LATVIAN POLITICS TURNS WEIRD; FM RESIGNS, PM

C O N F I D E N T I A L SECTION 01 OF 02 RIGA 000782

SIPDIS

NOFORN
SIPDIS

E.O. 12958: DECL: 10/19/2017
TAGS: PGOV PINR LG
SUBJECT: LATVIAN POLITICS TURNS WEIRD; FM RESIGNS, PM

REFUSES TO ACCEPT

REF: RIGA 778 AND PREVIOUS

Classified By: Charge d'affaires a.i. Stuart M. Seldowitz. Reason: 1.4
(d)


1. (C/NF) Summary: Latvia's internal political machinations
took a bizarre turn on October 19. FM Pabriks submitted his
resignation, telling the Ambassador that he had "lost trust"
with the current cabinet. But PM Kalvitis refused to accept
the resignation and Pabriks is, in effect, hostage in the
cabinet. At the same time, regional development/local
government minister Stokenbergs, traveling in Spain was
kicked out of the People's Party and the PM demanded his
resignation. Both men are likely to resume their seats in
parliament, which would change the coalition math in the
legislature. The PM is trying hard to project an air of at
least moderate stability and suggesting that any changes in
government will be managed. But it is not clear that the
various forces pushing on his government can be held back
that long. Our best guess is that the government will be
able to hang on for a few weeks, but that could very easily
change. The dismissal of anti-corruption chief Loskutovs,
ostensibly the cause for much of the turmoil will likely be
left to the side while the political issues are worked out.
End summary.


2. (C) Following his October 18 announcement that he now
opposed the cabinet decision to recommend dismissal of
anti-corruption chief Loskutovs (reftel),FM Pabriks
submitted his resignation October 19. Pabriks informed the
Ambassador that he had "lost trust" with PM Kalvitis' current
cabinet. Kalvitis, however, refused to accept the
resignation. Kalvitis said that Pabriks needs to finish what
he started, especially bringing the Latvia-Russia border
treaty in to force. Pabriks has accepted that he must stay
on, but has cancelled planned foreign travel and announced
that he will go to work on Monday with no enthusiasm. Andris
Pelss, foreign policy advisor to President Zatlers, told
Charge that the President called in his legal advisor to ask
about Pabriks' status. The advisor confirmed that Pabriks
remains FM until such time as new FM is approved by Saeima.
Previously, though, ministers who resigned simply stayed away
form work. The advisor said this is an unprecedented and
unforeseen situation.


3. (C) While rejecting Pabriks' resignation, Kalvitis
demanded the resignation of Aigars Stokenbergs, Minister for
Regional Development and Local Government. Stokenbergs has
been critical of the leaders of the People's Party to which
he, Kalvitis and Pabriks all belong. His criticism has most
notably been directed at former PM Andris Skele, who remains
the "godfather" of the People's Party and is considered one
of Latvia's oligarchs. On the morning of 19th, with
Stokenbergs in Spain, the board of the People's Party
expelled Stokenbergs from the party. Kalvitis called him to
inform and demand his resignation. Stokenbergs has said he
will not cut short his trip, but will resign when he returns
October 23. In meetings with Embassy personnel over the past
2 - 3 months, Stokenbergs made clear that he understood his
days as minister were numbered after taking on Skele and that
he expected either to leave People's Party or be thrown out,
so today's actions would not have been a total surprise to
him.


4. (U) Other members of People's Party and of the coalition
are expressing varying levels of support for Kalvitis. Some
are saying he should go now, others are saying that the 2008
budget should be passed first, but few are voicing outright
support for the embattled PM. Kalvitis himself is urging
that the government and parliament finish the 2008 budget
first, and then consider the possibility of changes to
government.


5. (C/NF) Pol/Econ chief had a previously planned meeting
with Jurgis Liepniks, former chief of staff to PM Kalvitis,
as all of this played out. Liepnieks, who is on the outs
with People's Party for testifying against Skele in a
criminal case, has long been close to Stokenbergs. During
the meeting, it became clear that he is also working with
Pabriks, who called to seek Liepnieks' advice when Kalvitis
refused to accept the resignation. Liepnieks said that both
Pabriks (who has not yet resigned from the party but is
likely to do so) and Stokenbergs would resume their seats in
parliament (in Latvia, they are traditionally given up when
joining the cabinet, but the individual can always take it
back),which would reduce People's Party to 21 seats and the
coalition to 55 out of 100. Liepnieks said that sacking
Stokenbergs and refusing to accept Pabriks' resignation were
"stupid moves" that make People's Party look weak. In his
mind, at least, both are clear evidence that Skele is calling
the shots in People's Party at the moment.

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6. (C/NF) We also met recently resigned Saeima speaker
Indulis Emsis on October 18. At that time, he already
thought that the coalition was in trouble. He suggested that
there was a possibility that leftist party Harmony Center
(SC) could be brought into government, although bringing in
what many view as a "Russian" party would be difficult for
many coalition voters to accept. Liepnieks also thought SC
could be invited to join government, but said that with the
coalition parties as weakened as they are by scandal and bad
economic news, they would try to avoid that. The first
choice would be to keep the current coalition in place. Next
would be to invite in New Era. In the former, a new PM would
be needed, Liepnieks said, but in a coalition with New Era he
saw possibilities for Kalvitis to continue in office.


7. (C/NF) Comment: The Kalvitis government has always tried
to avoid "messy" situations, often delaying difficult issues
until they can be resolved behind the scenes. That makes
today's actions especially surprising because the party is
airing its dirty laundry for all to see. One person we spoke
to speculated that Kalvitis refused to accept Pabriks'
resignation so that the FM would be forced to stick around
and go out with the entire cabinet as one. Whatever the
proximate cause, the reality is that these moves have been
coming for some time. Party leadership planned to dump
Pabriks after the last election but he was the highest vote
getter in the party behind Kalvitis and is currently its most
popular minister. Pabriks has used that popularity to go his
own way on many issues, often becoming a thorn in the PM's
side. The rejection of his resignation is likely borne of
pique, with Kalvitis unwilling to let Pabriks leave on his
terms, but it will leave the PM with a vocal critic in the
cabinet. Stokenbergs, once being groomed for PM, has grown
disillusioned in recent months and has been increasingly
critical of the party and Skele in particular. He made no
secret of his displeasure with the choice of Zatlers as

SIPDIS
president and refused to attend the inaugural ball, instead
attending a counter-inauguration for Zatlers' rabbit.
Interestingly, Stokenbergs has since built a good
relationship with Zatlers, and the President's Chief of Staff
recently told the Ambassador that Stokenbergs would be
Zatlers' choice for PM, but there is no way he could get the
necessary support in parliament.


8. (C/NF) Comment, contd.: So, what next? No one in Latvia
really seems to know. Most, if not all, of the seven parties
in parliament have serious internal difficulties that would
complicate any coalition negotiations. Many of Latvia's
elite recognize that Kalvitis, while far from perfect, is
much better than some of the other likely choices for PM.
So, it is not out of the realm of possibility that he could
remain as PM, either with a remade cabinet or even a new
coalition. We think that right now political leaders believe
they can hold the current government together long enough to
pass a new budget, which could be done in as few as three
weeks, then turn to forming a stable government. And while
this is sorted out the dismissal of anti-corruption chief
Loskutovs, in many ways the proximate cause of the current
situation, will be "investigated" and further parliamentary
action likely delayed until the political situation is worked
out. But while party leaders and elites engage in back room
discussion and strategy sessions, the average Latvian is
growing increasingly frustrated by what they view as politics
as normal. If the current situation is allowed to drag on
indefinitely, more actions like the October 18 protest are
likely, which would put pressure on the government to make
changes sooner. Already various unions are planning protests
against the new budget, which they think does too little for
wages of teachers, police, and health care workers. This
government may not like a mess, but that is exactly what it
has.
SELDOWITZ