RESTRUCTURING AND REDUCTIONS AT LATVIAN MFA

C O N F I D E N T I A L RIGA 000815

SIPDIS
NOFORN

E.O. 12958: DECL: 12/23/2018
TAGS: PGOV PREL PINR LG
SUBJECT: RESTRUCTURING AND REDUCTIONS AT LATVIAN MFA

Classified By: A/DCM Tamir G. Waser. Reasons: 1.4 (b and d)


1. (C/NF) Summary: A planned restructuring of the Latvian
foreign ministry to reduce the size of senior leadership and
staff and salary reductions necessitated by budget cuts will
likely add to the frustrations of an already unhappy
diplomatic service. Decision making will be further
concentrated in the hands of a few people, all of whom are
generally supportive of the US, but it will be harder for the
Latvians to follow multiple issues concurrently. In the next
six months, as many as 20 diplomats will lose their jobs and
all personnel will face pay cuts. This is only one example
of the very difficult choices Latvia will face in
implementing the changes in fiscal policy necessitated to
qualify for international financial assistance. End summary.


2. (C) Starting January 1, the current eight undersecretaries
at the MFA will be reduced to two - handling political and
administrative functions. Peteris Ustubs, currently
political director at the ministry, will become the political
undersecretary, overseeing EU affairs, bilateral issues,
economic and security policy. The current undersecretaries
for EU, bilateral and economics issues will become
directors-general and security policy will be subsumed in
bilateral affairs. Ivars Pundars, returning from being
Ambassador to Turkey, will head up the administrative area,
with the current undersecretaries for personnel, legal, and
consular affairs also becoming directors-general. Ustubs and
Pundars will report to new State Secretary Andris Teikmanis.


3. (C/NF) Contacts in the MFA generally view this as a plan
by FM Riekstins to further close the limited circle of
advisors he consults on issues. Many desk officers and
office directors say that they are completely removed from
any discussions of actual policy and limited simply to
writing briefers and planning visits. The mood in the
ministry has noticeably worsened in the past year.


4. (C/NF) While it is true that the number of decision makers
in the MFA will be reduced, we believe that all of the key
officials are supportive of strong and robust ties with the
U.S. Riekstins, of course, has a long history as MFA state
secretary and Ambassador to Washington. Ustubs has been one
of this Embassy's closest contacts both in his current
position and as foreign policy advisor to former PM Kalvitis.
Pundars was a close contact prior to his assignment to
Turkey. Teikmanis made an effort to ensure that Ambassador
Larson was among the first Ambassadors he met upon assuming
the job at the beginning of December. That said, some of the
demoted undersecretaries, especially on economic, bilateral
and consular issues, have also been good friends and we fear
that their substantive knowledge and intellectual firepower
will be used less, making it harder for the minister to stay
abreast of more than a few key issues at any one time.


5. (C) Adding to the ministry's challenges are the deep
financial cuts needed to satisfy the government's drive for
fiscal discipline. Already 24 vacant positions have been
eliminated and 21 more need to be cut by July 1. Our
understanding is that this will require letting personnel go
and while many of the vacant positions were administrative,
most of the lay offs will come from diplomats. There will
also be a hiring freeze. Those employees who remain will
face salary cuts of 5 percent for lower paid employees and 10
percent for the higher paid ones. In addition to the salary
cuts, personnel serving overseas will also see an additional
cut of 15 percent in their cost of living and hardship
allowances. Housing, education and medical benefits overseas
will be preserved. The ministry will almost certainly close
its consulate in Bonn and closures of other missions may be
needed. Travel budget has been reduced drastically.


6. (C/NF) Comment: The cuts and restructuring coming at the
same time will do little for morale at the MFA, but given the
overall economic situation here, we don't see a mass exodus
of employees as likely. One senior official voiced concern
about the long-term impact of the staffing cuts and hiring
freeze, saying that the MFA will find itself in future with
more senior officials and not enough people to handle the day
to day work. The situation at the MFA, especially on staff
and salary reductions, is likely to be repeated across the
Latvian government in coming weeks as institutions implement
the tough fiscal policy passed by the government to qualify
for international financial assistance.
ROGERS