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 KYIV 00001507 002 OF 003 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 KYIV 00001507 003 OF 003 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