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April 24, 2007

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Reference ID Created Released Classification Origin
07KYIV973 2007-04-24 14:49 2011-08-30 01:44 CONFIDENTIAL Embassy Kyiv

DE RUEHKV #0973/01 1141449
P 241449Z APR 07

C O N F I D E N T I A L SECTION 01 OF 03 KYIV 000973 
E.O. 12958: DECL: 04/24/2017 
REF: KYIV 924 
Classified By: DCM Sheila Gwaltney for reasons 1.4 (b,d). 
1. (C) Summary: Arseniy Yatsenyuk is familiar with Washington 
as a former Economics Minister and acting and deputy head of 
the Ukrainian National Bank, but his visit at the end of 
April will be his first opportunity to discuss the full range 
of foreign policy issues.  With respect to the bilateral 
relationship, Yatsenyuk will probably push for a firmer 
signal on the timing of a U.S. presidential visit and bring 
with him the draft of a "roadmap" on the way forward in 
U.S.-Ukraine cooperative activity.  He will want to discuss 
the outlook for Ukraine's membership in WTO with appropriate 
Washington interlocutors.  For our part, we can urge Ukraine 
to maintain the right approach in its relations with Russia 
and Belarus and to exercise leadership in resolving the issue 
of Moldova's break-away Transnistria region.  Yatsenyuk's 
visit comes during an ongoing political crisis in Ukraine 
that at least temporarily complicates movement toward his 
goals of advancing Ukraine's economic integration with the 
world economy and strengthening his country's relations with 
partners in NATO and the European Union.  End summary. 
2. (C) Message/themes for the visit: 
-- We welcome the consistent messages from the President and 
Prime Minister that Ukraine will stay the course with respect 
to its European and Euro-Atlantic aspirations.  We hope 
Ukraine will also continue to exercise the strong regional 
leadership started under your predecessor. 
-- The current political crisis is an internal affair for 
Ukrainians to resolve and we will not take sides, but we urge 
you to find a democratic and peaceful solution that adheres 
to Ukraine's laws and constitution.  A state of prolonged 
political uncertainty also endangers prospects for achieving 
goals important to both the U.S. and Ukraine. 
-- The USG's negotiators are working hard to move Ukraine's 
WTO accession forward quickly.  The Rada will need to make a 
select number of legislative changes to implement existing 
commitments by Ukraine to its WTO partners. 
-- We share Ukraine's interest in highlighting energy 
security and would welcome expanded dialogue.  The GOU needs 
to do its part by focusing on energy efficiency and opening 
its domestic oil and gas sector to international expertise. 
-- We are excited about the possibilities for cooperation 
through the Millennium Challenge Corporation (MCC).  For the 
MCC compact, the next step is for the GOU to fund its 
technical team.  The anti-corruption Threshold program is 
underway, but needs GOU attention to ensure implementation. 
A Young, but Experienced, Compromise Candidate 
--------------------------------------------- - 
3. (C) President Yushchenko nominated Yatsenyuk after the 
Verkhovna Rada (parliament) repeatedly rejected the 
president's first choice for foreign minister, and Yatsenyuk 
was confirmed March 21 by a vote of 426 votes in favor (with 
432 MPs present out of the Rada's complement of 450). 
Yatsenyuk ascribed the successful vote (reftel) to his 
acceptability to both camps (Presidential and Prime 
Ministerial), but subsequently clearly showed his loyalty to 
Yushchenko.  Yatsenyuk demonstrated his priorities when he 
elected to make his first trip abroad to Brussels, rather 
than to Moscow as was traditional.  After his April 16 visit 
to Moscow, Yatsenyuk will complete the round of visits to 
Ukraine's most significant partners with his visit to 
Washington.  The visit will be an introductory one for him, 
but he is ready to discuss the full range of issues on the 
U.S.-Ukraine agenda. 
4. (C) Yatsenyuk's deep experience in economic issues 
inclines him to stress economic objectives, but, as foreign 
minister, he is committed to advancing Ukraine's relations 
with the EU and NATO.  With respect to the EU, Yatesnyuk is 
edgy over the possibility that Ukraine might not join the WTO 
this year, leading to an unacceptable delay in getting 
started on an EU-Ukraine free trade agreement, the 
center-piece of the EU-Ukraine "New Enhanced Agreement."  He 
will raise his concerns with appropriate Washington 
interlocutors.  We have reassured him the U.S. continues to 
work hard to advance the Ukrainian WTO accession, but the 
political wrangling in Kyiv could at some point theoretically 
hamper parliament's ability to fix remaining legislation for 
WTO.  On NATO, Yatsenyuk moved quickly to secure a 
ministerial meeting of the NATO-Ukraine Council at Oslo and 
is pushing for the North Atlantic Council to visit Ukraine in 
KYIV 00000973  002 OF 003 
July to mark the 10th anniversary of formal NATO-Ukraine 
The Political Backdrop 
5. (C) Yatsenyuk, who served as former Deputy Head of the 
Presidential Secretariat before becoming FM, has kept a toe 
in internal politics and tried to act to some degree as a 
mediator in the
current political crisis, although he does 
not appear to be in the President's inner circle in this 
battle.  Nonetheless, he will be prepared to discuss the 
domestic political scene, given Washington's expected 
interest in the topic, and the possible impact that 
prolongation of the crisis might have on achievement of 
Ukraine's foreign policy goals.  Following Yushchenko's April 
2 decree dissolving the Rada and calling for early 
parliamentary elections and the Rada and Government's refusal 
to adhere to the decree, the President and Prime Minister 
have been conducting almost daily closed-door meetings to 
work on a political compromise.  Such a compromise might 
include an agreement on early elections at some later, 
unspecified date; the amendment of laws, such as of the 
controversial law on the Cabinet of Ministers; further 
amendment of the constitution; and an agreement to adopt into 
law a set of national priorities, both in terms of internal 
and foreign policy. 
6. (C) The Constitutional Court has been considering 
Yushchenko's decree since April 17 at the request of the 
majority coalition.  Yushchenko and Yanukovych have said 
publicly that they will respect the Court's ruling, and 
Yatsenyuk told us privately that was the best solution. 
Accusations from all sides of corruption, pressure, and 
politicization are reflect in low public confidence in the 
Court, with opinion polls showing less than 20% believe the 
Court can issue an independent ruling.  The gist of the 
argument is whether the movement of more than 20 MPs from the 
opposition to the majority in March was a violation of the 
electorate's will and whether the President as guarantor of 
the Constitution has the power and right to disband the Rada 
as a result of this perceived violation.  Both sides have 
turned their supporters onto the streets, in what have been 
mostly peaceful rallies on the Maidan and around key 
government buildings.  Security, military, and law 
enforcement structures have been careful to remain 
professional and outside this fray. 
The Bilateral Agenda 
7. (C)  As part of his effort to set a definite policy course 
at the Ministry, Yatsenyuk hopes to bring a draft of a 
U.S.-Ukraine "roadmap" with him to Washington, based on our 
response to President Yushchenko's January letter to 
President Bush regarding the bilateral relationship,  MFA is 
working hard within the interagency process under a short 
fuse to get the paper finalized in time for the trip.  If it 
is successful, Yatsenyuk will hand over the roadmap during 
his Washington meetings with the suggestion that the 
Bilateral Coordination Group review the roadmap and endorse 
it.  We have not yet seen a copy, but understand that it will 
cover a broad set of bilateral activities. 
8. (C) We continue intense engagement with the Ukrainians as 
their WTO accession moves into the end game.  Ukraine's 
negotiators will meet with USTR during Yatsenyuk's visit and 
a Working Party meeting will happen in mid-May.  Although the 
accession looks to be on track to be completed late this 
year, one hitch could be that Ukraine's parliament will need 
to pass some legislative changes to make their legislation 
fully consistent with WTO and with the commitments Ukraine 
made in their March 2006 bilateral agreement with the U.S. 
Yatsenyuk will likely raise energy security, including a 
possible U.S.-Ukraine-EU dialogue.  Ukraine needs to do much 
more on its own.  While many major industry players are 
investing heavily in energy efficiency, Ukraine still lags 
badly in efficiency.  After awarding an exploration block in 
the Black Sea a year ago, the GOU still has not concluded a 
Production Sharing Agreement with the U.S. firm Vanco, thus 
sending a weak signal about Ukraine's openness to foreign 
investment in the energy sector.  On MCC, the Threshold 
program to fight corruption has started implementation.  For 
the eventual compact program, the GOU is assembling its 
technical team; the current hold-up is the GOU needs to 
allocate funding for the team from its budget. 
9. (C) Relations with Russia appear to be in a holding 
pattern for the moment.  Ambassador Chernomyrdin has 
repeatedly offered to mediate in the current political 
crisis, but otherwise the Russians have in public held back 
KYIV 00000973  003 OF 003 
from any involvement.  Ukraine saw its price for gas go from 
$95/thousand cubic meters (tcm) to $130/tcm in 2007, and will 
likely see the price go up to $180/tcm or more in 2008.  Some 
GOU officials have floated suggestions that they remove the 
middleman RosUkrEnergo from the gas deal, but there 
apparently has not yet been any decision by the GOU to pursue 
this.  Ukraine has also expressed perfunctory interest in the 
Russian-led Common Economic Space (CES) trade bloc.  However, 
the GOU is not willing to accept Russia's current terms for 
the CES, which include a supra-national governing body that 
the Ukrainians feel would result in an unacceptable cession 
of national sovereignty. 
10. (C) Yatsenyuk will reiterate continuing Ukrainian 
interest in hosting a visit of President Bush to Kyiv and 
urge the Secretary also to consider making a second visit. 
Ukraine's Regional Role 
11. While the current political crisis has distracted MFA and 
caused Ukraine to be less diplomatically active recently, we 
can use this visit to make our expectations clear to 
-- On Transnistria, we welcome Ukraine's renewed commitment 
to the "5-plus-2" negotiating framework to move Moldova and 
Transnistria toward fulfillment of the "Yushchenko Plan." 
-- On Belarus, although we have heard less of late regarding 
a possible Lukashenko-Yushchenko summit meeting in Kyiv, we 
should reiterate that such a meeting serves to legitimize 
Lukashenko while providing little benefit to Ukraine and 
drawing the opprobrium of the international community.  The 
Ukrainians continue to argue that they will only agree to 
such a meeting if the Belarusans agree to make progress on 
several outstanding border issues, including Ukrainian access 
to the Chernobyl site through Belarusan territory. 
-- On the regional GUAM (for its members, Georgia, Ukraine, 
Azerbaijan, and Moldova), we welcome Ukraine's continuing 
support for the organization and look forward to the 
Ukrainian parliament's ratification of the GUAM charter. 
12. (U) Visit Embassy Kyiv's classified website: 




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