed Lithuania to avoid ethnic tensions that have troubled 
the other Baltic states. 
 
¶6.  Some in Lithuania may be ready to tentatively hit the 
restart button together with allies.  The Lithuanian Foreign 
Ministry has signaled an increased willingness to engage 
Russia on border, cultural and diplomatic initiatives. 
President-elect Grybauskaite, Lithuania's former European 
Commissioner, has said she would seek "respectful, balanced 
cooperation, but without selling out Lithuanian values."  But 
she also called for a united European approach to Russia. "We 
would like the EU to speak with one voice on energy supplies 
and not leave separate states alone in their battle with 
Russia." 
 
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Jewish Issues 
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VILNIUS 00000340  002 OF 003 
 
 
¶7.  Lithuania has struggled to deal with the effects of the 
Holocaust and the involvement of Lithuanians in it.  This 
embassy has been deeply engaged with the GOL to push for the 
restitution of Jewish communal property and for the 
protection of a historic Jewish cemetery in the Snipiskes 
neighborhood of Vilnius.  Congress passed concurrent 
resolutions critical of the GOL on both of these topics last 
year.  Lithuania also has appeared more zealous in efforts to 
investigate Jewish WWII partisans who fought alongside Soviet 
troops than Nazi collaborators, and some politicians clearly 
consider the Soviets a greater historical evil than the Nazis. 
 
¶8. Lithuania is one of the few countries in Europe that has 
not resolved the issue of communal Jewish property 
confiscated by Nazi or Soviet occupation forces.  For years, 
successive governments have promised -- and failed -- to 
introduce restitution legislation in the Seimas (parliament). 
 Prime Minister Kubilius has committed to sending legislation 
to the Parliament, possibly this week.  Jewish leaders say 
they were not consulted before the government unveiled the 
latest proposal, and they have difficulty with some of the 
provisions. 
 
¶9. The GOL in April took an important and welcome step in 
unilaterally protecting from development most of the site of 
the historic Jewish cemetery in the Snipiskes area of 
Vilnius.  That cemetery was the main burial ground for 
Vilnius's large Jewish community for several centuries. It 
was largely destroyed by the Soviets, who removed headstones 
and used them in other construction projects, although many 
graves remain in place. In 2006-2007, the GOL allowed the 
construction of office/apartment buildings in one corner of 
the site, despite significant evidence that they likely were 
partially inside the cemetery's boundaries.  While applauding 
the GOL's recent action, we continue to urge the government 
to work with international Jewish groups to ensure that the 
cemetery is protected and appropriately memorialized in 
compliance with Jewish law. 
 
¶10. Although the Justice Department's Office of Special 
Investigations (OSI) has provided the GOL with extensive 
files of evidence on Lithuanian-born Nazi  collaborators, few 
have been prosecuted here and none has been imprisoned.  Yet 
the Prosecutor General's office last year actively pursued 
investigation of several elderly Jews, who had been anti-Nazi 
partisans, about mass killings of Lithuanians allegedly 
committed by fighters allied with Soviet troops during World 
War II.  The GOL dropped the case against the most well-known 
of these partisans, General Arad, and has told us that 
prosecutors will not seek to question any of the partisans. 
Nonetheless, some of the partisans are unwilling to return to 
Lithuania without explicit assurances. 
 
----------------- 
Economic Downturn 
----------------- 
¶11. After years of strong growth, the economy has reversed 
course.  Unemployment levels have increased from 4.9 percent 
in the first quarter of 2008 to 11.9 percent in the first 
quarter of 2009. 
 
¶12. As revenues decline, the government's budget deficit is 
growing, despite earlier budget cuts and tax increases.  The 
GOL slashed spending by approximately 15 percent at the 
beginning of this year, a further 1.2 billion dollars of 
additional cuts in May and is likely to add cuts of another 
385 million dollars in August or September.  Further cuts 
could follow.  The media report that the Finance Ministry now 
anticipates negative growth of 18.2 percent this year. The 
prime minister has said that the GOL would consider laying 
off 4,000 public-sector employees, approximately 20 percent 
of total staff. 
 
¶13. External borrowing, already a challenge, should become 
more difficult following Standard and Poor's recent lowering 
of Lithuania's sovereign credit rating to BBB/A-3 from BBB 
plus/A-2. 
 
¶14.  The United States ranks 12th in Foreign Direct 
Investment (FDI) in Lithuania.  U.S. direct investment stands 
at 314 million dollars, or 2.6 percent of total FDI, trailing 
well behind neighboring and other European countries.  At the 
corporate level, though, Philip Morris, Kraft and Mars are 
among the largest single foreign investors in Lithuania. 
 
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End of an era 
 
VILNIUS 00000340  003 OF 003 
 
 
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¶15.  Lithuanian President Valdas Adamkus will step down after 
two terms as President on July 12.  As a former U.S. citizen, 
President Adamkus has been a great friend of the United 
States.  He will be missed.  His successor, Dalia 
Grybauskaite, is a former European Commissioner and Finance 
Minister.  She also served in the Lithuanian Embassy in 
Washington in the late 1990s.  We anticipate a continued 
excellent relationship with President-elect Grybauskaite, but 
expect some of the empathy we had with President Adamkus will 
be lost. 
 
¶16.  All of us at Embassy Vilnius very much look forward to 
seeing you in Lithuania June 28 to July 3, and wish you safe 
travels. 
 
CLOUD