UKRAINE: MOROZ AND THE SOCIALIST PARTY: ANOTHER

C O N F I D E N T I A L SECTION 01 OF 03 KIEV 001081

SIPDIS

E.O. 12958: DECL: 03/20/2016
TAGS: PGOV PHUM ETRD PARM NATO
SUBJECT: UKRAINE: MOROZ AND THE SOCIALIST PARTY: ANOTHER
DIFFICULT "MAIDAN" ALLY


Classified By: Political Counselor Aubrey Carlson, reason 1.4 (b,d)


1. (C) Summary: Most of the attention on the failure of the
"Maidan" coalition to form a coherent, effective government
team in office in 2005 justifiably focused on the bitter
falling out of the two main Orange parties, President
Yushchenko's Our Ukraine and Yuliya Tymoshenko's eponymous
bloc (BYuT),as well as on Tymoshenko's difficult, even
destructive, personality. Yet Yushchenko's most unreliable
partner in 2005 (and potentially in 2006, if a Maidan
coalition re-forms after the elections) may well have been
the pink members of the Maidan team: Oleksandr Moroz and the
Socialist Party. The Socialist Rada faction seemingly
opposed more government bills in the Rada than it supported,
particularly on economic and national security issues. A
Socialist member of the Cabinet frequently claims to be "in
the opposition," and Moroz staunchly opposes Yushchenko's
desire to revisit constitutional reform. What Our Ukraine
and the Socialists share is not policy perspective but
certain basic values and a European orientation. With the
voters, the Socialists' quiet, non-confrontational opposition
to Yushchenko's priorities stand it in good stead, and the
party appears set to benefit March 26 from voters
disillusioned with fratricidal Orange squabbling, facilitated
by the Socialists' claim to being the most fervent opponent
of Kuchmaism and, by extension, of the Party of Regions and
Rada Speaker's Lytvyn's bloc. Over the past several years,
the Socialists have overtaken the Communists as the leading
"leftist" force in the country, even though they have for the
first time accepted some big businessmen with dubious
backgrounds into their ranks, as they seek to secure a modest
but secure niche in Ukraine's evolving political spectrum.
End summary.

Who's the truly difficult Maidan partner?
--------------


2. (SBU) The well-documented squabbling between former PM
Tymoshenko and President Yushchenko and his Our Ukraine party
over a range of policy and personality issues in 2005
detracted attention away from the other Maidan party in
government which consistently undermined the ability of
Yushchenko and the government to pursue his stated goals: the
Socialist Party, led by its often prickly leader Oleksandr
Moroz. While formally a member of the coalition government
with an allotment of Cabinet seats, governorships, and other
administration jobs, Socialist opposition covered the entire
range of Yushchenko's agenda, from economic priorities (WTO),
to security policy (NATO),to domestic policy (constitutional
reform).

WTO and Economic Policy
--------------


3. (SBU) When we compared voting records of Rada factions on
bills introduced in 2005 to bring Ukraine into conformance
with WTO requirements, the Socialists had one of the worst
voting records in favor of government-sponsored bills (note:
only the Communists, SPDU(o),and Regions were worse); they
also failed to support several related bills brought before
the Rada March 15, including a veternary medicine law. The
Socialists vigorously opposed one of the GOU's signature
accomplishments of 2005: the reprivatization sale of
Kryvorizhstal to Mittal Steel, with Socialist State Property
Fund Chair Semenyuk opposing the auction and calling in sick
for several days to avoid any association with the sale,
which went ahead as planned. While Tymoshenko attracted much
criticism for her reprivatization proposals, Semenyuk and the
Socialists were even more radical: they wanted to nationalize
the same properties, if not more, and keep them under state
control, rather than reprivatize them. Semenyuk has been
featured on TV ads running a week before the March 26
elections promising to battle for more of the same if the
Socialists return to government.


4. (SBU) Socialist Minister of Agriculture Baranivsky has
repeatedly voiced public opposition to official GOU policy,
particularly WTO-related measures, going so far as to claim
that he was "in opposition to the government" - a ludicrous
claim from a sitting member of the Cabinet, and one which
drew calls for his resignation if he truly felt that way.
Baranivsky instead clammed up; control of the Agriculture
Ministry is a valuable tool for reaching out to the agrarian
component of the Socialist electorate, particularly given the
fierce competition with Rada Speaker Lytvyn's bloc -- built
around the former Agrarian Party.


5. (SBU) Moroz's February 17 election briefing for the
diplomatic corps highlighted his many differences with
Yushchenko's agenda, from WTO to NATO and constitutional
reform, but demonstrated the indirect approach that has
allowed the Socialist Party to remain in government and in
the running for a repeat engagement after the March 26
elections, if an Our Ukraine-Regions coalition does not
transpire. The Socialists were not against WTO membership
per se, but they would "speak out against conditions imposed
on Ukraine and could not support anything that hurt Ukrainian
farmers."

NATO and security
--------------


6. (SBU) On NATO, Moroz sidestepped any mention of the
Socialists' official position (Ukraine should remain neutral,
without joining any security alliance) and instead stressed
his support for full exploitation of cooperation within the
framework of Partnership for Peace. The Socialists have a
pattern of failing to support government-sponsored
NATO-related bills the first time they come up for a vote,
creating lost opportunities; even when they subsequently vote
in favor after arm-twisting by Defense Minister Hrytsenko,
the loss of other votes has torpedoed at least two important
security-related bills that had no problems passing even
under Kuchma-Yanukovych.


7. (SBU) In the first vote to ratify a NATO-Ukraine MOU on
strategic vote (November 2, 2005),only 4 of 25 Socialist MPs
voted in support; the measure fell 19 votes short of the 226
necessary. On December 14, all 25 Socialists voted in favor,
but leakage elsewhere prevented passage. When we asked Moroz
at the February 17 briefing why Socialist MPs had failed to
vote on February 9 to authorize the annual foreign troops
exercise bill (ref A),a bill routinely passed when Moroz was
Rada Speaker, Moroz squirmed before replying that if Defense
Minister Hrytsenko would lay out the case to the Socialist MP
caucus and answer questions about Ukraine's national
interests, the matter would be resolved (ref B). As with the
strategic lift MOU, a majority of Socialists did vote in
favor when the measure came up for a vote in late February
(but again it was too little, too late, due to defections
from Lytvyn's bloc and even National Security and Defense
Council Secretary Kinakh's faction).

Constitutional Reform
--------------


8. (SBU) Regarding Yushchenko's headline proposal in his
February 9 State of the Nation address to call for a new
constitutional committee to redraft the constitution as a way
of addressing real flaws (ref A),Moroz was adamant at the
February 17 briefing: "I will not allow Constitutional
reform to be revised." Indeed, it was Yushchenko's pledge to
Moroz to support constitutional reform in early November 2004
that led Moroz to throw his support behind Yushchenko in
round two of the 2004 Presidential election, creating the
orange-pink alliance that carried through to the Maidan
(shorthand for Independence Square, the center of the Orange
Revolution events).

What are the ties that bind? Values (not policy)
-------------- --------------


9. (SBU) Given all the fundamental policy issues that
separate the Socialists from Our Ukraine, and to a lesser
extent BYuT (which favors more of the state intervention
approach that is a Socialist staple),the basis for a
productive partnership is more difficult to quantify,
amounting to generally shared basic values and a European
orientation. During the televised, multi-party debate March
10 on the "Svoboda Slova" (Freedom of Speech) program, deputy
Socialist leader Iosef Vinnsky highlighted the contrast
between policy dissonance but shared values. Those values,
which Vinnsky said for the Socialists included staunch
anti-Kuchmaism, were crucial for ensuring Ukraine kept moving
forward toward Europe, rather than sinking back into the past
morass that Kuchmaism had represented.

10, (SBU) In the same way Moroz and Interior Minister Yuri
Lutsenko played a leading role in the "Ukraine without
Kuchma" movement in 2000-01 and in publicizing the Gongadze
affair, they have used the prominence of Lutsenko to attack
the "Regions Party bandits" far more vigorously than either
Our Ukraine or BYuT, which have spent more time attacking
each other and have a number of dubious lesser oligarchs of
their own. On the March 3 edition of "Svoboda Slova,"
Lutsenko concluded the four-hour marathon by ripping into
previous speaker, Regions' campaign chair and former Kharkiv
governor Kushnaryov, detailing a half dozen Kharkiv banks and
businesses that Kushnaryov had "stolen or self-privatized"
while governor, and emotionally vowing that some day
Kushnaryov and the other Regions leaders who had "stolen the
country blind under Kuchma" would eventually answer for their
crimes.

2006 campaign: Adding businessmen, battling Lytvyn
-------------- --------------


11. (SBU) The Socialists previously maintained a general
image of being more honest than most other political forces
by avoiding the practice of recruiting big businessmen onto
their Rada list. That changed for 2006; at the February 17
briefing, Moroz trumpeted the Socialists' plans to "reanimate
industry" due to their "strengthened industrialist lobby."
Most notably, that includes No. 8 on the Socialist electoral
list Volodymyr Boyko, the colorful "Red" director of the
Mariupol Illich steel plant, who identifies himself as "a
communist at heart" and supported Regions in 2004; No. 21
Anatoli Buhanets, Director of Kharkiv's Turboatom plant; No.
15 Myhailo Honcharov, Chairman of the Board of "East European
Bank; Oleksiy Kunchenko, Chairman of the Board of
Severodonetsk Azot plant (note: a disputed privatization
case); and No. 9 Andriy Derkach, owner of pharmaceutical and
oil businesses, as well as a media empire centered around ERA
Radio and TV plus the Kievski Telegraph newspaper.


12. (SBU) The inclusion of Derkach made the most waves in
early December because the Socialists simultaneously cut ties
with 2002 Socialist MP candidate Mykola Melnychenko, whose
2000-01 tapes of Kuchma's conversations authorizing the
Kolchuga radar sale to Iraq and Gongadze-related discussions
purportedly between Kuchma, Derkach's father Leonid (then
head of the Security Service of Ukraine (SBU)),then-Kuchma
Chief of Staff Lytvyn, and then-Interior Minister Kravchenko
destroyed Kuchma's reputation within and outside of Ukraine.
The Socialists have used the Gongadze case cudgel against
Lytvyn more sparingly in the 2006 campaign than in the past.
Nevertheless, the parties battle for similar electorates:
the central Ukrainian agrarian electorate, plus urban voters
who consider themselves neither "orange" nor "blue." Moroz's
rivalry with Lytvyn extends to both men's aspirations to
return to the Rada Speaker's chair, and to provide the
Kingmaker swing votes necessary for larger parties to form a
coalition.

Overtaking the Commies, finding an enduring niche
-------------- --------------


13. (SBU) One of the interesting developments of the 2004
presidential campaign, confirmed in the 2006 Rada cycle, is
that the Socialists have overtaken the Communist Party as
Ukraine's leading leftist (pink-red) political force. The
Communist electorate is literally dying off, its leadership
bereft of any positive agenda, and its campaign all but
invisible. In contrast, the Socialists, who proudly joined
the Socialist International as a constituent party in
January, promote a "Building Europe in Ukraine"
people-focused agenda, have built a party network across the
country, and can lay claim to an identity and a future.


14. (C) Comment: The above developments appear to have
secured a modest yet solid niche in Ukraine's shifting
political spectrum for the Socialists, who are the only
political force with nearly even support throughout the
country (5-7 percent),slightly higher in agrarian central
provinces like Poltava and lower in Donetsk/Luhansk/Crimea.
The Socialists seemingly do not aspire to large party status,
are content to consolidate a certain base and focus on a
certain number of clearly defined causes, and will seek
common cause with the Orange parties they joined in 2004 on
the Maidan if the math, personalities, and preconditions
allow. While there are a number of post-election coalition
scenarios, it would be safe to say that the least likely
would be a government including both the Socialists and
Regions. A Maidan-plus arrangement of Our Ukraine, BYuT,
Socialists and Lytvyn's Bloc would likely generate as much
friction between the latter two as the former two, adding to
the strains which would be inherent if a "Maidan 2" coalition
manages to form after the elections.


15. (U) Visit Embassy Kiev's classified website at:
www.state.sgov.gov/p/eur/kiev.
Herbst