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Cablegate: People's Party Embroiled in Third-Party Campaign Ad

DE RUEHRA #0584 2050622
R 240622Z JUL 06




E.O. 12958: N/A

Ref: Riga 527

1. SUMMARY. The People's Party, the senior partner in
Latvia's minority coalition government, has come under the
scrutiny of the press and the Anti-Corruption Bureau (KNAB)
over a series of TV commercials that praise the party's
cabinet ministers. The clips do not make reference to the
elections or the party and contain no disclosure about who
paid for them. The People's Party has so far been evasive
about whether it is behind the clips. However, the ads have
been placed by an obscure NGO whose founders include Prime
Minister Aigars Kalvitis' (People's Party) chief of staff
Jurgis Liepnieks. If the KNAB determines that the People's
Party has been directly involved in funding the ads, it may
face monetary penalties. As a young democracy, Latvia is
trying to balance limits on campaign financing and spending
with freedom of speech. END SUMARY.

2. The Anti-Corruption Bureau is looking into ads being
broadcast on the Latvian TV over the past few weeks praising
several People's Party ministers, including Prime Minister
Aigars Kalvitis. The clips do not indicate who paid for
them, nor do they include specific electoral references such
as "vote for", "support", etc. The People's Party has
declined to comment on whether the ads are part of their
election campaign. However, the ads have been placed by an
NGO called "Society for the Freedom of Speech" whose
founders include Prime Minister Kalvitis' chief of staff
Jurgis Liepnieks (reftel). Some of the cultural workers
praising Culture Minister Helena Demakova and doctors
commending the work of Health Minister Gundars Berzins have
said that they were approached with a request to express
their honest opinion about the ministers. The participants
deny that they were given any prepared scripts, or that they
knew of any political context of the request. Liepnieks told
Latvian TV that there were "precious few positive ads in
Latvia and we decided to fill the gap."

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3. The current law on campaign financing sets strict limits
on how much money the parties can spend during the election
campaign. However, the law only applies to direct spending
by political parties. One of the editors of Diena, a
centrist paper that has taken the lead in reporting on this
story, told the Ambassador that they felt it was important
to try to get the Latvian public energized in opposition to
efforts to circumvent the law. Diena also believes that
Liepnieks is directly transferring People's Party funds to
the NGO for these ads in an effort to get around the law.
If the KNAB can find evidence of this, the party could be
subject to a fine as well as required to pay to the State an
amount equal to what they spent over the allowable limit.
If a party fails to pay the stipulated sum within thirty
days, or if a party is a repeat offender, the KNAB has the
authority to initiate the suspension of the party through
the Latvian courts. Though the KNAB has been successful in
using this legislation against smaller parties, it has not
been tried against the larger political parties.

4. Comment: Latvia's young democracy has struggled with the
influence of money in politics since the restoration of
independence in 1991. Many of the parties here are
controlled by wealthy individuals to secure and advance
their personal political agendas and campaigns here rely
heavily on television advertising. The campaign finance law
attempted to control how much parties could spend, but not
how much they could raise. As in the U.S., there are
questions here about how restrictions on campaign finance
should be balanced against constitutional guarantees of
freedom of speech. Liepnieks even cited several U.S.
examples to defend the ads, while still not conceding that
they were paid for by the party. There is no question that
parties here will try many creative methods to get around
the campaign finance law in advance of the October 7 ballot,
much as soft money and 527's have played in U.S. elections.
However, this case would be especially concerning if party
funds were directly transferred for these ads in a blatant
attempt to get around the law. Even if the KNAB can prove
that and secure a court verdict, the financial penalty to
the party would be far outweighed by what they see as the
positive message to voters about their ministers'
performance in office. The most interesting aspect about
this case is how little the average Latvian seems to care,
seemingly expecting that shady financing will be an
inevitable part of the campaign. END COMMENT.

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