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May 5, 2006

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Reference ID Created Released Classification Origin
06KIEV1773 2006-05-05 15:17 2011-08-30 01:44 CONFIDENTIAL Embassy Kyiv
DE RUEHKV #1773/01 1251517
P 051517Z MAY 06


C O N F I D E N T I A L SECTION 01 OF 03 KIEV 001773 



E.O. 12958: DECL: 05/05/2016 

REF: KIEV 1711 

Classified By: Political Counselor Aubrey Carlson, reasons 1.4 (b,d) 

1. (C) Summary:  While much of Ukraine takes off the first 
week in May between the May Day and Victory in Europe 
holidays, work on possible Rada majority coalition policy 
agreements inched forward, even as the question remained open 
as to which coalition, if any, would ultimately emerge.  In 
May 3-4 meetings with PolOff, proponents of Orange and 
Orange-Blue coalitions agreed on two things: 1) it would come 
down to a decision by President Yushchenko; and 2) Yushchenko 
traditionally agonizes, Hamlet-like, until the last possible 
moment to make any important decision.  Mykola Katerynchuk, 
head of the Our Ukraine (OU) party Executive Committee and of 
the OU coalition negotiating team for economic issues, 
frankly acknowledged OU's weaknesses, strongly advocated the 
Orange option, but did not rule out Yushchenko deciding to 
partner with Yanukovych's "Blue" Party of Regions, even 
though such a decision would have calamitous political 
consequences for Our Ukraine in his view.  Volodymyr 
Makeyenko, a long-time Rada MP who defected from Our Ukraine 
to Regions in 2004 and helped negotiate the September 2005 
memo of understanding between OU and Regions, called current 
negotiations between erstwhile Orange partners OU, Yuliya 
Tymoshenko's Bloc (BYuT) and the Socialist Party of Ukraine 
(SPU) "mere theater"; he predicted an OU-Regions coalition 
would emerge in late June, perhaps June 22.  Vira Nanivska, 
head of the International Centre for Policy Studies (ICPS) 
and a strong proponent of platform-based political parties 
over personalities, told us she had been consulting with both 
OU and Regions on policy proposals and favored an OU-Regions 
coalition, even though she believed the OU-BYuT-SPU coalition 
would emerge first.  She noted that the emergence of an 
Orange coalition would allow Regions time to prove it had 
adopted a newfound responsible approach to politics as a 
constructive opposition force, prior to returning to 
government, likely in coalition with OU.  She did not rule 
out eventual formation of a hybrid force she dubbed "Our 
Regions" as a counterweight to Tymoshenko's populism.  End 

Katerynchuk: deep Orange, but wary 

2. (C) Based on Tymoshenko's identification of Katerynchuk as 
an Our Ukraine figure likely to leave the party if OU went 
into coalition with Regions (reftel), we met with Katerynchuk 
May 3 to discuss coalition possibilities and OU 
organizational problems.  Katerynchuk explained that, from 
the founding of the People's Union Our Ukraine political 
party in early 2005 (as opposed to the Our Ukraine electoral 
bloc that formed in late 2005 to run in the March 2006 
parliamentary and local elections), there were two competing 
visions of party development:  a European-style modern 
political party and a pro-presidential "technical project." 
Katerynchuk had favored the former; party elders had decided 
on the latter, "and the results were crystal clear on March 
26," when OU stumbled to a disappointing third-place showing 
far behind Regions and BYuT.  OU now needed to learn the 
harsh lessons and rebuild itself based on the more modern 
approach, said Katerynchuk. 

3. (C) A firm Orange coalition advocate, Katerynchuk believed 
OU could not ignore "the will of the Ukrainian people" who 
had delivered a majority of seats March 26 to the major 
Maidan (i.e., Orange Revolution) parties -- OU, BYuT, and 
SPU.  These parties agreed on Ukraine's strategic direction: 
democratization of governmental institutions; granting 
society a clear voice in governance; and a European identity. 
 While he acknowledged there was convergence on economic 
policy between OU and Regions, differences on more 
fundamental issues remained.  Katerynchuk claimed that recent 
local OU-Regions alliances in the Kiev City Council and 
Zakarpattya Oblast Council were not done deals, and that the 
OU leadership would not finalize such coalitions; the search 
for common ground with BYuT and SPU would continue. 

4. (C) Katerynchuk squirmed uneasily when asked what would 
happen to OU if Yushchenko ultimately were to decide to go 
into coalition with Regions rather than BYuT and SPU.  He 
made no attempt to deny the possibility, acknowledged not all 
OU members/voters would stay with Yushchenko, and said that 
"we -- Yushchenko and Our Ukraine -- would face a tough 
second round" in the 2009 presidential elections, presumably 
against Tymoshenko.  (Note:  Katerynchuk's phrasing indicated 
no immediate plans to abandon OU, contrary to Tymoshenko's 
prediction in reftel, were Our Ukraine to ally with Regions 
to form a majority coalition.) 

5. (C) On the timing of coalition formation, Katerynchuk 

KIEV 00001773  002 OF 003 

suggested that the coalition would be announced on the last 
day possible, or perhaps "29 instead of 30 days" after the 
opening of the new Rada.  The "real" coalition negotiations, 
he suggested, would only begin once the Rada convened. 
(Note:  Katerynchuk is t
he OU lead representative for 
coalition talks on economic policy issues with BYuT and the 
SPU, but as of May 4, he was still gathering input and 
suggestions from Ukrainian experts; see below.)  Katerynchuk 
also left the door open for an extended delay in forming the 
new government, noting there was nothing in the Constitution 
that obliged Yushchenko to dismiss the Rada if no government 
were formed within 60 days; Yushchenko merely had the right 
to do so. 

Makeyenko: Hamlet-like Yushchenko will choose Regions 
--------------------------------------------- -------- 

6. (C) Regions MP Volodymyr Makeyenko described to us May 4 a 
growing mood among his fellow party MPs against continued 
warfare with their political opponents; hard opposition would 
be bad for (their own personal) business(es), and bad for 
Ukraine as well.  As one of only six MPs-elect left from the 
original Soviet Ukrainian Rada that voted for sovereignty in 
1990 and independence in 1991, he had taken the floor at the 
latest Regions' Congress to describe how the nationalist Rukh 
party and the Communist Party had worked together despite all 
their differences to take the country forward; he had 
advocated that now was the time for Regions and OU to do 
likewise.  Many newly-elected MPs from eastern Ukraine 
(Regions' stronghold) expressed concern over "how a deal with 
Yushchenko would play in (far eastern) Luhansk," but 
Makeyenko said Regions' future lay in compromise, not further 

7. (C) The key now was, of course, Yushchenko himself. 
Yushchenko would wait until the very last moment possible to 
make a decision on a coalition, a behavior pattern dating 
from his time as head of the National Bank, when Makeyenko 
was a bank owner and faced similar indecision and dithering 
by Yushchenko.  Makeyenko dismissed the current negotiations 
between OU-BYuT-SPU as mere theater, akin to the working 
groups Yushchenko would set up at the Bank for bankers to 
engage his underlings to come up with draft decisions to 
resolve various crises.  Even after well-considered proposals 
had been worked out, Yushchenko would still delay a decision, 
listen to everyone, and finally make up his own mind at the 
last possible moment, with disaster looming. 

8. (C) A similar dynamic was now in play, said Makeyenko, who 
suggested Yushchenko was also delaying government formation 
to milk as much out of the current RosUkrEnergo gas deal as 
possible and tie the hands of the incoming coalition. 
Yushchenko would eventually cut the deal with Regions, he 
predicted, because Yushchenko would realize "the only way he 
could win re-election in 2009 and beat Tymoshenko is with 
Regions' support."  Regions would support Yushchenko because 
it was clear Donetsk alone could not secure its own 
presidential victor, and Yushchenko was a more dependable, 
stable "roof" as President than Tymoshenko. 

9. (C) While Makeyenko, a former Our Ukraine MP from 
Chernihiv who defected to Regions in 2004, had been 
instrumental in negotiating the September 2005 Memorandum of 
Understanding between Our Ukraine and Regions that ensured PM 
Yekhanurov was confirmed (and also boosted Regions' 
legitimacy as a political force), he said that this time 
around, "Donetsk is completely in charge."  Makeyenko 
predicted an OU-Regions coalition would emerge "on the 30th 
day" after the Rada convened, based on a deal cut by 
Yushchenko and Yanukovych; since the Rada would most likely 
convene on May 23, his prediction for a coalition 
announcement was June 22. 

Nanivska: Regions serious on policy; a future "Our Regions"? 
--------------------------------------------- --------------- 

10. (C) Vira Nanivska, head of the International Centre for 
Policy Studies (ICPS) and a respected former World Bank 
executive who returned to Ukraine to push for platform and 
policy-based politics on the ground in Ukraine, is personally 
close to many figures in Our Ukraine, to whom she has been 
giving free advice for years.  (Note:  As we were talking May 
3, Katerynchuk called Nanivska, pleading for her assistance 
in bringing order to the process of turning expert advice 
into economic policy proposals for OU to use in a coalition 

11. (C) Nanivska claimed Regions was taking the most 
systematic and serious approach to putting together detailed 
and coherent policy platforms for coalition negotiations and 
the next Rada session.  She acknowledged having been 

KIEV 00001773  003 OF 003 

approached by Regions, noting that, unlike Our Ukraine or 
BYuT, Regions signed contracts and paid for advice.  She 
would conduct a "tutorial" session for Regions' financier 
Rinat Akhmetov May 5 on a seven-point approach to 
institutionalizing an anti-corruption agenda based on 
European norms.  Akhmetov knew that corruption was the weak 
point of Regions and that Regions needed to appear serious 
and actively embrace European standards if it were to return 
government.  (Note:  Nanivska thus confirmed one of 
Tymoshenko's other comments in reftel, that Regions was 
engaging/romancing leading think tanks.  ICPS' latest policy 
bulletin clearly favors an OU-Regions coalition as the best 
way to carry the country forward on economic policy issues.) 

12. (SBU) Nanivska predicted that an OU-BYuT-SPU coalition 
would form first.  She sensed in her discussions with 
Regions leaders that they were preparing to go into 
opposition in the Rada -- but as a constructive opposition, 
not a hard-line one.  In embracing a more modern, 
policy-based agenda and engaging responsibly in politics, 
rather than seeking confrontation, Regions could improve its 
reputation among skeptics in Ukraine and the West and lay the 
groundwork for a return to government, presuming the Orange 
coalition would fall apart.  An OU-Regions coalition should 
not be seen as a threat even by strong supporters of the 
Orange Revolution such as herself, as long as Regions 
continued to advocate the right policies and practices. 
Looking ahead, she mused that such an alliance, which she 
dubbed "Nashi Rehioni" ("Our Regions"), might well prove to 
be an enduring new force in Ukrainian politics, balanced 
against a more populist force led by Tymoshenko. 

13. (U) Visit Embassy Kiev's classified website at 




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