Cablegate: Scenesetter for Secretary Chertoff's Visit to Riga

DE RUEHRA #0123/01 0701115
O 101115Z MAR 08




E.O. 12958: N/A
SUBJECT: Scenesetter for Secretary Chertoff's visit to Riga

1. We look forward to welcoming you in Riga. Your visit, and the
accompanying signing of the MOU (assuming agreement can be reached
on the text) on the Visa Waiver Program (VWP), is a significant
marker of the strength of our bilateral relationship. Joining the
VWP is the foreign policy issue that average Latvians care about
most and it is the lens through which the bilateral relationship is
viewed. The U.S. and Latvia enjoy strong relations, including
through our common membership in NATO. Latvia has been a true ally
in Iraq and Afghanistan and has actively shared its successful
transition to democracy with other post-Soviet states. Latvia faces
challenges in the rule of law that are common in the post-Communist
world but where you can deliver a strong message on the importance
of the issue. Latvia faces some economic challenges including
slowing growth and double digit inflation. DHS has been active in
Latvia, assisting in promoting security and transparency in the port
of Riga, combating financial cyber crimes, cracking down on
narcotics trafficking, and working to secure Latvia's borders.

2. The US and Latvia have enjoyed 85 years of unbroken diplomatic
relations and our refusal to recognize the Soviet occupation and
annexation of the country has led to a strong base of public support
for the US in Latvia. We led the way in supporting Latvian
membership in NATO and were pleased to see them join the EU, putting
to an end the historical anomaly of their separation from Europe.
Latvia has stood with the US since September 11 in the fight against
terrorism. It has deployed troops to Iraq and Afghanistan, losing
three soldiers in Iraq. Last year, Latvia decided to focus its
attention on Afghanistan; deploying troops as part of the NATO ISAF
mission and police as part of the EU training mission. Later this
year, Latvian troops will deploy jointly with soldiers of the
Michigan national guard to train and mentor units of the Afghan
National Army. Latvia has also been a strong supporter of Georgia
and Moldova, assisting in their transition to democracy and a market
economy and has even established a small aid program to assist

3. As we near 17 years since the restoration of Latvia's
independence, though, the reserve of good will from the policy of
non-recognition of the Soviet occupation has begun to fade. Younger
Latvians question the value of the military deployments and wonder
what Latvia would get in return. EU membership creates the
possibility of travel, study and work within Europe, exposing young
Latvians more often to European values and standards.

4. That is why admission to the VWP has been such a hot political
issue here - Latvians see admission as acknowledgement that Latvia
has truly joined the ranks of modern European states and that the US
honestly values Latvia as a partner. Attempts on our part to
separate the technical requirements for admission to VWP from the
strength of the bilateral relationship have been doomed from the
start. We believe that Latvia is serious about meeting its security
obligations under the enhanced VWP and that Latvian admission to the
program will help increase Latvian awareness and understanding of
American values by facilitating travel and people-to-people

5. Latvia is making good progress on VWP related issues, expressing
a willingness to work with us on all admission criteria including
information exchange. But as a small EU members state, Latvia faces
challenges in handling the pressure of negotiating the MOU
independent of the EU. As we move forward, we will need to further
review the security of the Latvian passport issuance process (below)
and air security arrangements. We believe that, based on current
trends, the refusal rate for Latvians will fall below 10% by the end
of the fiscal year.

6. Latvia's economy has been the fastest growing in Europe for 3 of
the last 4 years, nearly reaching 10% in 2007. This has begun to
decline as initial rush of post-EU membership growth slows and is
likely to be only 4 - 7 % this year - a rate most countries would be
ecstatic to achieve, but represents a significant slow down here.
EU membership has also brought inflation as prices soar to EU
levels. In 2007, it hit double digits and finished the year at 14%
on an annualized basis.

7. As rapid as Latvia's growth has been, it has been hampered by
corruption, which is prevalent at all levels and throughout all
sectors of the economy. It also holds back Latvia's political
development as many of the major political parties are tied to
oligarchs who use politics to advance their personal business
agendas. Latvia has seen progress in combating corruption, with
several of the oligarchs under active criminal investigation and
another arrested. The complexity of the cases and the vast
resources of the oligarchs make successful prosecution of these
cases difficult, but if convictions and stiff sentences can be
secured it will help provide a brighter future for Latvia. In
addition to stressing the general need to combat corruption, you can
help us by talking about the importance of plea bargaining from your
experience as a judge. Latvia is currently debating such a law,
which is vital to the cases against the biggest fish, but those
against whom it could be used are effectively distorting the reality
of what it does and turning public opinion against it by calling it

RIGA 00000123 002 OF 002

"the snitch law."

8. A recent scandal in the passport office not only illustrates the
nature of the corruption problem in Latvia, but also the challenges
in addressing it. Between 2003 - 2005 almost 100 individuals,
mainly from Russia and other former Soviet countries, were able to
secure valid Latvian passports by having fraudulent entries created
for them in the Latvian citizenship register. These people paid as
much as 100,000 Euros to receive these documents. As the scandal
unfolded in the press at the beginning of 2008, no officials lost
their jobs, although one did resign. The GOL was slow to report the
problem to us and when it did, initial reports were contradictory or
lacked key details. We think that this stemmed both from
embarrassment at the scandal as well as from interagency turf
battles. We have stressed to the Latvians, though, that this is not
acceptable and that if they join VWP we would demand more rapid and
accurate information of such an incident. A DHS team will visit
Riga later this month to examine what happened and to learn what
measures the Latvians have put in place to avoid a repeat of the

9. Another example of corruption in Latvia has been the Riga
Freeport. Given its location, available capacity and connection to
road and rail links it could become a real engine for future growth
in Latvia, but corruption prevents it from being used to its full
potential and raises the possibility of it becoming a security
liability. Pursuant to a Congressional request, a DHS-led
interagency team visited Riga in 2006 to conduct a study of the
port. Their report identified a number of issues where security and
transparency could be improved, but little action has been taken to
date to address these concerns. Coast Guard personnel have also
been in Latvia to assist in port security initiatives to help Latvia
meet international standards.

10. Border security is a key issue for Latvia and one in which we
have provided extensive assistance. Latvia joined the Schengen area
in late 2007 and now forms part of the EU's (and NATO's) eastern
border (with Russia and Belarus). The US has provided extensive
assistance to the Latvian border guards to improve their capacity,
in particular to detect and intercept any attempt to bring nuclear
material into Latvia. Given the long Latvian border with Russia (as
well as Latvia's long coastline), narcotics trafficking and
trafficking in persons are also issues of concern and we have also
provided training and assistance in these areas.

11. The border with Russia is also the site of extensive backlogs of
trucks from all over Europe waiting to cross into Russia.
Corruption and outmoded systems contribute to the Russian delays.
Latvia has appealed to the European Union for help in managing its
overworked road border crossings. The long truck lines are one
major area of friction in an otherwise improving Latvian-Russian
relationship. Over the past two years Latvia and Russia have sought
to move past their historical issues stemming from the Soviet
occupation and move on to more practical cooperation. Latvia
remains wary of Russia and its future intentions, though.

12. One area of friction in the bilateral relationship with Russia
is the status of more than 400,000 individuals, mainly ethnic
Russians, who are not citizens of Latvia. About half of all ethnic
Russians are not citizens. These are individuals who moved to
Latvia during the occupation or their descendents. They can become
citizens, but must pass a test of Latvian language, history and
government. Many resent the need to naturalize or feel that the
language requirement is too hard. In 2007, the EU granted these
individuals the ability to travel within the union without visas and
eased the employment restrictions on them, thus reducing the
incentives for naturalization. The ethnic Russian community has
asked whether we will extend VWP privileges to the non-citizen
community here, analogous to the EU's step.

13. The fact that over 35% of all Latvians (and 50% of the residents
of the capital, Riga) have Russian as their first language gives
rise to two separate media spaces in Latvia; one in Latvian and one
in Russian. Their coverage reflects the divergent interests of the
two communities and the Russian language media's line on foreign
policy tends to be pro-Moscow in its orientation. Questions from
the press will focus largely on when Latvians can actually begin to
travel under the VWP, VWP participation by non-citizens, the above
mentioned passport scandal, and possibly the port.

14. I appreciate you making the stop in Riga, even if short. It
will show that we are committed to working with Latvia in
partnership and it will show progress on the issue most important to
the man on the street.


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