VZCZCXYZ0001
PP RUEHWEB

DE RUEHVL #0013/01 0081520
ZNR UUUUU ZZH
P 081520Z JAN 10
FM AMEMBASSY VILNIUS
TO SECSTATE WASHDC PRIORITY 4051

UNCLAS VILNIUS 000013 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: PREL ECON LH
SUBJECT: SCENESETTER FOR DAS QUANRUD 
 
¶1. (U) Embassy Vilnius warmly welcomes you to Lithuania. 
Your upcoming visit is an excellent opportunity to reinforce 
our close bilateral relations with this small but committed 
ally in a sensitive and strategic region.   The Embassy has 
organized a schedule that will address key areas of joint 
interest, including our partnership with Lithuania to help 
address global challenges like Afghanistan; reassurances of 
our commitment to defend Lithuania under NATO Article 5; 
discussions about boosting U.S. trade and investment in 
Lithuania, including U.S. investment in the planned nuclear 
power plant; and human rights issues.  At the Snow meeting, 
you will join other top policymakers and strategists from 
Europe and North America for an informal brainstorming on key 
transatlantic issues, including relations with Russia, 
further NATO and EU enlargement, and the Eastern Partnership. 
 
A Close Ally - With Real Concerns 
--------------------------------- 
 
¶2. (SBU) Lithuania's alliance with the U.S. is rooted in our 
longstanding support for its independence during the Soviet 
occupation, our shared democratic values, and the personal 
ties of Lithuanian immigrants to the U.S.  Lithuania 
particularly values U.S. partnership, because the 
Transatlantic relationship, along with EU and NATO 
membership, are considered key to Lithuania's continued 
independence and protection from the possibility of Russian 
aggression or undue interference in the economic, political 
and social -- as well as security -- spheres.  Fear of 
Russian intentions have increased since the 2008 invasion of 
Georgia as has frostier rhetoric from Moscow.  The perceived 
Russian threat motivates Lithuania's concerns about ensuring 
air policing beyond 2014 and ensuring adequate plans are in 
place to defend Lithuania. 
 
¶3. (SBU) Your visit tangibly underscores U.S. commitment to 
our close ties with Lithuania.  As a small country seeking to 
build democracy and maintain its independence on the outer 
eastern edge of both NATO and the European Union, and with 
only two decades since its liberation from the Soviet Union, 
Lithuania's civic and political institutions remain works in 
progress.  Lithuania has been an EU and NATO member only 
since 2004 and is still in the midst of a profound social and 
cultural transition.  It has not fully completed the 
transformation from a half-century of Soviet occupation to 
mature Western-style democracy. Weak governmental and 
judicial institutions, a media manipulated by business 
interests, ambivalence about foreign investment, and 
corruption remain challenges.  One of the countries hardest 
hit by the global economic crisis after several years of 
post-independence economic boom, Lithuania is suffering a 
crisis of confidence, with some questioning Lithuania's 
western and free market orientation.  Lithuania's membership 
in the EU demands considerable time from all branches of 
government and leads to a Brussels-focused perspective. 
While Lithuania's integration into the Euro-Atlantic 
community is a U.S. foreign policy success, as 
Europeanization proceeds and memories of our Cold War support 
fade, we need to intensify our efforts to maintain strong 
bilateral ties and vibrant relations, especially with the 
newest generation of leaders. 
 
Concern about Russian Influence 
------------------------------- 
 
¶4.  (SBU) Lithuania-Russian relations are complicated, and 
historically have been characterized by occupation and 
intimidations. 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 deeply concerned about Russian 
aggression in Georgia in 2008, but there are clearly mixed 
feelings about whether the best path is to engage Russia or 
try to isolate it.  The Prime Minister, President, and FM 
Usackas have followed a policy more in tune with our  "reset" 
with Russia, seeking cooperation in areas of mutual interest 
and practical solutions to bilateral concerns where possible. 
 President Dalia Grybauskaite has noticeably dialed back the 
anti-Russia rhetoric that was a staple of her predecessor, 
Valdas Adamkus. 
 
¶5.  (SBU) Lithuanian officials have become increasingly 
concerned about what they see as growing Russian influence on 
Lithuanian politics and media. With strong support from 
Moscow, Lithuania's first openly "pro-Russia" political party 
was established by a former Lithuanian prime minister in 
early December.  Businessmen with Russian ties have bought 
ownership stakes in several major Lithuanian media outlets in 
the past few years.  In addition, Russian TV channels are 
widely available and watched by Lithuanians, most of whom 
speak and understand the Russian language well.  The Seimas 
(Parliament) National Security Committee Chair Arvydas 
Anusauskas, with whom you will meet on January 14th, has 
strong and well-informed views on Russian influence on the 
local media. 
 
Afghanistan 
----------- 
 
¶6.  (SBU) Lithuania is a committed partner in Afghanistan and 
our strong support and appreciation of its mission, 
especially under intense economic pressure from the global 
crisis, is a key component of our bilateral relationship. 
Lithuania is the smallest NATO member to run a PRT, in the 
central Afghanistan province of Ghor.  It has been working in 
Ghor for five years, and recently renewed its commitment to 
work in Afghanistan through 2013.  It is notable that despite 
a 19% defense budget cut, the GOL has announced that 
Afghanistan remains its top national priority and that it 
will maintain and even increase where it can its efforts in 
Afghanistan. Our continued support for Lithuania's effort in 
Ghor will advance our goals in Afghanistan, and reassure a 
small but committed ally of our appreciation for their 
support and the strength of our bilateral partnership.  You 
will have an opportunity to learn more about Lithuania's 
mission in Afghanistan on January 13th when Ambassador Derse 
hosts a dinner for the President's Chief Foreign Policy 
Advisor Darius Semaska, Advisor to the Minister of Defense 
Andrius Krivas, Seimas (Parliament) Foreign Affairs Committee 
Chair Audronius Azubalis and the MFA's Director of 
Transatlantic Cooperation and Security Policy Department 
Gediminas Varvuolis. 
 
Economic Crisis 
--------------- 
 
¶7. (SBU) After many years of strong growth, Lithuania has 
been hard hit by the economic crisis, with an expected GDP 
contraction of 15% in 2009.  A severe revenue crunch has 
forced the government to impose large budget cuts, but a 
record budget deficit of 5 billion litas still is expected in 
¶2010. The GOL in December passed a budget that included 
significant cuts in wages, public employment and social 
benefits.  Some protests already have occurred, and as the 
budget cuts begin to bite they could induce more significant 
public opposition and weaken an already unpopular government. 
 
Trade and investment 
-------------------- 
 
¶8.  (SBU)  The United States does not rank in Lithuania's top 
10 as either an investor or trading partner.  The Lithuanian 
Government is very interested in encouraging two way trade 
and investment with the U.S., and considers increased 
economic ties a strategic priority.  PM Kubilius' February 
visit to the U.S. will focus exclusively on these issues. 
With foreign direct investment of more than 400 million USD 
as of the third quarter of 2009, the United States is now 
only the eleventh largest foreign investor, although American 
companies Philip Morris, Kraft and Mars are among the six 
largest foreign companies here.    The largest trading 
partners are Russia, Germany, Poland, Latvia and other nearby 
and European countries.  The United States, with about 500 
million USD in total trade turnover from January to October 
2009, ranks fourteenth.  Lithuania's largest import, by far, 
is crude oil.  The Lithuanian Development Agency (LDA) is the 
GOL's principal agency dedicated to attracting foreign 
investment and promoting Lithuanian exports.  LDA has offices 
in Germany and Belgium, but none in the United States. 
 
¶9.  (SBU)  Businessmen and investors have identified for us 
several impediments to investing in Lithuania.  These include 
tax increases and tight credit as a result of the financial 
crisis; complex tax payment procedures and lack of a cap on 
social-security taxes; convoluted regulations concerning land 
purchase, ownership and use permits; concerns about 
corruption; lack of a customer-service mentality; inflexible 
labor rules and lack of large labor pools outside urban 
areas; Lithuania's self-isolating mindset in which it sees 
itself as a small market and not part of the huge EU market; 
and the lack of a clear, pro-foreign-investment approach at 
high levels of the GOL. 
 
¶10.  (SBU)  As it agreed in its accession treaty with the EU, 
Lithuania shut down its Ignalina Nuclear Power Plant on 
December 31.  It plans to build a new nuclear power plant, 
expected (optimistically) to begin operations in about 2020. 
Two American companies, Westinghouse and GE, have expressed 
interest in that project, as have companies from France, 
Canada, South Korea and Japan.  The technology tender is 
likely to be issued later this year, after Lithuania has 
selected a strategic investor for the project.  You could 
inquire about Lithuania's plans for building energy 
infrastructure, and about interest in U.S. participation, 
when you meet with the Vice Minister of Energy Romas Svedas. 
Human rights 
------------ 
 
¶11.  (SBU)  Lithuania has a good record on human rights in 
general, but problems persist.  Lithuania is a homogeneous 
and socially conservative country influenced by the Catholic 
Church (although far less than Poland).  In 2009, the Seimas 
(parliament) passed a law that made it illegal to expose 
minors to information that "promotes homosexual, bisexual and 
polygamous relations."  After months of criticism by 
human-rights organizations and the European Union, the Seimas 
adopted amendments suggested by President Grybauskaite that 
removed all references to sexual orientation.  However, much 
of Lithuanian society and its political leadership remain 
intolerant of sexual minorities and only grudgingly, at best, 
accord them the human rights that Lithuanian has pledged to 
honor for all people. 
 
Jewish property restitution 
--------------------------- 
 
¶12.  (SBU)  The large Jewish community was almost wiped out 
during World War II, and only several thousand Jews live in 
Lithuania today.  Anti-Semitism is common although, 
fortunately, incidents of violence have been rare in recent 
years.  But the Jewish community has been fighting for more 
than a decade to win restitution of communal property stolen 
from it during the Nazi and Soviet occupations.  A bill to 
provide partial compensation for some of that property is 
before the Seimas, but has been rejected by the local and 
international Jewish communities as inadequate.  Working with 
the Jewish community to craft and pass an acceptable 
restitution bill could help the GOL rehabilitate Lithuania's 
international reputation, which has been damaged by years of 
intransigence and hostility on this and other Jewish issues. 
 
Snow summit 
----------- 
 
¶13.  (SBU)  The Snow meeting in Trakai, a picturesque and 
historic site 40 minutes' drive from Vilnius, will bring 
together government officials and others to discuss major 
transatlantic issues, including relations with Russia, 
further NATO and EU enlargement, and the Eastern Partnership. 
 It is now in its third year.  Although there is a program, 
organizers say their goals is to avoid imposing a rigid 
agenda and to keep discussions open, frank and informal. 
LEADER