C O N F I D E N T I A L SECTION 01 OF 03 KYIV 004295

SIPDIS

SIPDIS

E.O. 12958: DECL: 11/16/2016
TAGS: PREL PGOV UP
SUBJECT: UKRAINE: EMBATTLED FM SUPPORTS ENGAGEMENT WITH
YANUKOVYCH - "HE HAS CHANGED"

REF: KYIV 4285

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


1. (C) Summary: "Orange" and embattled Foreign Minister
Borys Tarasyuk told visiting EUR A/S Fried that the U.S.
approach to PM Yanukovych and the Party of Regions coalition
was correct, arguing that Yanukovych had changed for the
better. He noted that the PM's upcoming U.S. visit, and his
desire to change his image (badly tarnished in 2004), gave us
the opportunity to challenge the PM to maintain the pace of
democratic reforms in the country -- something that we could
assess through his concrete deeds. The FM said that the new
government was now united in moving forward on WTO,
suggesting that Ukraine could be a full member in the
organization by mid-February 2007. Tarasyuk also described
Ukraine's relations with Russia, Moldova and Georgia, and
worried about the negative affect of difficult Polish-German
relations on Ukraine. End Summary.


2. (C) Comment: Tarasyuk met with Fried after a long day
answering tough questions from the Regions-dominated Rada
over his performance as FM over the past few months. As
described reftel, the Rada will decide whether or not to vote
on whether Tarasyuk will remain at the MFA the week of
November 28. Therefore, it was surprising to hear Tarasyuk
endorse our policy of engaging the PM and judging the new
government on the basis of its concrete actions rather than
past misdeeds of its members. Tarasyuk had little to say
about his Rada appearance, except to argue vigorously that
the charges of corruption against his colleague at the
Defense Ministry, Anatoliy Hrytsenko, were misplaced, since
the events under discussion had all taken place prior to
Hrytsenko's start at the Ministry. End Comment.

On The Right Track - Engaging Yanukovych
--------------

3. (C) Tarasyuk began the conversation by noting that the
U.S.-Russian agreement on a WTO bilateral had made it easier
for Ukraine to move ahead. The President, PM and Rada
Speaker had all agreed, and Tarasyuk predicted that Ukraine
could join by mid-February 2007. In the FM's view, the

coalition was on track for now, but President Yushchenko
still wanted to unite the country, and in his mind, that
meant cooperation between Regions and Our Ukraine political
forces was key. Yushchenko was committed to pursuing a
cooperative course, but he was not extremely optimistic about
its success.


4. (C) Nevertheless, Yushchenko's continued push toward
cooperation had shown results. Referring to a 7-hour meeting
November 13 between Yushchenko and Yanukovych, the FM noted
that the PM had been more restrained in his comments over the
past few days -- a change from the past weekend when the PM
had personally and publicly attacked Tarasyuk in the press.
He said that at the opening of the November 15 cabinet
meeting, the PM had spoken in a measured tone about his
"orange" ministers, noting that he had "no complaints" about
their performance. The problem, in Yanukovych's view, was
that these ministers needed to define themselves politically
-- were they in the opposition or not? This new restrained
tone was a direct result of the November 13 meeting and
Tarasyuk said that Yushchenko was determined to continue to
seek regular meetings with the PM.


5. (C) Tarasyuk argued that preserving democracy in Ukraine
was task number one and above politics -- and Yushchenko, as
guarantor of the constitution, had done what he had to do
when he agreed to make Yanukovych PM, In Tarasyuk's view,
Yanukovych was "different" in 2006 than he was in 2004 and
both Yanukovych and Yushchenko were learning to deal with
each other as "ex-adversaries." Tarasyuk quipped, "we (their
advisors) are also learning," however, Yanukovcych's team is
"much more negative on working together" than the PM is.
Although the PM's team is not pro-Yanukovych "anti-democratic
in principle," they are tempted to work in the shadow
economy. But as time passes, Tarasyuk said that he is
increasingly convinced that if Yanukovych and Yushchenko work
together, the country will benefit politically.


6. (C) Even on NATO, Tarasyuk stressed that Yanukovych had
changed for the better; only the tactics differed now between
Yushchenko and Yanukovych regarding eventual membership.
Tarasyuk noted that this was a leap for Yanukovych - in the
2004 and 2006 elections, Yanukovych had been a stalwart
opponent of ties with NATO. The problem now was the strong
current of feeling against NATO membership within the Regions
Party and the Yanukovych-led anti-Crisis Coalition. The key
issue was MAP and Yushchenko was working this hard. But
anti-NATO feeling in the party and the coalition will make it

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hard for Yanukovych to move ahead toward NATO.


7. (C) Tarasyuk said that the U.S. strategy to challenge
Yanukovych to remain committed to democratic reform in
Ukraine and judge him by his concrete deeds was correct.
Like Kuchma, Yanukovych knows that he has an image problem in
the West, but unlike Kuchma, Yanukovych is determined to
change it, particularly in Washington during his December
trip. Tarasyuk said that the PM wants to overcome his image
from 2004 and his reputation as a pro-Russian, non-democratic
oligarch. In fact, the "pro-Russian" image of the Party of
Regions government was a myth. No one in the government
wanted to be under Russian control and Ukrainian businessmen
did not want Russian business on their turf.

The Neighbors - Views of Russia, Georgia, Moldova
-------------- --------------

8. (C) A/S Fried asked about the rumors that in a "grand
deal," the new government would be willing to exchange NATO
membership, a longer lease for the Russian Black Sea Fleet
and even democracy in order to get cheap gas from Russia.
Tarasyuk said that wasn't true, and noted that the Yanukovych
team was convinced that it now had a solid three year deal
with Russia for natural gas priced at 130 USD/tcm, In
Tarasyuk's opinion, Yanukovych had made setting the gas price
his number one priority upon taking office -- and now that a
deal had been reached, he felt that the pressure from Russia
was off. Fried mentioned that the U.S. had no desire to
encourage Ukrainian tension with Russia. In fact, the
Russians had a tougher task - encouraging Ukraine to stay
distant from the West - and that would be harder to achieve.


9. (C) Prefacing his comments regarding Georgia with the
statement that "the President has enormous constitutional
powers in foreign policy," Tarasyuk stated that there would
be no change in Ukraine's supportive policy toward Georgia -
the MFA was in charge. Tarasyuk acknowledged that the
Georgians needed to work harder to establish good relations
with the new government, especially between the two prime
ministers, similar to the close relationship that he had with
his counterpart. He acknowledged that some in the
Yanukovych/Regions team were uncomfortable with Ukraine's
Georgia policy, but that this policy was firmly under
Yushchenko's control. Unlike the Moldovans, the Georgians
were moving in the right direction although Tarasyuk noted
that the Georgian actions over the past months, (e.g. the
handling of the four accused spies) had been taken as a
personal insult by Putin.


10. (C) Tarasyuk said that as a neighboring country, the
situation regarding Moldova was different. On the positive
side, the new Ukrainian government had accepted the need to
honor the customs agreement, support EUBAM, etc. And all
understood that it was not possible to return to the Kuchma
period when the border was simply a huge smuggling zone.
However, the Moldovans were "difficult people to work with"
and their "selfish behavior" did not allow them to see that
the Ukrainians were carrying the major burden of the current
policy. For example, the Ukrainians had long used the
shortest railway connections to transport goods to and
through Moldova. However, now that they had agreed to use
the longer route, the Moldovans had taken advantage of the
situation by increasing the tariffs on Ukrainian trains.


11. (C) The previous government had worked hard to change
this situation, but the new team had less patience. They
told the Molodovans to stop it -- and when they refused, the
new government said that they would close the bridge and cut
connections. And that is what they did. Although the
Moldovans complained to the OSCE, the U.S. and the EU, that
they were the "victims," the Moldovans had contributed to the
situation. Despite this, according to Tarasyuk, Ukraine
remains firmly committed to the negotiations, noting that he
had raised with Lavrov during his Kyiv visit the importance
of re-starting the 5 2 talks -- and Lavrov agreed in
principle. Even on the negotiations front, the Moldovans
were complicating the issue by continuing to talk bilaterally
with the Russians on resolving the situation.

Polish-German Relations - A Problem for Ukraine
-------------- --

12. (C) Tarasyuk said that he remained very concerned that
rocky atmospherics between Poland and Germany were hurting
Ukraine, especially as Germany prepared to take over the EU
Presidency. He said that the Ukrainians had been working to
get Poland, as Ukraine's key advocate in Europe, back into
Germany's good graces. Tarasyuk urged the U.S. to use our
good relationship with Angela Merkel to increase German
interest in Ukraine and closer Ukrainian relations with the
EU. Tarasyuk noted that it has already been two years since

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a high-level German official agreed to visit Ukraine.


13. (U) This cable has been cleared by A/S Fried.


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