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08KYIV2485, CHERNOMYRDIN: UKRAINE MUST PAY GAS DEBTS

December 19, 2008

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Reference ID Created Released Classification Origin
08KYIV2485 2008-12-19 11:35 2011-08-30 01:44 CONFIDENTIAL Embassy Kyiv

VZCZCXYZ0000
PP RUEHWEB

DE RUEHKV #2485/01 3541135
ZNY CCCCC ZZH
P 191135Z DEC 08
FM AMEMBASSY KYIV
TO RUEHC/SECSTATE WASHDC PRIORITY 6941
INFO RUCNCIS/CIS COLLECTIVE
RUEHZG/NATO EU COLLECTIVE

C O N F I D E N T I A L KYIV 002485 
 
SIPDIS 
 
E.O. 12958: DECL: 12/10/2018 
TAGS: PREL PGOV ETRD PINR RU UP
SUBJECT: CHERNOMYRDIN: UKRAINE MUST PAY GAS DEBTS 
 
REF: KYIV 2303 
 
Classified By: Charge James Pettit.  Reasons: 1.4 (b/d). 
 
Summary 
------- 
 
1. (C) Viktor Chernomyrdin, in a meeting with the Ambassador, 
highlighted the importance of Ukraine paying its gas debts. 
He stressed that Russia was unwilling to subsidize Ukraine, 
adding: "if you like them, help them."   Chernomyrdin is 
convinced Ukrainian leaders, mired in power struggles, are in 
denial about the dimension of the unfolding 
economic/financial crisis and unprepared to deal with it. 
End Summary. 
 
"They Are in Denial" 
------------------- 
 
2. (C) Meeting with the Ambassador at our Embassy December 3, 
Russian Ambassador and former PM Viktor Chernomyrdin stressed 
that Ukraine's political leaders simply "do not understand" 
the dimension of the economic crisis.  It is the first time 
they have faced a crisis of such scale, and "they are in 
denial."  They are all fighting and jockeying; no one is 
focusing on the economic danger.  There is little prospect of 
a 2009 budget or a meaningful emergency plan.  The political 
leaders are strangely disengaged; "it's as if the crisis were 
far away."  Chernomyrdin pointed to a picture of a 17th 
century Cossack battle scene on the Ambassador's table and 
disdainfully remarked: "they haven't come far." 
 
3. (C) Chernomyrdin predicted the economic/financial crisis 
in Ukraine would last at least two years.  February and March 
2009 will be a crunch-time as Ukraine exhausts its financial 
reserves.  Asked which of Ukraine's leaders was more on top 
of the situation, Chernomyrdin said that Tymoshenko had "a 
better understanding."  The Party of Regions is disciplined 
and has "capable people" (he did not specify Yanukovych). 
Meanwhile, Yushchenko and the Our Ukraine party "don't offer 
anything."  Yushchenko is erratic, can't unite the country, 
and demeans the authority of the presidency.  His orders are 
ignored, which is "dangerous."  Russia needs reliable 
partners.  Chernomyrdin lamented that the political 
leadership was largely unchanged from his arrival eight years 
ago; the same people just keep changing seats. 
 
Gas: Ukraine must pay 
--------------------- 
 
4.  (C) Ukraine's failure to pay recent arrears to Gazprom is 
a major problem, Chernomyrdin stressed.  He recounted how 
Putin had reached an agreement on gas with PM Tymoshenko in 
Moscow October 2.  Russia agreed to Tymoshenko's demand for 
Gazprom to bypass intermediary RosUkrEnergo.  In return, 
Ukraine parastatal Neftohas would pay its arrears to 
RosUkrEnergo, which would in turn pay its arrears -- $1.5B -- 
to Gazprom.   Ukraine/Naftohas has not lived up to the 
bargain.  Instead, as every year since 2005, it is not paying 
its gas bill.  Tymoshenko and Putin spoke of a three year 
phase-in for market pricing.  Before that can happen, Ukraine 
must pay its arrears. 
 
"If you like them, help them" 
------------------------------- 
 
5. (C) "Why should Russia subsidize Ukraine with cheap gas?" 
Chernomyrdin repeatedly asked.  If the US wants to do so, 
fine; but Russia will not.  If Russia is not paid for its 
gas, it becomes a burden on the Russian people.  Russia does 
not have such a luxury at this time of economic crisis. 
Several times Chernomyrdin said (at first ironically, but 
each time more seriously): "you 'rich Americans' should give 
Ukraine the finances; if you like them, help them." 
 
Dismisses new GOU Framework 
--------------------------- 
 
6. (C) Chernomyrdin dismissed a new framework the GOU has 
announced to improve interagency coordination of Russia 
policy, with National Security and Defense Council Secretary 
Bohatyriova empowered to lead new discussions with Russian 
counterparts.  Existing frameworks are sufficient, 
Chernomyrdin said.  Mechanisms for bilateral relations are 
already in place, such as the bi-national Presidential 
commission, its committees and sub-committees. 
 
7. (C) Ambassador inquired whether Chernomyrdin thought 
Bohatyriova's assumption of the lead on Russia policy meant a 
diminution of the role of FM Ohryzko.  Chernomyrdin thought 
it probably did.  He finds the FM "difficult to understand." 
He faulted MFA for focusing on "internal things," (such 
promoting 
commemoration of Holodomor, the 1932-33 Terror 
Famine). 
 
NATO/MAP 
-------- 
 
8. (C) Ukraine has no claim on NATO membership if the process 
is based on fulfilling objective criteria, Chernomyrdin said. 
 In any case, 70-80% of Ukrainians are opposed.  Ukraine 
faces no threat; "no one will attack them."  Yushchenko was 
disappointed no offer of MAP came at the December NATO 
Ministerial but remains convinced that "the Americans are 
eager to embrace him."  Commenting on last August's events, 
Chernomyrdin observed that if Georgia did not have a "sick 
leader," nothing would have happened. 
 
Comment 
------- 
 
9. (C) Chernomyrdin was emphatic about Ukraine's need to pay 
its gas debts.  His repetition of points on this issue 
suggests that was the reason he sought the meeting.  Now in 
his eighth year as Ambassador, Chernomyrdin retains 
influence, but less than when Kuchma, a close friend, was 
President.  Given the length of his tenure, there are rumors 
that his time as Ambassador is drawing to an end.  Some say 
his wife is ill and he would like to retire.  Nonetheless he 
appeared in good spirits.  He has noticeably lost weight in 
recent times, leading some to wonder about the state of his 
health. 
TAYLOR

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