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December 10, 2007

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Reference ID Created Released Classification Origin
07KYIV3036 2007-12-10 14:04 2011-08-30 01:44 CONFIDENTIAL Embassy Kyiv

DE RUEHKV #3036/01 3441404
P 101404Z DEC 07

C O N F I D E N T I A L SECTION 01 OF 02 KYIV 003036 
E.O. 12958: DECL: 12/10/2017 
Classified By: Polcouns Kent Logsdon for reasons 1.4(b,d). 
1. (C) Summary.  Should Yuliya Tymoshenko be confirmed as 
Prime Minister -- a vote is scheduled for December 11 -- her 
government program would be based on the coalition agreement, 
a wide-ranging 81-page document that promises sweeping 
reforms across the board with an emphasis on social programs, 
economic reforms, and Western integration.  The agreement, 
which was signed by 227 MPs from BYuT and Our 
Ukraine-People's Self-Defense (OU-PSD) and submitted to the 
Rada on November 29, is mostly a rehash of the BYuT and 
OU-PSD campaign platforms, which means it is a mix of 
populist promises and stated economic reform goals.  Several 
of the program's items -- ending conscription, repaying 
Soviet banking debts, Ukraine's relationship with NATO -- 
have stirred debate within the coalition, but more of the 
struggle has been over senior positions, as well as 12 key 
pieces of legislation that President Yushchenko wants passed 
2. (C) Given the agreement's overly extensive and varied list 
of stated priorities, along with the strains already apparent 
from Tymoshenko's ambitious campaign promises on the one hand 
and President Yushchenko's legislative demands on the other, 
this agreement will not be an exact roadmap of a Tymoshenko 
government.  For example, Tymoshenko and her team have tried 
to downplay some of the commitments to NATO membership in the 
agreement -- the one major addition to the document since its 
2006 iteration when a similar document was first prepared for 
a proposed OU, BYuT and Socialist orange government -- while 
OU-PSD have fought against Tymoshenko's push to end 
conscription immediately, repay Sberbank debts within two 
years, and legislate imperative mandate.  Instead, this 
document serves as a catch-all that holds the interests for 
all groups with BYuT and OU-PSD, and we expect to see it 
implemented unevenly.  End summary and comment. 
What the Agreement Says 
3. (SBU) The coalition agreement lays out the coalition's 
agenda and policy priorities for both internal and foreign 
affairs.  It is 64-pages of text, followed by 10 detailed 
pages of rules on the internal structure, leadership, and 
etiquette of the coalition, as well as how the coalition 
should interact with the President and cabinet, and ending 
with a number of addenda that lay out the distribution of 
positions in the Cabinet, executive branch, and Rada.  There 
is also an addendum listing 12 key pieces of legislation, 
most of which are a Yushchenko priority. 
4. (SBU) Three aspects of the agreement have been the subject 
of debate both within the coalition. 
--Conscription.  Both BYuT and OU-PSD promised voters to move 
to a professional army, but Tymoshenko advocated that the 
change take place January 1, 2008.  After much back and 
forth, the only change made in the final coalition agreement 
from the draft that was circulated for signatures this fall 
was to replace the exact date with the language "when the 
necessary logistical basis (both financial and 
organizational) is formed."  This was a key demand of Defense 
Minister Hrytsenko who has said publicly that it was 
impossible to move so quickly to eliminate conscription. 
--Sberbank.  Tymoshenko also promised voters that she would 
repay within two years the debt owed to depositors by the 
Soviet Sberbank (Oshchadbank in Ukrainian) -- estimated at 
UAH 130 billion ($23.6 billion) after the collapse of the 
USSR.  (This also raised an outcry from OU-PSD, who argued 
that such a rapid repayment schedule would bankrupt the 
government.  Nevertheless, this remains in the agreement. 
--NATO.  The 2007 coalition agreement is predominantly based 
on the draft coalition agreement written for the proposed 
orange coalition after the March 2006 elections.  The most 
significant change between 2006 and 2007 was the addition of 
much stronger pro-NATO language to include phrases such as 
"full-fledged NATO membership," which is used several times, 
and the call for the adoption of laws necessary for MAP 
accession.  The language, however, still includes the 
requirement of a nationwide referendum before membership. 
Agreement Covers Range of Issues 
5. (SBU) Beyond those few more noted clauses, the coalition 
agreement spans the policy spectrum.  In the social sphere, 
it calls for the improvement of education and healthcare 
through a variety of state-funded programs and an increase in 
KYIV 00003036  002 OF 002 
subsidies for children.  In the economic arena, the agreement 
includes: diversification of energy supplies; introduction of 
a land market, including all necessary laws and regulations; 
pension reform; tax reform; reform of the housing utilities 
sector; and combating corruption -- with many of these 
sections including detailed lists of proposed measures.  On 
foreign policy, in addition to NATO, the agreement calls for: 
EU membership; the preservation and st
rengthening of good 
relations with Russia and other neighboring states; and 
strengthening Ukraine's position in Eastern Europe and the 
Black Sea Region 
6. (SBU) The agreement includes a variety of internal 
political policies.  There is discussion of constitutional 
reforms to improve checks and balances between different 
branches of power, including limiting immunity for 
parliamentary deputies to only official acts.  It also calls 
for abolishing other perks for parliamentarians, creating 
rights for the opposition, and improving the proportional 
election system.  The agreement also proposes adopting new 
laws on the Cabinet of Ministers, on central executive power 
agencies, on referendums, and on political parties. 
Addenda: The Real Focus of Debate 
7. (C) Most of the hold-ups and internal debates about the 
coalition agreement have focused on the addenda that 
distribute positions within the coalition and that list top 
priority laws.  Under the agreement, each party was given a 
quota of positions which it can fill as it sees fit. 
Nevertheless, there have been objections over potential 
nominees.  On December 7, Tymoshenko said that she hoped that 
the coalition would have worked out all personnel 
disagreements by December 11.  Under the terms of the 
document, BYuT receives the prime ministership and all the 
economic portfolios -- Agriculture, Ecology, Economics, Fuel 
and Energy, Coal, Labor, Industrial Policy, Transportation 
and Communications, and Finance.  OU-PSD receives the 
speakership and all the social and national security 
portfolios -- Regional Development, Interior, Foreign 
Affairs, Culture and Tourism, Emergency Situations, Defense, 
Science and Education, Health, Justice, and Youth, Family, 
and Sports.  The coalition agreement also specifies which 
ministers will control which state agencies, divides up the 
special executive bodies (like the State Property Fund and 
Anti-Monopoly Committee), and allocates control over the 
three state-owned banks.  The coalition has agreed that the 
President will also be able to nominate the Interior Minister 
directly; according to the Constitution, he already has the 
right to nominate the Foreign and Defense Ministers. 
8. (C) In addition, there are 12 laws, which the agreement 
stipulates should be considered before the PM vote. 
Yushchenko has mentioned this issue periodically in the past 
few weeks and Baloha has been pushing hard to pass the laws 
before confirming Tymoshenko, but it seems now that the Rada 
is likely to vote first on the PM before taking up the 
President's agenda.  (Embassy Note: This would be difficult 
given the lack of committees in the Rada and the opposition's 
reluctance to agree to establish a special commission to 
quickly review the draft laws before they come to the floor 
for a vote.  End Note.)   Yushchenko's decision to submit 
Tymoshenko's nomination to the Rada so quickly may have 
signified his acceptance of this order of business.  The 12 
laws are: changing the constitution to eliminate 
parliamentary immunity; amending the law on MPs to eliminate 
other parliamentary perks; amending the CabMin law; a law on 
the opposition; a law on imperative mandate (one of the few 
Tymoshenko projects on the list); amending existing laws to 
allow for early city council and mayoral elections in Kyiv; 
amendments to the laws on city and local self-government; a 
new law on Ukraine's internal troops; changes to the state 
procurement system; amending laws to strip some state bodies 
of their status as central executive bodies; and ratification 
of the GUAM statute. 
9. (U) Visit Embassy Kyiv's classified website: 




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