C O N F I D E N T I A L SECTION 01 OF 02 VILNIUS 000962
E.O. 12958: DECL: 11/10/2018
TAGS: PGOV PREL LH
SUBJECT: NEW GOVERNMENT TAKES SHAPE, SEEKS TO DEAL WITH
REF: A. VILNIUS 912
Â¶B. VILNIUS 855
Classified By: Ambassador John Cloud for reasons 1.4 (b) and (d)
Â¶1. (U) Summary: Lithuania's new government is taking shape as
the four parties in the ruling coalition divide up
ministerial posts and draft the government program. The
parties agree that their most pressing task is to deal with
economic challenges. While most of these result from
Lithuanian policies, the coalition leaders recognize the
global financial crisis puts Lithuania at increased risk.
The new government will be strongly pro-NATO and supportive
of continuing close ties to the United States. It will also
continue to be very suspicious of Russia. End Summary.
An experienced PM and a celebrity Speaker
Â¶2. (C) The new prime minister will be Andrius Kubilius, head
of the Homeland Union-Lithuanian Christian Democrat Party
(known as the Conservatives) that won the most seats in
October elections for the parliament (Seimas). Kubilius
served as prime minister in 1999-2000, in the aftermath of
the Russian financial meltdown that hit Lithuania's economy
badly. As prime minister he reoriented Lithuania's economy
away from Russia to the West, which helped lead to years of
rapid economic growth. He has worked well with the Embassy
in the past and is a strong supporter of U.S.-Lithuanian
Â¶3. (C) Arunas Valinskas, the TV host heading the
celebrity-studded National Revival Party, will be the new
speaker of the Seimas. He created the National Revival Party
earlier this year with a slate of Lithuanian entertainers,
but said before the elections that he would chose experts to
fill any government offices his party obtains. He told the
Ambassador before the elections that his primary goal was to
ensure that the party of impeached former President Paksas
did not form the new government. In this he succeeded as his
new party siphoned off support from other populist parties,
Paksas's and businessman Uspackich's Labor Party. Valinskas
is inexperienced, but we expect him to be centrist.
Home grown economic problems
Â¶4. (C) Kubilius blames the economic challenges Lithuania
presently faces on the irresponsible policies of the outgoing
government led by the Social Democrats (SDs). In the recent
past, when times were good with GDP growing at an impressive
pace, the SDs were able to spend a lot and save nothing.
Kubilius made clear in statements he made to the Press that
the GOL should have controlled the budget deficit. Instead,
the outgoing PM and the Finance Minister "are either afraid
or incapable of speaking openly about the situation."
Kubilius has called for an overhaul of the tax code and
abolition of some VAT exemptions to increase revenues by $600
million, combined with budget cuts of $700 million.
Likely key ministers
Â¶5. (C) Listed below are the coalition's candidates to lead
- Economy: Dainius Kreivys, a businessman, is new to the
Seimas. He is an economic analyst and has been chief
executive of furniture and public-relations companies.
- Energy: The new government is separating the energy
portfolio from the Economy Ministry. Arvydas Sekmokas, the
front-runner for Energy Minister, was vice-minister of
Economy in 1991-92 and is CEO of an IT company.
- Defense: Conservative party vice-chair Rasa Jukneviciene
is slated to become Lithuania's first female Defense
Minister. She has served on the Seimas's National Security
and Defense Committee and Commission for NATO Affairs, and
chairs the Seimas delegation to the NATO Parliamentary
- Finance: Former Minister of Finance Algirdas Semeta is to
take that post again, leaving his current job as director of
Lithuania's statistics department.
- Foreign Affairs: Former ambassador to the United States
and current ambassador to Great Britain, Vygaudas Usackas, is
the official candidate, according to Kubilius.
- Health: The head of the Liberal and Center Union, Arturas
Zuokas, who is a former mayor of Vilnius, is expected to be
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put forth by his party to become Minister of Health. Zuokas
is known as an excellent manager. However, he was recently
convicted of corruption. (Zuokas was not sentenced for his
corruption conviction and remains eligible for a ministerial
position.) But Kubilius, asked by the Press about the
conviction, said he "would really like the new government to
start work without any personal blemishes."
- Transportation: Eligijus Masiulis, head of the Liberal
Movement party, will head the Transportation Ministry.