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07KYIV2634, UKRAINE: PRESIDENTIAL SECRETARIAT AND OU-PSD

October 17, 2007

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07KYIV2634 2007-10-17 12:23 2011-08-30 01:44 CONFIDENTIAL Embassy Kyiv

VZCZCXRO2000
PP RUEHDBU
DE RUEHKV #2634/01 2901223
ZNY CCCCC ZZH
P 171223Z OCT 07
FM AMEMBASSY KYIV
TO RUEHC/SECSTATE WASHDC PRIORITY 4107
INFO RUEHZG/NATO EU COLLECTIVE
RUCNCIS/CIS COLLECTIVE
RUEHLMC/MILLENNIUM CHALLENGE CORP WASHDC

C O N F I D E N T I A L SECTION 01 OF 04 KYIV 002634 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: DECL: 10/17/2017 
TAGS: PGOV PREL UP
SUBJECT: UKRAINE: PRESIDENTIAL SECRETARIAT AND OU-PSD 
PROMOTE THIRD WAY 
 
KYIV 00002634  001.2 OF 004 
 
 
Classified By: Ambassador for reasons 1.4(b,d). 
 
1. (C) Summary.  Leader of Our Ukraine-People's Self-Defense 
Bloc Yuriy Lutsenko and Deputy Head of the Presidential 
Secretariat Roman Bezsmertniy told the Ambassador in separate 
 
SIPDIS 
meetings October 16 that OU-PSD and President Yushchenko 
would support an orange coalition and Tymoshenko to be Prime 
Minister; however, the end goal for their team was a 
"technical" government, led neither by Tymoshenko or 
Yanukovych, but by someone neutral, such as Presidential 
Chief of Staff Baloha.  They both described variations of the 
same plan, where Tymoshenko would become prime minister, 
serve briefly, and then be removed for failing to achieve key 
goals.  With a deadlock in the Rada -- neither BYuT nor 
Regions would be able to form a new coalition without OU-PSD 
-- the President's team would suggest a technocratic PM and 
Cabinet, backed by a loose configuration of OU-PSD, Regions, 
and Lytvyn Bloc.  This arrangement would be temporary, one to 
two years, while the constitution was rewritten to clarify 
the power structure in Ukraine.  Then there would be new 
elections.  Former presidential spokesman and new MP for 
OU-PSD Irina Gerashchenko told us that her bloc is solidly 
behind Tymoshenko and the orange coalition.  Perhaps a sign 
that this is now the official plan, President Yushchenko on 
October 16 endorsed the orange coalition agreement between 
OU-PSD and BYuT. 
 
2. (C) Comment.  Lutsenko and Bezsmertniy's plan, although 
very complicated, could work, but underscores how unstable 
Ukraine's government is likely to be for the next six to 
twelve months.  Moreover, the success of the strategy is 
based on the other parties reacting as the Presidential 
Secretariat has calculated they will.  The first test will be 
 
SIPDIS 
whether the Secretariat and OU-PSD can convince the few 
holdouts in OU, such as former PM Yekhanurov and NSDC 
Secretary Plyushch, to vote for Tymoshenko as PM despite 
 
SIPDIS 
their outspoken opposition to her.  The President's team is 
also gambling that Regions' threat to not take their seats is 
a bluff and that Regions will wait quietly in the opposition 
until OU-PSD is ready for stage two.  Finally, Lytvyn Bloc 
could still swing events.  As Bezsmertniy told the 
Ambassador, if Lytvyn is willing to formally join the orange 
bloc, that would significantly strengthen Tymoshenko's 
position and give her government some staying power.  On the 
other hand, if he openly allied with Regions, that might 
persuade some opponents within OU-PSD and BYuT to switch 
sides and join a new broad coalition.  Finally, 
Gerashchenko's comments highlight the fact that this new 
strategy may come as a surprise for many within OU-PSD, 
suggesting once again that these political intrigues could in 
the end split the President's party.  End summary and comment. 
 
Lutsenko: Our Two-Step Plan 
--------------------------- 
 
3. (C) OU-PSD leader Lutsenko, looking much more relaxed and 
confident than the last time we saw him, told the Ambassador 
October 16 that finally the President had approved a plan for 
government formation, which would take place in two stages. 
First, the orange coalition agreement will be signed and 
Tymoshenko will be confirmed as Prime Minister.  Lutsenko was 
confident that Tymoshenko will get all 228 votes from BYuT 
and OU-PSD, plus maybe 10-20 votes from the Lytvyn Bloc.  He 
acknowledged that there are seven or eight people in OU who 
hate Tymoshenko -- including Yuriy Yekhanurov, Ivan Plyushch, 
Volodymyr Stelmakh, and Valeriy Borysov -- but he believed 
that they will all do what the President says; Yushchenko had 
said directly to Lutsenko on October 15 that he would 
instruct them to vote for Tymoshenko. Of course, Regions 
would try to interfere.  Deputy Prime Minister Andriy Klyuyev 
had offered Lutsenko 20 million (he did not say whether it 
was hryvnia or dollars) to stay silent about his coalition 
preferences, so he could just imagine how much money was 
being thrown at MPs to encourage them to defect. 
 
4. (C) Tymoshenko would then have two-three months as prime 
minister to produce results.  If she let economists like 
Viktor Pynzenyk and Serhiy Terokhin run economic reform, then 
maybe she would actually accomplish something.  However, 
Lutsenko had his doubts.  He thought her economic ideas -- 
renationalizing all heating and energy companies, repaying 
the  130 billion hryvnia (about 26 billion USD) from defunct 
Soviet Sberbank (Oshchadbank in Ukrainian) to investors in 
only two years, releasing all conscripted soldiers on January 
1, 2008 -- showed that she was little better than a 
communist.  Most likely, she will fail. 
 
5. (C) Step two will be to remove Tymoshenko.  Then, at that 
point, presented with a situation where there are not enough 
MPs to support a BYuT prime minister or a Regions prime 
 
KYIV 00002634  002.2 OF 004 
 
 
minister, because OU-PSD will make sure their votes properly 
split between the two sides, Lutsenko and the President will &#x0
00A;propose a "technocratic, apolitical, and temporary" 
government.  Lutsenko said that because the constitution does 
not require a new coalition to be formed if the previous one 
falls apart, Yushchenko can decide to allow the Rada to 
continue without a formal majority.  This will allow OU-PSD 
to cooperate with Regions without having to formally go into 
coalition together.  Lutsenko did not say who the Prime 
Minister would be in this scenario, but named some others who 
might make good ministers, including Volodymyr Radchenko as 
Interior Minister and Roman Shpek as Economy Minister.  This 
temporary, technocratic prime minister would have to be 
subject to a law banning him, or possibly the whole 
technocratic cabinet, from running for president in the next 
election, so that people would understand that this was not a 
power grab but a serious effort to implement some policies. 
 
Regions Will Go Along in the End 
-------------------------------- 
 
6. (C) Lutsenko believed Regions would cooperate with this 
scenario because people like Akhmetov and Kolesnikov wanted a 
functioning government.  Regions was already offering to give 
OU-PSD everything they want to back Yanukovych as PM.  In the 
end, Akhmetov and Kolesnikov knew Yanukovych's political 
career was coming to an end and they would agree to 
cooperation without Yanukovych as PM.  He added that it would 
be helpful for the West to weigh in with Akhmetov and 
reassure him that being in the opposition was not the end of 
the world.  In addition, according to Lutsenko, Yushchenko 
was still considering giving the Speakership to Regions for 
someone like Raisa Bohatyreva so that Regions felt it had 
something to show its electorate. 
 
7. (C) Lutsenko argued that this was the only workable plan 
for forming a government.  To go straight to a Regions 
coalition with Baloha as PM would be political suicide for 
OU-PSD.  Their voters expected them to at least try a 
coalition with BYuT.  He said he was confident that he and OU 
leader Kyrylenko controlled 40 MPs in the OU-PSD faction, so 
they could block a broad coalition with Regions and Lytvyn 
Bloc. 
 
8. (C) Once the temporary government was in place, they would 
start work on a new constitution.  Lutsenko said that the 
main goal was to clarify whether Ukraine was a parliamentary 
system or presidential.  His own view was that if Yushchenko 
wanted to be reelected, he would have to choose a 
parliamentary system where the president was elected by the 
parliament and was more ceremonial.  Lutsenko was sure that 
Yushchenko would never again win a competitive election. 
(Note.  On October 16, longtime Yushchenko adviser Oleh 
Rybachuk told the Ambassador that he, Bezsmertniy, and 
Vitaliy Haiduk have all bluntly warned the President that he 
will not be reelected.  End note.)  In this form of 
government, Lutsenko would want governors and raion heads to 
be popularly elected to break the vertical of power from the 
president's office over local self-government. 
 
Lutsenko's Personal Ambition to Run Kyiv 
---------------------------------------- 
 
9. (C) As for his own future, Lutsenko wanted to be in charge 
of Kyiv; this was the only way where he could tangibly 
demonstrate that he was serious about reform, fighting 
corruption, and implementing change.  One of the 12 laws that 
OU-PSD now wanted passed before the prime minister's 
confirmation vote would separate the positions of mayor of 
Kyiv and head of the Kyiv city administration (which has the 
same status as an oblast governor).  Most of the power for 
city administration would be transferred to the 
administration head and the mayor would become ceremonial. 
If this law was not passed right away, Lutsenko would take a 
deputy prime minister position under Tymoshenko until the law 
was approved.  He said that he will also work with OU to form 
a new, unified political party in order to prevent the 
development of a two-party system. 
 
Bezsmertniy Tells a Similar Tale 
-------------------------------- 
 
10. (C)  Presidential Administration Deputy Head and Our 
Ukraine political insider Roman Bezsmertniy told a similar 
story to the Ambassador October 16 -- Tymoshenko might get 
her chance to lead an orange coalition government, but it 
would probably be unstable and short-lived.   When the orange 
coalition collapsed, Presidential Administration head Baloha 
would end up as a technocratic Prime Minister for the next 
year, as the President and political leaders turned to 
 
KYIV 00002634  003.2 OF 004 
 
 
constitutional reform.  Sketching out the numbers with one of 
his multiple color pencils, Bezsmertniy put 228 votes in the 
orange column versus 222 votes for a combined 
Regions/Communist/Lytvyn Bloc force.  In his view, a three 
vote majority was a serious margin for Europe, but not for 
Ukraine.  He noted that Lytvyn had a key role to play -- if 
he threw in his lot with orange, then they would have a 248 
seat majority and the game would be over.  However, 
Bezsmertniy thought it far more likely that Lytvyn would 
watch and wait, and after a vote was taken on a Tymoshenko 
premiership, he would move to the Regions-led opposition, 
where he felt more comfortable. 
 
11. (C)  Bezsmertniy dismissed a broad coalition as 
impossible since Tymoshenko controlled more than 150 seats. 
If faced with a broad coalition, she could refuse to accept 
BYuT's seats in the new Rada.  In his view, any conflict 
between Our Ukraine and BYuT could trigger this situation; 
Tymoshenko's assurances to the Ambassador and others that she 
would stay in the Rada and play by the rules no matter what 
would be forgotten.  Bezsmertniy said that OU-PSD had made 
itself a hostage to Tymoshenko and it was no longer an 
independent force.  Bezsmertniy noted that three OU-PSD 
members -- NSDC Secretary Plyushch, former PM Yekhanurov, and 
former Kyiv Deputy Mayor (and Yekhanurov loyalist) Borysov -- 
had refused to sign the new orange coalition agreement, 
bringing the total number of seats supporting orange to just 
225, one short of a majority.  He said that these three were 
working for a broad coalition, but he was dismissive of them. 
 In his view, a broad coalition could easily have been 
established if the Socialists had made it across the 
3-percent threshold and into the Rada; the orange coalition 
would have been denied and the game would have been over, 
leaving Regions in the decision-maker's seat.  Similarly, if 
Lytvyn turned to orange, then the game would be over -- this 
was the negative scenario for Regions who would then have no 
choice but to start to destroy the Rada. 
 
12. (C) Once Baloha became a technocratic PM, according to 
Bezsmertniy, the President would be in the driver's seat -- 
his involvement gives all sides hope and keeps them in the 
game.  Tymoshenko could possibly be given something like the 
Kyiv Mayor's job.  The five key figures in politics right now 
were Baloha (w
orking with Yushchenko), NSDC Secretary 
Plyushch, Regions financier Rinat Akhmetov, PM Yanukovych, 
and Tymoshenko. 
 
Reforming Constitution is Key, Other Policies Less Important 
--------------------------------------------- --------------- 
 
13. (C)  Bezsmertniy suggested that the new government, 
whatever color and form, would be temporary in nature -- both 
PM and Speaker.  It would only exist for the year while 
constitutional reform was debated and decided.  Obviously 
neither Tymoshenko nor Yanukovych wanted to be a "temporary" 
PM and Lytvyn didn't want to be a "temporary" Speaker. 
However, it was the job of President Yushchenko, backed by 
the international community, to develop new rules of the game 
and then to hold a new election based on those.  Otherwise, 
Bezsmertniy predicted a long negotiation process resulting in 
a "surrogate" government taking power.  In the current 
set-up, neither side was able to let the other side work and 
this was a dead-end for the country.  Only constitutional 
change could get the country out of this situation. 
 
14. (C)  Bezsmertniy was skeptical that the "technocratic 
government," in power for the year while Yushchenko pursued 
constitutional reform, would accomplish much in terms of 
policy; constitutional reform would take up 90 percent of the 
President's time, giving him only about 10 percent of his 
time to spend on policy.  Bezsmertniy downplayed the 
importance of WTO, NATO and EU membership for Ukraine, 
arguing that the country needed to focus on its own 
complicated development.  He said that tough issues like 
natural gas supplies from Russian would be more easily 
managed with one Ukrainian center of power.  Yushchenko would 
take care of the issue, and the Kremlin would be happy to 
deal with the President as the Ukrainian government. 
Bezsmertniy acknowledged that the NSDC was "nearly 
discredited," predicting that some kind of higher council 
would need to be established in the new constitution in order 
to coordinate the activities of all of the state bodies. 
 
Inside OU 
--------- 
 
15. (C)  Bezsmertniy concluded with several comments on the 
Our Ukraine party organization.  He acknowledged that 
although the party leader is Yushchenko, the management of 
the whole structure was controlled by Baloha.  For the party 
 
KYIV 00002634  004.2 OF 004 
 
 
to function, serious resources were needed and only Baloha 
was in a position to provide those.  Baloha's next task was 
to unify the party, and as executive manager, he needed to 
make Kyrylenko his political counselor and Lutsenko the 
faction leader.  In Bezsmertniy's view, the party 
organization in the field was dead.   He said that Yanukovych 
and Tymoshenko had done well in the last election because of 
their strong party organizations and this was why he needed 
to help Baloha strengthen OU's internal structure.  This was 
the task ahead.  Interestingly, Bezsmertniy, who was one of 
the leaders of the presidential administration group working 
on a new constitution earlier this year, told the Ambassador 
that he would no longer be involved in this process. 
 
Gerashchenko: A New Voice in OU 
------------------------------- 
 
16. (C) Irina Gerashchenko, former Yushchenko press secretary 
and current head of Unian wire service, is eager to take her 
seat in the new Rada and support an orange coalition, she 
told us October 16.  She said that she was part of the new 
group of young, ideological parliamentarians joining the 
OU-PSD faction.  In total, she said, they were 25 percent of 
the faction and they were solidly behind an orange 
government.  She stressed that she was a firm supporter of 
the President -- she joined the bloc on Yushchenko's quota -- 
but what the Presidential Secretariat said does not always 
equal what the bloc thinks.  She dismissed the threat of 
Yekhanurov and his allies undermining Tymoshenko's 
confirmation as unlikely. 
 
17. (C) Gerashchenko also thought Regions would take their 
seats; to not do so would lead to another election where they 
would fare even more poorly than last time.  The orange 
coalition would offer them a law on the opposition that would 
give them key Rada committees, including Budget and Free 
Speech.  The door was open to Lytvyn, but she warned that the 
former Speaker does not control all of his MPs.  (Note.  A 
charge we have heard from many interlocutors, who point to 
the multiple key financiers of his campaign as proof.  End 
note.)  OU, Gerashchenko admitted, had lost depth and talent 
in the past couple of years and needed to rebuild. 
 
18. (U) Visit Embassy Kyiv's classified website: 
www.state.sgov.gov/p/eur/kiev. 
Taylor

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