page_title: Lithuanian Diplomatic Service
section_title: Finances
hierarchical_section_title: Lithuanian Diplomatic Service / History / Soviet occupation (1940–1990) / Finances
caption_attribution_description: English: Bronius Kazys Balutis, Lithuanian diplomat, journalist Lietuvių: lt:Bronius Kazys Balutis, Lietuvos diplomatas, žurnalistas, politinis bei visuomenės veikėjas
context_page_description: The Diplomatic Service of the Republic of Lithuania is part of the governmental service tasked with enforcing the foreign policy set by the President, the Parliament, and the Government of the Republic of Lithuania. The head of the service is the foreign minister.
context_section_description: One of the persistent difficulties of the diplomatic service was to obtain funds for its activities. The first few months were financed by funds held on hand, personal loans, and other improvised means. All legations and consulates cut salaries and other expenses, reducing their budgets 3–4 times. In August 1940, diplomats envisioned creation of a special fund, supported by donations of Lithuanian diaspora, particularly Lithuanian Americans. However, the solution was not ideal as the diplomatic service would have become dependent on various political groups of Lithuanian Americans. Therefore, the idea was abandoned when the United States Department of State agreed to allow the diplomats to draw on Lithuanian reserves held by the Federal Reserve Bank of New York.
  Before June 1940, Lithuania had gold reserves in the United States (Federal Reserve), United Kingdom (Bank of England), France (Banque de France), Sweden (Sveriges Riksbank), and Switzerland (Bank for International Settlements). Sweden transferred the funds to the Soviet Union. Initially, England froze the reserves and refused to transfer it to either Lithuanian diplomats or the Soviet Union; however, in 1967, the First Wilson ministry used the reserve in settling mutual claims with the Soviet Union. Swiss bank secrecy laws prevented the transfer of the gold to Lithuanian diplomats. Reserves in France were similarly not available. Thus only the funds held by the Federal Reserve were available: 2,493.6 kilograms (80,170 ozt) of gold reserve and a currency reserve.
  The funds were made available, but were supervised by the State Department and the Department of the Treasury. With limited exceptions, the funds were made available only for the use of American embassies and consulates. Therefore, embassies elsewhere had to be subsidized by the Lithuanian embassy in Washington. Initially, the diplomats drew only on the currency reserve, which sustained the diplomatic service until 1950. The gold reserve, valued at approximately $2.8 million, was sold in 1950 and 1955 and conservatively invested into Treasury bills and diversified industrial shares. The annual budget of the diplomatic service was approximately $100,000. Therefore, the funds lasted until 1980.
  Once the funds were exhausted, Lithuanian diplomats and American officials considered various solutions: donations by the Lithuanian community, consolidation or closure of Lithuanian consulates, sale of the embassy building in Washington, direct financing by the U.S. (Representative Charles F. Dougherty introduced HR 5407 to that effect), loan from the U.S., etc. Eventually, a solution was found when State Department brokered a deal with the Latvian diplomatic service, which was much better off financially. Based on a verbal agreement between Anatols Dinbergs and Stasys Antanas Bačkis, Latvians agreed to provide interest-free annual loan of $120,000 from investment returns generated on their reserves to the Lithuanians. The last such loan, increased to $148,000, was received in mid 1991. In total, Latvians loaned $1.523 million. The loan was repaid by independent Lithuania in 2005.
caption: Bronius Kazys Balutis
exif: {}