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2006-09-22 14:12:00
Embassy Kyiv
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DE RUEHKV #3674/01 2651412
P 221412Z SEP 06
						C O N F I D E N T I A L SECTION 01 OF 02 KIEV 003674 



E.O. 12958: DECL: 09/22/2016

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

C O N F I D E N T I A L SECTION 01 OF 02 KIEV 003674



E.O. 12958: DECL: 09/22/2016

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

1. (C) Summary: Newly-appointed head of the Presidential
Administration Viktor Baloha told the Ambassador September 19
that he was ready to engage with the U.S. to ensure that the
Millennium Challenge Corporation (MCC) Threshold
Anti-Corruption Project was a success and was eager to get
started on a proposed USG-funded program to reform the
Secretariat. Baloha acknowledged that this past week's

public "war of words" regarding Ukraine's future NATO
membership was an issue for his office and that it was
important for Ukraine to speak with one voice, especially on
foreign policy. However, he also noted that President
Yushchenko believed in the Universal signed in early August
and would hold PM Yanukovych's government to the text.
Baloha also noted that Ukraine had publicly supported the
Finnish Presidency's EU statement regarding the September 18
referendum in Transnistria. End Summary.

2. (C) Comment. The appointment of 43-year old Baloha, the
former Minister of Emergency Situations in the Yanukovych and
the previous orange governments, to replace Oleh Rybachuk as
presidential chief of staff has been rumored for months.
Baloha comes with a reputation as a "get it done" man who was
very responsive to us as Minister, particularly with regard
to Ukraine's response to Avian Influenza and
Chornobyl-related issues. However, he also comes with
earlier baggage from his Transcarpathian business-political
background, where allegations of corruption were rife.
During his meeting with the Ambassador, Baloha impressed us
as sincere in wanting to work closely with us to improve the
Secretariat's efficiency and committed to getting the office

organized -- something that his predecessor (who considered
his primary job to give straight unfiltered information to
the President) was not able to do. At the conclusion of the
meeting, Baloha's press secretary told the Ambassador that on
Baloha's first day at the office, he had called a general
meeting of the Presidential Administration staff and told the

assembled group that he would soon appoint deputies to run
different parts of the Secretariat, but that his goal was to
reduce the total number of staff. According to his press
secretary, this had caused anxiety among some long-time

staffers about the security of their jobs. Baloha plans to
bring long-time top aide Katerina Rogach, with him from the
Ministry of Emergency Situations to run his personal office.
End Comment.

Secretariat Reform on Top


3. (C) The Ambassador led off the meeting by congratulating
Baloha on his new position and raising President Yushchenko's
earlier request for U.S. assistance in reforming the
Presidential Administration. The Ambassador noted that work
had not really begun due to pre-election and post-election
issues. However, if Baloha was ready to work with us on this
project, we were ready to start. Baloha said that he was
ready to move ahead quickly with the project and that if the
group of U.S. experts was prepared to meet, then he was
prepared to receive them immediately. He noted that after
months of political crisis and change, the government
situation was stable and it was "time to move to the next
level" of work. Baloha said that he was ready to personally
lead this project and ensure that the experts had access to
the Secretariat at the most senior levels.

MCC - Ready to Make it Work

4. (SBU) Turning to Ukraine's MCC Threshold Anti-Corruption
Program, the Ambassador gave a brief explanation about this
new form of USG grant-based assistance, reviewed the criteria
for participation and discussed the process of moving from a
threshold to an MCC compact country. The Ambassador noted
that Ukraine had done very well in all areas except for
anti-corruption and that's why an anti-corruption threshold
program had been proposed. He asked for Baloha's personal
involvement in and support for the MCC program, and suggested
that Baloha appoint someone in his office to work with us.
Baloha knew of the project, noting that the USG had submitted
the project to the Government, and signing and approval was
expected soon. He cautioned that he was ready to move
forward as soon as Government approval was obtained.

5. (SBU) Baloha asked whether there were particular
obstacles that could block MCC's success; the Ambassador
responded that only official GOU agreement was needed at this
point and then we were ready to go. There are several
components to the MCC program, including one involving civil
society that would receive input from the NGO community. The
Ambassador noted that a contractor had already been selected
(award pending a signed agreement) and that tenders for the

KIEV 00003674 002 OF 002

other components were ready to go as well. Baloha stressed
that President Yushchenko was very enthused about the program
-- both the anti-corruption program and the possibility of a
full compact in the future. The Ambassador thanked Baloha
for his interest, emphasizing that we would need help from
the Cabinet of Ministers, key ministries and the Presidential
Administration if MCC was to succeed. Baloha said that he
was ready to help and asked the Ambassador to stay in close
touch and to offer advice as the program proceeded.

Finding Ukraine's One Voice

6. (C) In response to the Ambassador's comments about the
lack of agreement in the many public official Ukrainian
statements about NATO membership over the past few weeks,
Baloha agreed that this was a real concern - especially in
the eyes of the world that did not understand who was
actually speaking for the country. Baloha confided that this
issue "makes me nervous" and noted that each morning
President Yushchenko meets with PM Yanukovych and Rada
Speaker Moroz in order to coordinate their positions and
discuss these issues. However, that had not been enough to
head off these public disagreements. In Baloha's view, the
root of the problem is that constitutional and political
reform that had begun in Ukraine had not yet been completed.
There were inconsistencies in the constitution that needed to
be fixed and that problems connected with them also needed to
be fixed.

7. (C) Baloha noted that he was also concerned about
stresses within the anti-crisis coalition. He expected Our
Ukraine to eventually join and sign a new coalition
agreement. However, in Yushchenko's view, the key document
is the Universal and that is the document upon which
relations between the presidency and the government should be
based. According to Baloha, Yushchenko had reacted according
to the Universal when he criticized the Prime Minister
publicly for his Brussels remarks on NATO membership. Baloha
predicted that Yushchenko would continue to refer to the
Universal when discussing several key issues for Ukraine --
the status of Russian language, NATO membership and, more
generally, Ukraine's Euro-Atlantic aspirations.

8. (C) For example, Yushchenko had been angered by the
decision of the Party of Regions to propose draft legislation
in the Rada to give Russian the status of an official
language and termed the move "not constructive" and "in
contradiction to the text of the Universal." With regard to
Euro-Atlantic integration, Yushchenko was convinced that the
PM's remarks regarding Ukraine's "unpreparedness" to enter a
MAP had been incorrect and that the PM did not have the
authority to change the overall foreign policy course of the
country. In the view of Baloha (and Yushchenko), the PM did
not have the same constitutional competency to define foreign
policy as the President did. The Ambassador repeated EUR A/S
Fried's message during his visit to Kiev - that the door to
NATO is open, but it was up to Ukraine to do the work and to
choose the right time and pace for a decision.

9. (SBU) In another key foreign policy area, Transnistria,
Baloha told the Ambassador that the position of Yushchenko --
and Ukraine -- was unchanged; that Ukraine supports the
territorial integrity of Moldova. Therefore, Ukraine had
joined the statement of Finland, on behalf of the EU
Presidency, in noting the unacceptability of the referendum
in Transnistria on September 18. In Baloha's opinion,
Ukraine had the same view of ongoing events in Georgia and
the possibility of a referendum in South Ossetia. Baloha
noted the importance of continued stability in both Moldova
and Georgia for Ukraine.

So When is Bush Coming?

10. (SBU) Baloha concluded the meeting by asking when
President Bush would be able to visit Kiev, expressed regret
that an earlier trip planned for this year was postponed.
The Ambassador explained the circumstances of the earlier
postponement and reiterated the importance of seeing how the
new Prime Minister and Cabinet governed the country before we
could move ahead with considering a visit. He noted that the
President was very interested in making a visit, but that
there were no concrete plans yet.

11. (U) Visit Embassy Kiev's classified website: