UKRAINE: PM YANUKOVYCH TELLS A/S FRIED: UKRAINE'S

C O N F I D E N T I A L SECTION 01 OF 03 KYIV 004302

SIPDIS

SIPDIS

E.O. 12958: DECL: 11/17/2016
TAGS: PREL PGOV UP
SUBJECT: UKRAINE: PM YANUKOVYCH TELLS A/S FRIED: UKRAINE'S
EUROPEAN CHOICE HAS BEEN DECIDED

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


1. (C) Summary. PM Yanukovych told visiting EUR A/S Fried
and Ambassador November 16 that he was determined to bring
Ukraine to Europe, meaning the WTO soon, and eventually into
the EU and NATO. The latter would take time, both to change
currently ambivalent public opinion and also to strengthen
Ukraine,s economic position, including developing energy
alternatives to Russia, particularly through cooperation with
Kazakhstan and Azerbaijan. Yanukovych was defensive about
the Orange Revolution but conciliatory toward Yushchenko,
whom he clearly (and possibly accurately) believed to be
beaten politically. He said that he shared the strategic
objective of a European future with Yushchenko, but differed
on tactics and timing.


2. (C) Comment: The PM is no born democrat, and probably not
even a born-again democrat. Still, two things came through
that we can make use of: Yanukovych clearly wants respect
and, in particular, to get rid of the label of having been
the villain of the Orange Revolution. Second, though
Yanukovych does not think in terms of values, he does seem to
be thinking in terms of Ukraine,s national interest, its
sovereignty, and its freedom of action, especially vis a vis
Russia. Yanukovych seems to want, in other words, to be the
leader of a sovereign country, not a stooge of the Kremlin.
This give us something to work with, including during his
December 4-5 visit to Washington. End Summary and Comment.

Lunch with the Hunter
--------------


3. (C) EUR A/S Fried and Ambassador had lunch November 16
with PM Viktor Yanukovych and two of his foreign policy
advisers, Konstantin Hryshchenko and Andriy Fialko. Fried
stressed to Yanukovych how important his scheduled meeting
with the Vice President in Washington would be in presenting
a new face for himself and changing perceptions of his role
in the 2004 Presidential elections. The Vice President would
listen carefully to Yanukovych's vision for Ukraine's
direction, its energy policy, and relations with Russia and
Central Asia. The U.S. considered that Yanukovych had
prevailed in post-election maneuvering through the democratic
process and would work with him on that basis. Ukraine's
internal politics were not the USG's concern; Ukraine's
policies were.


4. (C) Yanukovych, who in a November 5 lunch with Ambassador
had bragged how he had brought down three boars from 70
meters with single shots, replied that "I am a hunter; I know
how to be patient and when to take the right shot." He had a
vision and a strategy for Ukraine which was in line with
Yushchenko's; the differences were over the tactics, and what
speed to pursue the strategic goals. On the WTO, Yanukovych
said the recent U.S.-Russia bilateral agreeemnt was an
incentive for Ukraine to finish quickly; he intended to
complete all steps by mid-December to allow for possible
accession in February.


5. (C) Yanukovych claimed to be doing everything possible to
stabilize his relationship with Yushchenko and form an
effective partnership (note: the pair met for eight hours
November 13). Yanukovych and Regions wanted a strong
President with higher ratings, but Yushchenko had advisers
like Tarasyuk whose suggestions hurt the President. The
chief sticking point remained the presence in Yanukovych's
cabinet of ministers who claimed that they were in opposition
to the coalition government. Either they should state their
clear support for the government as opposed to their parties'
positions, or they should quit the cabinet, in which case
Yushchenko could name replacements, and Yanukovych would work
to secure Rada approval. (note: it appeared Yanukovych was
referring to all five remaining "orange" ministers - Foreign
Affairs, Defense, Interior, Health, and Youth/Family/Sports).


6. (C) Two times later in the conversation, the PM returned
to the theme of support for Yushchenko, affirming his "100%
support for higher ratings" for the President. He said the
only way to ensure a second term for Yushchenko was to give
him credit now for positive news on the economy. "I propose
that we shake hands and move forward together." And "after
the parliamentary elections I extended my hand in
partnership. I do so again. He thinks a lot; I act. We
both want a partnership."

Ukraine's European Choice
--------------


7. (C) Yanukovych claimed that Ukraine had already made its
European choice; the question of how to get there depended on
political will and capabilities. Ukraine could not enter

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Europe with a dirt poor population; it had to help them get
richer, convince them to work hard and not steal, clean up
corruption, and continue reform, including improving the
investment climate. A/S Fried suggested starting with
resolving long-standing investment disputes.


8. (C) Yanukovych said that "if he happened to bump into the
President" in Washington, he would make a pitch for help with
EU leaders, particularly Merkel, to give Ukraine a signal for
prospects, to show that the door was not shut in their face.
Yanukovych expressed a distaste for current Italian PM Prodi,
who as European Commission head in 2004, when Yanukovych was
previously PM, had categorically ruled out Ukrainian
membership. Ukraine needed a ten-year framework as an
incentive to reform and give it hope for eventual membership.
A/S Fried cautioned that Ukraine should not expect much on
membership from the EU, but the U.S. agreed on the importance
of keeping the EU,s door open until Europe was in a less
inward-looking frame of mind and Ukraine looked more like a
viable member.


9. (C) Turning to relations with NATO, Yanukovych asked to be
judged on actions, not words. He did plan to act, citing
Regions' support of the military exercise bill passed the
same day he had been named PM in August, a move criticized
only by pro-Russian radical Natalya Vitrenko. Yanukovych had
argued to the Regions Rada faction that the bill made sense
because: it supported the European choice; it was cheaper
than exercising alone; it prepared against possible terrorist
acts; and Ukraine's forces needed training. (note:
Yanukovych also disingenuously criticized his predecessors
for failing to secure earlier passage of the annual bill;
such efforts failed because Regions repeatedly voted against
it, both before and after the March elections, until they
formed the new Rada coalition majority).


10. (C) Yanukovych stated that he had budgeted for a NATO
information campaign (note: $600,000 in 2007, less than in
2006, and far less than what is needed. End note) and
claimed that, while at NATO September 14, he had asked NATO
SYG de Hoop Scheffer for programs and speakers for the
education campaign (note: Yanukovych took U.S PermRep Nuland
aside with such a request, but NATO staffers in Kyiv claim no
knowledge of such a request to the SYG. End note). The
effort would "probably" take three years, he predicted, to be
marked by a gradual increase in support, and decrease in
opposition. The three year period would extend past the
Russian Presidential elections in 2008.


11. (C) Returning to his hunter analogy, Yanukovych said that
there was a need to be patient, in the meantime improve the
economy, save and diversify energy, and become less dependent
on Russian gas. A quick move towards NATO now would lead the
Russians to raise gas prices to $180/tcm this winter, which
would drive the Ukrainian chemical and metallurgical sectors
into deep crisis and significantly decrease support for NATO.
Once Ukraine was stronger, it would be in a better position
to engage Russia on why Ukraine in NATO could be good for
them too. Internally, Ukrainians would not believe FM
Tarasyuk if he tried to assure them that NATO had no
intention of putting military bases on Ukrainian territory.
If he or his advisers gave the same assurances, Ukrainians
would believe them.

Energy, Russia, Central Asia, CIS
--------------


12. (C) In particular, Yanukovych stressed, Ukraine needed to
develop energy alternatives to escape Russian monopoly
control. In practical terms, this meant putting off a
confrontation with Russia in the near term, i.e., not
challenging current pipeline arrangements, but seeking
instead to work effectively with Kazazkh President Nazarbayev
and Azeri President Aliyev, whom Yanukovych respected and
liked, on non-Russian controlled gas supplies. (Note: This
may be wishful thinking, as A/S Fried pointed out, since
Russia will not easily allow Ukraine to escape the energy
"iron ring" that Moscow appears intent on constructing. End
note) Yanukovych also raised Ukraine,s long-term interest
in developing gas relations with Iran once the current
nuclear problem was resolved. Fried urged caution in any
approach to Iran.


13. (C) Yanukovych raised a companion political element to
cooperation with Kazakhstan and Azerbaijan: to mitigate
Russian regional domination. When he met with other CIS
leaders in Sochi in August, Yanukovych said they pleaded with
him not to allow Ukraine to leave the CIS, since Ukraine
provided the counterweight to total Russian domination.
Without Ukraine, they agreed, Putin would treat the remainder
as little brothers. Tarasyuk's suggestion that Ukraine leave

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the CIS had no benefits, only costs, he claimed.

Orange Revolution: celebration would be divisive
-------------- ---


14. (C) Yanukovych said he had urged Yushchenko not to
politicize the November 22 second anniversary of the Orange
Revolution. Ukraine should remember the events, recognize
the achievements and failures, and agree on the values of
freedom and democracy. But celebrating the anniversary would
be divisive.


15. (U) A/S Fried did not have the opportunity to clear this
cable.


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