PM BRAZAUSKAS RIDING OUT POLITICAL TURBULENCE

C O N F I D E N T I A L SECTION 01 OF 02 VILNIUS 001238

SIPDIS

STATE FOR EUR/NB

E.O. 12958: DECL: 11/22/2015
TAGS: PREL PGOV LH
SUBJECT: PM BRAZAUSKAS RIDING OUT POLITICAL TURBULENCE

REF: VILNIUS 1198

Classified By: Gregory L. Bernsteen for reasons 1.4(b) and (d)

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SUMMARY
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1. (SBU) Lithuania's Prime Minister Algirdas Brazauskas
quashed a parliamentary inquiry and continues to hold the
ruling coalition together amidst investigations into his
wife's business dealings. While two law enforcement
institutions have launched investigations at President
Adamkus's request, the Prime Minister has not stepped down,
and no one is calling for impeachment or new elections. Some
speculate that fatigue and stress may drive the PM from
office soon, but the unlikelihood that legal investigations
will produce evidence of a crime and a common fear among the
President and many in the Parliament of ceding the
premiership to the Labor Party will keep Brazauskas secure
for now. In the meantime, the opposition is pleased to have
knocked back the coalition, and make it more difficult to
sell the Mazeikiu Nafta oil refinery to Lukoil. END
SUMMARY.

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The PM Weathers the Storm
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2. (U) Prime Minister Brazauskas mustered sufficient votes in
parliament to kill the commission set to investigate his
wife's purchase at deeply discounted prices of shares in
Vilnius's Crown Plaza hotel from a Lukoil-linked investment
company (reftel). In a November 10 vote of 55-42, with 24
abstaining, the Parliament dismissed the ad hoc investigatory
commission. The opposition Conservative Party will ask the
Constitutional Court to resolve whether a Parliamentary
majority can override ethics rules that direct the
establishment of an ethics committee investigation on the
basis of a petition of more than one-fourth of the members.
The Court's ruling will not reopen or reverse the
Parliament's decision on the current petition. Nonetheless,
should the Court rule that a petition with sufficient
signatures automatically establishes a commission, it would
pave the way for the Conservatives to circulate another
petition and begin the process anew.

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The President Weighs In
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3. (C) Responding to mounting pressure for him to weigh in,
President Valdas Adamkus delivered a speech to the public
November 17, citing a need to restore "political stability."
Adamkus commented that the matter of Kristina Brazauskas's
purchase of the now-Crowne Plaza Hotel falls more
appropriately under the purview of law enforcement agencies
than the national legislature, specifically the State
Property (Privatization) Fund and the State Auditor. The
President's remarks have drawn criticism from some local
commentators. The editor of Lithuania's leading daily
newspaper sharply criticized Adamkus for entering the fray
rather than letting the political process play out.

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Worse for Wear
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4. (U) The episode has tarnished the PM's reputation and
credibility, compelling him to fight for his political life.
His ratings in public polls have dropped dramatically. In
some public appearances, the PM's plainspoken amiability has
given way to irritability. During a televised address to the
Lithuanian public November 22, however, Brazauskas was back
in form, avuncular delivery and all. In his remarks,
directed to the Lithuanian man and woman on the street, the
PM highlighted the successes of his government; promised
further improvements in living standards under his
leadership; and vowed to remain in office.


5. (C) Other observers are less sanguine about his prospects.
Noting the strongman's apparent fatigue, some politicians
and journalists speculate that Brazauskas will not finish out
the three years remaining in his term. Labor Party leader
Viktor Uspaskich forecast publicly November 22 that the PM
will soon step down, giving Labor the opportunity to form a
new coalition. Coalition MP Vaclov Stankevic (Social
Liberal) told us that he expects Brazauskas to resign "in
days or weeks," or "as soon as the budget is passed."
Others, including Vladimir Orechov (Labor Party) and Birute
Vesaite (Social Democrat),said that Brazauskas's health will
be a deciding factor in his tenure. According to this view,
it is possible he will serve out his term (until 2008) if his
health holds up and he is able to outlast his critics.
Orechov theorized that Brazauskas may persevere until the
sale of the Mazeikiu Nafta refinery concludes sometime in

2006.

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Coalition Dynamics
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6. (C) The lack of an obvious successor within the PM's
Social Democratic party also drives coalition partners to
hope Brazauskas will stay put. SocLib MP Alvydas Sadeckas
told us that the coalition agreement ends the day that
Brazauskas leaves office. Sadeckas said that Brazauskas's
personal leadership (along with the concession of some key
ministries to Labor) was sufficient to persuade the Labor
Party to cede the PM's office to the SocDems in 2004, despite
the fact that Labor controlled nearly twice as many seats.
Without Brazauskas, Sadeckas said, an emboldened Labor would
negotiate with a strong hand and would take the premiership
and perhaps other ministries. Uspaskich promised that Labor
would "work with the devil, if it benefits the state,"
implying Labor's determination to lead new coalition,
including some elements of the current opposition.


7. (C) A deal giving Labor more power may already be in play
as a result of the PM's problems. MP Orechov told us that
Uspaskich has negotiated within the Government for more Labor
involvement in the disposition of the Mazeikiu Nafta oil
refinery sale in return for his support of Brazauskas.
Labor's popularity has been on the rise again recently, and
it now enjoys more than twice the support of any other party.


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Comment
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8. (C) Brazauskas's poor handling of what at least
superficially seem to be legitimate questions about a
conflict of interest between his wife's business dealings and
Lithuanian state interests has seriously tarnished his
reputation. But ever the fighter, he has skillfully played
on widespread fears (including those of President Adamkus) of
putting the premiership in the untested and unpredictable
hands of the populist Labor Party. Given poorly developed
conflict of interest legislation in Lithuania, it is unlikely
the law enforcement agencies examining the case will find any
evidence of a crime, allowing Brazauskas some time to rebuild
his reputation. His televised address, targeted at the
average citizen, is a clear indication that Brazauskas is in
for the long haul. The Conservative Party can take some
pride in achieving one of its objectives -- all the fuss
about the Prime Minister's rumored indebtedness to Lukoil
will make it much harder for the Lithuanian government to
sell the valuable Mazeikiu Nafta oil refinery to the
Kremlin-linked business.
KELLY