UKRAINE: NEGOTIATIONS STALLING OUT AGAIN?

C O N F I D E N T I A L SECTION 01 OF 02 KYIV 001180

SIPDIS

SIPDIS

E.O. 12958: DECL: 05/16/2017
TAGS: PGOV PREL UP
SUBJECT: UKRAINE: NEGOTIATIONS STALLING OUT AGAIN?

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


1. (C) Summary. Despite talk over the weekend that President
Yushchenko and Prime Minister Yanukovych would finalize a
political compromise that included early parliamentary
elections on May 16, talks between the two leaders fizzled
out as disagreements over the date of a new vote and what the
legal basis for the new elections would be remained
unresolved. Privately, Deputy Head of the Presidential
Secretariat Chaliy and PM Foreign Policy Adviser Gryshchenko

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told Ambassador that a possible way forward might be for
Yanukovych to dissolve the coalition; if a new coalition was
not formed within 30 days, the President would have the
explicit constitutional right to dissolve the Rada. Regions
MP Kolesnikov, a close ally of oligarch Rinat Akhmetov, told
Ambassador that some in Regions favored a different strategy:
the President would dissolve the Rada after 30 days without
quorum, but in exchange, Regions would get to implement
constitutional amendments that would effectively push the
election date back to October 28.


2. (C) Summary ctnd. Publicly, both PM and President
increased their public rhetoric before meeting. Yanukovych
told the Cabinet that elections would be a solution only if
there was a legal basis--a departure from his broader
endorsement of new elections on May 4--and said that he hoped
for a Constitutional Court ruling in the near future, as the
two Judges Yushchenko fired returned to work under a regional
court order. Yushchenko told the press that if nothing was
fixed by May 18, he would ask the NSDC to resolve the crisis
at its scheduled meeting. Publicly, their
seconds-in-command, First Deputy PM Azarov and NSDC Secretary
Plyushch, told the press that the two leaders had decided to
give the working group a couple more days to iron out key
differences.


3. (C) Comment. Although both sides have indicated that a
fall election might be acceptable, apparently neither side
was happy enough with the deal to finalize it. The
Ambassador continues to encourage all participants to find a
compromise and to reiterate that dramatic steps from either
camp may only jeopardize a political resolution. Some in
Regions again appear to be banking on the threat of a
favorable CC ruling against the President as a pressure point
against Yushchenko. Chaliy told Ambassador that the
President's team feels that the PM may be backing away from
early elections and that this is a "dangerous and uncertain
time" that might require strong presidential action, implying
that Yushchenko may be poised to use the NSDC to overrule the
Court or the Government to enforce his decree. Even if both
sides are simply ratcheting up the rhetoric in hopes of
getting a better deal in a political compromise, the longer
they go without a final agreement, the more likely it is that
elections will not take place until the fall. Such a delay
allows Regions time to increase social spending to bolster
its political standing and more opportunity to chip away at
Yushchenko's new-found popularity; he outranks opposition
leader Tymoshenko for the first time in more than a year.
End summary and comment.

No Progress Made in President-PM Talks
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4. (SBU) Although Plyushch and Azarov told the press on May
12 that the President and PM would decide on an election date
on May 16, the meeting between the two leaders, with Plyushch
and Azarov present, produced no results. In a briefing
afterwards, the two lieutenants said that the working group
would be given a few more days to work out remaining
disagreements, of which, Plyushch said, there were more than
they had originally thought. Plyushch indicated that he
believed constitutional amendments would be needed, although
the group would try to work around that. Azarov said that he
thought the problems could all be resolved through
legislation.


5. (SBU) Prior to the meeting, Yanukovych held a Cabinet
meeting at which he spoke of the possibility of elections,
only if the proper legal grounds were established, a seeming
backtrack from his May 4 agreement with Yushchenko that early
elections were part of the deal. He also demanded that the
full Rada get back to work and that the President start
signing laws passed by the Rada. Yanukovych also announced
that he planned for 40 percent increases in wages and 33
percent increases in pensions by the end of the year.
(Comment. The wage and pension increases, which could cause
fiscal problems if fully implemented, appear aimed at
building up popular support for Regions before elections take
place, probably one reason why Regions is pushing hard for a
fall election date. End comment.) Regions faction leader
Bohatyreva told Ambassador on May 15 that they could not help

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it if such social spending looked like it was
election-related; they were, she argued, simply part of an
economic policy that Regions had advocated all along.

Chaliy and Gryshchenko: Elections Need Legal Basis
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6. (C) Deputy Head of the Presidential Secretariat Chaliy and
PM Adviser Gryshchenko told Ambassador separately late on May
16 that there were two remaining points of dispute between
Yushchenko and Yanukovych: the date of the election and the
legal basis for holding the election. Gryshchenko said that
Regions is still committed to early elections, but there has
to be solid legal grounds, so that no one can challenge the
new vote later on. He said that they were considering having
Yanukovych dissolve the coalition and then refuse to form a
new one; this would invoke constitutional article 90, which
says the President can dissolve the Rada if a coalition is
not formed within one month.


7. (C) Chaliy also mentioned this scenario to Ambassador, but
he cautioned that his team was worried that Regions might
renege on the agreement on early elections. He said this was
a "dangerous and uncertain" time and he warned that strong
presidential action might be needed. He seemed to be
implying that Yushchenko might use the NSDC to move forward
on elections, which Yushchenko suggested publicly, although
he did not specify how.

Kolesnikov, Bohatyreva: Fall Elections Are Best
-------------- --


8. (C) Regions MP Borys Kolesnikov, the political yin to
Akhmetov's financial yang, told Ambassador late on May 16
that he did not think Regions dissolving the coalition itself
was a sound political strategy. Instead, the Rada would stop
meeting for 30 days, invoking constitutional article 82,
which says that without a two-thirds quorum, the Rada is not
competent. In exchange for agreement on early elections,
Kolesnikov argued that Regions should be allowed to amend
article 90, to avoid a similar political crisis in the
future. He added that amending the constitution requires two
votes in two separate Rada sessions, so by his timeline new
Rada elections would take place October 28. Early September
was bad anyway, he stated, because it would mean a summer
campaign. Kolesnikov also said that BYuT was comfortable
with fall elections, with the condition that the threshold to
get into the Rada be raised from its current 3 percent.
(Note. Kolesnikov did not say to what level the threshold
might be raised, but conventional wisdom in the past has been
5-7 perecent. End note.)


9. (C) In a May 15 meeting, Regions faction leader Bohatyreva
also argued strongly to Ambassador that an October election
made a lot more sense--they needed to wait until people were
back at work and students back in school. She also said that
Regions wanted Our Ukraine and Yushchenko to have a higher
political rating than Tymoshenko and her Bloc. She argued
that that Regions and OU were the two parties that shared the
most similar ideology; her party's strategy would be to
advertise that similarity to the electorate. Regions
believed that Yushchenko had to demonstrate that he was
President of the whole country and that he needed to do it
quickly--after all, 2009 was not that far away. (Note. A
reference to the next presidential election. End note.)

Constitutional Court: Back to Full Capacity
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10. (C) Yanukovych announced at the May 16 Cabinet meeting
that CC Judges Pshenychniy and Stanik were back at work--on
May 15 a Donetsk court overturned Yushchenko's decrees firing
them, although a Donetsk appellate court froze that decision
on May 16 while it hears the case. The PM said that he was
hoping for a Court ruling in the near future. Kolesnikov
also gave the sense that some in Regions would like a CC
decision. Yushchenko's nominee to replaced Pshenychniy on
the Court, Stepan Havrysh, told the press on May 16 that he
expected a CC ruling by Friday May 18, and many press sites
are reporting that the CC has moved to consider the April 2
and April 26 decrees together. However, Judge Shyshkin told
us privately that although it was true that Stanik and
Pshenychniy had returned to work, the Court was not
considering either decree, but rather reviewing procedural
issues. Given that fact, he did not see how a decision could
be reached by May 18.


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