Viewing cable 06VILNIUS813
Title: LITHUANIA'S LABOR PARTY: UNDER NEW LEADERSHIP?

IdentifierCreatedReleasedClassificationOrigin
06VILNIUS8132006-08-31 14:37:00 2011-08-30 01:44:00 CONFIDENTIAL Embassy Vilnius
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DE RUEHVL #0813/01 2431437
ZNY CCCCC ZZH
R 311437Z AUG 06
FM AMEMBASSY VILNIUS
TO RUEHC/SECSTATE WASHDC 0547
INFO RUEHSK/AMEMBASSY MINSK 1809
RUEHMO/AMEMBASSY MOSCOW 2433
RUEHRA/AMEMBASSY RIGA 3210
RUEHTL/AMEMBASSY TALLINN 6833
RUEHWR/AMEMBASSY WARSAW 3606
C O N F I D E N T I A L VILNIUS 000813 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: DECL: 08/28/2016 
TAGS: PGOV LH
SUBJECT: LITHUANIA'S LABOR PARTY: UNDER NEW LEADERSHIP? 
 
 
Classified By: Political/Economic Section Chief Rebecca Dunham for reas 
ons 1.4 (b) and (d). 
 
¶1. (C) Summary:  The Labor Party, recently fallen from power 
amid scandal, elected former Economy Minister Kestutis 
Dauksys its new leader August 26.  Dauksys called for changes 
to the way Labor runs itself, but continued publicly to link 
the party to its disgraced former leader.  It seems clear 
that Labor is still anathema to most (but not all) other 
parties, but it may survive the bad news of the past few 
months.  Some observers believe that it may be the centrist 
Social Liberal Party, not Labor, that will leave the 
Lithuanian political scene.  End Summary. 
 
Background 
---------- 
 
¶2. (U) Lithuania's scandal-prone Labor Party held its annual 
conference August 26.  Conference participants elected 
Kestutis Dauksys (Ke-STOO-tis Dauk-SHEES) as Labor's new 
leader.  The party has been in turmoil since its former 
leader, Viktor Uspaskich, fled the country amid allegations 
of corrupt party financing and tax evasion.  His departure 
from the scene, and the defection of seven Labor MPs to a new 
party, contributed to the collapse of the Brazauskas 
government in June. 
 
¶3. (U) As former Minister of Economy, Dauksys himself may not 
be immune from scandal even if he can escape his party's 
financing woes.  The new Minister of Economy is currently 
investigating the improper appointment of tens of people to 
positions controlled by the Economy Ministry and looking into 
donations by state-owned companies (overseen by the Economy 
Ministry) to organizations linked to the Labor Party during 
Dauksys's tenure. 
 
The Ballot 
---------- 
 
¶4. (SBU) From a safe haven in Russia, Uspaskich has been 
engaged in a fight with Lithuanian prosecutors -- often 
played out in the media -- over his role in the party's 
scandals.  Prosecutors confirmed on August 30 that they had 
issued an arrest warrant for him.  Uspaskich nevertheless had 
an important, if eerie, presence at the conference, 
addressing delegates by phone prior to the vote and urging 
them to support his former deputy Loreta Grauziniene.  5. (C) 
Dauksys beat out acting party chair Grauziniene and party 
deputy chair Vydas Gedvilas in the final vote.  Grauziniene 
is close to Uspaskich, and glossed over the party's problems 
in her candidacy speech.  Gedvilas, at the other end of the 
spectrum, called for wide-ranging efforts to clean up the 
party.  Tellingly, his suggestion for a way out of the 
party's current crisis was met with cries of "what crisis?" 
from many delegates.  (He finished a distant third.)  Dauksys 
took the middle road, but also said that it is impossible to 
separate Labor from Viktor Uspaskich. 
 
Center Bloc? 
------------- 
 
¶5. (C) The morning of the conference, media reported that 
Social Liberal leader Paulauskas had made overtures to Labor, 
calling for the formation of a centrist bloc in parliament. 
Paulauskas, per local tradition, represented his party and 
addressed the conference, calling on delegates to contribute 
to responsible politics and to play a role in forming a 
centrist bloc.  Social Liberal MP Vaclav Stankevic told us 
August 28 that Paulauskas had been pushing the idea of a 
center-leaning block for some time.  He had previously 
floated it with both the Conservatives and the Liberal 
Movement, neither of which had shown any interest. 
Unfortunately, the former Parliament speaker's shopping 
around has only called attention to his reduced stature; one 
political observer told us that the future of the Social 
Liberal party is uncertain. 
 
Reactions 
--------- 
 
¶6. (C) Defense Minister and Social Democrat powerhouse Juozas 
Olekas told the Ambassador August 28 that the ramifications 
of Dauksys's selection are still unclear.  On the one hand, 
Dauksys is more acceptable to other parties than his 
predecessor; on the other, his public embrace of Uspaskich 
repels many political players here.  Olekas, who also 
addressed the Labor conference, told Labor delegates that he 
hoped that "sooner or later" his party would be able to work 
with them.  Two days later, he seemed to predict the party's 
demise, and told the Ambassador that he still sees the strong 
possibility that more MPs will defect from Labor in the 
Seimas.  Andrius Kubilius, leader of the opposition 
Conservatives, was even more skeptical about Labor's future. 
He acknowledged that Labor and the Social Liberals have 
enough MPs to toy with the idea of forming a center block in 
parliament, but he said that the Social Liberal party was 
"based on being in parliament," and not on values.  Thus, he 
argued, the party has no future. 
 
Comment 
------- 
 
¶7. (C) We doubt that Dauksys's election will move Labor 
beyond the Uspaskich era.  Dauksys has longstanding personal 
and business relationship with Uspaskich.  When Uspaskich 
left his post as Economy Minister under the Brazauskas 
government, he handpicked Dauksys to replace him.  In our 
dealings with him, we found Dauksys to be oblivious to calls 
for economic reform -- he even challenged the need for 
Lithuania to attract more foreign investment in public 
settings.  His close association with Uspaskich in the past, 
and immediate embrace of the exiled party leader after his 
election as party leader, makes us wonder whether the whole 
exercise was staged to ensure that Uspaskich retains control 
of Labor while giving the party and Dauksys the appearance of 
independence. 
 
¶8. (C)  For now, traditional parties inside and outside the 
government will avoid working with Labor.  For the governing 
Social Democrats, the taint of Labor's scandal and trauma 
from its unhappy coalition with that party in the last 
government is still too fresh, and their support agreement 
with the opposition Conservatives prohibits Labor's 
participation in the coalition.  All this could change, 
however, depending on the results of  the municipal elections 
scheduled for February.  If the electoral numbers require it, 
the Social Democrats could conceivably reassess their 
position and dump their agreement with the Conservatives for 
a coalition agreement with 29-MP Labor. 
 
¶9. (C) Perhaps the most unexpected casualty of the Conference 
may be Social Liberal leader Paulauskas.  His approach to 
Labor, after falling out with the Social Democrats on the 
left and being rejected by the Liberal Movement and 
Conservatives on the right, suggests his desperation to 
return to power, whatever the cost.  Even in a country that 
still embraces populist politics, he may have gone too far. 
CLOUD