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08KYIV2080, REGIONS-BYUT COALITION DEAL: WHY IT FELL APART

October 17, 2008

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Reference ID Created Released Classification Origin
08KYIV2080 2008-10-17 12:25 2011-08-30 01:44 CONFIDENTIAL Embassy Kyiv

VZCZCXYZ0003
PP RUEHWEB

DE RUEHKV #2080/01 2911225
ZNY CCCCC ZZH
P 171225Z OCT 08
FM AMEMBASSY KYIV
TO RUEHC/SECSTATE WASHDC PRIORITY 6564
INFO RUCNCIS/CIS COLLECTIVE
RUEHZG/NATO EU COLLECTIVE

C O N F I D E N T I A L KYIV 002080 
 
SIPDIS 
 
E.O. 12958: DECL: 12/31/2018 
TAGS: PGOV PREL UP
SUBJECT: REGIONS-BYUT COALITION DEAL: WHY IT FELL APART 
 
Classified By: DCM James Pettit for reasons 1.4 (b,d). 
 
SUMMARY 
-------- 
 
1. (C) The Party of Regions and Prime Minister Tymoshenko's 
party (BYuT) narrowly failed to form a majority coalition in 
the Rada after the ruling coalition disintegrated on 
September 3.  They had agreed to a broad pro-European foreign 
policy that included continued cooperation with NATO. 
Ultimately, however, mistrust and fears that the other side 
would fail to fulfill the coalition agreement sunk the deal. 
An internal power struggle within Regions may have also 
contributed to the agreement's failure.  END SUMMARY. 
 
 
NINETY-NINE PERCENT AGREED 
-------------------------- 
 
2. (C) In an October 16 meeting with the Ambassador, senior 
Regions MP Andriy Kluyev said that Regions and BYuT had 
agreed to form a majority coalition in the Rada in early 
September.  Personal negotiations between Tymoshenko and 
former Prime Minister Yanukovych, with Kluyev as the 
facilitator, had been ongoing since the summer.  Kluyev said 
there was "99% agreement" on the coalition agreement and 
there were no outstanding contentious issues.  The key goal 
of the coalition would be political and economic stability in 
order to raise standards of living.  Although he offered no 
details, Kluyev also said that the deal would have made next 
year's presidential election so quiet "you would hardly know 
it was happening." 
 
3.  (C) Kluyev emphasized that the populace was ready for a 
Regions-BYuT coalition.  He said that internal polls showed 
seventy-nine percent of voters supported the creation of 
their coalition instead of an election.  Their constituencies 
were also expecting such a tie-up because in many local and 
regional councils BYuT-Regions coalitions already existed. 
 
 
 
RUE, VANCO, AND FOREIGN POLICY NOT A PROBLEM 
-------------------------------------------- 
 
4. (C) The coalition documents agreed to remove the shady gas 
middleman RosUkrEnergo (RUE) and move to direct contracts 
between state-run Naftohaz Ukrainiy and Russia's Gazprom. 
Kluyev said that eliminating RUE was not a concession to 
Tymoshenko, as he had publicly supported the removal of RUE 
since he was Deputy Prime minister in 2007.  Kluyev also said 
that the coalition agreement would have reinstated Vanco's 
contract to develop hydrocarbons in the Black Sea.  The deal 
would proceed at a slower pace than envisioned in the 
original contract, but the entire agreement would have been 
fulfilled.  Kluyev described Tymoshenko as a "player" who 
could find a way to sell Vanco to her constituents despite 
previously canceling the project. 
 
5. (C) Under the coalition agreement Ukrainian foreign policy 
would focus on integrating into European economic and 
political structures.  Ukraine would follow the EU's lead on 
Georgia and other conflicts in the Caucasus.  Kluyev said 
that cooperation with NATO would not change.  The agreement 
defined a "purely pragmatic, purely Ukrainian" policy on NATO 
and allowed for NATO membership after a nationwide 
referendum. 
 
 
NO GUARANTOR EQUALS NO DEAL 
--------------------------- 
 
6. (C) Despite reaching an amicable coalition agreement and 
cooperating on the September 2 legislation to weaken the 
presidency, fear of betrayal on both sides ultimately doomed 
the coalition deal.  Kluyev said that frequent meetings 
between Yanukovych and Tymoshenko had improved their 
relationship.  However, it was not enough to overcome seven 
years of competition and mud-slinging.  Kluyev said that 
Yanukovych and Tymoshenko needed a guarantor who could ensure 
both sides fulfilled the agreement, but lamented that there 
was no such person in Ukraine. 
 
7. (C) Kluyev said there still remained the chance of a 
coalition with BYuT after the election.  He maintained close 
contact with Tymoshenko, whom he called an old friend, and 
she remains open to an alliance.  Kluyev cautioned, however, 
that Regions needs to agree with BYuT to moderate the tone of 
their campaigns to avoid jeopardizing a post-election 
coalition. 
OTHER DYNAMICS 
-------------- 
 
8. (C) Regions MP Taras Chornovil, who has announced he will 
quit the party, in a meeting with Ambassador on October 14 
described other factors that may have played a role in 
undermining a Regions-BYuT coalition.  Chornovil indicated 
his decision to quit Regions was due to his disgust with the 
continued infighting within the party.  He said that a 
faction within Regions associated with RUE, headed by Yuriy 
Boyko, Serhiy Lyvochkin, and Hanna Herman, ultimately 
convinced Yanukovych not to form a coalition with BYuT. 
Chornovil said Lyvochkin and Hanna Herman have a monopoly on 
all information reaching Yanukovych and convinced him that a 
coalition with Yushchenko would be more secure.  He noted 
that ever since Boyko stepped up in 2006 and funded Regions' 
Rada campaign when Akhmetov was unable to, RUE's influence 
has been growing within the party. It is now more influential 
than Akhmetov, who only controls ten to twelve deputies and 
is no longer the
main funder of the party.  Chornovil said 
that Regions would have to remove the RUE faction from the 
party in order to form a coalition with BYuT -- because of 
Tymoshenko's strident opposition to RUE's role in the gas 
trade. 
 
 
COMMENT 
------- 
 
9. (C) The outcome of a Regions-BYuT coalition would be to 
minimize Yushchenko's role.  Kluyev's hints of a quiet 
presidential election under the coalition agreement probably 
means the presidency would have been reduced to a figurehead 
position not worth fighting for.  If Regions and BYuT focus 
their attacks on Yushchenko in the expected parliamentary 
election, rather than each other, it would indicate that 
there is a chance that a Regions-BYuT coalition could still 
emerge in the next Rada. 
TAYLOR

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