LITHUANIA: SCENESETTER FOR VISIT OF CODEL BERKLEY

UNCLAS VILNIUS 000180 SIPDIS PLEASE PASS TO H FOR CODEL BERKLEY FROM AMBASSADOR JOHN CLOUD E.O. 12958: N/A TAGS: PREL PGOV ECON ENRG OREP LH SUBJECT: LITHUANIA: SCENESETTER FOR VISIT OF CODEL BERKLEY REF: STATE 27301 ¶1. Welcome to Lithuania! We look forward to your visit, which coincides with a number of local celebrations. This year marks the fifth anniversary of Lithuania's membership in NATO. Lithuania is also celebrating the 1,000-year anniversary of the first reference to the country in historical texts, and Vilnius is one of Europe's 2009 Capitals of Culture. The United States and Lithuania enjoy a friendly and productive bilateral relationship based on a century of immigration, as well as our non-recognition of the forcible incorporation of Lithuania into the Soviet Union. Lithuania was delighted to join the Visa Waiver Program late last year, allowing easier travel to the United States. Lithuania has been a staunch U.S. partner, sending troops to Kosovo and Afghanistan. The Government of Lithuania (GOL) and all mainstream political parties value the friendship with the United States, as evidenced by the fact that you will meet with the President, the Prime Minister, the parliamentary Speaker and the leader of the opposition. -------------- Preview of Your Visit -------------- ¶2. I look forward to greeting your delegation upon arrival at the Vilnius airport on Wednesday and you will also meet with President Valdas Adamkus that afternoon. On Thursday, you will meet Seimas Speaker Arunas Valinskas, opposition leaders in the Seimas, and Prime Minister Andrius Kubilius. You will have lunch Thursday with Belarusian opposition leaders and Embassy Minsk Charge d'Affaires Jonathan Moore. At other meetings you will have the opportunity to discuss economic and energy topics, Russia relations and Jewish issues with a variety of experts from government, business and academia. Another issue the Embassy has worked hard to resolve, but so far unsuccessfully, is the hardship on American families caused by a restrictive Lithuanian residency law. -------------- Relations with Russia -------------- ¶3. Lithuanian-Russian relations are complicated, and historically have been characterized by occupation and repression. In the last century, the Russian Empire and the Soviet Union occupied Lithuania from 1900-1918, 1940-1941 and then again from 1944-1991. In 1990, Lithuania became the first republic to proclaim independence from the Soviet 
Union. Today Lithuania's relations with Russia remain strained. Even average Lithuanians were concerned about Russian aggression in Georgia last August, but there are clearly mixed feelings about whether the best path is to engage Russia or try to isolate it. ¶4. In the economic field, Lithuania is fully dependent on Russia for its natural gas supply and largely dependent on Russia for oil imports. Looking ahead, Lithuania's Ignalina Nuclear Power Plant (a Chernobyl-style Soviet-era facility) will close on December 31, 2009, under the terms of its EU accession agreement. Lithuania presently has no replacement ready and has no option to replace this electrical power other than increased reliance on Russian resources. Lithuania is uncomfortable with Russia maintaining so much leverage but developing alternative energy sources will take time. Russia is also Lithuania's largest trading partner. ¶5. Lithuania has a small (five percent) Russian minority, which plays no significant role in domestic politics. When Lithuania regained its independence, ethnic Russians living here were able to apply for Lithuanian citizenship, which has allowed Lithuania to avoid ethnic tensions that have troubled the other Baltic states. ¶6. Some in Lithuania may be ready to tentatively hit the restart button together with allies. The Lithuanian Foreign Ministry has signaled an increased willingness to engage Russia on border, cultural and diplomatic initiatives. -------------- Belarus -------------- ¶7. Lithuania and Belarus share a relatively long (679-km) border and much history. As a result, the GOL focuses much attention on pulling Belarus toward the West and democracy. Lithuania strongly supports Belarusian participation in the EU's Eastern Partnership initiative, which is set to launch in May of this year. ¶8. In addition to engaging the Government of Belarus directly, the GOL supports organizations that have been shunned by the Lukashenka regime. The European Humanities University (EHU) was closed by Belarusian authorities in 2004, but re-launched its activities in Vilnius in 2005 and has been operating in exile ever since. There are also a number of NGOs working out of Vilnius on Belarusian human-rights issues including the International Republican Institute, the Human Rights House and the Eastern European Studies Center. The GOL also supports an annual rock concert "B2Gether" on the Lithuanian-Belarusian border to promote friendship and freedom. -------------- Jewish Issues -------------- ¶9. Lithuania has struggled to deal with the effects of the Holocaust and the involvement of Lithuanians in it. This embassy has been deeply engaged with the GOL to push for the restitution of Jewish communal property and for the protection of a historic Jewish cemetery in the Snipiskes neighborhood of Vilnius. Congress passed concurrent resolutions critical of the GOL on both of these topics last year. Lithuania also has appeared more zealous in efforts to investigate Jewish WWII partisans who fought alongside Soviet troops than Nazi collaborators, and some politicians clearly consider the Soviets a greater historical evil than the Nazis. ¶10. Lithuania is one of the few countries in Europe that has not resolved the issue of communal Jewish property confiscated by Nazi or Soviet occupation forces. For years, successive governments have promised -- and failed -- to introduce restitution legislation in the Seimas (parliament). The current government has published draft legislation, but Jewish leaders say they were not consulted before the government unveiled the latest proposal. It calls for monetary compensation for the stolen properties, but how the valuation of these properties was determined is unclear. ¶11. The historic Jewish cemetery in the Snipiskes area of Vilnius was the main burial ground for Vilnius's large Jewish community for several centuries. It was largely destroyed by the Soviets, who removed headstones and used them in other construction projects, although many graves remain in place. In 2006-2007, the GOL allowed the construction of office/apartment buildings in one corner of the site, despite significant evidence that they likely were partially inside the cemetery's boundaries. We have urged the government to work with Jewish groups to protect and appropriately memorialize the cemetery site in its entirety. ¶12. Although the Justice Department's Office of Special Investigations (OSI) has provided the GOL with extensive files of evidence on Lithuanian-born Nazi collaborators, few have been prosecuted here and none has been imprisoned. Yet the Prosecutor General's office last year actively pursued investigation of several elderly Jews, who had been anti-Nazi partisans, about mass killings of Lithuanians allegedly committed by fighters allied with Soviet troops during World War II. Although the GOL dropped the case against the most well-knowm of these partisans, General Arad, the prosecutor continues to want to interview others as potential witnesses. -------------- Economic Downturn -------------- ¶13. After years of strong growth, the economy has reversed course. Unemployment levels have increased from 3 percent in September 2008 to 8.2 percent in March 2009. ¶14. As revenues decline, the government's budget deficit is growing, despite earlier budget cuts and tax increases. The GOL slashed spending by approximately 15 percent at the beginning of this year, and is now seeking approximately 1 billion dollars of additional cuts -- about 11 percent of the original budget. The Finance Ministry now anticipates negative growth of 10.5 percent this year. The prime minister recently said that the GOL would consider laying off 4,000 public-sector employees, approximately 20 percent of total staff. ¶15. External borrowing, already a challenge, should become more difficult following Standard and Poor's recent lowering of Lithuania,s sovereign credit rating to BBB/A-3 from BBB plus/A-2. ¶16. The United States ranks 11th in Foreign Direct Investment (FDI) in Lithuania. U.S. direct investment stands at $347.5 million, or 2.5 percent of total FDI, trailing well behind neighboring and other European countries. At the corporate level, though, three of the six largest foreign investors in Lithuania are American firms: Philip Morris, Kraft and Mars. -------------- Residency for Americans -------------- ¶17. In November 2006, the Parliament amended the law on the legal status of foreigners so that it requires foreign workers from non-EU countries to live in Lithuania for two years before their family members can receive residency permits and join them. The change has caused hardship for the private American community in Lithuania including the families of teachers, Fulbright Scholars, businesspeople, military-exchange participants, and basketball players working in Lithuania. The law now creates a disincentive for a variety of professionals to work in Lithuania and limits the potential for Americans and others to share their cultural and business talents with Lithuania. Despite our intense attention to this problem, there has not yet been an amendment proposed that would resolve it. ¶18. All of us at Embassy Vilnius very much look forward to seeing you in Lithuania April 15-17, and wish you safe travels. CLOUD