UKRAINE: LOOKING TOWARD AND BEYOND THE MARCH

C O N F I D E N T I A L SECTION 01 OF 03 KIEV 000520 SIPDIS E.O. 12958: DECL: 02/07/2016 TAGS: PGOV SUBJECT: UKRAINE: LOOKING TOWARD AND BEYOND THE MARCH PARLIAMENTARY ELECTIONS Classified By: Ambassador for reasons 1.4(a,b,d). ¶1. (C) Summary: A majority in the new Rada elected by the March 26 parliamentary elections will select a new Prime Minister, who will take the lead on forming a new Cabinet (with the exception of Defense and Foreign Ministers). Poll results have for months consistently suggested that at least three parties or political blocs that make it past the three-percent threshold will need to coalesce to form the constitutionally-required Rada majority. Various permutations are among the quite possible, but the leading likelihood is for a pro-reform re-alliance of the Orange Yushchenko-Tymoshenko-Socialist team to form. Such an outcome would bode best for Ukraine's pace of Euro-Atlantic integration, though it would potentially revisit clashing economic philosophies on display in 2005. That likelihood does not lead by much, however, and is far from guaranteed given the still bad blood between the erstwhile Orange Revolutionary comrades Yushchenko and Tymoshenko. Yushchenko could find it easier, even if distasteful, to join parliamentary forces with ex-PM and Party of Regions leader Viktor Yanukovych, the candidate of the archenemy camp in the 2004 presidential elections. A deal with Regions would bring in a government with which we could work, but which might slow-track some Euro-Atlantic vectors. ¶2. (C) A less likely Tymoshenko-Yanukovych accommodation would likely derail NATO aspirations, at least temporarily, while an even less likely Yanukovych-led majority with no Orange tint whatsoever would be a train wreck for Ukraine's Euro-Atlantic goals. A final possible result to contemplate would be stalemated negotiations and new elections, but that would depend on a significant number of forces in the new Rada seeing benefit from going through another election process within two months. For our part, the U.S. should continue to support democratic elections, to promote reconciliation and cooperation among pro-reform elements, and to push Euro-Atlantic integration of this pivotal country. We shall have to await the election results and post-election bargaining, however, before we will be able to judge near-to-medium-term prospects for progress. End summary. Constitutional reform requires Rada majority -------------- ¶3. (C) Under constitutional reforms that came into effect January 1, the Rada (parliament) elected March 26 will be empowered to form a majority that will in turn take the lead on selecting a Prime Minister (who will take the lead on naming his/her Cabinet, with the exception of Defense and Foreign Ministers, who will continue to be nominated by the President). If most reputable current polling numbers remain stable, it is highly likely that two of the top three parties in the race will need to work together to form the new Rada majority. The opposition Party of Regions led by Orange Revolution loser and last Kuchma-era PM Viktor Yanukovych has in the last several months been polling on average in the range of 25-30 percent. President Yushchenko's People's Union Our Ukraine (PUOU) lately has risen to around 20 percent. Support for ex-Orange PM Yuliya Tymoshenko's bloc (BYuT) has been struggling in recent weeks to stay at 15 percent. Of the other parties likely to make it over the 3-percent threshold into parliament (Socialists, Communists, Speaker Lytvyn),none appears likely to attract anywhere close to 10 percent. A few other parties have a slim chance to break 3 percent (ex-President Leonid Kravchuk's Ne Tak bloc, radical Socialist Natalya Vitrenko's People's Opposition bloc, and pro-democracy Pora-Reforms and Order bloc),while a couple dozen others are even worse-positioned to enter the 450-seat Rada. Yushchenko in driver's seat... -------------- ¶4. (C) Given the personal and political dynamics involved, as well as the still considerable power of the Presidency, Yushchenko's PUOU is most likely one of the parties that would be involved in a majority coalition-making deal. Of the three party leaders, Yushchenko is less of an anathema than Yanukovych and Tymoshenko in this three-way dynamic. The mutual distrust between Tymoshenko and Yanukovych is probably more of an obstacle than the negative feelings either of them harbors toward Yushchenko. The relative attractiveness of the parties in any coalition will depend on how they do at the polls. Nonetheless, whether any of the three will be able to come to an understanding with one or the other will depend on their ability to put practical politics over personal sentiments. ...but not by himself -------------- ¶5. (C) It is important to note that, unless the numbers of these three groups improve at the polls in March, any two would still need to join with a third or fourth bloc to achieve a majority. Moroz's Socialists and or Speaker Lytvyn's bloc are the most likely to be brought into a majority coalition, both because of their relative strength at the polls and because of their relatively acceptable ideologies. These parties' potential king-making role could give them considerable influence in coalition talks. Have we got a deal for you! -------------- ¶6. (C) A Yushchenko-Tymoshenko deal, despite the still strongly felt falling-out, remains a real possibility. Such a force would likely result in the greatest continuity in GOU policies, both domestic and foreign. A Western-leaning, Euro-Atlantic integrationist approach would continue. Economic policies would also likely remain pro-reform, but an important question would be the extent to which Tymoshenko learned from the mistakes of her less-than-market-based approaches she adopted during her stint as PM. Perhaps a positive indication is that in her last weeks as PM she had begun talking the talk of a more market-based approach to resolving problems. ¶7. (C) The question of which party gets the Premiership and the predominant influence over policies will to a great extent be determined by the March vote results. The better the showing of PUOU vis-a-vis BYuT, the more favorable an environment for policy decisions we would like to see. For instance, if PUOU were to take the Prime Ministry, the next GOU would be less likely to pursue questionable policies such as reprivatization. Stranger things have happened... -------------- ¶8. (C) Perhaps the second most likely Rada coalition would involve PUOU and Regions. If Yushchenko and Tymoshenko prove unable to overcome their differences (perhaps because of a Tymoshenko insistence on becoming PM),the strange bedfellows combination of 2004's archenemies could be the result. There is a precedent: the two signed a September 22, 2005 MOU that led to the approval of PM Yekhanurov and lent renewed legitimacy to Yanukovych and Regions after the elections travesty of 2004. The March 2006 vote results, once again, would be key in determining the two forces' relative strengths. Were Regions to lead PUOU in the polls by 8% or more, it may feel little reason to compromise on a candidate for the PMship. Despite the pro-Russia stance of Yanukovych, however, we would likely see a continued, albeit slower, movement toward the West. Just as then-President Kuchma found it in Ukraine's interest to have a "multi-vectored" foreign policy, a GOU led by a strong Party of Regions element would likely find it useful to maintain as much leverage as possible against the influence of its northeastern neighbor. Macroeconomic policies would likely remain acceptable. The danger of a return to power of forces keen on robbing the state on behalf of their and their cronies' personal interests would have to be closely watched. ...but not stranger than this -------------- ¶9. (C) The least likely pairing among this threesome would be Tymoshenko and Yanukovych. Overcoming mutual distrust and personal distaste would be very difficult. However, were both unable to reach a deal with Yushchenko and company, they would be left to consider their mutual interests in regaining influence over the government (whatever their conflicting motivations). Such an outcome would be worst for U.S. interests, as the Yushchenko team's pro-reform, pro-West policies would be seriously derailed. Even if macroeconomic policies did not suffer too much, the prospects of market-oriented reform could be dimmer. Moreover, significantly increased corruption would seriously affect their impact. NATO membership would lose even lip service support, while EU membership might remain a stated goal, but would be less vigorously pursued. The anti-Orange possibility -------------- ¶10. (C) Two other possibilities are worth mentioning. If some opinion polls are to be believed, there is a potential majority coalition that would involve Regions, but neither Yushchenko nor Tymoshenko's blocs. While unlikely, the March vote could result in a majority of Rada seats going to Regions, Speaker Lytvyn's bloc, ex-President Kravchuk's Ne Tak coalition, and radical Socialist Vitrenko's group. While such a coalition would require bringing together a diverse group, all but the last of these forces are driven more by a hunger for power (and spoils) rather than ideology. The attraction of an unspoiled anti-Orange coalition might drive the groups together. And if Vitrenko and company do not make it into the Rada, the more ideological Communists could conceivably be convinced to join forces. Foreign policy directions would turn even more toward Moscow. Even the specter of a reversal of some civil society gains would threaten, although most observers think that the civic freedoms cat cannot be rebagged. Doing it all over again? -------------- ¶11. (C) Finally, it is conceivable that the forces that make it into the Rada in the March elections will not be able to make the compromises necessary to form a majority. Constitutionally, they have 30 days after taking their seats to form a majority and 60 days after the divestiture of powers of the Cabinet to appoint a new Cabinet. If they fail to do so, the President, after consultations with the Rada and Rada faction leadership, may dismiss the Rada, and new elections are held within 60 days. Presumably, for this to happen, significant forces would have to calculate that they could do better in new elections. U.S. approach should remain as is; we can calibrate later -------------- -------------- ¶12. (C) Our approach should be to continue to support democratic elections in March. With the unlikely exception of a majority coalition that excluded both Yushchenko's and Tymoshenko's forces, the USG should be able to work with the government put together by the majority that eventually emerges. A Yushchenko-Tymoshenko alliance still would bode best for reform prospects, and so we should continue to encourage these pro-reform elements to work together. Whatever government results, we will be seeking to promote Euro-Atlantic integration of Ukraine. The March elections will determine in the near-to-medium term the overall pace of Ukraine's own progress, but, as we have seen over the past year with a purely Orange government in place, progress is unlikely to be simple, swift, smooth and steady no matter what the results. ¶123. (U) Visit Kiev's classified website: www.state.sgov.gov/p/eur/kiev. HERBST