US embassy cable - 05VILNIUS1238

C O N F I D E N T I A L SECTION 01 OF 02 VILNIUS 001238 
 
SIPDIS 
 
STATE FOR EUR/NB 
 
E.O. 12958: DECL: 11/22/2015 
TAGS: PREL, PGOV, LH, HT3 
SUBJECT: PM BRAZAUSKAS RIDING OUT POLITICAL TURBULENCE 
 
REF: VILNIUS 1198 
 
Classified By: Gregory L. Bernsteen for reasons 1.4(b) and (d) 
 
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SUMMARY 
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1. (SBU) Lithuania's Prime Minister Algirdas Brazauskas 
quashed a parliamentary inquiry and continues to hold the 
ruling coalition together amidst investigations into his 
wife's business dealings.  While two law enforcement 
institutions have launched investigations at President 
Adamkus's request, the Prime Minister has not stepped down, 
and no one is calling for impeachment or new elections.  Some 
speculate that fatigue and stress may drive the PM from 
office soon, but the unlikelihood that legal investigations 
will produce evidence of a crime and a common fear among the 
President and many in the Parliament of ceding the 
premiership to the Labor Party will keep Brazauskas secure 
for now.  In the meantime, the opposition is pleased to have 
knocked back the coalition, and make it more difficult to 
sell the Mazeikiu Nafta oil refinery to Lukoil.    END 
SUMMARY. 
 
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The PM Weathers the Storm 
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2. (U) Prime Minister Brazauskas mustered sufficient votes in 
parliament to kill the commission set to investigate his 
wife's purchase at deeply discounted prices of shares in 
Vilnius's Crown Plaza hotel from a Lukoil-linked investment 
company (reftel).  In a November 10 vote of 55-42, with 24 
abstaining, the Parliament dismissed the ad hoc investigatory 
commission.  The opposition Conservative Party will ask the 
Constitutional Court to resolve whether a Parliamentary 
majority can override ethics rules that direct the 
establishment of an ethics committee investigation on the 
basis of a petition of more than one-fourth of the members. 
The Court's ruling will not reopen or reverse the 
Parliament's decision on the current petition.  Nonetheless, 
should the Court rule that a petition with sufficient 
signatures automatically establishes a commission, it would 
pave the way for the Conservatives to circulate another 
petition and begin the process anew. 
 
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The President Weighs In 
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3. (C) Responding to mounting pressure for him to weigh in, 
President Valdas Adamkus delivered a speech to the public 
November 17, citing a need to restore "political stability." 
Adamkus commented that the matter of Kristina Brazauskas's 
purchase of the now-Crowne Plaza Hotel falls more 
appropriately under the purview of law enforcement agencies 
than the national legislature, specifically the State 
Property (Privatization) Fund and the State Auditor.  The 
President's remarks have drawn criticism from some local 
commentators.  The editor of Lithuania's leading daily 
newspaper sharply criticized Adamkus for entering the fray 
rather than letting the political process play out. 
 
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Worse for Wear 
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4. (U) The episode has tarnished the PM's reputation and 
credibility, compelling him to fight for his political life. 
His ratings in public polls have dropped dramatically.  In 
some public appearances, the PM's plainspoken amiability has 
given way to irritability.  During a televised address to the 
Lithuanian public November 22, however, Brazauskas was back 
in form, avuncular delivery and all.  In his remarks, 
directed to the Lithuanian man and woman on the street, the 
PM highlighted the successes of his government; promised 
further improvements in living standards under his 
leadership; and vowed to remain in office. 
 
5. (C) Other observers are less sanguine about his prospects. 
 Noting the strongman's apparent fatigue, some politicians 
and journalists speculate that Brazauskas will not finish out 
the three years remaining in his term.  Labor Party leader 
Viktor Uspaskich forecast publicly November 22 that the PM 
will soon step down, giving Labor the opportunity to form a 
new coalition.  Coalition MP Vaclov Stankevic (Social 
Liberal) told us that he expects Brazauskas to resign "in 
days or weeks," or "as soon as the budget is passed." 
Others, including Vladimir Orechov (Labor Party) and Birute 
Vesaite (Social Democrat), said that Brazauskas's health will 
be a deciding factor in his tenure.  According to this view, 
it is possible he will serve out his term (until 2008) if his 
health holds up and he is able to outlast his critics. 
Orechov theorized that Brazauskas may persevere until the 
sale of the Mazeikiu Nafta refinery concludes sometime in 
2006. 
 
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Coalition Dynamics 
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6. (C) The lack of an obvious successor within the PM's 
Social Democratic party also drives coalition partners to 
hope Brazauskas will stay put.  SocLib MP Alvydas Sadeckas 
told us that the coalition agreement ends the day that 
Brazauskas leaves office.  Sadeckas said that Brazauskas's 
personal leadership (along with the concession of some key 
ministries to Labor) was sufficient to persuade the Labor 
Party to cede the PM's office to the SocDems in 2004, despite 
the fact that Labor controlled nearly twice as many seats. 
Without Brazauskas, Sadeckas said, an emboldened Labor would 
negotiate with a strong hand and would take the premiership 
and perhaps other ministries.  Uspaskich promised that Labor 
would "work with the devil, if it benefits the state," 
implying Labor's determination to lead new coalition, 
including some elements of the current opposition. 
 
7. (C) A deal giving Labor more power may already be in play 
as a result of the PM's problems.  MP Orechov told us that 
Uspaskich has negotiated within the Government for more Labor 
involvement in the disposition of the Mazeikiu Nafta oil 
refinery sale in return for his support of Brazauskas. 
Labor's popularity has been on the rise again recently, and 
it now enjoys more than twice the support of any other party. 
 
 
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Comment 
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8. (C) Brazauskas's poor handling of what at least 
superficially seem to be legitimate questions about a 
conflict of interest between his wife's business dealings and 
Lithuanian state interests has seriously tarnished his 
reputation.  But ever the fighter, he has skillfully played 
on widespread fears (including those of President Adamkus) of 
putting the premiership in the untested and unpredictable 
hands of the populist Labor Party.  Given poorly developed 
conflict of interest legislation in Lithuania, it is unlikely 
the law enforcement agencies examining the case will find any 
evidence of a crime, allowing Brazauskas some time to rebuild 
his reputation.  His televised address, targeted at the 
average citizen, is a clear indication that Brazauskas is in 
for the long haul.  The Conservative Party can take some 
pride in achieving one of its objectives -- all the fuss 
about the Prime Minister's rumored indebtedness to Lukoil 
will make it much harder for the Lithuanian government to 
sell the valuable Mazeikiu Nafta oil refinery to the 
Kremlin-linked business. 
KELLY