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08KYIV902, UKRAINE: COALITION TEETERING, BUT ALTERNATIVES

May 13, 2008

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08KYIV902 2008-05-13 16:46 2011-08-30 01:44 CONFIDENTIAL Embassy Kyiv

VZCZCXRO3200
PP RUEHBW
DE RUEHKV #0902/01 1341646
ZNY CCCCC ZZH
P 131646Z MAY 08
FM AMEMBASSY KYIV
TO RUEHC/SECSTATE WASHDC PRIORITY 5555
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 000902 
 
SIPDIS 
 
E.O. 12958: DECL: 05/13/2018 
TAGS: PGOV PREL PINR UP
SUBJECT: UKRAINE: COALITION TEETERING, BUT ALTERNATIVES 
STILL UNCLEAR 
 
 
KYIV 00000902  001.2 OF 004 
 
 
Classified By: Ambassador for reasons 1.4(b,d). 
 
1. (C) Summary.  Cracks in the coalition appeared to widen 
May 12-13 as the two sides faced off in the Rada and in 
public comments from President Yushchenko and Prime Minister 
Tymoshenko.  Privately, Tymoshenko told the Ambassador that 
coalition was de facto dead, because the President had set 
his sights on destroying her politically.  To this end, he 
was trying to make inflation worse and blaming her -- as a 
result, her popularity ratings were dropping.  The PM 
admitted that she was negotiating with Regions, as well as 
some in OU-PSD, to try to build support for her proposed 
constitutional reforms to move Ukraine toward a parliamentary 
system (that would give the PM more power at the expense of 
the President).  After a May 12 Coordinating Council meeting 
in the Rada, during which BYuT and OU-PSD leaders traded 
mutual recriminations, BYuT blockaded the rostrum and 
Speaker's dais on the morning of May 13.  Although Speaker 
Yatsenyuk opened the session from the floor, the blockade 
prevented Yushchenko from giving his annual address to the 
parliament.  Instead, Yushchenko went to the press and 
criticized the Government and BYuT for breaking the agreement 
to hold his speech and not engaging in serious economic work; 
however, he also noted that the coalition had not yet "gone 
beyond the breaking point."  In a subsequent televised speech 
by the PM and in conversations in the Rada halls, the 
official reason for the blockade was a demand for immediate 
passage of three anti-inflationary laws, which Tymoshenko 
said Yushchenko and OU-PSD were refusing to support. 
However, some in BYuT suggested that the real motivation was 
concern that Yushchenko planned to nominate and have sworn in 
three new Constitutional Court judges to fill long-standing 
vacancies on the presidential quota, which would give the 
Presidential Secretariat greater influence on the Court to 
block the PM's constitutional reforms.  (Note.  The CC's 
current judges were present in the Rada balcony.  End note). 
OU-PSD MPs told us that BYuT was just trying to blackmail the 
President to gain the upper-hand rather than work through the 
established rules of the coalition.  Meanwhile, grinning 
Regions MPs confided that they were waiting for Tymoshenko's 
dismissal so they could get on with forming a broad 
coalition.  In their public comments after the failed Rada 
session, Yushchenko and Tymoshenko blamed each other for the 
current stalemate, but both indicated that they were 
committed to the democratic coalition and saw no alternatives. 
 
2. (C) Comment.  It is clear that these political games, 
which have gone on all year, will continue in the near term 
as the major players position themselves for either upcoming 
presidential elections or a new parliamentary system or even 
the possible formation of a new coalition.  However, over the 
longer term Ukraine may be merely transitioning through an 
awkward stage on the road to democracy.  All sides threaten 
and posture, but none so far has shown the capability or 
willingness to manipulate the system completely in its favor, 
which is why the Rada has managed to limp along in its work. 
It also appears that there are no better alternatives right 
now to the current coalition -- Regions is openly negotiating 
with both Tymoshenko and Yushchenko, but it does not sound 
like anyone has proposed an acceptable option.  Yushchenko 
may want to dump Tymoshenko, but he does not want to suffer 
the electoral wrath for having destroyed the orange 
coalition, and he would prefer a new coalition without 
Yanukovych as Prime Minister.  Tymoshenko too must show she 
made every effort to keep the government together.  As the 
2009/2010 presidential elections draw closer, especially if 
Tymoshenko takes a beating in the public polls, short-term 
calculations may change, but the current political circus is 
a distraction from the pro-European and pro-market path that 
all three major parties endorse as their longer-term goal. 
End summary and comment. 
 
Tymoshenko: The President is Trying to Destroy Me 
--------------------------------------------- ---- 
 
3. (C) A resolute Tymoshenko told the Ambassador on May 12 
that the coalition de facto no longer existed.  She said that 
Yushchenko has done everything he could to collapse the 
coalition, and she underscored that she believed it was the 
President who was the main problem, not Chief of Staff 
Baloha.  She said that her team had patiently endured this 
behavior for four months, but now they were seeing a drastic 
drop in both Yushchenko's and her ratings.  She said that 
this was Yushchenko's main goal, to lower her ratings before 
the 2010 presidential elections, but she did not understand 
his strategy because he had zero chance of winning 
reelection.  He was doing everything he could to make 
inflation worse and then blaming the government for it.  She 
listed the ways in which she believed Yushchenko was 
exacerbating inflation.  First, the NBU's monetary policy -- 
 
KYIV 00000902  002.2 OF 004 
 
 
the President's orders had stoppe
d the NBU from adjusting the 
exchange rate, as a result experts said the exchange rate was 
adding 12% to Ukraine's inflation. (Note. She cited IMF, 
EBRD, World Bank, and Anders Aslund, although only the last 
to our knowledge has blamed the NBU alone. End note.) 
Moreover, governors were obligated to regulate pricing 
policy, but were not doing so on the President's orders.  She 
believed she had a matter of weeks left before the coalition 
split, and it would definitely not live until 2010. 
Tymoshenko said that Yushchenko's end goal was a broad 
coalition with Regions.  She doubted it would be possible to 
achieve MAP at the NATO Ministerial in December anymore, and 
even if they did, who would implement it -- Yanukovych?, she 
asked rhetorically. 
 
4. (C) The PM argued that all sides, regardless of the 
ongoing political crisis, believed that the constitution 
needed to be amended.  Her amendments would introduce a 
parliamentary form of government.  Her team wanted major 
changes to the judiciary to make courts independent, as well 
as changes to local government and the Constitutional Court. 
In her draft, the President would be directly elected in 
2010, would retain the veto and the right to dismiss the 
Rada, be commander in chief, coordinate foreign policy, chair 
the NSDC, and be the guarantor of the constitution.  He would 
lose the power to appoint the Defense and Foreign Ministers, 
governors and raion heads, and judges, and he could no longer 
cancel Cabinet decisions.  She said that she hoped half of 
OU-PSD would support her draft and acknowledged that BYuT was 
in negotiations with Regions for support as well.  The PM 
underscored that cooperation with Regions on the constitution 
did not presage a coalition between the two, which she said 
would be impossible for ideological reasons.  Tymoshenko said 
that they will table their constitutional amendments soon and 
hold the first vote quickly (on sending the draft to the 
Constitutional Court).  She couldn't exclude the possibly 
that the President would use the introduction of her 
constitutional draft to ruin the coalition.  Tymoshenko said 
that she had reached out to Presidential Secretariat Head 
Baloha on the constitutional amendments, but Baloha had 
suggested that she sit down with his deputy Pukshin and read 
through the constitution.  She had been willing to do that, 
even though she considered the suggestion demeaning for 
protocol reasons, but then Pukshin had become unavailable. 
The PM believed that if she moved forward on constitutional 
changes, Yushchenko might also try to destroy the 
Constitutional Court.  (Note.  We heard this story from BYuT 
MPs in the Rada as well, see below.  End note.)  In this 
case, she could not rule out impeachment proceedings. This 
would be a shameful end to the democratic forces.  Meanwhile, 
the irony was if the situation was left as is, in the next 
month or so, the democratic forces would each be inviting in 
Regions.  She knew that the President was courting Akhmetov; 
she had been working with Yanukovych to gain support for 
constitutional changes.  "It's absurd," she sighed. 
 
5. (C) In response to the Ambassador's question about early 
presidential elections, Tymoshenko said she personally had 
proposed postponing the presidential elections until 2013 to 
allow the new constitution to come into force.  But 
Yushchenko's team opposed this idea -- they were convinced 
they needed to fight to expand the President's powers, even 
though she thought this was completely unrealistic.  She said 
that if Yushchenko kept stoking inflation, not only could he 
not win the next presidential election, but she would not be 
able to win either.  She bemoaned the fact that even though 
inflation was a global problem, in most countries, 
governments worked with the opposition to mitigate 
inflation's effects, but in Ukraine the President was using 
inflation to drive apart his own coalition.  Tymoshenko said 
she did not understand why the President had created the 
current situation -- he was a dying politician and he was 
trying to drag her down with him.  She said that democracy 
was suffering in the region and meanwhile Russia was engaged 
in "abnormal activities" in Crimea.  Many of the processes he 
had set in motion were irreversible and she did not know the 
right way to come out of this or what she could offer 
Yushchenko to end the current war.  The PM suggested 
organizing a private roundtable with serious European 
politicians whom the President respected.  They could explain 
to Yushchenko that he needs to cooperate with the Cabinet. 
 
In the Rada: BYuT Blockades, Rumors Swirl 
----------------------------------------- 
 
6. (SBU) With the diplomatic and press balconies packed on 
May 13 in anticipation of Yushchenko's annual address to the 
Rada (postponed several times over the past few months for 
political reasons), observers were instead treated to BYuT 
blocking the rostrum, the President's seat, and the Speaker's 
 
KYIV 00000902  003.2 OF 004 
 
 
dais.  Speaker Yatsenyuk eventually entered the session hall 
from behind the Speaker's dais, opened the session without 
the aid of a microphone, registered 256 MPs in the hall 
(OU-PSD, Regions, Lytvyn Bloc), and recessed the Rada for the 
morning.  He then met with Yushchenko, Tymoshenko, and BYuT 
MPs in his office, according to press reports.  The 
Coordinating Council also met again in the afternoon, but MPs 
from Regions and OU-PSD told the press that no compromise was 
reached. 
 
7. (C) In the halls, MPs from different factions offered 
their take on the situation.  The first explanation for the 
stand-off was the ongoing dispute between the Prime Minister 
and the President over the head of the State Property Fund 
(SPF), with BYuT demanding that current official head 
Semenyuk be removed by the Rada before the President spoke. 
However, BYuT faction head Ivan Kyrylenko told the press that 
there was actually a dispute over three anti-inflationary 
bills submitted by BYuT.  The faction either wanted the bills 
approved before Yushchenko's speech or a gentlemen's 
agreement to approve them immediately afterwards.  However, 
BYuT MP Ostap Semerak told us that the anti-inflationary 
measures were just a pretext.  BYuT's real motivation was 
concern that Yushchenko planned to introduce three new 
nominees to the Constitutional Court and demand their swift 
confirmation -- all three new judges would be allied with 
Baloha and thus could block Tymoshenko's constitutional 
reform.  (Note.  This tracks with what Tymoshenko told the 
Ambassador about being concerned that Yushchenko might tinker 
with the Constitutional Court.  We did see most of the 15 
sitting judges in the visitor's balcony in the Rada today, 
although they could have been there to hear the speech. End 
note.) 
 
8. (C) OU-PSD MP Iryna Herashchenko told us that the blockade 
was political blackmail.  BYuT wanted to demonstrate its 
power and push its constitutional reforms.  She said that her 
faction was trying to wo
rk constructively with its coalition 
partner, but BYuT kept working outside the coalition 
agreement.  For example, she said OU-PSD also believed 
constitutional reform should go through the Rada, but first 
the draft should be agreed to by the coalition council.  In 
addition, her faction wanted a consultative referendum to 
demonstrate popular support for the new constitution.  OU-PSD 
also supported removing Semenyuk from the SPF, but wanted a 
discussion of replacements within the coalition, rather than 
BYuT insisting on its preselected candidate. 
 
9. (C) Regions MPs looked very pleased with the turn of 
events.  Close Yanukovych ally Serhiy Lyovochkin told the 
Ambassador that they were happy to be in the position where 
Tymoshenko and Yushchenko were both trying to woo them.  He 
thought that soon a resolution of no confidence in the 
current government might be introduced in the Rada and if it 
was, he expected it to pass.  Lyovochkin said that everyone 
was tired of elections and that Regions would push for a 
broad coalition with Lytvyn Bloc and part of Our Ukraine.  He 
added, however, that Yushchenko was probably waiting until 
Tymoshenko's ratings  dropped down to around 14 percent 
before agreeing to let her go.  MPs Hanna Herman and Taras 
Chornovil repeated to us the idea that there would be a new 
coalition, with Chornovil adding that he thought Tymoshenko 
would be gone this summer. 
 
He Said, She Said 
----------------- 
 
10. (SBU) Instead of his formal address in the Rada, an 
irritated, but under control Yushchenko made brief remarks to 
the press from another room in the Rada building, which were 
broadcast on Rada TV.  He stressed the danger of high 
inflation for the country and criticized the government for 
playing with the constitution when it should be solving this 
problem.  He also said that an agreement had been reached the 
previous day that he would give his address and then the Rada 
would adopt the anti-inflationary measures --- therefore he 
believed BYuT had ulterior motives for blocking the Rada. 
However, he underscored that there would be no early 
elections or changes to the coalition and said the coalition 
had not yet reached the breaking point.  He said the current 
coalition and government had an obligation to the voters to 
stick together and get to work.  Yushchenko said their main 
priorities should be: anti-inflation measures, urgent 
budgetary amendments, urgent agricultural measures, and 
analysis of the situation in Nafothaz.  He also said that 
constitutional amendments should be drafted in his National 
Constitutional Council, then submitted to the Rada for 
discussion and approval. 
 
11. (SBU) A more visibly angry Tymoshenko then gave her own 
 
KYIV 00000902  004.2 OF 004 
 
 
remarks to the press from the same podium.  She said that her 
political force had blocked the rostrum because the Rada had 
refused to consider the anti-inflation bills.  Tymoshenko 
noted that they had also been waiting four months for the 
Rada to examine the bill on lifting deputies' perks.  She 
accused the President's team of playing politics with the 
welfare of the Ukrainian people.  Specifically, she accused 
five unnamed regional governors of sabotaging the Cabinet's 
efforts to combat inflation and said they would consider 
these governors' actions at the May 14 CabMin meeting. 
(Note.  The press later reported that the Cabinet had called 
the governors of Volyn, Kherson, Cherkasy, Zaporizhzhya, and 
Lviv, and the head of the Crimean government to the CabMin 
meeting. End note.)  Tymoshenko made the same points she had 
made to the Ambassador regarding constitutional reform -- all 
sides believed it necessary because the current government 
system causes chaos.  She closed with the same firm message 
as Yushchenko that there is no alternative to the democratic 
coalition and that the government and Rada would continue to 
work together. 
 
12. (U) Visit Embassy Kyiv's classified website: 
www.state.sgov.gov/p/eur/kiev. 
Taylor

Wikileaks

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