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September 22, 2006

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Reference ID Created Released Classification Origin
06KIEV3674 2006-09-22 14:12 2011-08-30 01:44 CONFIDENTIAL Embassy Kyiv

DE RUEHKV #3674/01 2651412
P 221412Z SEP 06

C O N F I D E N T I A L SECTION 01 OF 02 KIEV 003674 
E.O. 12958: DECL: 09/22/2016 
Classified By: Ambassador for reasons 1.4(a,b,d). 
1.  (C) Summary:  Newly-appointed head of the Presidential 
Administration Viktor Baloha told the Ambassador September 19 
that he was ready to engage with the U.S. to ensure that the 
Millennium Challenge Corporation (MCC) Threshold 
Anti-Corruption Project was a success and was eager to get 
started on a proposed USG-funded program to reform the 
Secretariat.  Baloha acknowledged that this past week's 
public "war of words" regarding Ukraine's future NATO 
membership was an issue for his office and that it was 
important for Ukraine to speak with one voice, especially on 
foreign policy.  However, he also noted that President 
Yushchenko believed in the Universal signed in early August 
and would hold PM Yanukovych's government to the text. 
Baloha also noted that Ukraine had publicly supported the 
Finnish Presidency's EU statement regarding the September 18 
referendum in Transnistria.  End Summary. 
2.  (C)  Comment. The appointment of 43-year old Baloha, the 
former Minister of Emergency Situations in the Yanukovych and 
the previous orange governments, to replace Oleh Rybachuk as 
presidential chief of staff has been rumored for months. 
Baloha comes with a reputation as a "get it done" man who was 
very responsive to us as Minister, particularly with regard 
to Ukraine's response to Avian Influenza and 
Chornobyl-related issues.  However, he also comes with 
earlier baggage from his Transcarpathian business-political 
background, where allegations of corruption were rife. 
During his meeting with the Ambassador, Baloha impressed us 
as sincere in wanting to work closely with us to improve the 
Secretariat's efficiency and committed to getting the office 
organized -- something that his predecessor (who considered 
his primary job to give straight unfiltered information to 
the President) was not able to do.  At the conclusion of the 
meeting, Baloha's press secretary told the Ambassador that on 
Baloha's first day at the office, he had called a general 
meeting of the Presidential Administration staff and told the 
assembled group that he would soon appoint deputies to run 
different parts of the Secretariat, but that his goal was to 
reduce the total number of staff.  According to his press 
secretary, this had caused anxiety among some long-time 
staffers about the security of their jobs.  Baloha plans to 
bring long-time top aide Katerina Rogach, with him from the 
Ministry of Emergency Situations to run his personal office. 
End Comment. 
Secretariat Reform on Top 
3.  (C)  The Ambassador led off the meeting by congratulating 
Baloha on his new position and raising President Yushchenko's 
earlier request for U.S. assistance in reforming the 
Presidential Administration.  The Ambassador noted that work 
had not really begun due to pre-election and post-election 
issues.  However, if Baloha was ready to work with us on this 
project, we were ready to start.  Baloha said that he was 
ready to move ahead quickly with the project and that if the 
group of U.S. experts was prepared to meet, then he was 
prepared to receive them immediately.  He noted that after 
months of political crisis and change, the government 
situation was stable and it was "time to move to the next 
level" of work.  Baloha said that he was ready to personally 
lead this project and ensure that the experts had access to 
the Secretariat at the most senior levels. 
MCC - Ready to Make it Work 
4.  (SBU)  Turning to Ukraine's MCC Threshold Anti-Corruption 
Program, the Ambassador gave a brief explanation about this 
new form of USG grant-based assistance, reviewed the criteria 
for participation and discussed the process of moving from a 
threshold to an MCC compact country.  The Ambassador noted 
that Ukraine had done very well in all areas except for 
anti-corruption and that's why an anti-corruption threshold 
program had been proposed.  He asked for Baloha's personal 
involvement in and support for the MCC program, and suggested 
that Baloha appoint someone in his office to work with us. 
Baloha knew of the project, noting that the USG had submitted 
the project to the Government, and signing and approval was 
expected soon.  He cautioned that he was ready to move 
forward as soon as Government approval was obtained. 
5.  (SBU)  Baloha asked whether there were particular 
obstacles that could block MCC's success; the Ambassador 
responded that only official GOU agreement was needed at this 
point and then we were ready to go.  There are several 
components to the MCC program, including one involving civil 
society that would receive input from the NGO community.  The 
Ambassador noted that a contractor had already been selected 
(award pending a signed agreement) and that tenders for the 
KIEV 00003674  002 OF 002 
other components were ready to go as well.  Baloha stressed 
that President Yushchenko was very enthused about the program 
-- both the anti-corruption pr
ogram and the possibility of a 
full compact in the future.  The Ambassador thanked Baloha 
for his interest, emphasizing that we would need help from 
the Cabinet of Ministers, key ministries and the Presidential 
Administration if MCC was to succeed.  Baloha said that he 
was ready to help and asked the Ambassador to stay in close 
touch and to offer advice as the program proceeded. 
Finding Ukraine's One Voice 
6.  (C)  In response to the Ambassador's comments about the 
lack of agreement in the many public official Ukrainian 
statements about NATO membership over the past few weeks, 
Baloha agreed that this was a real concern - especially in 
the eyes of the world that did not understand who was 
actually speaking for the country.  Baloha confided that this 
issue "makes me nervous" and noted that each morning 
President Yushchenko meets with PM Yanukovych and Rada 
Speaker Moroz in order to coordinate their positions and 
discuss these issues.  However, that had not been enough to 
head off these public disagreements.  In Baloha's view, the 
root of the problem is that constitutional and political 
reform that had begun in Ukraine had not yet been completed. 
There were inconsistencies in the constitution that needed to 
be fixed and that problems connected with them also needed to 
be fixed. 
7.  (C)  Baloha noted that he was also concerned about 
stresses within the anti-crisis coalition.  He expected Our 
Ukraine to eventually join and sign a new coalition 
agreement.  However, in Yushchenko's view, the key document 
is the Universal and that is the document upon which 
relations between the presidency and the government should be 
based.  According to Baloha, Yushchenko had reacted according 
to the Universal when he criticized the Prime Minister 
publicly for his Brussels remarks on NATO membership.  Baloha 
predicted that Yushchenko would continue to refer to the 
Universal when discussing several key issues for Ukraine -- 
the status of Russian language, NATO membership and, more 
generally, Ukraine's Euro-Atlantic aspirations. 
8.  (C)  For example, Yushchenko had been angered by the 
decision of the Party of Regions to propose draft legislation 
in the Rada to give Russian the status of an official 
language and termed the move "not constructive" and "in 
contradiction to the text of the Universal."  With regard to 
Euro-Atlantic integration, Yushchenko was convinced that the 
PM's remarks regarding Ukraine's "unpreparedness" to enter a 
MAP had been incorrect and that the PM did not have the 
authority to change the overall foreign policy course of the 
country.  In the view of Baloha (and Yushchenko), the PM did 
not have the same constitutional competency to define foreign 
policy as the President did.  The Ambassador repeated EUR A/S 
Fried's message during his visit to Kiev - that the door to 
NATO is open, but it was up to Ukraine to do the work and to 
choose the right time and pace for a decision. 
9.  (SBU)  In another key foreign policy area, Transnistria, 
Baloha told the Ambassador that the position of Yushchenko -- 
and Ukraine -- was unchanged; that Ukraine supports the 
territorial integrity of Moldova.  Therefore, Ukraine had 
joined the statement of Finland, on behalf of the EU 
Presidency, in noting the unacceptability of the referendum 
in Transnistria on September 18.  In Baloha's opinion, 
Ukraine had the same view of ongoing events in Georgia and 
the possibility of a referendum in South Ossetia.  Baloha 
noted the importance of continued stability in both Moldova 
and Georgia for Ukraine. 
So When is Bush Coming? 
10.  (SBU)  Baloha concluded the meeting by asking when 
President Bush would be able to visit Kiev, expressed regret 
that an earlier trip planned for this year was postponed. 
The Ambassador explained the circumstances of the earlier 
postponement and reiterated the importance of seeing how the 
new Prime Minister and Cabinet governed the country before we 
could move ahead with considering a visit.  He noted that the 
President was very interested in making a visit, but that 
there were no concrete plans yet. 
11.  (U) Visit Embassy Kiev's classified website: 




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