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April 16, 2008

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Reference ID Created Released Classification Origin
08KYIV771 2008-04-16 12:53 2011-08-30 01:44 CONFIDENTIAL Embassy Kyiv

DE RUEHKV #0771/01 1071253
P 161253Z APR 08

C O N F I D E N T I A L SECTION 01 OF 03 KYIV 000771 
E.O. 12958: DECL: 04/16/2018 
Classified By: Ambassador for reasons 1.4(b,d). 
1. (C) Summary.  Although the President, Prime Minister, 
OU-PSD, and BYuT all say they want the democratic coalition 
to last, public infighting, growing distrust, and mutual 
recriminations are making the tenuous majority even shakier. 
An April 16 spat erupted over the vote for the President's 
law on the Cabinet of Ministers and BYuT walked out of the 
session, allowing more than half the proposed amendments to 
fail before Speaker Yatsenyuk postponed the rest of the 
voting.  BYuT faction leader Kyrylenko then issued an 
"ultimatum" telling Yushchenko to stop trying to destroy the 
coalition and to stop interfering in the Cabinet's work. 
Privately, BYuT MPs told us that they believed Yushchenko was 
blocking all Cabinet activities that could bring Tymoshenko 
budget funds for her programs.  OU-PSD MPs have also said 
publicly and privately that the coalition was in danger. 
Exacerbating the situation is Presidential Secretariat Head 
Baloha and his team's continued public attacks on the 
Tymoshenko government, and the Secretariat's strains with 
parts of OU-PSD as well. 
2. (C) Comment.  The coalition has been tenuous since its 
inception, but frustrations on all sides are starting to 
bubble to the surface.  Although both parties still strive 
toward the same goals, personal ambitions are starting to 
overshadow shared values of European integration, including 
MAP, and market reforms.  One thing that may hold the 
coalition together for now is the lack of immediately viable 
alternatives.  Rumors of new Rada elections continue to 
circulate, but may not be possible until October at the 
earliest given constitutional limitations -- there are still 
some legislative items that have broad support that they may 
want to pass before then, which speaks against dissolution. 
Concerns voiced by some in OU-PSD and Regions that to fire 
Tymoshenko now would give her a political edge in the 
presidential elections may also delay hasty changes.  End 
summary and comment. 
Marathon Coalition Meeting Resolves Little 
3. (C) The coalition met for four hours on April 14 to try to 
reach agreement on key issues moving forward.  Very few 
details of the meeting were released to the press, although 
afterwards OU-PSD leader Vyacheslav Kyrylenko said that he 
believed the coalition was on the verge of collapse.  Among 
the items discussed was a resolution to ask Yushchenko to 
fire Baloha, which was supported by BYuT, PSD, and Rukh. 
OU-PSD MP Tarasyuk told Deputy Assistant Secretary Merkel and 
the Ambassador early on April 16 that the Presidential 
Secretariat was the villain in the current drama and that 
something needed to be done about the Presidential 
Secretariat.  Interestingly, Baloha told the Ambassador April 
15 that the discussion about him was the work of a 
"hysterical" PM who initially managed to convince Tarasyuk 
and Lutsenko and their MPs to support her in the effort to 
force Baloha's removal, but then actually lost support of 50 
deputies because of her continued discussion of the topic. 
(Note.  Baloha seemed pleased that the coalition spent two 
and a half hours discussing him.  End note.) 
Agreement Falls Through 
4. (C) Tarasyuk told DAS Merkel and the Ambassador that the 
coalition had struck a deal to move two legislative 
priorities forward.  OU-PSD had agreed to support BYuT's law 
on eliminating deputy's benefits -- the law would remove 
certain monetary perks and give the factions greater rights 
to remove noncompliant MPs from the Rada (imperative mandate) 
-- in exchange for BYuT's support to approve the President's 
law on the Cabinet of Ministers in its second reading. 
However, ten minutes later, when Yatsenyuk called the session 
to order and OU-PSD MP Yuriy Kluchkovskiy stood up at the 
rostrum to introduce the CabMin bill, the entire BYuT faction 
walked out of the session hall and did not return for almost 
2 hours.  BYuT MP Stepan Kurpil admitted that there had been 
a deal between the two coalition factions about supporting 
each other's legislation, but claimed that OU-PSD had 
violated the agreement because the version of the CabMin law 
up for vote violated the constitution.  He also admitted that 
the vote on CabMin was a final reading, while the vote on 
eliminating perks and instituting imperative mandate was only 
a first reading, making the deal inherently unfair.  (Note. 
Tarasyuk admitted that his faction was only planning to 
support the bill in the first reading, unless imperative 
mandate was explicitly limited in the law to a short period, 
such as 2-3 years.  End note.)  BYuT MP Nataliya Korolevska 
told us that eliminating these benefits would return 200 
million hryvnia to the budget; Kurpil said that the 
KYIV 00000771  002 OF 003 
Presidential Secretariat did not want the Cabinet to see 
those budget funds returned because it was hoping to see the 
Cabinet fail to implement its promises. 
(SBU) In the end, the vote on the CabMin law did not go 
well.  After considering amendments one by one for the entire 
morning, not one had passed.  At that point, Yatsenyuk 
adjourned the Rada until April 17.  Afterwards at a press 
conference, the Speaker said that he had saved the coalition 
by not putting the full CabMin law to a vote. 
6. (SBU) Immediately after the Rada session, BYuT faction 
leader Ivan Kyrylenko issued an ultimatum to Yushchenko on 
behalf of his bloc.  Kyrylenko said that the conflict between 
Yushchenko and his team versus Tymoshenko had gone so far 
that Tymoshenko could no longer remain silent.  He said that 
the Secretariat's criticisms of the Cabinet were 
unsubstantiated and he implied that Yushchenko supports shady 
gas and land deals.  He urged Yushchenko to stop trying to 
split the coalition, retract all his bills and decrees that 
contradict CabMin decisions, and dismiss "random people" from 
the NSDC (presumably a comment about newly appointed deputy 
secretary and former Yanukovych adviser Konstantyn 
Gryshchenko.)  OU-PSD's Kyrylenko then made his own statement 
to the press, criticizing BYuT for creating a "show" in the 
Rada.  He said BYuT MPs should not walk out of session every 
time they have a legislative disagreement with OU-PSD. 
Kyrylenko also said that Tymoshenko's irritation with Baloha 
was not a reason for her to try to collapse the coalition. 
(Embassy note.  PM Tymoshenko is in Strasbourg for a PACE 
event.  End note.) 
Doubts About Stability 
7. (C) Kurpil said that of course they would like the 
coalition to last, but it seems very difficult when Baloha's 
sole goal in life was to get Tymoshenko removed.  When asked 
what Baloha wanted aside from Tymoshenko's removal, Kurpil 
said that the Chief of Staff would either push for a broad 
coalition with Regions or new Rada elections.  He would force 
compliance from OU-PSD members by telling them they would be 
removed from the party list if they did not back a broad 
coalition.  Kurpil said that the response to the coalition's 
request for Yushchenko to fire Baloha was the President's 
harsh accusations from Warsaw that the Cabinet was corrupt, 
in particular that its decision to hold land auctions was 
corrupt (see below). 
8. (C) At a dinner for DAS Merkel on April 15, BYuT MP Andriy 
Shevchenko reacted strongly to a statement that Tymoshenko 
was lukewarm on NATO MAP, saying that the coalition was in 
dire straits, but NATO was one area where the coalition 
agreed.  However, he did not see how the coalition could be 
dissolved unless new elections were part of the package. 
Justice Minister Onishchuk tried to be more circumspect when 
the Ambassador asked him on April 14 about the state of the 
coalition, but did admit it was in danger.  He repeated that 
Yushchenko had told OU-PSD that there was no alternative to 
the current coalition, but quietly blamed Tymoshenko for many 
of the problems, and then said that both parties were 
directed by business interests that were pushing the factions 
in different directions.  Baloha told the Ambassador April 15 
that if Tymoshenko and BYuT insisted on pushing ahead with 
creating a special Rada commission on a new constitution, to 
compete with Yushchenko's National Constitutional Commission, 
then the "coalition was finished." 
9. (C) There are also ruptures between OU-PSD and the 
Presidential Secretariat, which increase instability in the 
coalition.  Two of the President's priority bills have now 
been killed -- on creating a national guard from the Interior 
Ministry troops and on the use of natural monopolies.  Both 
times, OU-PSD MP and former Defense Minister Hrytsenko spoke 
out strongly against them.  The OU-PSD faction also strongly 
supports amendments to the law on local elections to make the 
May 25 Kyiv's mayoral race a two-round event -- Yushchenko 
has already said he will veto such a  law.  Yushchenko held a 
meeting with his faction on March 20, where he tried to stem 
their criticisms of the Secretariat.  According to MP David 
Zhvaniya, the President told his MPs, "You must listen to 
Viktor Baloha's words.  Baloha is me." 
Yushchenko, Baloha Strike Back 
10. (C) BYuT has accused Yushchenko of overstepping his 
bounds to limit their activities.  From Warsaw, Yushchenko on 
April 15 sharply criticized the Cabinet's proposal on land 
auctions for municipal land.  In addition, Yushchenko issued 
decrees canceling the privatization of the Odesa Portside 
KYIV 00000771  003 OF 003 
Plant and suspending a CabMin resolution that had dismissed 
the deputy heads of the State Property Fund and appointed 
their replacements.  Deputy PM Turchynov responded that 
Yushchenko did not have the power to issue these decrees and 
that the President was undermining the budget by blocking the 
government's privatization plans.  More clearly partisan were 
Baloha's criticisms of the government for failing to address 
Ukraine's economic problems, when he said the economic 
ministers in the Cabinet should take responsibility for 
rising inflation and prices and resign.  Baloha has also 
continued to publicly allege that Tymoshenko has ties to 
former Kuchma chief of staff Medvedchuk, the bogeyman of the 
orange revolution.  Privately, Baloha told the Ambassador 
that Medvedchuk was "a magnet on her body pulling her toward 
Russia" and he reiterated his public claims that Medvedchuk 
had drafted a new constitution for BYuT to propose. 
11. (C) Comment.  Yushchenko's objections to the land 
auctions may have been reasonable because Tymoshenko 
reportedly wanted to create a new bureaucracy to handle the 
sales, possibly leading to a situation similar to that of the 
now defunct Tender Chamber.  Moreover, his action was fairly 
consistent with his past comments on land sales -- last 
summer Yushchenko vetoed a law on agricultural land because 
he said it created parallel bureaucracies.  It is harder to 
tell who is in the right on the Odesa Portside Plant. 
However, Yushchenko could also make his comments in a less 
public way and without the implications of broad, high-level 
corruption.  These do little for the stability of the 
government.  End comment. 
12. (U) Visit Embassy Kyiv's classified website: 




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