C O N F I D E N T I A L SECTION 01 OF 03 KIEV 001940

SIPDIS

SIPDIS

E.O. 12958: DECL: 05/19/2016
TAGS: PREL PGOV PARM UP
SUBJECT: UKRAINE: KINAKH AND FM TARASYUK ON COALITION
NEGOTIATIONS AS OF MAY 17

REF: A. KIEV 1913


B. KIEV 1851

Classified By: Ambassador, reason 1.4 (b,d)


1. (C) Summary: In Ambassadorial farewell calls May 17 on
outgoing National Security Defense Council (NSDC) Secretary
Anatoliy Kinakh and Foreign Minister Borys Tarasyuk, Kinakh
and Tarasyuk, both of whom lead minor parties that contested
the March 26 elections as part of President Yushchenko's Our
Ukraine bloc, spoke about the need to form an Orange
coalition and the prospects for it, though neither with
conviction. Kinakh said that the situation demanded an
Orange coalition, and claimed that the coalition document
(principles, program, rules, and positions) was 70% done, but
he was not sure that Yushchenko would accept Tymoshenko as
Premier; he rated the chances of forming an Our Ukraine
(OU)/Tymoshenko bloc (BYuT)/Socialist ("Orange Coalition")
Rada majority within the mandated 30 days after the Rada
convenes May 25 as "60-40." A coalition with Regions was a
serious possibility, but Regions still did not embrace key
Our Ukraine policy priorities, such as NATO and abandoning
the Russian language and federalism issues. Tarasyuk
likewise claimed that there would be a Orange Coalition, that
the coalition document was almost done, and that such a
document would make it possible to control PM Tymoshenko, but
declined to answer whether Yushchenko would accept Tymoshenko
as PM. He added that Yushchenko and OU would not accept the
Socialists if they did not support key policies such as NATO
membership and market reform. Comment: Given the math of
securing a Rada majority of 226 seats, that begs the question
of the only alternative for OU: a coalition with Regions.
Kinakh is suspected of actually favoring Orange-Blue, and his
detailed comments about the nature of a theoretical
OU-Regions alliance suggested as much, but he knows our
preferences. End Summary and Comment.

Kinakh: Likely Orange, but OU-Regions a serious alternative
-------------- --------------

2. (C) Outgoing NSDC Secretary Kinakh, also leader of the
Party of Industrialists and Entrepreneurs, one of five
parties that joined Yushchenko's People's Union Our Ukraine
Party to contest the March 26 elections as part of the Our
Ukraine (OU) bloc, told Ambassador May 17 that he looked
forward to the opening of the Rada May 25 (note: Kinakh had
to resign his NSDC post in order to be registered as a Rada
MP). He expressed less confidence of when a Rada majority
might officially form and a coalition government emerge.
Kinakh, who has not been involved in coalition negotiations
directly but sits on the OU Political Council that must
approve any agreement, characterized the OU-BYuT-Socialist
draft coalition document, which covers principles, programs,
rules, and positions, as 70% complete. That said, he gave
OU-BYuT-Socialists only a 60-40 chance of forming a majority
within the 30 days from the Rada's opening allowed by the
Constitution, with a total of 60 days (through July 24)
allowed to appoint a government. Ambassador noted that
President Yushchenko had the right but not the obligation to
dismiss the Rada after 60 days if no government emerged.
Kinakh stated flatly that Yushchenko would not dismiss the
Rada, because that would only complicate government-Rada
relations in the aftermath of constitutional reform and would
not be a welcome sign of political stability.


3. (C) Ukraine needed a focused government, Kinakh
maintained, because there was a concentration of very real
risks facing Ukraine, political and economic, and the ongoing
delay in forming a coalition exacerbated the situation. The
effectiveness of governmental administration and management
was a real concern; the lack of clarity of implementation of
constitutional reform and the changing power relations
between President, government, and the Rada continued; the
Constitutional Court as final arbiter lacked a quorum and
could not work. Kinakh stated this was why it was important
to form an Orange coalition sooner rather than later, based
on openess between the three parties and a clear agenda of
continued reform and conditions for the dynamic pursuit of
Euro-Atlantic integration. While negotiations revolved
around such a format, there was no agreement yet; if an
agreement were reached, he did not rule out that such a
coalition could be long-lasting, in contrast to predictions
that such a coalition was doomed to be short-lived.


4. (C) Commenting on Tymoshenko's public claim on the
Premiership and suggestion that Socialist leader Moroz should
be made Rada Speaker because Our Ukraine had the Presidency
(Yushchenko), Kinakh rejected efforts to "drag the
Presidency" down to a bargaining chip in coalition
negotiations. In response to Ambassador's question about
whether OU would accept Tymoshenko as Premier if she were to

KIEV 00001940 002 OF 003


accept an OU Speaker, Kinakh hedged, replying: "basically,
yes." Poroshenko was not a serious OU candidate for Speaker,
Kinakh suggested, his name mentioned more to make him feel
good and to increase pressure on Tymoshenko; Yushchenko would
not back Poroshenko as Speaker. Yekhanurov and Bezsmertny
were more realistic, and Moroz would eventually back down
because he knew he would have more influence inside an Orange
coalition than outside the alternative (OU-Regions).


5. (C) The real issue, Kinakh continued, would be whether
Tymoshenko could secure 226 votes in the Rada, even with a
signed coalition agreement behind her. Kinakh claimed that
in all three potential factions with 243 MPs -- OU,
Socialists, and even BYuT itself -- there were MPs who would
vote against Tymoshenko's PM candidacy. Regions was working
hard at peeling away MPs, claimed Kinakh. With 186 MPs of
their own and 21 Communist MPs "willing to vote however they
are paid," Regions only needed to find another 19 MPs to
block action. Were they to succeed and defeat a Tymoshenko
premiership vote, that would be a serious blow to the Orange
team and to the system. As a result, if OU were to embrace
the Tymoshenko option, there would have to be a guarantee of
success. Kinakh suggested that Yushchenko was not yet ready
to cut the final deal with Tymoshenko, but that unspecified
others were already at work preparing ways of forcing her
eventual resignation were she to emerge as PM. (Note:
Tymoshenko has told us Poroshenko is leading this charge; see
ref B.)


6. (C) The alternative to the OU-BYuT-Socialist coalition was
OU-Regions; Kinakh confirmed that Regions was conducting
"very intensive work" on an alternative coalition document
and list of positions (note: the Regions' coalition proposal
was released May 18, on the web at:
http://www.glavred.info/archive/2006/05/18/13 0240-8.html).
Kinakh discounted the chance of Yanukovych emerging as PM and
suggested that, rumors to the contrary, current PM Yekhanurov
had no chance of staying on even in an OU-Regions coalition,
since Regions would not accept working under the No. 1 party
list candidate of a distant third-place finisher. While
Regions' MP Azarov was a possibility, more likely would be a
nonpartisan technocrat with strong economic credentials.
Kinakh mentioned current Economics Minister Yatsenyuk or
Industrial Union of the Donbas VP Hayduk, though the latter
would have to divest himself of his business holdings to meet
Yushchenko's demand to separate government from business.


7. (C) The main stumbling block to an OU-Regions coalition,
said Kinakh, was that Regions still did not accept key
elements of Yushchenko's agenda. While Regions was ready to
support the general strategy on NATO, they would not accept
the tempo and intensity favored by Yushchenko; for instance,
Regions was "categorically against" a Membership Action Plan
(MAP) in 2006. Similarly, Regions had not yet abandoned its
unacceptable positions on Russian as a state language and
federalism.

Tarasyuk: A new coalition by mid-June
--------------


8. (C) Tarasyuk made reassuring noises regarding the
likelihood of a parliamentary ruling coalition being formed
by June 21. Neither President Yushchenko nor his Our Ukraine
bloc were interested in dragging the current state of affairs
to the June 24 constitutional deadline to form a
parliamentary majority. While no one could give a guarantee
about the future, Tarasyuk expressed optimism that the
process would be completed "by mid-June or June 20, at the
latest."


9. (C) Detailing the state of coalition negotiations,
Tarasyuk said President Yushchenko on May 16 uttered publicly
for the first time what he had been saying privately. If
there were no change in the Socialist Party of Ukraine (SPU)
stance on certain issues, SPU might not be part of a future
coalition. While SPU had leverage on this issue, OU also had
its leverage, since SPU had no desire to be in opposition,
Tarasyuk commented. OU would not forsake gains by
accommodating outdated SPU positions, many of which resembled
the Communist Party's positions. OU was discussing
intensively the SPU's positions regarding membership in NATO,
the EU, and WTO, rights to ownership of land,
reprivatization, and other similar issues.


10. (C) Responding to Ambassador's observation that Tarasyuk
was skirting the crucial issue of Tymoshenko's future status,
Tarasyuk laughed in wry agreement. While acknowledging that
he had no way of divining Yushchenko's views, he said OU's
approach was clear. OU had managed to obtain Tymoshenko's
assent that the first priority would be to develop a
statement of principles, then allocate government positions.

KIEV 00001940 003 OF 003


Of course, while there was no enthusiasm in some quarters for
Tymoshenko's return to the prime ministership, once agreement
was obtained on basic principles, the way forward would be
clear. OU was interested in forming a durable coalition, not
one that would fall apart again after a few months, so OU was
seeking to develop the "tightest straitjacket" possible to
constrain Tymoshenko. Tarasyuk claimed that, of course,
there were still some people who were working "the other
option," but he stoutly asserted that they would not gain the
upper hand.


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