LABOR PARTY JOSTLING FOR EARLY POSITION AHEAD OF

C O N F I D E N T I A L SECTION 01 OF 02 VILNIUS 000771

SIPDIS

STATE FOR EUR/NB

E.O. 12958: DECL: 07/24/2014
TAGS: PGOV PREL LH
SUBJECT: LABOR PARTY JOSTLING FOR EARLY POSITION AHEAD OF
2006 MUNICIPAL ELECTIONS

REF: A. VILNIUS 662


B. VILNIUS 769

C. VILNIUS 636

D. 04 VILNIUS 1352

Classified By: Pol/Econ Officer Gregory L. Bernsteen
for Reasons 1.4 (b) and (d)

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SUMMARY
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1. (C) Lithuania's uneasy ruling coalition continues to
function amid signs that some of the constituent parties are
already beginning to look to the next election cycle. The
dual triggers of Labor Party Chairman Viktor Uspaskich's
forced resignation as Economy Minister and upcoming municipal
elections in late 2006 have encouraged the Labor Party
especially to reevaluate the status quo. Our sources agree
that the coalition will remain intact for now. However, many
believe that the Labor party will pull out of the coalition
and go into opposition prior to the elections next year in
order to blame other coalition members for Labor's failure to
deliver on its campaign promises. If Labor pulls out, there
are few options for alternative coalition formations, and
none would be as stable as the current group. We do not
expect any substantive changes in Lithuania's foreign policy,
regardless of whether the ruling coalition's composition
changes. END SUMMARY.

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LABOR'S FUTURE
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2. (C) The Labor Party's two most senior representatives
after leader Viktor Uspaskich, Loreta Grauziniene and
Viktoras Muntianas, have recently given remarks to the press
on the future of the ruling coalition. Grauziniene has
recommended that Labor discuss pulling out of the four-party
coalition government, of which they are the biggest faction,
and go into opposition. Grauziniene's complaints center on
an alleged lack of respect for Labor from its partners. She
claims that the PM's Social Democrats are attempting to
exclude Labor from exercising influence over the coalition
agenda despite Labor having twice as many MPs. Muntianas
displayed a more conservative position, taking a "wait and
see" attitude. Uspaskich, returning from vacation on July
23, denied that the party was considering leaving the
coalition, but Grauziniene said the party leadership would
still discuss the possibility at their next meeting on July
25-26.


3. (C) Lauras Bielinis, a political analyst at the Institute
of International Relations and Political Science, told us
that Grauziniene's threats are most likely an attempt to
enforce coalition discipline and gain ground for Labor.
Bielinis theorizes that it is a similar strategy to Prime
Minister Brazauskas's recent threat to resign if the Seimas
did not pass the coalition's tax reform package (ref B).
Bielinis also said that if Labor were to pull out of the
coalition this early, some of its members would likely join
other parties in order to "be in the government." Juozas
Olekas, senior member of the Social Democrats in Parliament,
told us that he believes the Labor Party is just "making
threats" and that the comments "cannot be taken seriously
since Uspaskich has not been in Lithuania."


4. (C) Labor's image has suffered lately, with its leader
resigning from his position as Minister of Economy after a
Seimas commission found that he had violated rules
prohibiting conflicts of interest (ref C). Social Democrat
MP Algirdas Paleckis hinted to us on July 20 that, tiring of
the turmoil in Labor's councils, Muntianas and two to three
other Labor members in Seimas would likely switch to the
Social Democrats in the near future. Paleckis commented that
"(Muntianas) is a smart guy," and that "smart people will
leave Labor." Although Muntianas is one of Labor's most
prominent members, the press has reported that he is not
satisfied with his status inside the party nor with Labor's
accomplishments so far. Muntianas has made several comments
that conflict with the Labor party line during the past
several months.


5. (C) Paleckis also discussed a possible scenario in the
event that Uspaskich is forced to give up his chairmanship of
the Labor Party. He believes that there could be a merger
between the Social Liberals (the party of Arturas Palauskas,
Seimas Speaker and former interim President after Rolandas
Paksas' impeachment) and the Labor Party. Palauskas is a
statesman who commands a small party. He began his political
career as a populist, but generally is considered a
dispassionate moderate nowadays.


6. (C) Bielinis mentioned a second option should Labor's
party discipline weaken. He suggested that the more
business-oriented and less populist members of Labor could
join with former members of the smaller opposition Liberal
and Center Union to form a new faction in Parliament.

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COALITION ALTERNATIVES
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7. (C) Several contacts, including both Paleckis and
Bielinis, are convinced that Labor will pull out of the
coalition sometime next year prior to the municipal elections
in late 2006. Labor would benefit, they suggest, by being
able to shift the blame for the stalemate in Parliament to
its coalition partners. All municipal elections occur across
Lithuania simultaneously, meaning that Labor could hope for
another sweep similar to its decisive win in the last
Parliamentary election.


8. (C) The three other members of the ruling coalition,
Social Democrats, Social Liberals, and the Peasant's Party,
do not have much room to maneuver if forced to form a new
coalition. Without Labor's MPs, the group would be
hard-pressed to cobble together a majority. The only real
option would be a "Rainbow Coalition" including the
center-left Social Democrats, Social Liberals and Peasant's
Party along with the center-right Conservatives and
Liberal-Center Union. However, the parties would surely find
it hard to agree on common goals and power sharing, just as
they did during the formation of the current government (ref
D). Impeached President Paksas' Liberal Democrats tend to be
shunned by all sides, and are unlikely to participate in any
coalition unless Labor needs them to fill in the gap if one
of the smaller parties were to pull out.

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COMMENT
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9. (C) The coalition will likely remain intact in the near
term. The Labor party is interested in extending its
influence and its current threats are likely meant to support
that goal. Labor has twice as many MPs as the Social
Democrats, but has had much less input on the legislative
agenda. As Labor gains more experience in government, it can
be expected to assert its authority more frequently. Looking
ahead, Uspaskich and his fellow party members will have to
decide whether the freedom they would enjoy in opposition
merits relinquishing the perquisites of power.
Kelly