UKRAINE: DNIPROPETROVSK LUKEWARM ON RADA

C O N F I D E N T I A L SECTION 01 OF 06 KYIV 001516

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SIPDIS

E.O. 12958: DECL: 06/18/2017
TAGS: PGOV PREL UP
SUBJECT: UKRAINE: DNIPROPETROVSK LUKEWARM ON RADA
ELECTIONS, MORE INTERESTED IN ECONOMIC/SOCIAL ISSUES

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Classified By: Political Counselor Kent Logsdon for reasons 1.4(a,b,d).


1. (C) Summary. On an early June trip to Dnipropetrovsk
city, the capital of a major industrial center in the East,
poloff found a wealthy city more blue than orange, but with a
great deal of distrust of both Donetsk-based Party of Regions
and Dnipro-native Tymoshenko, leaving an opening for other
political forces. In meetings with representatives of all
major political forces and outside journalists and analysts,
all talked about a population fiercely proud of their city
and oblast, focused on economic issues, and disinterested in
Kyiv politics. They talked about the need for political
decentralization, and cited a small but growing middle class
that demanded a higher quality of life and a city free of
garbage and environmental pollutants. They also advocated
decentralization, of the budget and the government as a
whole, to give more power to the local governments and to be
less dependent on Kyiv. People were proud of
Dnipropetrovsk's status as a military-industrial center in
the Soviet Union and as the dominant political force in
Ukraine in the 1990s, when most key politicians, including
President Kuchma, hailed from Dnipropetrovsk. Accompanying
this regional pride was an equally high disdain for
Donetsk--Dnipropetrovsk's rival during its glory days in the
1990s. Even former Prime Minister Lazarenko, the
Dnipropetrovsk native currently in jail in San Francisco for
money laundering, still holds sway here and is remembered for
the wealth and structural improvements he brought to the
city.


2. (C) Summary contd. In terms of a September 30 Rada
elections, Regions is likely to be the highest vote getter in
Dnipropetrovsk, as it was in the 2006 Rada elections (it got
45 percent),but it does not dominate this oblast as it does
neighboring Donetsk and Luhansk. Moreover, Regions could
lose some support to the Communists and Vitrenko's
Progressive Socialists on one side and to the more populist
orange parties, such as BYuT on the other. Tymoshenko is
likely to retain her foothold--15 percent in 2006--but there
is potential for smaller parties, especially Lutsenko's
People's Self-Defense to garner support here. Everyone we
spoke with acknowledged that Russian language and NATO would
be major campaign themes again, although populist
promises--higher pensions, salaries, etc--would dominate all
parties' platforms. People agreed that these elections would
be dirtier than the 2006 elections, but that it was not
possible to return to 2004 levels of voter fraud--no one
party or group had that much control over the oblast. There
was also on ongoing race to buy media before the election;
Regions was winning, but Tymoshenko and Lazarenko also had
stakes. End summary.

BYuT: Vote for Tymoshenko, She Was Born Here
--------------


3. (SBU) BYuT Rada MP Ivan Kyrylenko laid out the BYuT
strategy--focus on social populism and remind people that
Tymoshenko is from Dnipropetrovsk. He said that they had
just commissioned a poll that showed voters were most
concerned with social and economic issues--utility costs,
quality of medical care, garbage in the streets, and the
level of wages. But voters in Dnipropetrovsk blamed the
central government for these problems, not the city or oblast
administrations. When Dnipropetrovsk was in charge of Ukraine
in the 1990s, they had built roads and bridges. Now Donetsk
is in power and does nothing for anyone else--this could hurt
Regions, he believed.


4. (SBU) According to Kyrylenko, BYuT wanted to raise the
barrier to get into the Rada to between five and seven
percent, so they could have a two party system, which would
force good people to leave the smaller fringe parties and
join one of the big parties. Then, after elections, they
would focus on getting a law on the opposition passed that
gave the opposition an oversight function and other ways to
represent its electorate. He also said that it was time to
move forward on the second stage of constitutional
reform--decentralization of power to the municipal and oblast
levels.


5. (C) Comment. Poloff was struck once again by BYuT's
well-structured party infrastructure. Kyrylenko said he had
overall responsibility for the campaign in the oblast, but
the region is divided into "okrugs"--districts bigger than a
rayon--with an MP assigned to each one. He said he comes
back to Dnipropetrovsk at least once a week to attend to
party business.

Party of Regions: We Don't Want Elections, But We'll Win
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6. (SBU) Oleksandr Parubets, head of Party of Regions'
Dnipropetrovsk party secretariat, said that people in his
oblast want stability, not new elections. However, they will
vote if the elections are based on constitutional grounds.
Dnipropetrovsk is one of Ukraine's five or six donor oblasts,
and people don't want to see their tax money spent unwisely.
(Note--a "donor oblast" contributes more revenue to the
central budget than it gets back. End note) Parubets praised
the Yanukovych Cabinet as one of the strongest governments in
Ukraine's history, especially for its work in raising
pensions and salaries. In terms of what Regions saw as the
key campaign issues for the region, it would be job creation
and economic development. But he said that they may be
forced to raise the Russian language issue, even if was not
at the top of the party's platform--if Regions doesn't, the
Communists will. Regions' ratings were probably about 10
percent less than in March 2006, but they were stable at
27-28 percent.


7. (SBU) Parubets noted that Regions in Dnipropetrovsk ran in
close conjunction in the 2006 elections with the Communists,
and that the two parties are now in coalitions in most city
and rayon councils, along with the Socialists and Hromada.
He could envision the two parties cooperating again, even if
not in a formal bloc. He thought that both politicians and
voters were more focused on politics at the rayon level than
at national level. Parubets also told us that Regions had
boycotted oblast council sessions in June 2006 until they
succeeded in securing the position of head of the council.


8. (C) Parubets described Regions's national party structure
in similar terms to how Kyrylenko described BYuT's--an okrug
structure with MPs assigned to reach out to voters in
different parts of the country. He emphasized that the local
Regions party takes it own decisions; although they talk to
Kyiv headquarters daily, they do not feel pressured to make
certain decisions. (Note. Lutsenko's representative in
Dnipropetrovsk said that Regions does not have a home grown
presence, so the party anointed Dnipropetrovsk businessman
Tsarov, now a Regions MP, to run the party in the oblast.

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Tsarov's brothers are Regions deputies in the oblast and city

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councils. End note.)

Journalist Sakhanov: No Political Force Dominates
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9. (SBU) Respected local journalist Hennadiy Sakhanov
described Dnipropetrovsk as having a higher intellectual
level than other parts of the country--there were a lot of
university students and professors here, as well as the old
intelligentsia. He described the people as quiet,
thoughtful, and mostly concerned with economic issues. He
commented that after WWII, Dnipropetrovsk became a major
military-industrial center, which saw an influx of both
workers and technological improvements.


10. (SBU) He believed that exact election results were
unpredictable, but the new Rada will likely end up split
about 50-50 again between orange and blue. Donetsk was not
very popular in Dnipropetrovsk and Regions was tied very
closely to Donetsk, which limits their popularity.
Tymoshenko was very polarizing in Dnipropetrovsk--she is a
native daughter and miners had respected her for increasing
their salaries and cracking down on corruption in the mining
industry, but Regions controls the mining areas now and have
countered her influence. Tymoshenko was now paying a lot of
attention to rural areas. Communist support seemed to be
decreasing--they used to get 8,000-9,000 people to show up
for May 1 rallies, this year it was less than 1,000. Because
of this ambivalence towards all the parties represented in
the current Rada, Lutsenko had the possibility to build
support here if he continued holding his regional meetings.


11. (SBU) Sakhanov was not overly worried about election
fraud, saying that the administrative resource chain from
2004 had been broken. He believed the local government had a
lot of influence on elections, both through ownership of
media outlets and in staffing district election commissions
and polling stations. However, the local administrative
vertical did not work for Yanukovych or Yushchenko, but for
local political interests.

Analyst Romanov: New Parties Wanted, Lutsenko Could Benefit
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12. (SBU) Vladyslav Romanov, director of the Prydniprovya
analytical center, said that people will vote, despite
passive political views. However, no political force was
offering anything concrete--the slogans are all about higher

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wages and lower tariffs. He thought that Regions will suffer
in the upcoming election in Dnipropetrovsk because they had
been discredited here. Moreover, they were funding road
construction in Donetsk ten times more than in
Dnipropetrovsk, which caused tension between the two oblasts.
The BYuT strategy of portraying Tymoshenko as a
Dnipropetrovsk native won't work because she is viewed here
as having never done anything for Dnipropetrovsk. Romanov
believed this left an opening for other parties; Lytvyn and
Lutsenko had a good chance here.


13. (SBU) In terms of local politics, Regions members of city
council seemed to get a lot of guidance from Kyiv. In
contrast, BYuT city council members had the majority, so they
tended to ignore their Kyiv headquarters. There was a lot of
corporate consolidation underway in Dnipropetrovsk, along
with greater efforts by businessmen to distance themselves
from politics. But business was suffering--in particular,
they needed a land market; without it there would be
stagnation. There was no vertical chain in government from
the center down to the city, instead there was an ongoing
fight between civil servants at the oblast level, where
Regions was in charge, and the local level, where BYuT had a
majority. Dnipropetrovsk would benefit from a
decentralization of the budget--the current process was too
vertical.

CVU: Voter Fraud Will Be Low
--------------


14. (C) Regional head of election watchdog Committee of
Voters of Ukraine (CVU) Oleksandr Sidorenko expressed doubt
that there would be an election on September 30, although he
allowed it might happen at some point. If there was an
election, he said, he did not expect the mass falsifications
of 2004 to reemerge because the administrative vertical from
Kyiv through the regions to the local level has been
destroyed. There was a higher risk of falsification in some
of the industrial cities like Kriviy Rih or Pavlohrad than in
Dnipropetrovsk city. In terms of party standings, Our
Ukraine's ratings had dropped a lot, BYuT's and Regions'
slightly. Only BYuT had a strong party structure in the
oblast, with MPs visiting at least once a week. He also
said that although people in Dnipropetrovsk do not like
Donetsk, they still vote for Regions. Moreover, Regions had
increased its appeal to young people between 2004 and 2006,
surprising people with how well they did in Dnipropetrovsk,
although he gave most of that credit to older voters.
Sidorenko thought Lutsenko might get more than four percent
of vote in Dnipropetrovsk.

Lutsenko's Movement Targeting the Young and Disappointed
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15. (SBU) Journalist Olena Harahuts, leader of the
Dnipropetrovsk branch of the People's Self Defense movement
(PSD),told us that PSD had a seven percent rating and
Lutsenko's rallies have been well-attended, even in places
that supported Regions or the Socialists in 2006. Harahuts
believed that the same old issues and slogans would be used
again in the upcoming campaign, including Russian language.
The older generation will support the Communists and
Vitrenko, but PSD hoped to gain support from the youth.
There were places around universities where Yushchenko beat
Yanukovych in 2004, but these people were now disappointed in
Yushchenko; this was a Lutsenko target demographic.


16. (SBU) Regarding the Dnipropetrovsk political scene,
Harahuts did not believe ideology was key to party
membership; Tsarov had bought his seat in Regions and
Vitrenko's Progressive Socialist faction had businessmen in
it, including Socialist MP Shybko's son. BYuT had 22 percent
support in the oblast, but equally high levels of distrust.
Although Tymoshenko was born here, people viewed her as
having cheated Dnipropetrovsk in enriching her business.


17. (C) Regarding its own plans, Harahuts said PSD had
concerns about joining a megabloc with Our Ukraine and
Pravitsya. They would like to have their own faction in the
new Rada, but cannot if they run as a bloc. Moreover,
tensions were high because Our Ukraine was exploiting a legal
loophole to pressure PSD into joining the bloc. Because PSD
is not a party itself, Harahuts explained, it would need to
run as a bloc, which legally must have at least two
constituent parties. However, one of PSD's two parties,
Forward Ukraine, had been too inactive in recent years to
meet all the legal requirements to be a party, an issue that
Our Ukraine brought to the attention of the Ministry of
Justice and several regional courts. Lutsenko ally and
former OU MP Mykola Katerynchuk was preparing a new

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constitution, which Lutsenko and he will present on
Constitution Day (June 28). Other members of PSD were
working on the movement's economic platform. They were also
planning an anti-corruption campaign, in which PSD would have
two lawyers in each of nine oblasts who would provide legal
council to regional organizations and journalists attempting
to disclose and publicize corruption.

Our Ukraine: Not Much of a Factor in Dnipropetrovsk
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18. (SBU) Serhiy Belikov, deputy head of the Our Ukraine
branch in Dnipropetrovsk city, acknowledged that new
elections won't change the composition of the Rada much, but
argued that MPs who switched sides deserved to be punished.
He said that elections should be followed by the adoption of
laws on the opposition and imperative mandate, and then the
establishment of a constitutional commission to remove
contradictions from the constitution. OU's plan for its
campaign in Dnipropetrovsk is to remind voters of the gains
made in the Orange Revolution--a free press, a freer
society--to point out that Regions' 2006 campaign promises of
a better life for all have been empty, and to promise higher
pensions and student stipends. Yushchenko has seen a bump in
his ratings in Dnipropetrovsk since issuing his decrees on
early elections--they would play up the President's
affiliation with OU in the campaign.


19. (SBU) There is a plan to unite with PSD and Pravitsya and
to cooperate with BYuT, but they need to sign a memo with
BYuT on holding an honest election and avoiding dirty
campaigns. Regions, Socialists, and Communists will raise
the Russian language and anti-NATO issues again. OU tried a
purely economic platform in 2006, but it did not generate any
interest. In 2004, a lot of votes Yushchenko got in the
third round in Dnipropetrovsk were really anti-Yanukovych
votes. In 2006, BYuT picked up this protest vote. This
time, they feared election fraud would be much worse.


20. (C) Comment. Our Ukraine has almost no presence in
Dnipropetrovsk and most people we talked to did not take it
seriously. Outside observers agreed that Our Ukraine had
damaged its reputation significantly when it put Mykola
Shvets as the number one person on its 2006 oblast party
list. (Note. Shvets was the Kuchma-appointed governor of
Dnipropetrovsk from 1999-2003 and a blatant example of
corruption and abuse of administrative resources, whom Our
Ukraine had criticized sharply following the Orange
Revolution. End note.) Harahuts said that Shvets had
falsified 24,000 votes for OU in 2006. Even the OU reps
acknowledged that they weren't much of a factor in
Dnipropetrovsk--that Tymoshenko was the only serious
challenge to Regions. End comment.

Dnipropetrovsk's Oligarchs Still Active Behind the Scenes
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21. (C) Although Dnipropetrovsk is not the power center it
was in the mid-late 1990s, it is still home to two major
"oligarchs"--Viktor Pinchuk and the Pryvat duo of Ihor
Kolomoyskiy and Hennadiy Boholubov--and most people we talked
to believed they kept their fingers in politics, albeit
quietly. Kyrylenko said Pinchuk is not on any specific team,
but will work with Regions. He acknowledged that BYuT had
some ties with Prvyvat Group, but said they were distant.
Romanov said that the role of business was changing, big
business still tied to power/government--but slightly smaller
non-oligarchic companies are trying to develop a public image
separate from politicians. Romanov said Tymoshenko and
Pryvat had some ties, but he was not sure how deep they were.
Parubets said that Pinchuk and Pryvat are as involved in
politics as anyone, especially Pryvat, but people just don't
see it. Parubets added that Pinchuk's charity work is, at
least partially, for political reasons and he is still
funding the Viche political party, which did not make it into
the Rada in 2006, but has seats on regional councils.
Belikov said that earlier Pryvat and IUD did not care who was
in the government, but now, when they are losing money, they
care a great deal. Belikov believed Pinchuk wavers between
Yushchenko and Regions. Harahuts said that Prvyvat supported
all major parties, but Regions a little less than the others.

Civil Society
--------------


22. (SBU) Beyond politics, life in Dnipropetrovsk appeared to
be developing positively in other directions. There was a
lot of discussion of the city's small, but growing middle
class--people who wanted a high quality of life and demanded
things of their elected officials. Analyst Romanov said that

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these people were less interested in politics than in other
issues--including ecological problems and garbage in the
streets. These people were willing to pay more for things
like water and gasoline if the quality was higher. Mostly
they were concerned that there be no economic backsliding.
Journalist Sakhanov said that the youth in Dnipropetrovsk was
more socially active than middle age people. The youth want
a good life, no ties to the USSR. He also said that
Dnipropetrovsk had a multicultural heritage--before WWII the
population was a mix of Ukrainians, Russians, Catholic, and
Poles that brought religious diversity with them--that still
resonated in the city today. There was also a strong Jewish
presence in Dnipropetrovsk; in his estimation the synagogues
had more influence than the Orthodox Church in Dnipropetrovsk
politics. There was a lot of civic pride in the city, with a
fondness for reminiscing about Dnipropetrovsk's former status
as major center of Soviet military-industrial complex and
about its control of Ukrainian politics under President
Kuchma. It was clear that there was some resentment that
Donetsk, Dnipropetrovsk's rival for power and money, had
taken such strong control of the central government.


23. (SBU) Interestingly, Lazarenko--Prime Minister of Ukraine
1997-1998, currently in San Francisco, convicted on money
laundering charges--still has popularity and influence. His
party Hromada has the third largest faction on the oblast
council and he still owned the most popular newspaper. Last
year, they rehung his picture in city hall. CVU head
Sidorenko said that although general views of Lazarenko are
more negative than positive, people remember that he brought
money and order to the oblast. Harahuts said Lazarenko was
still respected because when he was Prime Minister,
Dnipropetrovsk got money, metro stations, bridges, pipelines,
and improved transportation infrastructure, especially in
agricultural areas. People had been disappointed that
Hromada had agreed to go into a coalition with Regions in

2006.

Russia is an Important Neighbor, but Europe is More Desirable
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24. (SBU) There was general agreement that Russia was an
important economic partner, but that Moscow should not
interfere in Ukrainian politics and that the Russian path was
not Ukraine's. Sakhanov said Dnipropetrovsk residents view
Russia as an economic partner, but not a political one. If
Russia verbally attacks Ukraine, they attack right back. He
said they also viewed the Single Economic Space as a
negative. Regions representative Parubets said that people
in Dnipropetrovsk have good feelings toward Russia, both in
terms of maintaining the industrial links from the Soviet
Union and through the Slavic ties between Russia, Ukraine,
and Belarus, but they do not want Russia interfering in
Ukraine's internal affairs. Harahuts said that in general
Dnipropetrovsk did not feel a lot of pressure from Russia--no
one wanted a union or a return the past. Romanov argued that
Russian pressure was very strong; the Kremlin was clearly
unhappy with Yanukovych. The Russians had lots of business
interests in Ukrainian coal and metals sectors, Russian
insurance companies are active in Ukraine, the financial
market is attractive--all of which impacts on Ukrainian
developments.


25. (SBU) In contrast, there was more focus on Europe as a
possible future. Romanov said that Dnipropetrovsk residents
consider themselves Europeans--Europe has a positive context
in terms of lifestyle and technology. A majority of people
supported joining the EU, especially young people. Harahuts
said people related well to the EU; there has been an
increase of travel and now Ukrainians see how others live and
want that for themselves. The one negative most people cited
was that there was still a lack of understanding about what
NATO was and criticism that Western governments were not more
actively engaged in prompting the alliance.

Fight for Control of Oblast, City Media
--------------


26. (SBU) Most people we talked to expressed concerns that
Regions was buying up media in the oblast in anticipation of
the September election. In particular, they had used a
so-called "raider" attack to get Dnepr Vcherni, the oldest
newspaper in the oblast. Harahuts said that Regions was
snapping up regional media through the courts and the
prosecutor's office. She had received offers for her paper
from Tsarov on behalf of Russian businessmen. According to
Harahuts, when she refused, they threatened her family.
Overall, two-thirds of commercial papers and one-third of
government papers tied to Regions. Lazarenko, however, still
owned the largest circulation newspaper, Dnipropetrovsk

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Pravda. Hromada also controlled a major tv network, although
Harahuts said that since they were allied with Regions now,
they expressed the same point of view.


27. (SBU) The opposition, however, still had some press and
BYuT had the city's television station. Belikov said that
only Regions, Hromada, and BYuT have money to fight for media
in Dnipropetrovsk; OU is not a player. Harahuts said that
Pinchuk and Prvyvat also both had oblast television stations;
in fact Pryvat's 9th Channel was the most popular in
Dnipropetrovsk. Harahuts added that Governor Nadeyeva did a
good job of decreasing administrative pressure on the press,
as well as on civil society as a whole. Governor Chervonenko
from neighboring Zaporizhzhya also helped with this.


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