C O N F I D E N T I A L SECTION 01 OF 02 VILNIUS 001038
E.O. 12958: DECL: 12/09/2018
TAGS: PGOV PINR ECON LH
SUBJECT: NEW GOVERNMENT TAKES OFFICE, WINS APPROVAL FOR
PLAN TO TACKLE ECONOMIC CRISIS
REF: 07 VILNIUS 202
Classified By: Ambassador John Cloud for reasons 1.4(b) and (d)
Â¶1. (U) Summary: Lithuania's new prime minister, Andrius
Kubilius, and center-right coalition Cabinet took oaths of
office on December 9 and won approval for their program,
which focuses largely on minimizing the effect on Lithuania
of the world economic crisis. The program also emphasizes
deeper ties with the EU and United States and stable
relations with Russia. End summary.
Â¶2. (U) Lithuania's fifteenth government since regaining
independence was sworn in December 9. The four-party,
center-right coalition led by the Conservatives replaced a
Social Democrat-led coalition in power since July 2006. The
Seimas (parliament) also approved the government's program.
Â¶3. (U) New Prime Minister Andrius Kubilius, 52, is leader of
the Homeland Union-Lithuanian Christian Democrats, commonly
known as the Conservatives. Kubilius had a leadership role
in Lithuania's liberation movement and has been in the Seimas
since 1992. After serving as prime minister in 1999-2000, he
was credited with reorienting Lithuania's economy toward the
West and having mitigated some of the harshest consequences
of the Russian financial crisis of that time.
Â¶4. (U) In addition to the Conservatives, the governing
coalition includes the Liberal Movement and Liberal and
Center Union, two pro-business parties that split from each
other due to a leadership dispute in 2006. The Liberal and
Center Union was also part of the previous governing
coalition. The fourth coalition partner, the National
Revival Party, was formed in 2008. It filled its ranks with
show-business and TV-journalism celebrities, including new
Seimas speaker Arunas Valinskas. The party ran on a platform
of responsible government and taking votes away from
Lithuania's populist parties, but has not elaborated its
Â¶5. (U) In presenting its program, the new government listed
its strategic priorities: navigating the global economic
crisis without grievous harm to state finances; implementing
reforms in energy policy, government structure, health care,
education, business innovation, and the fights against
corruption and socioeconomic inequalities; and providing
responsible leadership based on openness and public dialogue.
Â¶6. (U) The new government pledged to move forward quickly
with its "anti-crisis plan," which aims to restore and
preserve fiscal health in a time of global recession. Key
elements of the plan include cutting the personal income tax
rate by 4 percent while raising the VAT rate by 1 percent,
abolishing most VAT exemptions, increasing excise duties on
fuel and alcohol, increasing taxes on dividends by a third to
20 percent, and reducing government expenditures by an
average of 15 percent. The government also plans to increase
access to credit for businesses, encourage banks to lend to
start-up businesses, reduce social payments and government
salaries, slash spending for road construction and
maintenance, and shelve long-term construction projects in
favor of shorter-term construction and renovation of housing
units. The new government says savings and revenue increases
from these actions will total USD 2 billion.
Â¶7. (U) The government's action plan also calls for
strengthened solidarity within the EU and stronger EU-U.S.
relations. Lithuania will strive for good relations with
Russia, paying particular attention to the Kaliningrad
enclave that borders Lithuania, and will continue to support
Euro-Atlantic integration for countries such as Ukraine,
Moldova and Georgia.
Â¶8. (U) The new GOL also will seek an effective EU energy
strategy that will not leave Lithuania dependent on Russia
for its energy needs. Kubilius also plans to split the
Ministry of Economy into a Ministry of Energy and a Ministry
of Innovation, Business and Labor. The candidate for Energy
Minister has been identified, but cannot be proposed until
the Seimas approves the split.
Â¶9. (C) Here are brief biographies of the Cabinet members,
only six of whom are members of the Seimas. More detailed
biographies will be sent via e-mail to INR/B:
-- Minister of Health Algis Caplikas (AL-giss CHAP-lih-kuss),
46, has previously served as Minister of Construction and
Urban Development and Minister of Environment. He is a
construction engineer by trade but has been an elected
official, both in the Seimas and the Vilnius City Council,
VILNIUS 00001038 002 OF 002
-- Minister of Social Security and Labor Rimantas Dagys
(ree-MAN-tuss da-GEES), 51, is a biochemist by training, but
has spent 12 of the last 16 years in the Seimas, where he is
a member of the American Caucus.
-- Minister of Defense Rasa Jukneviciene (RAH-sah
yook-NEV-i-cheh-neh), 50, is Lithuania's first female defense
minister, and the sole female member of this Cabinet. She
has long been an ardent supporter of the United States, NATO
and the EU, and is openly critical of Russia. She is deputy
chairwoman of the Conservative party. Post worked closely
with Jukneviciene following last year's State Security (VSD)
crisis (reftel) to expose her to the American system of
-- Minister of Environment Gediminas Kazlauskas
(GEH-dih-mee-nas kaz-LOW-skas), 49, has worked in
construction management, most recently as CEO of a
construction company. He was nominated for his post by the
National Revival Party, to which his company had made the
maximum legal campaign contribution. He is not a member of
-- Minister of Economy Dainius Kreivys (DAY-nee-yuss
kray-VEES), 38, is a businessman who has written on market
behavior and macroeconomics. He is not a Seimas member.
Most recently he was CEO of a furniture company and a board
member of several other firms.
-- Minister of Transportation Elgijus Masiulis (EL-gee-yuss
mah-SOO-lis), 34, became leader of the Liberal Movement in
early 2008. He has been a Seimas member since 2000 and is in
the American Caucus. He has a master's degree in political
science, and has held no jobs outside of politics.
-- Minister of Interior Raimundas Palaitis (ray-MOON-duss
pah-LAY-tis), 51, was in the Seimas, where he served as
deputy chairman of the budget committee, for eight years
before losing a re-election bid in 2008. He was nominated
for his post by the Liberal and Center Union. He has worked
as a computer programmer and securities trader.
-- Minister of Finance Algirdas Semeta (AL-gir-duss
she-MEH-tah), 46, was previously Finance Minister (1997-99).
He also has been deputy head of the government's
privatization office, head of the Securities and Exchange
Commission, director general of the government's statistics
agency and the Government Secretary, responsible for
coordinating the civil service. He is not a Seimas member.
-- Minister of Justice Remigijus Simasius (reh-MIG-ee-yuss
shi-MAH-shyuss), 34, was until recently the president of the
Lithuanian Free Market Institute, a leading think tank. He
studied at the Ludwig von Mises Institute in Alabama, and has
been an intern at the Heritage Foundation in Washington and a
board member of Transparency International's Lithuania
chapter. He is an expert on competition economics and NGO
law and has worked on privatization, education reform and
public procurement. He is not a Seimas member.
-- Minister of Agriculture Kazys Starkevicius (kah-ZEES
star-KEH-vih-chuss), 52, is a lawyer and former deputy mayor
and city administrator of Kaunas, Lithuania's second city.
He was a founder of the Farmers Union of Lithuania and helped
lead the Lithuanian Family Farmers Union. His wife is a
farmer. He has been a Seimas member since 2004.
-- Minister of Education and Science Gintaras Steponavicius
(GIN-tah-russ steh-poh-NAV-ih-chuss), 41, is a lawyer who has
been involved with liberal-party politics since his student
days. He has been in the Seimas since 2000, and is a strong
supporter of the EU and United States, as well as of
-- Minister of Foreign Affairs Vygaudas Usackas (VEE-goh-duss
oo-SHATS-kuss), 43, served as Lithuania's ambassador to the
United States from 2001 until 2006, after which he became
ambassador to the United Kingdom. At the Foreign Ministry he
has been a NATO liaison in Brussels, Lithuania's chief
negotiator on EU accession, and deputy foreign minister. He
is not a member of the Seimas.
-- Minister of Culture Remigijus Vilkaitis (reh-MIH-gee-yuss
vil-KAI-tis), 58, is a popular stage actor who worked for
many years at the Lithuanian State Youth Theater. He also
has been involved with radio and television productions, and
has taught at the Vilnius Conservatory. He was nominated by
the celebrity-laden National Revival Party. He is not a
member of the Seimas.