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February 28, 2008

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Reference ID Created Released Classification Origin
08KYIV455 2008-02-28 10:03 2011-08-30 01:44 CONFIDENTIAL Embassy Kyiv


DE RUEHKV #0455/01 0591003
P 281003Z FEB 08

C O N F I D E N T I A L KYIV 000455 
E.O. 12958: DECL: 03/24/2016 
Classified By: Ambassador for reasons 1.4 (b) and (d). 
1.  (C) Summary and Comment:  During a February 19-21 visit 
to the city of Lviv in western Ukraine, the Ambassador met 
with the First Deputy Oblast Governor Valery Pyatak, Lviv 
Mayor Andriy Sadoviy, and a group of young local politicians 
representing the political parties Pora, Svoboda, Ukrainian 
People's Party (UNP), Reforms and Order, and Kostenko-Plyusch 
in the municipal or oblast councils.  They were generally 
optimistic that preparations for the 2012 UEFA European 
Football Championship would be successful, but all noted 
serious challenges with transportation infrastructure and 
expressed a general desire for greater fiscal and political 
autonomy from the national government.  Given that this was a 
western Ukrainian audience, not surprisingly, all supported 
closer ties with the EU and NATO. 
2.  (C) Comment:  All agreed with the Ambassador that private 
investment would be crucial to the successful outcome of Euro 
2012.  We are concerned, however, by the sense in Lviv that 
the central government will wait until the last possible 
moment to provide the needed support and resources to local 
authorities to address related infrastructure problems such 
as needed improvements to the Lviv airport.  In fact, some 
are now arguing that the matches scheduled to be played in 
Lviv will be transferred to Odesa which has a better airport 
and more developed infrastructure.   Many also expressed 
concern that Ukraine needed a strong information campaign to 
inform the Ukrainian public at large about the political 
nature of the alliance and long-term benefits of closer ties 
with NATO for Ukraine.   End Summary and Comment. 
Few Comments on Lviv Governor's Surprise Resignation 
--------------------------------------------- ------- 
3.  (C) Emboffs were informed hours prior to the scheduled 
meeting with Oblast Governor Petro Oliynyk on February 19 
that his deputy Valery Pyatak would sit in for him because of 
Oliynyk's urgent travel to Kyiv.  Soon afterwards, media 
sources announced that Oliynyk, who had held the post since 
2005, had submitted his resignation and there was speculation 
that he was forced to resign by Presidential Secretariat 
Chief of Staff Viktor Baloha.  Pyatak told Ambassador Taylor 
that he was representing the oblast in his capacity as deputy 
governor until President Yushchenko issued a decree accepting 
Olinyuk's resignation. (Note: President Yushchenko accepted 
Olinyuk's resignation on February 20. End note.) Pyatak did 
not give any more details on the resignation and focused his 
discussion on economic themes.  Lviv Mayor Andriy Sadoviy 
explained in a separate meeting that the resignation was not 
yet official, but seemed to expect that Yushchenko would 
accept the resignation and expressed hope for a good 
replacement.  There was little additional comment on the 
governor's resignation at the meeting with the young 
politicians.  Voldymyr Hirnyak from the UNP faction of the 
Lviv Municipal Council said that there were three possible 
candidates for the governorship and added that media reports 
that he was forced by Kyiv to resign reminded him of the 
Kuchma Era.  (Note:  On February 26, the media reported that 
businessman Mykola Kmit will soon be named as the new 
governor and, according to the presidential website, former 
governor Oliynyk had been appointed as a presidential 
advisor. End note.) 
Preparations for Euro 2012 
4.  (C) While all the interlocutors were optimistic that Lviv 
would be ready for the 2012 UEFA Championship to be co-hosted 
by Ukraine and Poland, there was a consensus that much needed 
to be done - and quickly - to prepare for the games.  The 
First Deputy Oblast Governor, Mayor, and young politicians 
all highlighted the urgent need to develop infrastructure for 
the event - especially Lviv's airport.  Mayor Sadoviy 
explained that the city will have to accomplish 30-40 years 
of work in a period of 2.5 years at an estimated cost of 800 
million USD (4 billion UAH) with only 300 million USD (1.5 
billion UAH) expected from the government.  Sadoviy 
complained that the cities in Ukraine hosting the games 
needed more funding, but tax revenues collected locally were 
going back to the central government.  Sadoviy complained 
that the Ministry of Transportation had delayed the handover 
of the airport in Lviv to the city preventing work on a new 
terminal to accommodate the expected influx of visitors for 
the games.  He criticized the National Agency for Preparing 
and Hosting the 2012 European Soccer Championship formed by 
the Cabinet of Ministers in October 2007 and headed by Yevhen 
Chervonenko for lacking the authority to accomplish its 
mission.  (Note: There were recent reports in the media that 
UEFA was considering moving the venue of the games from Lviv 
to Odesa.  The reports have not been confirmed.  End note.) 
5.  (C) Deputy Governor Pyatak said that the current 
organization to prepare for the games was not worki
ng well 
and that the central government needed to make hosting the 
2012 games a top priority.  He felt the government must 
establish clear lines of authority to avoid waste and 
duplicated efforts.  Echoing Mayor Sadoviy, Pyatak 
highlighted the need to improve Lviv's transportation 
infrastructure, especially the airport.  Among the young 
politicians, Petro Adamyk of the Pora faction warned that the 
city's committee responsible for preparing for the games had 
collective responsibility, but that no one person was 
accountable for results.  He added that the biggest hindrance 
was with the central government where responsibilities had 
not been clearly delineated.  Adamyk echoed the concerns 
raised by the mayor and deputy governor that the local 
government needed to retain at least 50 percent of the tax 
revenues collected in the oblast to improve infrastructure. 
Oleh Nimchynov of the Kotsenko-Plyusch Bloc said that the 
mayor needed to do a better job of listening and responding 
to concerns from city council members and to increase the 
participation of private business.  Markiyan Ivashchyshyn of 
the Pora Party complained that government corruption was the 
biggest problem and that he did not expect to see any 
progress for at least a year until the public becomes 
alarmed, thereby forcing the government to mobilize its 
efforts.  All agreed on the need to stimulate private 
investment and thought that the games would help Ukraine move 
closer to Europe. 
Local Governments want more Revenues and Authority 
--------------------------------------------- ----- 
6.  (C) There was consensus among all the interlocutors that 
that the central government should allow oblast and local 
governments to keep more tax revenues.  Mayor Sadoviy 
complained that 80 percent of the taxes collected by local 
governments went to Kyiv, leaving local authorities with too 
little to fund education, social services, and utility 
infrastructure.  He felt a 50/50 split would be equitable and 
cited the recent gas explosion of a building in Lviv 
(resulting in one fatality) as an example of the poor state 
of the city's infrastructure.  Deputy Governor Pyatak 
emphasized the need for the oblast to have more control over 
the budget to support education and other services to the 
local governments in the oblast.  Volodymyr Hirnyak, a member 
of the UNP faction of the Lviv Municipal Council, echoed the 
mayor's suggestion that Lviv retain 50 percent of its tax 
revenues while Oleh Bas of the Reforms and Order Party and 
Andriy Khomytskiy called for broader reforms to the tax 
system including changing the provisions on property and 
income taxes. 
7.  (C) Mayor Sadoviy lamented that too much power was 
concentrated in Kyiv and felt that it was "absurd" that he 
did not have control over the police, tax collectors, and 
emergency response services.  When asked about possible 
changes to the constitution that would shift more power to 
local government, the mayor complained that the central 
government needed to understand that cities and local 
governments carry most of the burden of Ukraine's social and 
political problems.  He said that elected oblast officials, 
including the governor, should be more accountable to voters 
and expressed hope for open voter lists in the future. 
Deputy Governor Pyatak said that Ukraine is moving towards a 
constitution with a fully proportional system, but said that 
as long as city and regional councils are elected directly, 
the government needs to look at other models, like the Polish 
system, before making a final decision on a system of 
directly electing oblast governors.  From the young 
politicians, there was a consensus supporting the devolution 
of authority to local governments and general hope that 
constitutional reforms currently under consideration would 
move in that direction. 
Strong Support for NATO and Euro Integration 
8.  (C) All of the interlocutors expressed support for closer 
ties with the EU and NATO.  Mayor Sadoviy believed that NATO 
accession would help to convince the rest of the country that 
closer ties to the West would be good for Ukraine.  The 
Deputy Governor stated that NATO and EU accession would be 
good for the entire country, but acknowledged that Lviv 
Oblast's historical ties with Poland gave it a different 
perspective and more positive view towards NATO than other 
parts of the country.  All of the young politicians expressed 
support for NATO and EU accession, but views on the specifics 
were varied.  While representatives from the Kotsenko-Plyusch 
Bloc and UNP stated unqualified support for NATO accession, 
members from the Pora Party noted that the U.S. had to 
continue making its case for the political and not just the 
military aspect of NATO to convince the Ukrainian public at 
large.  In addition, they noted that the recent recognition 
of Kosovo by the U.S. and many European countries could 
complicate matters because Slavs will tend to side with the 
Serbians.   The nationalist Svoboda faction member stated 
that his party will support NATO but also said that Ukraine 
needed to thoroughly consider its options, including 
involvement in the EU's rapid reaction force, and that 
Ukraine should not ally itself too closely with any alliance. 
9. (U) Visit Embassy Kyiv's classified website: 




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