AMBASSADOR'S MEETING WITH MINISTER OF ECONOMICS

C O N F I D E N T I A L SECTION 01 OF 02 RIGA 000566

SIPDIS

SIPDIS

STOCKHOLM FOR FCS

E.O. 12958: DECL: 07/18/2011
TAGS: ECON ETRD PREL PINR OFPD RS LG
SUBJECT: AMBASSADOR'S MEETING WITH MINISTER OF ECONOMICS

REF: A) RIGA 552 AND PREVIOUS B) RIGA 481

RIGA 00000566 001.2 OF 002


Classified By: Ambassador Catherine Todd Bailey. Reason: 1.4 (D)


1. (C) Summary: In a July 17 meeting, Ambassador Bailey and
Economics Minister Stokenbergs discussed outstanding trade
issues Liepajas Metallurgs and Coca-Cola, building bilateral
trade links, and Latvia's relations with Russia. While we
had little to offer on Liepajas Metallurgs, Stokenbergs was
extremely constructive on Coca-Cola. He thought that the
health ministry was playing politics, and he agreed to meet
with Coca-Cola reps and to join the Ambassador on a visit to
the bottling plant. Stokenbergs plans to follow up with
participants in the May pan-Baltic trade and investment
conference and would consider leading a trade mission to the
U.S., perhaps in September. Mortgage lending and alternative
energy sources were two areas where he thought there would be
good opportunities for U.S. business in Latvia. Access to EU
structural funds should also be a selling point, he argued.
On Russia, the GOL is curious to see whether the recent
progress in bilateral relations will continue now that the G8
is over. Stokenbergs is reported to be a bigger player in
government than he appears, but it is still early for us to
draw that conclusion. End summary.


2. (U) Ambassador Bailey met with Economics Minister Aigars
Stokenbergs July 17. Stokenbergs was joined by Deputy State
Secretary Zaiga Liepina and a notetaker. Pol/econ chief

SIPDIS
(notetaker) accompanied Ambassador.

Trade Issues: Liepajas Metallurgs and Coca-Cola
-------------- --------------

3. (C) Stokenbergs opened by asking about the Department of
Commerce's imposition of countervailing duties on imports of
rebar from Liepajas Metallurgs. He said that President
Vike-Freiberga had asked him about this issue when they were
in London last week and wanted to see if there had been any
action since she raised it with Secretary Rice in early June.
Ambassador assured Stokenbergs that we were aware of the
GOL's great interest in this issue, but that there was no
immediate action planned. P/E chief noted the results from
the next administrative review would be announced in early
August.


4. (SBU) The Ambassador raised our continuing concern over
proposed government regulations that could harm Coca-Cola's
business in Latvia. She stressed that Coke wants to be a
good corporate citizen, but both Coke and we are having
trouble getting through to the health minister on this issue.
Stokenbergs said that regulations should be based on facts,
and restrictions on business only imposed to safeguard
security. That was not the case with Coca-Cola, in his view.
The minister pledged to talk to the health minister and said
he would meet with Coke. Stokenbergs then accepted the
Ambassador's invitation to join her on a visit to the
Coca-Cola bottling plant in early August.

Bilateral trade and investment
--------------

5. (SBU) How could we follow up to the successful pan-Baltic
trade and investment conference in May, the Ambassador asked.
How could we continue to work together to build business
links between the U.S. and Latvia? Would the minister
consider leading a trade delegation to the U.S.? Stokenbergs
said he would task the Latvian Investment and Development
Agency (LIDA) to prepare a report on what they were hearing
from companies who attended the conference and analyze what
investment possibilities existed. He cited the energy
sector, especially in alternatives to fossil fuels, as one
where he thought there was great potential for U.S. - Latvian
business ties. Stokenbergs said he would consider leading a
trade mission in September, but did not commit. The
Ambassador noted that she would be in the U.S. at the
beginning of September and willing to help with a mission if
she could. Stokenbergs stressed that a major selling point
for U.S. businesses to come to Latvia should be their ability
to apply for some of the large amount of EU structural funds
that would be available for projects in Latvia over the next
six years. He also highlighted the difficulties LIDA
personnel assigned to the Latvian Embassy in Washington were
having with accreditation as an impediment to their
commercial efforts. The Ambassador acknowledged the problem,
and expressed hope that meetings with protocol this week
could address that issue.


6. (SBU) While in London, Stokenbergs said that he met with
representatives of Citibank, and was encouraged by the
meeting. He is eager to avoid German and Swedish domination
of Latvia's fast-growing mortgage lending sector and would
like to see Citibank and other U.S. financial institutions

RIGA 00000566 002.2 OF 002


focus in particular on that area. Stokenbergs was pleased
with the language in our recent statements on the Latvian
banking sector, saying they helped Latvia's efforts to
develop into a regional financial center. The Ambassador
recalled President Vike-Freiberga's desire to host a regional
forum of the World Economic Forum in Riga and the minister
said he would follow up with the President's office on this
idea.

Latvian-Russian relations
--------------

7. (C) The Ambassador asked about recent press reports that
Stokenbergs might travel to Moscow to sign some bilateral
economic cooperation agreements. The minister said that the
two sides had agreed in principle at expert level to
agreements on economic cooperation and on establishing the
long-stalled intergovernmental commission. There was also a
treaty on double taxation that has been waiting for signature
since 2000. Although there would be a delegation of Latvian
businessmen going to Moscow July 19 - 21, Stokenbergs said
the GOL had decided he should not go at this time as
suggested by his Russian counterpart, economic minister Gref.
Instead, Stokenbergs would go when all three documents were
ready for signature, which he hoped would be in early
September. The GOL, he acknowledged, wanted to see whether
recent improvements in the bilateral relationship would last
past the G8.


8. (C) Comment: Stokenbergs' initial months as economics
minister were not marked by much dynamism, but he is becoming
more active and visible as he settles into the job. However,
he lacks the business-friendly personal style of his
predecessor, Kristianis Karins. A local journalist recently
told us that, based on his previous role as economic advisor
to PM Kalvitis, Stokenbergs is more powerful than he appears,
but he does all of his work behind the scenes. That may be
true, but we have yet to see that on any of our issues. A
possible trade mission to the U.S. and assistance with
Coca-Cola's case will provide good opportunities for us to
better understand just where he fits in the government and
party hierarchy. End comment.
Bailey