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08KYIV2212, KUCHMA AND KRAVCHUK ON ECONOMIC AND POLITICAL

November 7, 2008

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Reference ID Created Released Classification Origin
08KYIV2212 2008-11-07 07:43 2011-08-30 01:44 CONFIDENTIAL Embassy Kyiv

P 070743Z NOV 08 ZDK
FM AMEMBASSY KYIV
TO SECSTATE WASHDC PRIORITY 6693
INFO CIS COLLECTIVE
NATO EU COLLECTIVE

C O N F I D E N T I A L KYIV 002212 
 
 
E.O. 12958: DECL: 11/07/2018 
TAGS: PGOV PREL PINR UP
SUBJECT: KUCHMA AND KRAVCHUK ON ECONOMIC AND POLITICAL 
CRISES 
 
Classified By: Ambassador William Taylor, reasons 1.4 (b/d). 
 
Summary 
------- 
 
1.  (C) Ambassador recently sounded out former Presidents 
Kuchma and Kravchuk on Ukraine's dual economic and political 
crises.  Kuchma worries most about the potential for 
large-scale unemployment in the metal, mining, chemical and 
construction sectors.  Kravchuk's focus is more on the 
political fallout.  The worse the economy gets, the better 
for the Party of Regions.  Kravchuk, while expressing 
sympathy for Yushchenko's "sensitive nature," lamented his 
disengagement on substance and his willingness to defer to 
Presidential Secretariat Head Baloha.  Both Kuchma and 
Kravchuk regard early elections as undesirable.  However, 
given continuing enmity between Yushchenko and Tymoshenko, 
Kuchma believed early elections might offer the best chance 
for a stable future coalition.  Kravchuk worried that an 
electoral sweep by Regions would derail Ukraine's 
Euro-Atlantic integration.  End Summary. 
 
Kuchma: Focus on Economic Crisis 
-------------------------------- 
 
2. (C) Ambassador called separately on former Presidents 
Leonid Kuchma and Leonid Kravchuk recently to get their views 
on Ukraine's current economic and political crises.  Kuchma, 
from the well-appointed offices of his foundation in Central 
Kyiv, focused on the economic situation.  He lamented that 
before the current economic crisis hit, Tymoshenko and 
Yushchenko had ignored warnings of tough times to come. 
Ukraine's debt -- public and private - had mushroomed, and 
was at unsustainable levels.  Given its large export sector, 
Ukraine was highly vulnerable to the international 
financial/economic crisis, particularly in such sectors as 
metallurgy, machine building, and chemicals.  Demand for 
Ukraine's steel, for example, has been declining in China, 
India and other markets.   The construction sector was 
grinding to a halt.  Kuchma predicted that over the next 
quarter there would be numerous bankruptcies.  He lamented 
that, unlike Russia, Ukraine does not have a stabilization 
fund to fall back on. 
 
3. (C) While now is not the time for snap elections, Kuchma 
said, the deep distrust between Tymoshenko and Yushchenko 
meant that early elections might be "the best way out." 
Kuchma suggested that Regions leader Yanuykovych backed out 
of a possible coalition with Tymoshenko's Bloc (BYuT) after 
he concluded that BYuT might make inroads with voters in the 
East if it joined with Regions. 
 
Wary of Medvedev 
---------------- 
 
4. (C) Turning to foreign policy, Kuchma said that Russian 
President Medvedev's talk of Russian prerogatives in the 
former Soviet space was unacceptable: "they are not talking 
about mutually beneficial relations but about a zone of 
special interest."   Ukraine has large exports to Russia and 
needs "strategic relations" with Moscow, but not at the cost 
of Ukraine's sovereignty.   Kuchma said the EU had been too 
soft on Russia over Georgia.   He attributed this to Europe's 
over-reliance on Russian gas supplies. 
 
Kravchuk:  Party of Regions Would Gain From Snap Elections 
--------------------------------------------- ------------- 
 
5. (C) Kravchuk said he could not comprehend Yushchenko's 
push for early elections.  Yushchenko's Our Ukraine was down 
in the polls to the point that it might not enter the next 
Rada.   Meanwhile, Party of Regions was poised to make major 
gains.   "The worse things get, the better it is for 
Regions," Kravchuk said.  Regions Oligarch Rinat Akhmetov and 
his ally, Presidential Secretariat head Baloha, had convinced 
Yushchenko to push forward on the elections.   Akhmetov, 
Kravchuk said, had convinced Yushchenko that Regions would 
support Yushchenko in Presidential elections.  Yushchenko was 
deluded if he believed Regions would honor any such 
commitment.  Yushchenko's unpopularity in the East make it 
impossible for Regions to do it.  A new government under 
Regions would mean a GOU "subordinate to Russia," Kravchuk 
said.   If Regions wins early parliamentary elections they 
will go on to capture the Presidency too, Kravchuk predicted. 
 They will also win local elections.  This will set back the 
course of Ukraine's integration into Euro-Atlantic 
institutions. 
 
6. (C) Yushchenko is a "prisoner of his inner circle," 
Kravchuk said. Secretariat head Baloha is in league with 
Akhmetov and Regions Donbass boss Kolesnikov.  The President 
is "sensitive, subject to influence," Kravchuk said.  He said 
Yushchenko was notable for his love of Ukraine's history, 
language and culture, but as a politician, he is deeply 
flawed.  Baloha plays to Yushchenko's vision of himself as an 
essential President. The public is aware of the extent to 
which Yushchenko defers to Baloha and it weakens Yushchenko 
further.  Yushchenko wants to avoid responsibility and, like 
many flawed leaders, only wants to hear "pleasant things." 
If Baloha and Akhmetov were to get control of the state 
apparatus, they would turn the Ukrainian government into "a 
bazaar," Kravchuk concluded. 
 
TAYLOR

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