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May 21, 2008

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Reference ID Created Released Classification Origin
08KYIV960 2008-05-21 13:33 2011-08-30 01:44 CONFIDENTIAL Embassy Kyiv

DE RUEHKV #0960/01 1421333
P 211333Z MAY 08

C O N F I D E N T I A L SECTION 01 OF 04 KYIV 000960 
E.O. 12958: DECL: 05/21/2018 
REF: A. KYIV 00954 
     B. KYIV 00873 
KYIV 00000960  001.2 OF 004 
Classified By: Ambassador for reasons 1.4(b,d). 
1. (C) Summary.  For now, Ukraine's fragile coalition is 
holding itself together -- barely-- for a variety of reasons 
and in spite of the public bickering and threats, and could 
continue to muddle along for weeks or months.  All parties 
are reluctant to return to expensive and time-consuming new 
elections, both orange parties are suffering from dropping 
ratings in the polls, and there is no agreed upon alternative 
coalition/government in the wings.  However, should 
intra-coalition relations continue downhill there are a 
number of ways this could play out.  A formal decision to 
terminate the coalition would result in an acting government 
and could evolve in one of several directions.  If enough Our 
Ukraine deputies would agree, it is possible that a new broad 
coalition could be formed with Regions and the Lytvyn Bloc, 
although it is an open question as to whether Yanukovych 
could reclaim the premiership.  Another alternative might be 
a technocratic solution, with no new coalition and a new 
government approved by a situational majority of MPs, 
apparently a favorite of Presidential Chief of Staff Baloha 
but quite possibly unconstitutional.  More radical solutions 
would be the holding of new elections or agreement on a new 
2. (C) The most likely scenario in the short term is that the 
coalition will somehow manage to stick together and 
sporadically accomplish items in the Rada and Cabinet. 
President Yushchenko and Prime Minister Tymoshenko continue 
to insist that they are committed to the current coalition, 
in spite of their constant sniping in the press, and 
Tymoshenko's BYuT and the Cabinet have made several 
concessions since May 16 to try to ease tensions.  Moreover, 
voting in the Rada on May 16 and 20 shows that the coalition 
can get its act together when it needs to, although it 
sometimes needs outside support to get bills passed. 
However, the refusal by some in OU-PSD to support all of 
BYuT's anti-inflation laws on May 16 after they promised to 
do so, the announcement that the Prosecutor General is filing 
criminal charges against the BYuT-nominated head of the State 
Property Fund, the harsh public battle over Vanco, 
Yushchenko's strongly worded accusations May 17-18 that 
Tymoshenko had violated the coalition agreement, and 
Tymoshenko's equally strongly-worded May 20 rebuttals, 
suggest the coalition could still crack under pressure.  End 
summary and comment. 
Muddling Through 
3. (C) There are a number of incentives for the coalition to 
stick it out for at least a few more months.  Neither side 
seems prepared for early elections and there are political 
and legal impediments to any of the other scenarios outlined 
below.  In addition, there seems to be a sense from political 
observers, which was also echoed to us by Regions MPs 
Lyovochkin and Kolesnikov, that Yushchenko does not want 
Tymoshenko to leave office until her ratings have dropped 
sufficiently to hurt a future bid for the presidency, the 
consensus being that once she is back in the opposition, her 
ratings will not fall farther.  Lyovochkin told us that it 
could take a few more months to see her ratings drop into the 
low teens.  Deputy Head of the Presidential Secretariat 
Chaliy predicted to the Ambassador on May 20 that the May 25 
Kyiv mayoral election would be Tymoshenko's first big defeat. 
 He added that this loss, the declining economic situation, 
and her inability to get Regions' support, would cause her 
political star to fall.  (Note.  Reliable polls are somewhat 
hard to come by in Kyiv, but there has been no noticeable 
drop in Tymoshenko's ratings, which hover in the 23-26% 
range, since she became PM in December 2007.  In contrast, 
Yanukovych's numbers may be seeing an up-tick, rising above 
25%.  End note.)  For the opposite reason, Tymoshenko may 
want to stay in office while she fights inflation and rising 
prices to protect her image. 
4. (C) Another sign that the coalition might hold it together 
is that the Rada managed to pass legislation on May 16 and 
20.  On May 16, the coalition passed the CabMin law and the 
law amending customs tariffs (in the first reading), although 
the latter only with Regions' help.  On May 20, the Rada 
passed in the first reading the Labor Code, a WTO law on 
fish, a WTO law on veterinary medicine, and the tender 
chamber law -- in three of the four votes, the coalition had 
enough votes alone, although other factions voted for some of 
them as well (the tender chamber law would have failed 
without the Communists).  There may also be a few left on 
KYIV 00000960  002.2 OF 004 
both sides who see keeping the democratic coalition together 
as important for achieving goals, such as NATO MAP, increased 
foreign investment, Euro 2012 preparations, and a free trade 
agreement with the EU. 
The Mechanics - The Range of Po
ssible Changes 
5. (C)  Before any alternative scenarios could take place, 
one team or the other would have to officially end the old 
coalition or force a scenario that calls for the Rada to be 
dismissed.  One faction can withdraw from the coalition 
agreement if a majority of MPs agree to it -- this would mean 
37 OU-PSD MPs, which for now is still an uncertain number.  A 
simple majority in the Rada can vote no confidence in the 
government, which results in its dismissal, which may also 
lead to the end of the coalition.  Regions has been frank in 
its readiness for a broad coalition, given the right 
circumstances, which presumably involves a return of Viktor 
Yanukovych to the premiership.  We believe that Presidential 
Secretariat Head Baloha is still trying to devise a situation 
in which there is no formal coalition, just a situational 
majority with some sort of technocratic government, possibly 
with himself or Speaker Yatsenyuk as PM, although it is not 
clear how to legally reach this goal.  Should BYuT want to 
change the status quo, it could either go into opposition or 
once again resign en masse, depriving the Rada of its quorum. 
 The other possible route for change is constitutional reform 
-- if any draft is passed, it is likely to involve some sort 
of early elections and/or dramatic redistribution of power. 
Terminating the Old Coalition 
6. (C) The most straightforward way for the current coalition 
to collapse would be for at least half of one of the two 
factions to vote to withdraw from the coalition.  The 
departing faction must give 10 days notice to its coalition 
partner, according to the old Rada rules of procedure, after 
which the Speaker announces the MPs who are departing from 
the coalition and their names are printed in Holos Ukrainy. 
If the remaining MPs in the coalition number fewer than 226, 
the coalition is terminated.  In the present case, OU-PSD is 
more likely to withdraw, which would mean 37 MPs would have 
to vote to empower the faction to leave the coalition.  We do 
not believe that Presidential Chief of Staff Baloha -- one of 
the main proponents of an alternative coalition -- currently 
has 37 supporters, but there is growing frustration within 
OU-PSD.  Chaliy admitted that it was "very difficult to get 
to 37."  Rada rules say that if a coalition is terminated, 
the Rada can terminate the authority of the ministers from 
the party that left the coalition, but it does not say they 
7. (C) The other possible way to terminate the coalition 
could be via a no confidence vote in the Cabinet.  Article 87 
of the constitution says that the President or 150 MPs can 
initiate a vote of no confidence in the government -- a 
simple majority (226) in favor results in the automatic 
resignation of the PM and all ministers.  Regions alone, with 
its 175 deputies, could introduce a resolution calling for a 
vote of no confidence.  This option is also mentioned in the 
Rada rules of procedure and is clarified in the new CabMin 
law.  Neither the constitution, the CabMin law, nor Rada 
rules specify that this automatically means the termination 
of the coalition, but given that a no-confidence vote could 
only pass with the support of at least some OU-PSD MPs, such 
an outcome is likely. 
Broad Coalition 
8. (C) Should the current coalition collapse, Regions MPs 
have repeatedly confirmed to us that they are still hopeful 
that a new coalition will be formed between their faction and 
OU-PSD.  Regions oligarch Akhmetov told the Ambassador on 
March 3 that eventually he wanted to see this outcome, 
Yanukovych confirmed to DAS Merkel on April 18 that they had 
been working for a broad coalition since March 2006, and 
Lyovochkin told us on May 13 that they all expected sooner or 
later that the President and his faction would be ready to 
reformat the ruling coalition.  Lyovochkin also said that he 
thought someone might soon register a no confidence 
resolution, but he was coy about which faction might initiate 
the action, implying it could be Regions to give OU-PSD 
political cover. 
9. (C) However, deciding who will be PM, and to a lesser 
degree Speaker, is probably one of the key issues holding 
back a broad coalition.  Lyovochkin confirmed to us that 
KYIV 00000960  003.2 OF 004 
Yanukovych would expect to be PM if a new coalition was 
formed.  However, Yushchenko and OU-PSD are likely looking 
for a scenario with a PM who would not be such a political 
liability for them and who would be more cooperative, and 
Chaliy admitted to the Ambassador that "what to do with 
Yanukovych" was a big stumbling block.  He added that he was 
sure that one condition Yushchenko would demand of a new 
prime minister would be support for NATO MAP.  Speaker 
Yatsenyuk and Defense Minister Yekhanurov's names get thrown 
around occasionally as possible "neutral" candidates, who 
both sides might accept.  (Note.  Yatsenyuk was also the 
consensus candidate for Foreign Minister in March 2007, 
ending a Regions-OU dispute.  End note.)  A complicating 
factor could be the role Lytvyn Bloc might play in a new 
coalition.  Both Regions and OU-PSD may want Lytvyn Bloc in 
the coalition as a moderating factor, and if not all 72 
OU-PSD MPs agree to the new coalition, they will need Lytvyn 
Bloc for stability, and possibly to form the coalition at all 
(since 175 Regions deputies plus 37 OU deputies would only 
equal 212 seats and 226 are needed for a majority). 
Presumably, in exchange for joining a coalition, Lytvyn Bloc 
would hope to return Lytvyn to the Speaker's chair, but 
between OU-PSD and Regions, whichever did not get the 
premiership would probably want to run the Rada.  It seems 
that Yushchenko and most of OU-PSD would hesitate to move 
toward this variant until these key issues are resolved.  In 
addition, they are probably concerned about their image being 
further damaged by formally joining efforts with its former 
opponents, especially with presidential elections and a 
certain Tymoshenko candidacy on the horizon in early 2010. 
Technocratic/Acting Government 
10. (C) It appears that the preferred option for the 
Presidential Secretariat is probably a technocratic 
government backed by a situational majority, which wouldn't 
have to deal with Yanukovych as PM or explain a broad 
coalition to Yushchenko's electorate.  Article 83 of the 
constitution says that the Rada must form a new coalition 
within 30 days of the termination of the previous coalition, 
and article 90.2 says the President has the right to disband 
the Rada if this does not happen.  However, the constitution 
does not say Yushchenko "must" disband the Rada and the 
President is constrained by article 90.4 that says the powers 
of a Rada elected in pre-term elections cannot be terminated 
for a year.  This leaves open the possibility of a &#x0
00A;situational majority rather than a formal coalition with some 
sort of technocratic government.  We heard a lot of talk of 
this from the Presidential Secretariat and others in the 
winter, and Baloha may hope that he could be named acting PM 
-- Yatsenyuk and Yekhanurov's names also come up in this 
context.  Chaliy said this could be the option they push 
following a no confidence vote on Tymoshenko. 
11. (C) However, this path is constitutionally dubious and 
not covered in the constitution or Rada rules, a problem 
Chaliy admitted to the Ambassador when he noted that this 
would probably be on the "edge of legality."  Technically, 
Tymoshenko should remain as acting PM until a new PM is 
confirmed in the Rada.  Since coalitions name the PM, it is 
not clear through what mechanism a PM could be named without 
a coalition.  Ukrainian politicians are skilled at reading 
between the lines and exploiting loopholes, so we cannot rule 
out this scenario.  However, it would require Regions or BYuT 
to join OU to vote for the new PM, so negotiations would 
still have to occur. 
Early Elections 
12. (C) There are several ways to disband the Rada. 
Yushchenko could take advantage of article 90 of the 
constitution if there is no new coalition within 30 days or 
no new government within 60 days.  In addition, there is now 
the precedent, after the spring 2007 political crisis, that 
151 MPs resigning also causes the Rada to disband.  However, 
given article 90's restriction on holding pre-term elections 
more often than once a year, no matter how the early 
elections were brought about, no vote could be held before 
October 1, 2008.  This means, should Yushchenko disband the 
Rada or 151 MPs resign, MPs would continue in acting capacity 
until the new election. 
13. (C) Moreover, there is also election fatigue among all 
the parties.  Lyovochkin told us May 13 that no one wanted 
new elections -- most likely because of both cost and general 
popular disgust with national politicians.  OU-PSD are 
worried that falling ratings would shrink their new faction 
even more.  Political analysts say that even BYuT is taking a 
KYIV 00000960  004.2 OF 004 
hit in its ratings, although once again there is not enough 
good published polling data to back this up.  Moreover, many 
are looking to the May 25 Kyiv mayoral and city council 
elections as a bellwether for national elections, so the 
outcome may influence how the major players view a new Rada 
election.  For example, CVU head Ihor Popov predicted BYuT 
would do poorly on May 25, which could drop their results in 
a new national election from 5-15 percentage points. 
14. (C) However, reservations about new elections have not 
quieted speculation and accusations that others are plotting 
to bring them about.  On May 17, Baloha accused BYuT of 
working for pre-term elections by the end of the year. 
Yanukovych said that Regions will not initiate new elections, 
but is ready for them, should they happen.  Yatsenyuk said 
that if the coalition can't fix itself quickly, he thinks 
early elections are likely. 
New Constitution 
15. (C) The final path to significant governmental change 
would be the adoption of constitutional amendments or a new 
constitution, which could occur with or without early 
elections.  All three parties have constitutional drafts in 
play.  BYuT legal adviser Zadorozhniy said the drafts from 
BYuT and Regions are very similar in that they move Ukraine 
toward a purely parliamentary system and the two parties are 
in talks on future cooperation (ref B), although Regions has 
publicly stated that it is not cooperating with BYuT on a 
joint draft.  Chaliy told the Ambassador that he thought this 
scenario was impossible because an alliance with Regions was 
"abhorrent" to Tymoshenko and Akhmetov opposed the idea as 
16. (C) BYuT did not introduce its constitutional draft in 
the Rada the week of May 12 as Tymoshenko had publicly 
threatened to do.  Zadorozhniy had confirmed to us privately 
that they planned to do so, but presumably they could do this 
at any time.  If Tymoshenko is serious about instituting her 
proposed constitution by the end of the year, she will need 
to act soon since the process takes time.  As Zadorozhniy 
pointed out, once the draft is registered with the Rada, they 
need to establish a commission to review the draft and come 
to a consensus.  Then 226 votes are required to send it to 
the Constitutional Court to ensure that it complies with all 
requirements in the current constitution.  When the CC 
approves the draft, it goes back to the Rada for another 226 
vote approving the text.  If this is done by the end of the 
spring session, the second vote of 300 MPs can take place in 
the fall, allowing the constitution to be approved this year. 
 However, there are only four more weeks of plenary left in 
the spring session, with July 11 the final date for voting. 
Interestingly, the Venice Commission reported that the only 
draft constitution it has received so far is from the 
Presidential Secretariat.  (Note. Venice Commission approval 
is not required, but it gives constitutional reform a stamp 
of legitimacy and European approval.  The Venice Commission 
offered opinions on constitutional drafts in 1996 and 2004. 
End note.) 
17. (C) If any constitutional draft is adopted, it will 
include transitional language that lays out when the new 
constitution comes into effect and under what circumstances. 
For example, Tymoshenko has said that she would be willing to 
include transitional provisions extending Yushchenko's 
current term in office until 2013, albeit with reduced 
powers.  Neither Yushchenko nor Yanukovych have indicated how 
or when they see their drafts coming into effect.  Many 
believe that any new constitution will come with new Rada 
elections, as parties try to maximize their advantage in the 
new system. 
18. (U) Visit Embassy Kyiv's classified website: 




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