INTERIM GOVERNMENT TAKES POWER IN LITHUANIA

C O N F I D E N T I A L SECTION 01 OF 02 VILNIUS 000511 SIPDIS SIPDIS STATE FOR EUR/NB E.O. 12958: DECL: 06/02/2016 TAGS: PREL PGOV LH SUBJECT: INTERIM GOVERNMENT TAKES POWER IN LITHUANIA REF: VILNIUS 502 Classified By: Pol/Econ Officer Randolph Flay for reasons 1.4(b/d) SUMMARY -------------- ¶1. (C) Lithuanian Prime Minister Algirdas Brazauskas handed a letter of resignation to the President Valdas Adamkus on June 1, following the May 31 withdrawal of the Labor Party and its five ministers from the ruling coalition (reftel). Brazauskas's Cabinet remains in place on an interim basis with Finance Minister Zigmantas Balcytis as acting Prime Minister. While the political parties are jockeying for position in the next coalition government, one thing seems certain: the Labor Party, smarting from its new role as a political pariah, is rumored to be preparing a campaign claiming that President Adamkus, whom it blames for its fall from power, served as a KGB agent. We have prepared a contingency statement to defend Adamkus in the event that these allegations surface publicly. End summary. PM RETIRES, PRESIDENT APPOINTS INTERIM GOVERNMENT -------------- -------------- ¶2. (U) Prime Minister Brazauskas officially departed the Government of Lithuania June 1, after submitting his letter of resignation to President Adamkus. President Adamkus signed a decree appointing Finance Minister Zigmantas Balcytis, a Social Democrat like Brazauskas, as acting Prime Minister. His decree also retains the Brazauskas government's ministers to serve with the interim government. ¶3. (U) Although he remains the Chair of the Social Democratic Party, Brazauskas stated publicly that he will not play a role in a new government. The PM said he will assume the life of an "ordinary pensioner," and may complete and publish memoirs he began during his last retirement, from 1998 to ¶2001. SOCIAL DEMS, CONSERVATIVES JOCKEYING TO LEAD NEW COALITION -------------- -------------- ¶4. (C) No clear leader has emerged to assemble the next government although two blocs are forming, but the Social Democrats appear to be leading the pack. They signed a cooperation agreement June 1 with the Peasant Parliamentary group that forms a 32-seat bloc in the 141-member parliament. The Civil Democracy group announced publicly today that it plans to join the bloc next Tuesday, potentially ratcheting up its strength to 43 MPs and making it the leading contender �A;to form and lead the coalition. A key member of the President's staff told us he expects that acting PM Balcytis will head the next coalition government. ¶5. (C) The Homeland Union (Conservatives) signed a cooperation agreement with the center-right Liberal Movement, giving that bloc command of 37 parliamentary seats. Media report that discussions are also underway to bring in the New Union Group (10 MPs) of former Parliamentary Speaker Arturas Paulauskas into the fold. Party leader Andrius Kubilius told us he would carefully consider his options in the days ahead. A six- or seven-party coalition, he said, would inevitably be difficult to manage and potentially short-lived. The Conservatives, he concluded, might be better advised to remain in opposition. ¶6. (U) The current correlation of forces within the Parliament is as follows: -- Social Democratic Group (21 MPs) Peasant Group (11 MPs) -- Civil Democracy Group (11 MPs) -- Homeland Union Group-Conservatives (26 MPs) Liberal Movement Group (11 MPs) -- New Union Group (10 MPs) -- Liberal and Center Group (8 MPs) -- Labor Group (31 MPs) -- Law and Order Group-Liberal Democrats (9 MPs) LABOR PAINS -------------- ¶7. (C) Both the President and the outgoing Prime Minister have said publicly that they do not expect to see the Labor Party in the government. A Liberal Movement MP and others have told us that six or seven Labor MPs will likely abandon ship and move to the Social Democrats or Civil Democracy Party. ¶8. (SBU) The Labor Party appears to be in disarray, beset with multiplying investigations. The Lithuanian Tax VILNIUS 00000511 002 OF 002 Inspectorate informed the Elections Committee June 1 of a $50,000 undeclared contribution to Labor Party coffers. Erstwhile Party leader Viktoras Uspaskich arrived back in Lithuania in the predawn hours of June 2 after more than two weeks in his native Russia. Other parties are keeping their distance. Even current Parliament speaker Muntianas, whose Civil Democracy group split from Labor just weeks ago, spoke publicly of his group's interest in being in the next coalition government, but said that it would only do so on the condition that Labor stayed out. POSSIBILITY OF A SMEAR CAMPAIGN -------------- ¶9. (C) A member of the president's staff told us June 1 that the Labor Party will launch a campaign to tarnish the reputation of President Adamkus, beginning June 3. We have been hearing for six months that Labor has a war chest, purportedly from Russian intelligence sources, to finance a smear campaign. We are told by well-placed Lithuanian sources that a central element of this campaign will be the manufactured allegation that Valdas Adamkus was a paid KGB agent. ¶10. (C) We have prepared a draft Embassy statement defending Adamkus that we plan to release in the event that these allegations surface publicly. Our statement reads: "We have no reason to believe these allegations are true. As an official with the U.S. Environmental Protection Agency, President Adamkus left behind a laudable record of accomplishments. Today, President Adamkus is an international leader of unimpugnable integrity who has done a great deal to advance the cause of democracy, liberty, and U.S.-Lithuania relations." We have shared this text with Adamkus's press spokeswoman, who told us that the Presidency was grateful for our planned response. TICKING OFF THE DAYS -------------- ¶11. (U) The Lithuanian Constitution stipulates that, within 15 days (i.e., June 16),the President must submit to the Parliament his candidate for Prime Minister. In practice, parliamentary groups will both form a coalition and recommend a PM candidate to the President in advance of this deadline. Following appointment by the President, the Prime Minister has 15 days to form a cabinet, obtain Presidential approval, and submit the Government's program to the parliament for consideration. ¶12. (U) The new Government receives its powers when Parliament approves its program. Should Parliament not vote on the Government's program within 30 days, or twice reject the program within 60 days, the President may call for new parliamentary elections. COMMENT -------------- ¶13. (C) We expect the Social Democrats will play a central role in the new government. Whether the Conservatives join their ideological opposites or stay on the outside remains to be seen. Our best guess is that they will choose to stay out, betting that they will be much better placed for municipal elections if they remain in opposition. MULL