US embassy cable - 04VILNIUS1352

C O N F I D E N T I A L SECTION 01 OF 02 VILNIUS 001352 
 
SIPDIS 
 
STATE FOR EUR/NB 
 
E.O. 12958: DECL: 10/28/2014 
TAGS: PGOV, PREL, LH, HT1 
SUBJECT: THE END OF THE RAINBOW: COALITION TALKS WITH 
CONSERVATIVES COLLAPSE 
 
REF: VILNIUS 1323 
 
Classified By: Pol/Econ Officer Christian Yarnell 
for Reasons 1.4 (b) and (d) 
 
 1. (C) SUMMARY: The Conservative Party suspended formal 
talks with the Brazauskas-Paulauskas coalition on October 28, 
following major disagreement over the constitution of a 
so-called "rainbow coalition."  Immediately following the 
collapse of talks, the Brazauskas-Paulauskas coalition 
formally agreed to begin negotiations with the upstart Labor 
Party led by Russian-born millionaire Viktor Uspaskich.  The 
Labor Party has said it will accept PM Brazauskas's and 
Parliamentary Chairman Paulauskas's remaining in their 
respective positions, although Uspaskich hopes to get more 
key posts in Parliament as compensation.  A coalition of the 
Social Democratic, New Union, Labor, and Peasant parties 
would have a solid majority of 84 MPs in the 141-seat 
Parliament, and would leave President Adamkus little choice 
but to endorse its proposed Cabinet.  Detailed negotiations 
will continue well into next week, however.  Brazauskas has 
signaled to the Labor Party that, if his demands are not met, 
he could form a minority Cabinet among the Social Democrats, 
New Union, and Liberal Center, and the Conservatives have 
said they would throw their needed support behind this 
minority Cabinet.  Brazauskas is driving a hard bargain, but 
we expect him to form a coalition government with Labor 
before the end of next week.  END SUMMARY. 
 
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Conservatives and Liberals Back Out of Talks 
-------------------------------------------- 
 
2. (U) "Rainbow" coalition negotiations between the 
center-left Brazauskas-Paulauskas alliance (Social Democratic 
and New Union Parties) and the center-right bloc of 
Conservatives and Liberal Centrists, launched following 
October 24 elections (ref A), have all but collapsed.  The 
ideological adversaries -- Conservatives as successors of the 
independence movement Sajudis and Social Democrats as 
Communist Party offspring -- failed to bridge their 
differences and agree on a sharing of power.  The 
Conservatives (25 seats in Parliament) rejected demands by 
the Social Democrats (20 seats) for the top leadership 
positions in the government and key ministerial posts.  The 
Social Democrats, in turn, dismissed the Conservative 
compromise proposal of a two-year rotation of the top 
government spots.  The crisis came to a head when 
Brazauskas's party signed an agreement on October 28 to 
launch formal negotiations with the Labor Party. 
Conservative leader Andrius Kubilius responded by suspending 
talks on the "rainbow" coalition.  The Liberal Center joined 
with the Conservatives and refused an invitation to join in 
talks with Labor. 
 
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Labor Party Eager for Coalition 
------------------------------- 
 
3. (U) The Labor Party (39 Parliamentary seats), meanwhile, 
has already declared that it considers PM Brazauskas and 
Parliamentary Speaker Paulauskas acceptable candidates to 
remain in their current leadership posts.  Uspaskich has 
limited his appetite to six ministerial portfolios (of lower 
importance) and complimented the current 
Brazauskas-Paulauskas Cabinet for implementing a program 
similar to his own.  Brazauskas cautioned that there was more 
to negotiate, however, noting that he could still form a 
minority Cabinet comprised of Social Democrats, New Union, 
and the Liberal Center if necessary.  The Conservatives 
indicated on October 29 a willingness to support such a 
minority Cabinet, bolstering Brazauskas's bargaining position 
vis-a-vis Labor. 
 
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Negotiation Details 
------------------- 
 
4. (U) Social Democrats demand for themselves the post of PM 
for Brazauskas and seven ministries (out of 13 total) that 
would administer the bulk of EU funds:  Finance, 
Transportation, Environment, Economy, Agriculture, and Social 
Security and Labor.  A majority of portfolios in the Cabinet 
would not only enable PM Brazauskas to steer policy, but 
would also enable him to continue on uninterrupted as PM. 
(Note: According to Lithuanian law, the PM must step down if 
more than half of the Cabinet ministers change.)  The New 
Union wants for itself the posts of Parliamentary Chairman 
and Ministers of Foreign Affairs and Education.  Uspaskich 
has said that Labor could accept as few as six Cabinet 
positions, as long as it received the lion's share of 
committee chair posts in Parliament as compensation.  Peasant 
Party leader Prunskiene is battling for control of the 
Ministry of Agriculture, but, according to media reports, is 
unlikely to assume the post herself. 
 
5. (U) A Brazauskas-Paulauskas-Uspaskich-Prunskiene (Social 
Democrats, New Union, Labor, and Peasants) coalition, 
including a few independents, would have a solid majority of 
84 MPs in the 141-seat Parliament.  Talks on the division of 
portfolios, personalities, and Cabinet program will continue 
well into next week, but President Adamkus would have little 
choice but to endorse the Cabinet of this coalition. 
 
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Comment 
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6. (C) Brazauskas has played hardball throughout the 
post-election negotiations, even though his Social Democratic 
Party finished third in the elections with only 20 of 141 
Parliamentary seats.  Yet the Brazauskas-Paulauskas coalition 
remains the only partner acceptable to all sides, and 
electoral math dictates that Brazauskas be included in the 
next government.  His flirtation with the right succeeded in 
frightening Labor, which is desperate to be included in the 
government following a very expensive campaign with high 
expectations of success.  Uspaskich's willingness to allow 
Brazauskas and Paulauskas to remain on as PM and 
Parliamentary Chairman, respectively, removes the most severe 
obstacle to a coalition agreement.  We expect the Social 
Democrats, New Union, Labor, and Peasants to announce the 
formation of a coalition government headed by PM Brazauskas 
by the end of next week, although a minority Cabinet 
excluding Labor remains a remote possibility. 
MULL