UKRAINE: YANUKOVYCH DISCUSSES GAS DEAL, RELATIONS

C O N F I D E N T I A L SECTION 01 OF 02 KIEV 000335 SIPDIS DOC FOR CLUCYK DOE FOR LEKIMOFF E.O. 12958: DECL: 01/26/2016 TAGS: PGOV PINR KDEM ETRD ENRG EPET UP WTO SUBJECT: UKRAINE: YANUKOVYCH DISCUSSES GAS DEAL, RELATIONS WITH RUSSIA, U.S., WTO Classified By: Ambassador for reasons 1.4(a,b,d). ¶1. (C) Summary: In a January 24 meeting with opposition Party of Regions leader Viktor Yanukovych and Rada Deputy Taras Chornovil, EUR A/S Fried told Yanukovych the U.S. supported Ukraine and would work with whatever democratically-elected government the people of Ukraine chose. The U.S. would judge any Ukrainian government by its actions and support for reform. Fried expressed U.S. concern about the lack of transparency in the January 4 natural gas deal struck with Russia. While we understood the nature of rhetoric during political campaigns, we expected that anti-U.S. sentiments should not become a campaign tool. Yanukovych said he shared U.S. concern about the gas deal, and asserted that Ukraine's approach would have been stronger if the parliament had been involved. Yanukovych said there would be no change in relations with the EU, Russia, or the U.S. should his Party of Regions participate in a ruling coalition following March 26 parliamentary elections. Ukraine would follow its own national interests but would not view the West and Russia as opposing camps to play off one another. On WTO, Yanukovych advocated a slower approach that would protect Ukraine's industry. End summary. U.S. will work with democratically-elected government -------------- -------------- ¶2. (C) On January 24, Assistant Secretary Daniel Fried, NSC Director Damon Wilson, and Ambassador met with opposition Party of Regions leader Viktor Yanukovych and Regions Party Deputy Taras Chornovil. Fried delivered to Yanukovych the same message he had given to President Yushchenko, Prime Minister Yekhanurov, and ex-Yushchenko ally Yuliya Tymoshenko: that the U.S. supported Ukraine and would work with whatever democratically-elected government the people of Ukraine chose, and that the U.S. would judge any Ukrainian government by its actions, including support for reform. Turning to the January 4 natural gas deal with Russia, Fried emphasized U.S. support for Ukraine and noted the Secretary's strong statements on Russian actions. However, the U.S. had concerns about the lack of transparency and the role of RosUkrEnergo (RUE). The U.S. hoped Ukraine's relations with Russia would be productive, but that Ukraine should be free to decide how to build its international relations as an independent country. The U.S. understood campaigns and associated rhetoric, but Regions should take care not to make it anti-American. Yanukovych: Close to the U.S. on RosUkrEnergo -------------- ¶3. (C) Yanukovych said he shared USG concerns about RosUkrEnergo's lack of transparency and unclear role in Ukraine's gas market. He and the Party of Regions team first became concerned when they saw how excited the Russians were over the deal struck in early January with Ukraine. Yanukovych blamed what he called an "inexperienced" Yushchenko team for agreeing to permit RUE to be the sole seller of gas to Ukraine. Relations with Russia were not simple, he said, and a team needed thorough preparation before entering into negotiations. Claiming to have information on the conduct of negotiations, Yanukovych said the inexperienced Yushchenko team operated from a position of weakness. A more experienced government would have consulted with Yanukovych and others in parliament, and would have united all political forces before entering negotiations, which might then have led to a "package" resolution. In such a case, at minimum, the agreement resolving the gas crisis would have been transparent and understandable, he claimed. Yanukovych said he had reached out to Yushchenko to discuss the gas crisis, but had been told Yushchenko was unavailable. The result of Yushchenko's "blunder" was a gas deal with no transparency and no legitimacy. Worse, the gas issue was not resolved: "We will go back to this again," Yanukovych warned. Yanukovych noted that he had learned through the media that Yushchenko and PM Yekhanurov had withdrawn their signatures from the September MOU with Yanukovych following the January 10 Rada vote to dismiss the Yekhanurov government over the gas deal. No Change in Relations with EU, Russia, U.S. -------------- ¶4. (C) Yanukovych said there would be no change in Ukraine's relations with the EU, U.S. or Russia in the event the Party of Regions formed the government after the March 2006 parliamentary elections. Yanukovych emphasized (without elaboration) that a Regions government would uphold Ukrainian national interests. He understood the importance of strategic relations with the U.S., and Regions stood for building strong relations with the EU in support of European integration and strong relations with Russia. However, the West and Russia were not opposing camps between which Ukraine would choose. Regions Party Deputy Taras Chornovil expressed concern over Ukraine's "geo-political orientation" under Yushchenko. The GOU was issuing declarations "strictly" oriented to the West, but their actions were contrary to these declarations. For example, the RUE gas deal benefited Russia but was hidden from the Rada and Western partners, Chornovil asserted. ¶5. (C) Yanukovych told A/S Fried that he had held no consultations with Russians in the last year, except one meeting with Russian Ambassador to Ukraine Viktor Chernomyrdin. Chernomyrdin had requested the meeting in January 2006 to ask if Yanukovych and Rada deputies from the Regions Party would support the motion to dismiss PM Yekhanurov's Cabinet. Yanukovych said he told Chernomyrdin that Regions would support the government, if Yushchenko would recognize Regions as the opposition and reverse his disavowal of the Memorandum of Understanding signed in September to secure Rada approval for Yekhanurov as Prime Minister. (Note: Yanukovych's explanation does not sound quite right, as Yushchenko disavowed the September MOU only after the Rada voted January 10 to dismiss the Yekhanurov government, not before the vote.) Regions Approach to WTO: First Identify Our Interests -------------- -------------- ¶6. (C) The Party of Regions' approach to the WTO would also be based upon "national interests," Yanukovych added, meaning the protection of national manufacturers and the "national market." Ukrainian manufacturing was vulnerable, yet the GOU had not yet analyzed how WTO accession would affect it. This was a mistake. Regions, however, would consider WTO legislation after making clear what protections were required by Ukrainian industry. ¶7. (C) Yanukovych said that Regions was ready to unite with other parties in an effort to improve the economy and living standards in Ukraine. Regions had talked with voters, who said that whatever government won in March needed to govern efficiently and effectively. Yanukovych now saw the need to discuss the process for uniting various parliamentary factions. Chornovil takes the blame -------------- ¶8. (C) Chornovil explained that during the 2004 presidential election, Yanukovych had had to "stand for Kuchma's sins." As Yanukovych's campaign director, Chornovil took responsibility for failing to distinguish his candidate from Kuchma's deeds. The events of the past year -- for example, Yanukovych's willingness to enter the MOU with Yushchenko in September -- had shown Yanukovych to be different from Kuchma. ¶9. (U) A/S Fried cleared this cable. ¶10. (U) Visit Embassy Kiev's classified website: www.state.sgov.gov/p/eur/kiev. HERBST