LATVIA WAVERING ON STRATEGIC AIR CONSORTIUM;

C O N F I D E N T I A L RIGA 000391

SIPDIS

E.O. 12958: DECL: 07/02/2013
TAGS: MARR MOPS PGOV PREL NATO LG
SUBJECT: LATVIA WAVERING ON STRATEGIC AIR CONSORTIUM;
REQUEST FOR GUIDANCE

REF: SELDOWITZ/OLSON TELCON

Classified By: DCM Stuart Seldowitz. Reason: 1.4 (d)


1. (U) This is an action request. Please see para 3.


2. (C) Latvia is in the midst of making decisions on cuts for
its 2008 budget (which covers the calendar year). As growth
has plummeted from nearly 10 percent to 3.5, expected
revenues have fallen significantly and the government is
seeking to cut 200 million lats (about 445 million USD) from
the budget (a 3.75 percent cut in planned expenditures) in
hopes of retaining a small surplus as the IMF and credit
rating agencies are urging. In that context, we understand
from senior officials in the MOD that Latvian participation
in the Strategic Air Consortium (SAC) for NATO to buy C-17
aircraft is an obvious target for reduction. The cabinet
could discuss the issue as soon as July 8, with the final
amendments to the budget adopted by parliament likely on July

17. The increasingly gloomy economic situation and the need
to find further cuts in an already tight budget, mixed with
what the Latvians perceive to be significant growths in the
cost of the SAC project have led us to this point.


3. (U) Action request: We understand that Latvia's
involvement in the SAC may be crucial to its viability, but
we also see the very real budgetary constraints in which
Latvia finds itself and we have heard numerous complaints
about the growth in costs. If Washington agencies believe
that Latvia's continued participation in the SAC is vital and
want us to raise this at the highest levels of the government
(the only place we could hope to have an impact) then we
request front channel guidance and talking points soonest,
but no later than Riga OOB, Monday, July 7.
LARSON