Identifier
Created
Classification
Origin
06KYIV4298
2006-11-17 15:39:00
CONFIDENTIAL
Embassy Kyiv
Cable title:  

UKRAINE: DEFMIN HRYTSENKO ON YUSHCHENKO,

Tags:  PREL PGOV PARM UP 
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VZCZCXRO2429
PP RUEHDBU
DE RUEHKV #4298/01 3211539
ZNY CCCCC ZZH
P 171539Z NOV 06
FM AMEMBASSY KYIV
TO RUEHC/SECSTATE WASHDC PRIORITY 0406
INFO RUCNCIS/CIS COLLECTIVE
RUEHZG/NATO EU COLLECTIVE
C O N F I D E N T I A L SECTION 01 OF 03 KYIV 004298 

SIPDIS

SIPDIS

E.O. 12958: DECL: 11/17/2016
TAGS: PREL PGOV PARM UP
SUBJECT: UKRAINE: DEFMIN HRYTSENKO ON YUSHCHENKO,
YANUKOVYCH, AND THE FIRST 100 DAYS

REF: A. KIEV 3570


B. KYIV 4251

C. KYIV 4290

Classified By: Ambassador, reason 1.4 (b,d)

C O N F I D E N T I A L SECTION 01 OF 03 KYIV 004298

SIPDIS

SIPDIS

E.O. 12958: DECL: 11/17/2016
TAGS: PREL PGOV PARM UP
SUBJECT: UKRAINE: DEFMIN HRYTSENKO ON YUSHCHENKO,
YANUKOVYCH, AND THE FIRST 100 DAYS

REF: A. KIEV 3570


B. KYIV 4251

C. KYIV 4290

Classified By: Ambassador, reason 1.4 (b,d)


1. (C) Summary. Defense Minister Hrytsenko told visiting EUR
A/S Fried and Ambassador November 16 that President
Yushchenko's remote style interfered with his effectiveness,
that PM Yanukovych was the most reasonable of the Regions'
team in office and that the U.S. was right to seek to work
with him, and that the effort by some in Regions to unseat
him as Minister to gain control of defense property had
failed. Providing a sobering analysis of the first 100 days
of the Yanukovych cabinet in office, Hrytsenko said that the
level of transparency, accountability, respect for rule of
law, and checks and balances had degraded from the previous
two orange governments, and in some respects was worse than
in the latter Kuchma period. Were he not to be Defense
Minister, Hrytsenko said he would lead the NATO public
education campaign, which needed to be focused on democratic
values, not the military. End Summary.

Yushchenko's style prevents effective leadership
-------------- ---


2. (C) Hrytsenko, who recently removed all the Orange
Revolution pictures which previously had hung for 20 months
on the walls of his office, replacing them with standard
photos of the Ukrainian military in action, stated that
Yushchenko's style and lack of connection to his ministers
was a real impediment to effective leadership. The lack of
connection is less important now, with Yushchenko effectively
reduced to only several ministers, but when there had been
serious intra-orange fights in 2005 between Tymoshenko and
Poroshenko, Yushchenko's detachment had been debilitating,
assessed Hrytsenko.


3. (C) As Commander-in-Chief, Yushchenko had only conducted
three separate meetings with Hrytsenko in 21 months, not
counting group gatherings or visits of foreign officials; in
comparison, Kuchma met with Hrytsenko's predecessors one hour
weekly. "Yushchenko has no idea what is going on here." On
the flip side, Hrytsenko felt he had Yushchenko's full trust

and could do whatever was necessary to push reform in the
Ministry/Armed Forces.

Yanukovych - most reasonable of Regions
--------------


4. (C) Hrytsenko assessed Yanukovych as the "most reasonable"
of the Regions team in power. He agreed that Yanukovych
wanted to be a leader of a sovereign country, not a Kremlin
lackey, though questions remained whether Moscow held
leverage over Yanukovych, perhaps documents relating to his
criminal past. The U.S. was right to seek to work with
Yanukovych and invite him to Washington. Hrytsenko stressed
that he had never criticized Yanukovych, noting the only
disagreement had been one of values/policy tactics over
Yanukovych's MAP related statements at NATO Sept 14 (ref A).
Hrytsenko claimed there had been five attempts to push
questionable decisions against the law through the cabinet.
Hrytsenko had taken on 5-6 other ministers, once for two
hours, and another time for an hour and a half; eventually
Hrytsenko's position won the day, with Yanukovych's support.



5. (C) A Yanukovych-Yushchenko agreement must have saved FM
Tarasyuk in the Rada's Nov. 15 review of the performance of
Tarasyuk and Hrytsenko, thought Hrytsenko, since the
expectation had been that Tarasyuk would be forced out.
Yanukovych was seeking to work with Yushchenko, noted
Hrytsenko, because he understood that his own ratings would
inevitably drop as citizens reacted to the recent 200-300%
rise in utility costs. The more authority Yanukovych and
Regions accumulated, the more responsibility and blame they
would bear. Pre-term elections in the spring of 2007 could
not be ruled out, with a potential Constitutional Court
gambit in play (ref C).


6. (C) Hrytsenko caveated his positive assessment of
Yanukovych by noting that Yanukovych also chose the people
who were causing problems. How to apportion
responsibility/blame between him and his lieutenants was an
open question, but Yanukovych knew exactly what was
happening. Yanukovych would tell western interlocutors what
they wanted to hear. The questions were whether his
decisions were in line with those slogans, and whether a
democratically elected and chosen leader was acting in the
interests of democratic principles (see below).


KYIV 00004298 002 OF 003


Regions' attempt to remove Hrytsenko - greed, not politics
-------------- --------------


7. (C) Hrytsenko believed the high-water mark of efforts to
unseat him had passed; "there is no way they will break me; I
will never give up." The removal effort, which he claimed
was initiated by the circle around DPM/Finance Minister
Azarov was only "2 percent" about NATO and policy; it was
almost entirely about attempts to gain control of defense
property (ref B). When efforts to do so via the cabinet
failed "because they were illegal," they resorted to
blanketing the Ministry with investigators, and generating
politically motivated corruption charges. What was needed
was a change in the Prosecutor General (note: Medvedko),who
had done absolutely nothing to act against real corruption
but was allowing his office to be used as a tool to make
politicians vulnerable; that should not be tolerated.
Unfortunately, such pressure had become a "real, daily
practice." (note: the PGO's office filed corruption charges
against Interior Minister Lutsenko, another Yushchenko
loyalist, November 14, leading to Lutsenko to respond
publicly in similar terms as Hrytsenko did privately).

100 days - significant slippage in governance
--------------


8. (C) In addition to such pressure brought upon "Orange"
Ministers, Hrytsenko provided a sobering, largely negative
assessment of governance in the first 100 days of the
Yanukovych government, in terms of slippage of key
indicators: transparency, accountability, the rule of law,
and checks and balances. Certain "closed circles of power"
and actions had emerged that were even worse than the
standards of the Kuchma era, claimed Hrytsenko; the main
focus of the Regions team was for control over property and
funds, little else.


9. (C) The first such circle was controlled by DPM/Finance
Minister Azarov, who to an unprecedented extent now had all
levers of financing under his control: the governmental
financial transfers system; customs; tax authority; the Rada
Budget Committee (previously always given to the opposition,
even under Kuchma); the State Audit Committee; the Rada
Accounting Chamber; and even the Prosecutor General's office,
"through which means I'm not sure." There was no opportunity
for society, opposition MPs, or even other ministers to
initiate inquiries or bring pressure for adjustments. In the
past, when there were holes in the budget, the PM/government
could mandate adjustments to tax receipts. Now, when it was
clear there were budget gaps, there were none. For example,
the Prosecutor General's inadequate response to President
Yushchenko's decree to investigate the manipulation of VAT
refunds in August was to analyze the situation on August 1,
four days before Yanukovych and Azarov assumed office.


10. (C) A second closed decision circle covered fuel and
energy. While formally there should be lines from the PM to
DPM Kluyev to Energy Minister Boiko and NaftoHaz, Hrytsenko
had doubts that Kluyev was in the loop. Certainly it was the
case that the President was cut off from relevant
information, as was FM Tarasyuk, who had legal obligations
vis-a-vis agreements with other countries. Before, other
ministers in the cabinet were eventually brought into the
picture (note: a reference to the January 2006 gas deal); in
the current negotiations for Russian gas, there was no
information, and no control. Yanukovych had breached a red
line even Kuchma never did when he said publicly that Ukraine
might extend the Russian Black Sea Fleet presence beyond

2017. Posing a series of rhetorical questions, Hrytsenko
asked: was that part of an unwritten deal with Russia for
gas? Who recommended Yanukovych say that? And at what price
to Ukraine's other national interests?


11. (C) A third decision circle involved government property
and the State Property Fund (SPF). The SPF established the
methodology for valuation of state property; the SPF issued
licenses to the 4500 companies to assess real estate; and the
2007 budget gave the SPF a monopoly right to sell property on
behalf of the GOU. Past cases like the 2004 Krivoryzhstal
privatization showed the danger of a lack of transparency;
Hrytsenko claimed that in 2006, the MOD had lost 176 million
hryvnia ($35 million) in sale of MOD property without any
return financing to the Armed Forces, as expected.


12. (C) Hrytsenko's final example touched on opposition
oversight rights in the Rada, which he asserted were now
weaker than under Kuchma. In addition to control of the Rada
Budget Committee, there was the case of the commission
proposed by Tymoshenko to investigate the threefold rise in
household gas tariffs, unjustified since Ukrainian-produced
gas was meant to cover household use, unconnected to the

KYIV 00004298 003 OF 003


(rising) price of Russian gas. The Rada majority approved
the commission, but installed their own person as chair,
ensuring a non-investigation. In contrast, even though
Kuchma hated many Rada members and had something to worry
about concerning the 2000 Gongadze murder, he had let the
Rada's Gongadze Commission be led by the opposition.

NATO info campaign - still stillborn
--------------


13. (C) Hrytsenko said that if he were not Defense Minister,
he would lead an effective public education campaign that
could bring public support for NATO membership to above 50%.
The challenge was akin to selling a candidate (note:
Hrytsenko headed the policy shop for Yushchenko's 2004
Presidential Campaign),but it could not be done out of the
Ministry of Defense. While Hrytsenko actively gave
interviews in Kyiv and in provincial trips, as he had done in
Kharkiv earlier November 16, the words of the Defense
Ministers simply reinforced old stereotypes that NATO was
about armies, as opposed to democratic values. All the
ministers in the government, Tarasyuk aside, simply avoided
mention of the word NATO or of the necessary reforms
associated with accession which would improve the country and
people's lives.


14. (U) A/S Fried has cleared this cable.


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