C O N F I D E N T I A L SECTION 01 OF 03 KIEV 001530

SIPDIS

CODEL
SIPDIS

DEPT PLEASE PASS TO USTR FOR KLEIN/MOLNAR; USDOC FOR
4231/ITA/OEENIS/NISD/CLUCYCK

E.O. 12958: DECL: 04/14/2016
TAGS: PGOV PREL ETRD NATO OREP PINR US UP
SUBJECT: UKRAINE: YANUKOVYCH TO CODEL FRIST: ORANGE
COALITION "DOOMED TO FAIL"

REF: KIEV 643

Classified By: Ambassador for reasons 1.4 (b,d).


1. (C) Summary: Former Prime Minister Viktor Yanukovych told
CODEL Frist and Ambassador April 13 that the pro-presidential
Our Ukraine (OU) bloc needed to form a coalition with his
Party of Regions in order to overcome the east-west split
within the country. A union of the previous ruling coalition
(of OU, the Yuliya Tymoshenko Bloc, and the Socialist Party)
would be doomed to fail, as it had once before. In the new
parliament, Party of Regions would put a priority on
legislation to empower local government. Yanukovych said
progress toward NATO membership should be a natural process
and would be assisted if NATO could demonstrate to the
Ukrainian public the concrete benefits of a closer
relationship. Yanukovych claimed to favor Ukraine's WTO
accession but said his party would seek to delay or slow
implementation of some WTO-related measures. Senator Frist
praised Ukraine's recent parliamentary (Rada) elections. End
summary.

A Milestone Election
--------------


2. (SBU) Yanukovych welcomed the opportunity to share views
with CODEL Frist (Senate Majority Leader Bill Frist, R-TN;
Senator Judd Gregg, R-NH; and Senator Richard Burr, R-NC) and
Ambassador. Senator Frist congratulated Yanukovych for Party
of Regions' (first-place, plurality-winning) electoral
results, saying that, as a politician, he found nothing more
exciting than a free and fair election. He congratulated
Yanukovych and other Ukrainian politicians for a process that
functioned well with open debate and a multi-party system.
He and his delegation were visiting Ukraine at an exciting
time, but, whatever the outcome (of ongoing Rada majority

coalition formation talks), he wanted to maintain an open
dialogue with Ukrainian counterparts.

Coalition Building
--------------


3. (SBU) Yanukovych started by noting the elections were
basically fair, for which he credited the Ukrainian people,
including its "Orange part." He asserted that real
negotiations on coalition-building within the new Parliament
(Rada) would take place after official publication of the
final poll results. Once this happened, Party of Regions
would be open to any possible coalition partner, but would
first approach (President Yushchenko's) Our Ukraine Bloc.
(Note: Ukrainian law calls for publication of the final,
official results within five days of announcement of the
results, barring any legal challenges. While the Central
Election Commission announced election results April 10, the
Supreme Administrative Court ordered suspension of their
publication based on an appeal by the People's Opposition
Bloc led by radical Socialist Natalya Vitrenko over
procedural irregularities. The court ruled that the CEC
could not take action to finalize the Rada election results
until the People's Opposition Bloc's case was settled.)


4. (SBU) Yanukovych said he was pleased with the election
results, since Regions had won with more than 50% of the vote
in 10 regions. (Note: Regions in fact came in first in 10
regions -- 8 southern and eastern oblasts, the Crimean
Autonomous Republic, and Sevastopol, which, like Kiev, has a
special administrative status -- but only took a majority of
the vote in 6.) These regions were the heavily populated and
industrialized areas in the south and east. Yanukovych said
President Yushchenko should seize the opportunity to create a
coalition that would bridge the divide in Ukrainian society
(i.e., between the areas supporting Party of Regions and the
17 regions where either Our Ukraine or the Yuliya Tymoshenko
Bloc, BYuT, emerged victorious).


5. (SBU) Furthermore, Yanukovych argued, as the recipient of
the largest number of votes, Regions should be included in
any ruling coalition. If Yushchenko failed to do so, he
(Yanukovych) and the Party of Regions would hold Yushchenko
personally responsible for the consequences. A reformation
of the earlier "Orange coalition" (of OU, BYuT, and the
Socialist Party) was doomed to fail; it had crumbled once and
it would do so again. If Regions were in the opposition,
however, the party would endeavor to work on the basis of its
platform with the government for the common good and
Ukraine's national interests.

KIEV 00001530 002 OF 003



Further Government Reform
--------------


6. (C) Yanukovych said that, as prime minister, he had worked
in close cooperation with the Rada to pass legislation that
had resulted in a strong economy -- 9.6% GDP growth in 2003
and 12.3% in 2004. The government's primary task now was to
restore the public's faith so that their renewed trust would
resuscitate the economy. Constitutional reform was the first
step toward further reform of the government structure.
Yanukovych said his primary task in the Rada would be to
empower local governments by passing legislation to reform
local government, including by allowing people to elect heads
of regional governments directly, rather than the central
government appointing them. Local governments, he argued,
should have the power and authority to fulfill their
responsibilities.

Euro-Atlantic Integration and NATO
--------------


7. (C) Senator Frist noted the importance of Ukraine's
continued progress toward integration into Euro-Atlantic
institutions, including NATO. Yanukovych responded carefully
that the Party of Regions platform supported developing a
relationship with NATO. He had welcomed then-NATO Secretary
General Robertson to Donetsk when he was governor there.
Ukraine's movement toward Euro-Atlantic integration, however,
should be natural, and Yanukovych drew a comparison to love,
"which must be mutual." For the moment, 80% of Ukrainians
opposed NATO membership. This could be overcome, Yanukovych
suggested, if NATO could demonstrate concrete benefits from
membership. NATO actions like a decision to purchase
Ukrainian-manufactured AN-70 aircraft would be welcomed and
convincingly display the benefits of NATO membership, so that
Ukrainians would not feel "forced and humiliated" if Ukraine
eventually became a member. Ukrainians also did not
understand why the USG provided a plant to Russia to
eliminate solid rocket fuel, but not one in Pavlohrad in
Ukraine for the same purpose. In addition, Ukrainians did
not understand why Ukrainian contributions toward Iraq had
not been reciprocated (with commercial deals).


8. (U) Note: Russia and Ukraine are developing the short
takeoff and landing AN-70 military transport aircraft under
intergovernmental agreements signed in 1993 and 1999. Under
the agreements, Russian financed 72% and Ukraine 28% of the
AN-70's research and development. The aircraft is being
developed by the Kiev-based Antonov ANTK Company. It will be
powered by D-27 engines to be mass-produced at the
Zaporizhzhya-based Motor Sich Enterprise. The Russian
government recently threatened to pull out from the AN-70
project.

WTO, EU, and Russia
--------------


9. (C) Yanukovych claimed to favor Ukraine's membership in
the WTO, noting that most bilateral protocols had been signed
when he was prime minister. (Note: the GOU signed 21
bilateral market access agreements during Yanukovych's tenure
as PM, from November 22, 2002 to the end of December 2004.
This is a substantial share but not quite the majority of the
approximately 46 WTO members that have required such
agreements of Ukraine; 43 of these have been signed to date.)
However, due to a need to support national industries and
the vulnerability of some economic sectors, his party would
advocate postponement or slower implementation of some
WTO-related measures. He would work to deepen Ukraine's
relationship with the EU, but not in terms of words but with
real achievements. Yanukovych acknowledged that, under
Yushchenko, Ukraine's relationship with the U.S. had reached
a new qualitative level, but he observed that Ukraine needed
to develop a new and long-term strategy toward Russia that
would not anger the citizenry of either country. He also
noted that many economic issues needed to be solved in the
trilateral relationship of Ukraine, Russia, and the EU and
suggested that the three parties should consider them
together.

Congressional Support
--------------


10. (C) At the end of the meeting, Senator Frist again
praised the transparency and fairness of the recently

KIEV 00001530 003 OF 003


concluded parliamentary elections. He said he looked forward
to future visits both by Ukrainian officials to Washington
and other Congressional delegations to Ukraine.


11. (C) Comment: Yanukovych had a nuanced message for the
Senators designed to suggest moderation. This was evident in
his praise, albeit offhanded, for the Orange contribution to
fair elections and improved relations with the U.S. It was
also evident in his suggestion of ways that NATO might
encourage Ukrainian cooperation. Perhaps the most troubling
view he expressed involved the possibility that his party
might need to oppose or amend certain WTO-related bills to
ensure that Ukrainian industry did not suffer.


12. (U) CODEL Frist did not have an opportunity to clear this
cable.


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