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08KYIV2128, POLITICS CONTINUE TO TRUMP ECONOMICS IN UKRAINE

October 23, 2008

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08KYIV2128 2008-10-23 14:20 2011-08-30 01:44 CONFIDENTIAL Embassy Kyiv

VZCZCXYZ0006
PP RUEHWEB

DE RUEHKV #2128/01 2971420
ZNY CCCCC ZZH
P 231420Z OCT 08
FM AMEMBASSY KYIV
TO RUEHC/SECSTATE WASHDC PRIORITY 6612
INFO RUCNCIS/CIS COLLECTIVE
RUEHZG/NATO EU COLLECTIVE

C O N F I D E N T I A L KYIV 002128 
 
SIPDIS 
 
E.O. 12958: DECL: 10/23/2018 
TAGS: PGOV PREL EFIN ECON ETRD UP
SUBJECT: POLITICS CONTINUE TO TRUMP ECONOMICS IN UKRAINE 
 
REF: KYIV 2113 
 
Classified By: Ambassador William Taylor for reasons 1.4 (b,d). 
 
Summary 
-------- 
 
1. (C) Continuing political turmoil threatens to hold up 
potential IMF assistance to Ukraine.  On October 23, PM 
Tymoshenko's government submitted anti-crisis legislation, 
and demanded that any election legislation be shelved until 
emergency economic measures were in place.  President 
Yushchenko's Our Ukraine allies continued to push a package 
that links anti-crisis legislation to funding for snap 
parliamentary elections.  Regions contacts said they would 
not support the PM's proposals because they included "too 
many add-ons," and Regions has its own as-yet unpublished 
legislative plan. The Rada agreed to consider the three 
competing legislative packages, including the unpublished 
Regions plan, in its plenary session on October 24.  Rada 
contacts said it would be "almost impossible" to pass 
anti-crisis legislation without personal agreement between 
Yushchenko and Tymoshenko, including a compromise on 
elections.  End Summary. 
 
Another Day of Rada Inaction 
---------------------------- 
 
2. (U) On October 23, PM Tymoshenko's government submitted a 
package of anti-crisis legislation to the Rada.  From our 
initial read of the 70-page package it appears the 
legislation would provide liquidity support to the banking 
sector, increase government deposit guarantees, and provide 
financial support to the construction and mortgage sectors. 
The legislation would also seek new sources of government 
revenue by raising taxes on some products such as alcohol and 
new cars, and slow the minimum salary growth rate. 
 
3. (C) BYuT MP Ostap Semarak told us that, while "no one has 
seen" President Yushchenko's legislation, he believed that 
the Cabinet's legislation was similar to Yushchenko's ideas, 
because both legislative packages came out of the Ministry of 
Finance's discussions with the IMF.  BYuT MP Andriy Shkil 
told us that BYuT aims to seperate anti-crisis legislation 
from election legislation, a step that President Yushchenko 
and his supporters continue to oppose according to OU-PSD 
Deputy faction head Ruslan Knyazevych.  Both Shkil and 
Semarak noted that BYuT likely does not have the votes to 
pass the PM's legislative initiative. 
 
4. (C) Party of Regions has largely stayed out of the fight 
over whether anti-crisis legislation should or should not be 
linked to election funding and has let the Tymoshenko and 
Yushchenko camps remain in the spotlight.  Regions contacts 
told us that they would not support the PM's anti-crisis 
legislation in its current form as it featured "too many 
add-ons," including what they characterized as an increase in 
property tax that would hurt all Ukrainians.  Regions MP 
Vitaliy Hommutynik told us that Regions could support a much 
simpler set of anti-crisis legislation that reflected only 
those issues recommended by the IMF.  Regions leader Viktor 
Yanukovych announced on October 22 that he had his own 
anti-crisis plan, but that the party would not yet make it 
public.  In the afternoon plenary session on October 23, 
Regions successfully got their unpublished plan on the 
October 24 agenda. 
 
Tymoshenko, Yushchenko, Yanukovych and Elections 
--------------------------------------------- --- 
 
5. (C) People's Self-Defense (PSD) MP Oles Doniy told us that 
Rada factions are unlikely to reach agreement without 
Yushchenko and Tymoshenko personally compromising on the 
anti-crisis package and election dates, adding that the Rada 
had "ceased to be a decision-making body."  He suggested that 
the most likely way out of the crisis was compromise on an 
election date sometime in late Winter or early Spring.  Doniy 
said that Yushchenko could not give up on elections, because 
he has staked his political future on them.  At the same 
time, Tymoshenko's inflexibility is hindering Yushchenko's 
ability to maneuver. 
 
6. (C)  Regions MP Vitaliy Makayenko told us that delaying 
elections would allow anti-crisis legislation to be passed, 
and that everyone "except Yushchenko" supported a delay.  He 
said that Rada Speaker Arseniy Yatsenyuk benefits by staying 
in the Speaker's chair and receiving free, positive coverage 
that will increase his popularity.  Meanwhile, he added, 
Tymoshenko wants to hold on to her PM seat "as long as she 
can" because "no one" will form a post-election coalition 
with BYuT.  Finally, Makayenko said that Regions would like 
to see elections postponed because, as the opposition, they 
benefit from the ongoing political turmoil, and can use it to 
their benefit in upcoming presidential and Rada elections. 
He noted that Yanukovych may not take the PM slot in a new 
government, but rather remain a party leader and presidential 
candidate "not saddled" with the current economic crisis. 
 
Comment 
------- 
 
7. (C) Pressure is building on Yushchenko and Tymonshenko to 
come to some sort of agreement to al
low the Rada to enact the 
necessary anti-crisis legislation.  However, their personal 
animosity continues to be a stumbling block to any agreement, 
even in the face of a potentially devastating economic 
crisis.  With three competing anti-crisis legislative 
packages set for discussion on October 24, tomorrow's plenary 
session has the potential to provide the needed breakthrough 
if the President and PM are willing to compromise. 
TAYLOR

Wikileaks

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