UKRAINE: PM YANUKOVYCH ADVANCES RELATIONS WITH EU

C O N F I D E N T I A L SECTION 01 OF 02 KIEV 003569

SIPDIS

SIPDIS

STATE PLS PASS USTR FOR CKLEIN/LMOLNAR

E.O. 12958: DECL: 09/18/2016
TAGS: PREL ECIN ETRD EPET EUN UP
SUBJECT: UKRAINE: PM YANUKOVYCH ADVANCES RELATIONS WITH EU

REF: USNATO 538

Classified By: Political Counselor Kent Logsdon for reasons 1.4(b,d)


1. (C) Summary: While media attention had focused on PM
Yanukovych's comments regarding a NATO Membership Action Plan
during his September 14 visit to Brussels, MFA European Union
Department acting director Dir argued that Yanukovych had
made significant statements and substantial progress on EU
relations. Yanukovych had affirmed that European integration
remained a priority goal of Ukrainian foreign policy and that
he was still working toward WTO membership. Dir noted
Ukraine and the EU were progressing toward negotiations on a
successor basic agreement to the Ukraine-EU Partnership and
Cooperation Agreement, due to expire in March 2008. Ukraine
hoped to include a reference to "association" in both the
title and text of the new basic agreement; the European
Commission had prepared a draft text with the likelihood that
it would receive negotiating authority by year's end.
Ukraine also hoped to initial or formalize in some other way
an understanding regarding a visa facilitation agreement
during the October 27 summit in Helsinki. The pace of
preparations was picking up, with five more bilateral
meetings scheduled before the summit. End summary.


2. (C) During a September 15 meeting, Acting Director of
MFA's European Union Department Ihor Dir bemoaned the fact
that media reporting had focused almost exclusively on PM
Yanukovych's comments regarding NATO during his September 14
visit to Brussels. In fact, Dir asserted, Yanukovych had
made significant statements and substantial progress in
Ukraine's relations with the EU in several areas. Dir
himself had traveled with Yanukovych's party, which arrived
late on September 14 then started the next day's program at
7:00 a.m., and participated in the Ukraine-EU Cooperation
Council session. He had not accompanied Yanukovych to his
NATO meetings or participated in Yanukovych's lunch, with its
more restricted guest list, when regional foreign policy
issues such as Transnistria had been discussed.

Affirming Ukraine's Existing Goals
--------------


3. (C) Media reports of Yanukovych's press conference in
Brussels track Dir's account, but Dir also highlighted the
fact that Yanukovych had clearly stated that European
integration was a priority task of Ukrainian foreign policy.
During the Cooperation Council meeting, both sides reviewed
progress under the Ukraine-EU Action Plan, with generally
laudatory EU comments regarding progress in many areas, but,
as Yanukovych himself told the media, the EU side noted
further progress that Ukraine needed to make regarding
efforts to combat corruption and improvements in the
investment climate, especially for small and medium
enterprises. The EU, however, cited the March parliamentary
elections as good evidence of Ukrainian progress toward more
democratic structures and practices.


4. (C) During a fairly extended discussion on the topic,
Yanukovych had also said his cabinet would put a priority on
WTO accession and assured his EU counterparts that he would
work to achieve WTO membership as quickly as possible.
Regarding a possible free trade agreement, Dir said Ukraine
and the EU had held three to four rounds of unofficial
consultations since May. Such consultations should continue
as long as they made progress, even if the EU side had not
received official authorization to negotiate.

The Next Basic Agreement
--------------


5. (C) Noting the current Ukraine-EU Partnership and
Cooperation Agreement was due to expire in March 2008, Dir
said Yanukovych has also discussed a new "basic treaty"
defining Ukraine-EU relations. Negotiations needed to start
soon, Dir observed, in order to allow time for negotiations
plus the ratification process by 25, soon to be 27,
parliaments on the EU side. EU representatives had informed
the Ukrainian delegation that the European Commission had
finished a draft text and was circulating it among EU member
states in order to receive authority to initiate
negotiations, which should start in early 2007.


6. (C) Dir also discussed the importance of the new basic
agreement's name, arguing that the word "association" needed
to be incorporated into both the title and text. The
successor to the current agreement needed to be an
enhancement of the current agreement. This enhancement
needed to be reflected not just in its specific terms but
also by referring to the new agreement as one of

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"association" so that the general public would immediately
understand its importance. "Everyone understands that
'association' is a closer and deeper relationship than either
'cooperation' or 'partnership,'" Dir observed. Ukraine would
not insist that association meant an automatic right to EU
accession, but wanted an acknowledgement that, by virtue of
its geographic location, Ukraine was eligible for membership.
Ukraine was hoping for a political signal at the Helsinki
Ukraine-EU summit that the new basic agreement would be a
type of agreement on association.

Visa "Facilitation" versus "Visa-free"
--------------


7. (C) Dir said Ukraine expected some result at Helsinki
after two years of negotiations over a visa facilitation
agreement. Both sides were continuing to make progress over
the remaining technical issues, but the approval process on
the EU side would not allow a visa-facilitation agreement to
be signed by the Helsinki summit. Dir hoped for some kind of
"formalizing" of the draft text during the summit. He also
noted Ukraine would view the visa facilitation agreement as
the first step to free movement in both directions across the
Ukraine-EU border.


8. (U) Third Secretary Serhii Leshchenko from Dir's office,
and Dir's notetaker at our meeting, had earlier explained to
us what a visa facilitation agreement provides for Ukrainian
travelers. Although EU citizens can travel visa-free for up
to 90 days to Ukraine, EU member states currently apply very
strict requirements on Ukrainian citizens. Typically, a
Ukrainian will receive a visa for a few days duration that
covers the dates of his/her travel. The visa facilitation
agreement would relax these requirements so that a qualified
Ukrainian would receive a one-, two-, or five-year, multiple
entry visa as a matter of course. The agreement would also
standardize the documents and fees required.


9. (C) While the visa facilitation agreement was at the point
of being initialed, the sticking point was the EU insistence
that Ukraine accept a "readmission agreement." Leshchenko
confirmed that the agreement required Ukraine to accept
illegal immigrants deported from the EU if the illegal
immigrants had entered the EU from Ukraine. Ukraine was
objecting on the grounds that the agreement would impose
costs on Ukraine in terms of expanded detention facilities
and deportation in turn of the illegal immigrants to their
country of origin. The Ukrainians were arguing for a
three-year suspension of the terms of the agreement, which
was what Russia and the EU agreed regarding the EU-Russian
readmission agreement.

Technical Discussions
--------------


10. (C) Dir said Yanukovych's visit to Brussels had yielded
beneficial progress in other areas when members of his
delegation held separate meetings. (Note: Interfax reported
Justice Minister Roman Zvarych, DFM Volodymyr Khandohy,
Deputy DefMin Leonid Polyakov, and Deputy Energy Minister
Serhiy Titenko accompanied Yanukovych.) Participants had not
only reviewed current programs but also resolved to intensify
future cooperation. Deputy Energy Minister Titenko had
signed a Memorandum of Cooperation that resulted from a
broader agreement on energy cooperation signed at the last
Ukraine-EU summit. Members of the visiting party had also
met with representatives of the European Bank for
Reconstruction and Development and the European Investment
Bank to discuss a concrete project that could result in an
investment of 200,000-400,000 euros to develop a metering
system, currently lacking, for natural gas deliveries
throughout Ukraine. Other Ukrainian officials had also had
good discussions with their EU counterparts for Justice and
Home Affairs.


11. (U) While Dir had alluded to progress in preparations for
the Ukraine-EU summit, he said the pace was picking up with
five different meetings before the October 27 summit. He was
leaving for New York to participate in a September 19 EU
Troika Foreign Ministers' meeting. Ukrainian participants
would be involved in a COEST meeting in Brussels at the level
of political directors. In October, there would be two other
meetings, including a Political and Security Committee
meeting on October 12.


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