UKRAINE: OLIGARCH AKHMETOV CONSIDERS STAYING OUT

C O N F I D E N T I A L SECTION 01 OF 03 KYIV 001507

SIPDIS

SIPDIS

E.O. 12958: DECL: 06/19/2017
TAGS: PGOV PINR UP
SUBJECT: UKRAINE: OLIGARCH AKHMETOV CONSIDERS STAYING OUT
OF PARLIAMENT NEXT ROUND

REF: KIEV 3304

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


1. (C) Summary: During a June 14 dinner, oligarch and Party
of Regions financier Rinat Akhmetov said he was considering
making a graceful exit from Parliament. He was disappointed
and frustrated with his role as a Parliamentary Deputy and
preferred to focus his efforts on his business activity and
on a 22-point economic reform plan that had been drafted by
U.S. consultants McKinsey and Company with the financial
support of his foundation. He had to find a way, however, to
surrender his Parliamentary seat in a way that could not be
interpreted as a falling-out with Prime Minister Yanukovych.
Akhmetov argued that a Regions-Our Ukraine coalition would be
the best outcome of September 30 pre-term elections and said
that he had been supportive of such a coalition since the
March 2006 parliamentary election. Both political groups had
to moderate their electioneering so that they could build
bridges to each other after the election. A Regions-Our
Ukraine coalition could also include Yuliya Tymoshenko in the
role of Parliamentary speaker and would set the stage for
Yushchenko's re-election as President in 2009.


2. (C) Comment: Akhmetov is a moderate within the Party of
Regions who, with his interest in market-oriented reforms and
promotion of a good investment climate, balances more
hard-line elements within the party. His departure from
Parliament could potentially mean that he would be less
involved in the implementation of the Party of Regions
specific policies. President Yushchenko, in public comments,
and Yuliya Tymoshenko, in private comments to Ambassador,
recently both praised Akhmetov's role in the Party of
Regions, and former NSDC Secretary Haiduk worked closely with
Akhmetov during the April-May political standoff to bring all
sides to a political compromise and to avoid violence.
Nonetheless, Akhmetov seemed to be 90% decided to leave
Parliament, although probably not until after the next
election. End summary/comment.


3. (C) During his trip to Donetsk (septels),Ambassador had
dinner June 14 with Ukrainian billionaire and Party of
Regions financier Rinat Akhmetov. Akhmetov admitted he had
been disappointed during his tenure as a deputy in Parliament
(Verkhovna Rada). Politicians were required to say what
their voters wanted to hear, so, frankly speaking, were
"under pressure to lie." As a businessman, Akhmetov said
that he made promises and was able to deliver. He had told
Donetsk residents that he would build a world-class hotel,
and he did. He had said he would transform the Donetsk
soccer team into a national powerhouse, and he did. Akhmetov
said he wanted to find a graceful way to exit from the Rada,
but he had to do so in a way that his departure would not be
interpreted as a falling-out with Prime Minister Viktor
Yanukovych.


4. (U) Akhmetov said U.S.-based McKinsey and Company had been
working with the Ukrainian government for the past three
months to develop a 22-point economic development program
that covered areas such as judicial, tax, and fiscal reform.
While his foundation had paid for McKinsey's work, his only
other contribution "was not to interfere." The program was
presented June 13 to President Yushchenko, who had responded
enthusiastically. Akhmetov commented the McKinsey program,
which incorporated "the best international practices," was
consistent with Yushchenko's approach, being progressive and
Western-oriented. The program had the potential to help
unite the country, since Yanukovych also was a strong
McKinsey supporter.


5. (U) His task was finding ways to advance the reforms,
Akhmetov said, with one approach being to attract the best
Ukrainian minds to his foundation, so that it could function
as an "independent auditor" that would not just say what the
President, Prime Minister, and Speaker wanted to hear.
Ukrainians needed to understand that globalization was an
inevitable process that would affect Ukraine and that Ukraine
could not build a fence around itself.


6. (C) Akhmetov noted that he had originally been reluctant
to run for a Rada seat, but had decided to do so after a long
conversation with Yanukovych. He had wanted to concentrate
on the work of his foundation. During the campaign, Akhmetov
had stressed three goals: to create economic growth, to
decrease unemployment, and to fight poverty. The idea of
working with his foundation and on McKinsey's economic
program appealed to him, but he had to leave the Rada in a
way that would not be seen as a betrayal of Yanukovych and
lose one or two percentage points of Regions' support. He
had no support in Western Ukraine, since he did not speak
Ukrainian and was not well known, but he had a strong base of

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support in his home of Donetsk. Showing that his mind was
not completely made up about whether or not to remain in the
Rada, Akhmetov also mused that, if he were to continue to be
a parliamentary deputy, he could ensure that the Committee on
Economic Policy considered the McKinsey program. (Note.
Given Akhmetov's personal clout, we suspect that it would be
easy for him to get the appropriate Rada committees to
consider the McKinsey program, regardless of whether he
remained in the Rada or not. End note.)

Pre-Term Elections
--------------


7. (C) From the beginning of the current political
uncertainty, Akhmetov observed, he had advocated that a
political settlement be reached before a Constitutional Court
decision was rendered. Had this been possible, an election
could have been avoided and a different coalition could have
emerged on the basis of the "Universal" agreement. Now, too
much water had gone under the bridge and the September 30
pre-term elections were the only solution. He was glad there
had been an agreement to hold elections on September 30.


8. (C) The conduct of the parliamentary election campaign
would be a determining factor whether a "broad coalition"
(between Party of Regions and pro-presidential Our Ukraine
bloc, OU) would emerge after the election, according to
Akhmetov. He had favored a broad coalition after the 2006
parliamentary elections, and he still did so. In Akhmetov's
view, both Regions and OU had to be careful to structure
their campaign messages in a way that would not set back the
process two or three years. When President Yushchenko had
referred to Party of Regions as "bandits" in 2004, the
name-calling may have been good for OU' ratings, but in the
future, such attacks should be avoided. Akhmetov said that
both sides should place the interests of the country above
their own narrow political ones.


9. (C) Akhmetov noted that he had warned Presidential Chief
of Staff Viktor Baloha and National Security and Defense
Council Secretary Ivan Plyushch that OU faced a dilemma
regarding its conduct of elections. Akhmetov laid out the
following analysis. If President Yushchenko wanted OU to get
two more percentage points of the vote, then OU should be in
sharp opposition to Regions. If OU did not do so, then Bloc
Yuliya Tymoshenko (BYuT) would steal votes from OU's support
base. If, however, Yushchenko thought about the country and
the 2009 presidential election, then he would moderate his
messages to the electorate with the tactic of losing some
votes now to gain more in two years. By his statements,
Yushchenko could split the country, or unite it.


10. (C) A democracy needed balance, noted Akhmetov. He
wanted to see Yushchenko reelected as president in 2009
because he was opposed to the concentration of too much power
in one hand, and had told Yanukovych as much six months ago.
In Akhmetov's view, the best outcome of the next elections
would be the return of Yanukovych to the prime ministership,
with current opposition politician Yuliya Tymoshenko as
Verkhovna Rada Speaker. Such an arrangement would ensure
that Yushchenko would stay on as president in 2009.
Ambassador noted that Tymoshenko had said something similar.
Her first preference would be a coalition of OU, BYuT, and
Lutsenko's People's Defense. If that were not possible, she
would prefer to see a coalition between Regions and OU,
because the alternative otherwise would be a coalition of
Regions, the Communists, and Nataliya Vitrenko's Progressive
Social Democrats.


11. (C) Akmetov reiterated his support for a Regions-OU
coalition, noting that within days of the 2006 parliamentary
elections, he had called a press conference in which he had
publicly called for a coalition between Regions and OU.
There would be no love between the two parties, just a
contract marriage, but such a coalition would be good for
Ukraine. He had made the same point privately to Yanukovych.
The conditions were now right for such a coalition to be
formed. The alternative, a Regions coalition with the
Communists and Nataliya Vitrenko's party, would put Ukraine
ten years behind and destroy prospects for further progress
on economic and market reforms. He was convinced that
Yanukovych was focused on forming a coalition with OU and
would not be able to tolerate a coalition with the Communists
and Vitrenko's party.

BIO Note
--------------


12. (U) When Ambassador mentioned that he had visited the
Belozersk mine earlier the same day, Akhmetov said mine
safety was an important issue. His father, who had died at

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the age of 25, had been a miner underground for ten years.
He and his older brother had also been miners.


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