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April 15, 2008

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Reference ID Created Released Classification Origin
08KYIV756 2008-04-15 07:58 2011-08-30 01:44 CONFIDENTIAL Embassy Kyiv

DE RUEHKV #0756/01 1060758
P 150758Z APR 08

C O N F I D E N T I A L SECTION 01 OF 04 KYIV 000756 
E.O. 12958: DECL: 04/15/2018 
     B. 2006 KYIV 04530 
     C. KYIV 00408 
     D. KYIV 00474 
     E. KYIV 00709 
     F. KYIV 00302 
     G. 2006 KYIV 4237 
Classified By: Ambassador for reasons 1.4(b,d). 
1. (C) Summary.  Although tensions exist between the Akhmetov 
and Yanukovych wings of the Party of Regions, the party shows 
no immediate signs of splitting.  Moreover, by taking a stand 
against a NATO MAP for Ukraine at the Bucharest Summit and 
playing on rumors of possible Rada elections in late 2008, 
former Prime Minister Yanukovych has bolstered his position 
as the only viable political leader and these issues may have 
actually brought the party closer together.  Although there 
are nuanced views among members, the party is fairly united 
in its opposition to NATO MAP now or membership in the 
near-term.  The moderates see closer cooperation with NATO as 
part of moving toward Europe and the EU, but they also see 
the issue of a MAP and future membership as unimportant and 
divisive for the country.  The most radical members oppose 
MAP because it conflicts with their pro-Russian orientation, 
but primarily all see a strong anti-NATO position as a way to 
pick up 3-5 additional electoral points.  In contrast, the 
whole party backs WTO accession - 164 of the faction's 175 
members supported ratification of the accession treaty on 
April 10 -- because they see concrete economic advantages. 
Moreover, the party retains strong voting discipline in 
general.  Rumors persist that Akhmetov will leave Regions to 
join Presidential Secretariat Head Baloha in a new political 
project - Akhmetov told us the two talk -- but Akhmetov does 
not control enough of his faction to dictate a broad 
coalition on his own terms and seems content to push a 
scenario that would bring the entire party back into power. 
2. (C) Comment.  Regions' comparative loss to BYuT in the 
2007 pre-term Rada elections may have worried party leaders 
that its efforts to move into central Ukraine as a more 
moderate, business-oriented party cost them support in the 
east; the party is likely still trying to calculate its 
strategy for upcoming presidential and Rada votes.  The party 
has always possessed a strong instinct for self-preservation, 
and it is likely to band together as long as it perceives 
external enemies, such as Tymoshenko.  Regions' push, 
especially from the Akhmetov wing, for a broad coalition 
appears, at least for now, to mean the whole faction would 
join the coalition, not that the moderates would depart.  For 
Akhmetov to leave Regions with only a percentage of the 
faction would make him much weaker in negotiations with 
President Yushchenko and Baloha than he is now with the 
potential power of 175 MPs behind him.  End summary and 
Regions: Several Factions, One Party 
3. (C) It is hard to know exactly how the subfactions within 
Regions are structured (ref B), but most observers see a 
group of MPs led by oligarch Rinat Akhmetov and his 
right-hand man Borys Kolesnikov, a second group led by former 
PM Yanukovych,  and then one or two other smaller groups. 
Akhmetov is generally credited with controlling 30-40 percent 
of the MPs in Regions' Rada faction.  This group largely 
consists of businessmen and other Akhmetov associates, many 
of whom place great value on European integration as 
benefiting their business interests, although they are less 
positive about NATO except as a way to move closer to the EU. 
 In several conversations with the Ambassador, Kolesnikov has 
made it clear that he and Azarov are on different teams.  In 
a March 7 meeting, Kolesnikov mentioned that he and Akhmetov 
had explained their tax and rule of law policies to 
Yanukovych and Azarov, trying to gain their support for 
proposed reforms.  However, Kolesnikov has been careful not 
to criticize the other group too much.  It was also 
noteworthy that key members of the Akhmetov team distanced 
themselves from the Severodonetsk 2 congress, a meeting on 
February 28 in the same city where Regions led a separatism 
conference during the Orange Revolution.  Kolesnikov chose to 
sit with the Donetsk delegation rather than taking a seat 
on-stage and Akhmetov and NSDC Secretary Raisa Bohatyryova 
did not show up at all.  (Note.  Akhmetov claimed he was 
sick, but was later seen on TV attending a Shaktar soccer 
match. End note.) 
4. (C) Yanukovych is also generally credited with controlling 
KYIV 00000756  002 OF 004 
a large portion of Regions MPs, but which other key Regions 
members are in his group is unclear.  Yanukovych loyalists 
include Hanna Herman, Olena Lukash, and Anton Prykhodskiy. 
In addition, the members of the 2006 Yanukovych Cabinet who 
joined the party list for the 2007 pre-term elections are 
generally asso
ciated with Yanukovych.  Most of these MPs play 
a low-key role in the party, with the exception of active 
faction members Oleksandr Lavrynovych and Nestor Shufrych. 
Some of the members of this faction are smart and somewhat 
progressive, like Herman, and some are political thugs, like 
Shufrych, but all seemed to have tied their wagon to 
Yanukovych's political career.  Yanukovych's control over the 
faction may have been enhanced somewhat with the installation 
of trusted assistant Serhiy Lyovochkin as deputy faction 
leader with responsibility for running the faction 
5. (C) Two other key members of Regions who are harder to 
place are Mykola Azarov and Andriy Klyuyev.  Azarov is very 
close to Moscow and generally described as the Kremlin's 
advocate within the faction.  Klyuyev has a long-standing 
personal friendship with Yanukovych, but is younger and more 
pragmatic than the former PM.  Moreover, he is one of the 
wealthiest members of Regions, which makes him more 
independent.  Klyuyev is often believed to have control over 
a number of other MPs.  In addition, there are a number of 
prominent Regions faction members, mostly career politicians, 
who are not explicitly linked to a specific subgroup, such as 
Oleksandr Yefremov, Vasyl Khara, Mykhaylo Chechetov, and 
Taras Chornovil. 
No Split Imminent 
6. (C) We are not aware of any formal plan to split Regions, 
nor do we think it likely in the short term.  The fact that 
no one group or person controls a majority of MPs or wields 
dominant power within the party is probably one of the 
reasons the party has stuck together.  Regions leaders are 
cognizant of the fact that they wield more power as a single 
party than either side would if they split in two, at least 
in the short-term.  Regions is also unlikely to split as long 
as it benefits from remaining together as one of the two most 
popular parties in the country.  It also benefits from being 
the only real alternative to BYuT at the moment.  One example 
of this tendency is the moderate Akhmetov wing's willingness 
to back the strong anti-NATO line currently coming out of the 
7. (C) Rumors have been rampant in the Ukrainian press since 
Presidential Secretariat Head Baloha formed his new political 
movement (first called Great Ukraine, then United Center, see 
ref C) that Akhmetov would depart the party to join Baloha in 
backing Yushchenko for reelection.  In addition, the decision 
by Akhmetov ally Raisa Bohatyryova in December, 2007 to leave 
the Rada at President Yushchenko's request to run the 
National Security and Defense Council led many to believe 
that her there was an impending alliance between Akhmetov, 
Yushchenko, and Baloha.  Akhmetov told the Ambassador that he 
talks to the President's team, but he and Kolesnikov have 
been clear in private meetings and in public that they have 
no intention at the moment of leaving Regions to form a new 
party or coalition (ref D).  Akhmetov told the Ambassador 
that although he saw the need for a new political party of 
young pragmatists, he had no immediate plans to pursue this 
goal.  (Comment.  Nor did it sound to PolOff like Akhmetov 
was referring to Baloha's party, which appears to have been 
created as a platform from which to run Yushchenko's 
reelection campaign.  Akhmetov stressed that a new party 
could only be successful if it was not led by an established 
politician like Baloha.  End comment.) 
8. (C) Akhmetov also told the Ambassador that he did not 
think anyone should rush to change the current coalition and 
government.  He stressed that any sudden move to dismiss 
Tymoshenko would only increase her popularity and lead to her 
winning the presidency, an outcome he opposed.  He also 
underscored that his idea for a broad coalition included all 
of Regions, not just part of it.  Akhmetov said that he would 
be pleased when the time came for a new coalition, and he 
admitted that Regions and OU did not have many key 
differences, but acknowledged that leadership ambitions have 
kept them apart. 
Regions Strategy for Presidential Elections Under Wraps 
--------------------------------------------- ---------- 
9. (C) Regions' strategy for the upcoming presidential 
KYIV 00000756  003 OF 004 
elections is still unknown.  Presumably, party leaders are 
still debating whether Yanukovych will be their candidate. 
His outspoken criticism of the government's request for a 
NATO MAP at Bucharest has raised his profile and he still 
comes in a close second in polls about whom people would vote 
for president.  This has made it hard for Regions to suggest 
any alternative candidates. 
10. (C) There are rumors that Yushchenko could become 
Regions' nominee for president, but for now that remains 
simply speculation.  Even if Akhmetov believed that 
Yushchenko is the best choice for president, he is unlikely 
to leave Regions to become one of many voices within OU.  If 
Baloha's United Center gains momentum and credibility, maybe 
Akhmetov would consider cooperating with them, but he is 
probably much more comfortable trying to bring Yushchenko to 
his side, rather than moving to the President's team. 
11. (C) Moreover, relations and the overall level of 
cooperation between Regions and OU-PSD are poor.  There is a 
high level of contact between the Presidential Secretariat 
and Regions, but most in the President's Rada faction dislike 
and distrust Regions.  Those OU-PSD MPs who left OU to join 
United Center are close to Baloha and therefore may favor a 
broad coalition.  Beyond this, we have no information about 
specific collaboration.  In fact, the most recent rumors in 
the Rada are that Regions and BYuT are working to raise the 
threshold to enter the Rada and to amend the constitution to 
further weaken the presidency (ref E). 
No to NATO 
12. (C)  Regions seized upon the letter sent by Yushchenko, 
PM Tymoshenko, and Speaker Yatsenyuk requesting NATO MAP as 
an opportunity to build electoral support and to hinder the 
coalition's work.  In fact, many MPs and politicians we spoke 
with believed the latter goal was the primary motivation for 
Regions to block the Rada's work for a month.  Regions' 
formal position on NATO is no discussion of membership 
(including accepting MAP) until a national referendum is 
held, but they often cater to strong anti-NATO sentiments in 
their electoral base.  In the run-up to and during the 
Bucharest summit, Regions conducted a series of anti-NATO 
rallies in Kyiv and other key cities, such as Donetsk and 
Kharkiv.  Following the summit a Regions demonstration was 
held in front of the German Embassy to "thank" Berlin for 
blocking MAP, much to the chagrin of our German colleagues. 
Now that a decision to postpone MAP has been taken, it is 
possible that Regions might be somewhat willing to let
issue fade, at least until the next election cycle. 
13. (C) The political fury surrounding NATO has seemed to 
coalesce Regions to a large degree.  In addition to giving 
Yanukovych a prominent public platform, it has pushed even 
moderate Regions members, like Herman and Inna Bohoslovska, 
into openly anti-NATO positions.  Moreover, the Akhmetov camp 
has acquiesced to this strong anti-NATO grandstanding. 
Akhmetov avoided directly answering the Ambassador's 
questions about NATO and comments from close allies indicate 
that his camp does not currently see any concrete benefit to 
joining MAP.  Irina Akimova, a new MP and head of Akhmetov's 
in-house think tank, which played a key role in convincing 
Akhmetov to push for WTO accession, argued strongly against 
NATO membership as a priority for Ukraine right now at a 
February 4 dinner with Congressman Wexler.  She said that 
NATO was not the proper impetus for encouraging democratic 
and economic reforms and that Ukraine's goal should be closer 
cooperation with and eventual membership in the EU.  Akimova 
dismissed the argument that NATO membership or even MAP would 
help improve Ukraine's investor climate by increasing 
stability, responding that rule of law and property rights 
would be a better strategy (ref F).  Kolesnikov made an even 
more stringent anti-NATO argument to the Ambassador on March 
7.  He said that Regions understood the difference between 
MAP and membership, but most Ukrainians did not, and he 
indicated Regions would capitalize on that misunderstanding 
and hold national protests against MAP during the Bucharest 
summit, because receiving MAP would be divisive for the 
14. (C) There are certain members of Regions generally held 
to be close to Moscow, such as Azarov and possibly Shufrych, 
but beyond personal ties, we do not see the Kremlin exerting 
strong influence or providing financial or other support to 
Regions.  The pro-Russian stances that Regions takes - on 
language, NATO, the Holodomor, etc. - are aimed at a domestic 
audience in eastern and southern Ukraine.  This population is 
KYIV 00000756  004 OF 004 
naturally predisposed to be pro-Russian, so there is a 
merging of common interests with Moscow.  However, we do not 
believe Russia is dictating actions to Regions, which is too 
independent to want to be under anyone else's influence. 
Yes to WTO 
15. (U) Regions has consistently supported WTO accession 
since the Yanukovych government took office in 2006.  Indeed, 
under Yanukovych's leadership in 2006-2007, the GOU passed a 
series of critical laws required for accession and, to a 
large degree, did the heavy lifting to finalize accession 
talks.  Moreover, Regions accomplished all of this with two 
coalition partners, the Communists and the Socialists, who 
were ideologically opposed to accession. 
16. (SBU) Regions' support for WTO accession did not change 
noticeably since it went into opposition following September 
2007 parliamentary elections.  Yanukovych said publicly that 
Regions would vote in favor of accession and that he had "no 
doubt" that the protocol of accession would be ratified. 
Given the strong party discipline within Regions, it was not 
surprising that 164 out of 175 faction members voted for 
accession on April 10. 
17. (C) Some Regions MPs are less supportive of accession 
than others, however.  For example, Dmitriy Svyatash, 
previously the deputy chairman of the Rada Banking and 
Finance Committee, which oversaw the passage of several WTO 
bills, expressed his concerns to EconOff in late 2006 that 
accession might negatively affect the domestic automobile 
industry (ref G).  In the end, Svyatash managed to put 
together a compromise draft law that only partially opened 
the Ukrainian market to foreign used cars, yet went far 
enough to satisfy WTO members.  This example is meant to 
demonstrate that the opposition of a few, individual Regions 
MPs tends not be ideological but rather a concern for 
particular domestic industries.  These MPs, unlike their 
colleagues in the Communist Party, tend to seek practical 
steps to mitigate what they see as negative consequences of 
accession, not block it altogether. 
18. (SBU) It is almost certain that Akhmetov calculates WTO 
membership to be in his business interest, and, indeed, it is 
assumed that this calculation is what drove Regions to so 
strongly support accession while in the government.  Some 
analysts have pointed to a 2006 study conducted by the Bureau 
of Economic and Social Technologies (BEST), Akimova's think 
tank, as the turning point for Regions' pro-WTO policy.  The 
study apparently found that Ukrainian industry in general, 
and particularly companies owned by Akhmetov, would benefit 
from accession, primarily from increased exports. 
19. (SBU) Jock Mendoza-Wilson, Director of International and 
Investor Relations for Akhmetov's System Capital Management 
(SCM), confirmed to EconOff in December 2007 that SCM saw WTO 
accession as a positive development for its businesses.  WTO 
accession was expected to increase foreign investment and 
bolster exports, said Mendoza-Wilson.  Mendoza-Wilson also 
noted that an EU-Ukraine Free Trade Agreement (FTA) would 
bring similar, positive benefits for SCM's businesses, which 
suggests that Akhmetov will support the FTA negotiations as 
20. (U) Visit Embassy Kyiv's classified website: 




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