Viewing cable 05VILNIUS859
Title: NEW MINISTER OF ECONOMY EMPHASIZES FOREIGN

IdentifierCreatedReleasedClassificationOrigin
05VILNIUS8592005-08-18 14:36:00 2011-08-30 01:44:00 CONFIDENTIAL Embassy Vilnius
This record is a partial extract of the original cable. The full text of the original cable is not available.
C O N F I D E N T I A L SECTION 01 OF 02 VILNIUS 000859 
 
SIPDIS 
 
DEPT FOR EUR/NB, EB/TPP/IPE (JURBAN), EB/CBA, AND INR/B 
COMMERCE FOR TAC JBOGER 
 
E.O. 12958: DECL: 08/16/2015 
TAGS: PGOV ECON EINV ENRG ECIN PREL LH
SUBJECT: NEW MINISTER OF ECONOMY EMPHASIZES FOREIGN 
INVESTMENT, BUSINESS, AND ENERGY 
 
REF: A. VILNIUS 781 
 
     ¶B. VILNIUS 838 
 
Classified By: Economic Officer Scott Woodard for reasons 1.4 (b) and ( 
d) 
 
¶1. (C) SUMMARY:  Minister of Economy Kestutis Dauksys, 
meeting with Ambassador on August 16, emphasized the need to 
attract foreign investment, to improve the capacity of 
Lithuanian companies, and to develop a sound energy policy 
that will guarantee fuel supplies and promote Lithuania's 
energy independence.  The Ambassador offered the Embassy's 
assistance in attracting U.S. direct investment to Lithuania. 
 We will continue to work closely with his ministry to 
improve Lithuania's commercial and investment climate and 
further USG and U.S. business interests.  END SUMMARY. 
 
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COURTESY CALL ON THE NEW ECON MIN 
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¶2. (C) Kestutis Dauksys, who replaced Viktor Uspaskich as 
Minister of Economy on June 29, is a successful businessman 
with limited government experience.  He served as chair of 
the Labor Party's Trakai regional branch and became a member 
of the Seimas in 2004 as part of the party's electoral list. 
Ambassador Mull called on the new minister, August 16, to 
discuss learn of Dauksys's priorities for the Ministry and to 
discuss our common agenda of economic issues, which includes 
foreign investment, Lithuania's business environment, and 
energy issues. 
 
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INVESTMENT: A TOP PRIORITY 
--------------------------- 
 
¶3. (C) Dausksys told the Ambassador that development of 
commerce and investment is among the highest priorities of 
the Ministry of Economy (MinEcon).  He said that Lithuania 
needs to improve its investment climate in order to compete 
successfully with other emerging markets for FDI.  Recounting 
recent joint efforts to promote investment in the Baltics, 
the Ambassador highlighted the successful December 2004 U.S. 
Ambassadors to the Baltics Trade and Investment Conference in 
London and the follow up conference in the Washington, which 
have led to new U.S. investment in Lithuania.  He said 
Lithuania could do more to attract further investment by 
taking several measures to remove impediments and 
disincentives to foreign investment, including: 
 
--addressing Lithuania's high rates of piracy and IPR 
infringements; 
 
--enhancing educational opportunities for the children of 
foreigners engaged in business in Lithuania; 
 
--taking a strong stand against public and private 
corruption; and 
 
--establishing a "one-stop shop" that would assist foreign 
investors in fulfilling the legal and bureaucratic 
requirements of setting up a business in Lithuania. 
 
Dauksys especially endorsed the Ambassador's suggestion for 
"one-stop-shopping" and said his ministry is already at work 
on a plan to institute the idea.  Dauksys noted that he has 
commissioned an overview of his ministry's strategic planning 
processes and said he would welcome U.S. input to that 
overview. 
 
¶5. (C) Dauksys squarely acknowledged that respecting and 
protecting IPR protections is a problem in Lithuania, noting 
for example that he recently examined his own music 
collection and was shocked to discover that 40 percent of it 
was possibly from pirated sources.  He said that in Soviet 
times, music belonged to "the people" and many Lithuanians 
still maintained this attitude towards recorded music and 
other forms of IPR.  He said that he expects, however, that 
these attitudes will continue to shift towards recognizing 
the importance of honoring IPR. 
 
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HELPING LITHUANIAN BUSINESSES DO BETTER 
--------------------------------------- 
 
¶6. (C) Dauksys said in response to the Ambassador's prompt 
that supporting the development of the country's strong small 
and medium enterprises is an important priority.  He said 
that his ministry had established several business 
information centers to address a lack of expertise in the 
small business community, but that they were not functioning 
well.  He mentioned that he would welcome U.S. assistance in 
improving the effectiveness of these centers and would like 
to learn more about micro-credit programs.  The Minister also 
expressed concern about the flight of skilled labor from 
Lithuania.  Ambassador Mull suggested consultations with the 
U.S. Small Business Administration and other USG resources, 
and offered to explore possibilities for Ministry of Economy 
personnel to travel to Washington for further research. 
 
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ENERGY DEPENDENCE 
----------------- 
 
¶7. (C) Dauksys said that Lithuania would continue to depend 
on Russia for much of its energy supply, especially for oil 
and natural gas.  He said that he was disappointed at the 
recent Russian-German agreement to build a gas pipeline under 
the Baltic Sea because the GOL had hoped that a new pipeline 
would transit Lithuania on its way to Western Europe, thereby 
reducing the likelihood of interrupted gas flows to 
Lithuania. 
 
¶8. (C) The Minister jokingly lamented the fact that the 
Soviet Union had built the Russian-supplied Mazeiku Nafta oil 
refinery (MN) in Lithuania.  "Without it, we could buy 
petroleum products from wherever we wanted, but now we have 
to buy everything from there," he said.  Dauksys soberly 
acknowledged that the GOL recognized that any buyer of 
Yukos's majority share in the refinery (ref A) would need to 
have "a connection to Moscow" to be able to insure supply. 
He noted, however, that the GOL hopes the company that does 
win the bid for MN has "international experience" and is not 
a "Russian federal monster." 
 
¶9. (C) Dauksys was more optimistic about Lithuania's ability 
to insure its supply of electricity, even after it fully 
decommissions the Ignalina nuclear power plant.  He said that 
the GOL plans to construct links to both Sweden and Finland 
that could supply electricity to Lithuania.  The GOL would 
also like a bridge to Poland, he said, but faces serious 
resistance from the Poles. 
 
¶10. (C) Ambassador Mull said that he hoped that sale of 
Yukos's shares would be a transparent process.  He said that 
if the GOL decided to replace Ignalina with another nuclear 
power plant, Westinghouse could build one or more of its IRIS 
units in Lithuania at a very competitive cost. 
 
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BERYLLIUM AD NAUSEUM 
-------------------- 
 
¶11. (C) Dauksys brought up the subject of the recent transfer 
of non-radioactive beryllium from a Lithuanian bank vault to 
a Russian company (ref B), noting that the media was trying 
to make "a big deal out of it."  The Ambassador said that, 
while he would have preferred that the GOL had given the 
Embassy advance notice of the transfer, he said that he fully 
recognized Lithuania's authority to transfer the beryllium as 
it wished, and was pleased that the GOL had resolved the 
problem of ownership and disposition of the material in 
accordance with established export control procedures. 
 
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AN INVITATION 
------------- 
 
¶12. (C) The Ambassador said that he hoped Dauksys would visit 
the United States in the near future, and offered his 
assistance in helping to arrange meetings with business 
leaders and policy makers.  Dauksys expressed interest in 
such a visit as his schedule permits. 
 
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COMMENT 
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¶13. (C) Dauksys, although new to the job, is already 
thoroughly engaged in addressing the key challenges that face 
the Ministry of Economy, notably energy security, increasing 
investment, and retention of labor.  We look forward to a 
constructive and active relationship with the Ministry under 
his leadership.  We will pursue opportunities to advance our 
IPR agenda and otherwise improve the climate for U.S. 
investment, and we will look to assistance from Washington 
agencies to provide some of the technical support he seeks. 
Mull