UKRAINE: PERSONALITIES, NOT PROGRAMS,

C O N F I D E N T I A L SECTION 01 OF 04 KYIV 002204

SIPDIS

SIPDIS

E.O. 12958: DECL: 09/04/2017
TAGS: PGOV PREL UP
SUBJECT: UKRAINE: PERSONALITIES, NOT PROGRAMS,
DIFFERENTIATE THREE MAIN PARTIES


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


1. (C) Summary. The conscious decision of the three main
parties in Ukraine to focus their campaigns on the same
themes -- populist social and economic promises and
anti-corruption slogans -- means that the vote will come down
once again to personalities and perceived leadership types.
The official platforms for Party of Regions, BYuT, and Our
Ukraine-People's Self Defense (OU-PSD) all promise huge cash
awards and subsidies to families with many children,
increases in salaries and pensions, better access to
healthcare, a renewed fight against corruption, and the need
for political and judicial reform, a nod to the disgust with
which many Ukrainians view this spring's political deadlock.


2. (C) Summary continued. The few issues where the platforms
do differ, such as foreign policy, NATO and the status of the
Russian language, have all taken a back-seat to economic
well-being, but could become important, as they were in 2006,
despite efforts by all three major parties to downplay them.
Regions includes planks in its platform promoting non-bloc
status for Ukraine, balanced relations between West and East,
and official status for the Russian language. OU-PSD talks
about Ukraine as a European state in speeches, but avoids
including it in the written platform other than to advocate
for WTO membership and a free trade agreement with the EU.
OU-PSD is also clear that they see Ukrainian as the only
official state language. BYuT's foreign policy goals are not
part of the "Ukrainian Breakthrough" program, but they are
described in a separate website, where they include moving
towards EU membership while maintaining good ties to Russia,
NATO membership only after a referendum, and support for WTO
accession.


3. (C) Comment. In our view, voters will be more inclined to
select parties based on leaders and leadership skills because
there are not enough substantive differences to help voters
choose. This latter trend is already visible; Regions plays
up Yanukovych as a strong leader who can promise stability
and order, while Tymoshenko, as usual, is the only person
shown on BYuT billboards and signs. OU-PSD has emphasized
Yushchenko's role as its leader, a change from 2006 when
Yushchenko kept his distance from OU and the actual campaign.
The wild card is the approach to the issues of the fringe
parties on both the left and the right. If they decide to
focus on the few differentiated issues, such as foreign and
language policy, then these issues may become the center of
the campaign and force all three major parties to address
them. End Summary and Content.

The Platforms
--------------


4. (C) With names like "Stability and Wellbeing" (Regions),
"The Ukrainian Breakthrough" (BYuT),and "For the People, not
the Politicians" (OU-PSD),the three major parties are
promising a broad array of social and economic improvements,
and judicial and political reform, relegating cultural values
and foreign orientation to a secondary status. Respected
newspaper Dzerkalo Tyzhnya (DT) expressed concern that
because all the platforms are so broad -- to try to woo as
many voters as possible -- the possibility of successfully
implementing the programs is much lower. In DT's assessment,
based on platforms alone, even the right-center parties sound
leftist.

5.(C) Embassy Note. Following DT's lead, we have tried to
focus this assessment on parties' official written platforms.
However, it is important to acknowledge that the parties are
also raising other issues not included in their platforms,
such as the debate over what to do about the price of bread,
a staple of their campaign stump speeches. Moreover, we
believe that the campaign platforms are not necessarily
intended to correspond to what the parties may actually put
forward as policies after the elections, but rather are a
reflection of what the major parties think their voters want
to hear. Although, in some instances, these promises made
for votes now may constrain how political leaders approach
difficult issues in the future. End Note.

Populist Social Policies Dominate
--------------


6. (SBU) All three blocs promise significant improvements in
voters' quality of life, offering incentives, subsidies, and
stipends with abandon at the expense of the 2008 budget.
OU-PSD envisions allocating three-quarters of the increase in
budget revenues from 2006 to 2007 to social policies, like
raising salaries, scholarships, and maternity allowances.
Regions advocates spending two-thirds of the same budget

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revenues on social policies. BYuT proposes raising pensions
to 80-90 percent of an average salary (70 percent is
considered high). Family subsidies seem to be one of the
most popular campaign topics. All three parties propose
maternity allowances in the range of 10,000-50,000 UAH
($2,000-$10,000),with increasing sums for each additional
child, as well as generous subsidies for families with
children.


7. (SBU) OU-PSD and Regions call for specific wage and
pension increases, although BYuT proposes better economic
situations for all citizens. OU-PSD wants 20 percent monthly
bonuses for teachers, doctors, and welfare workers in rural
areas. All three parties pay more attention to pensioners --
who are more likely to vote than the rest of the population
-- with Regions proposing personal accumulative bank accounts
and removing obstacles to private pension insurance. BYuT
proposes unified standards in calculating pensions and
immediately increasing pensions up to 80-90 percent of
average wages. OU-PSD suggests abolishing pensions for
members of parliament and government, and supports a general
35 percent pension increase.


8. (SBU) The three parties also address the housing shortage.
Regions advocates creating a land auction, investing
proceeds from housing construction back into building more
housing, and giving apartments to state employees as a reward
for long-term service. They also say the government should
subsidize free apartments for young families and new
university graduates employed at major industrial
enterprises. BYuT proposes a land mortgage system, lowering
credit interest to European levels, offering state funds and
tax incentives for construction of low-income housing,
providing long-term credits to young families, and giving
government-funded housing to military and law enforcement
officials. OU-PSD wants government housing for all military
servicemen by 2010, more land for mass residential
construction, and priority housing for families with five or
more children or who have triplets.


9. (SBU) The promise of affordable healthcare is also a major
topic for all parties. Regions proposes free medical care
for low-income people and new financing to allow hospitals to
upgrade medical equipment in the next two years. BYuT wants
to provide low-cost medicines to the poor, increase access to
healthcare for the rural population, and establish national
medical centers. OU-PSD promotes affordable medicines,
compulsory medical insurance, assignment of family doctors to
all families within the next five years, government-provided
vehicles to rural medical centers, and is supporting a
"children's hospital of the future".


10. (SBU) With regard to education, Regions proposes at least
half of university slots be government-funded, gradually
increasing stipends for university students, and providing
guaranteed first jobs for university graduates. BYuT wants
to give greater autonomy to institutions of higher education,
high-speed internet access for universities, student stipends
raised to subsistence minimum, and tax exemptions for
students who work while studying. OU-PSD advocates
compulsory university entrance exams to eliminate
bribe-paying to school officials and preferential acceptance
for students from families with five or more children. On
the primary and secondary level, OU-PSD proposes internet
connections for all rural schools by 2010, the development of
new preschools to teach Ukrainian language and traditions,
and providing buses for primary and secondary school students
who have to travel more than 3 km to school.

Economic Changes Also Emphasized
--------------


11. (C) The three parties center their economic proposals on
improving Ukraine's tax system, opening a land market to help
farmers, and decreasing energy dependence on Russia through
diversification and technological breakthroughs. There are
few new ideas in the mix.


12. (C) With both Minister of Finance Azarov and OU MP
Katerynchuk touting new tax codes, tax policy has become an
unlikely issue in an election season filled with populist
slogans. Azarov's tax code reduces corporate taxes, provides
incentives for energy conservation, and reduces Value Added
Tax (VAT) from 20 to 18 percent; Regions has also proposed
five-year tax breaks for small and family-owned businesses.
OU-PSD put forward the Katerynchuk tax code, which is
supposed to simplify the tax system -- in part by reducing
tax benefits and special economic zones for big business,
reducing VAT to 17 percent, ending VAT reimbursement schemes,
liquidating the tax police, and introducing a wealth/luxury

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tax that will go to local budgets. BYuT wants to abolish the
VAT entirely, introduce sales and luxury taxes, and minimize
tax privileges. (Comment. VAT is a common European practice
-- given Ukraine's European aspirations, the efficiency and
fairness of an effective VAT regime and the importance of VAT
for the budget, it is surely a better policy to improve
Ukraine's flawed VAT system rather than eliminate it
entirely. End comment.)


13. (C) In agriculture, Regions proposes creating a land
market, establishing a minimum rent for land, increasing
investment in rural infrastructure, and creating a national
grain exchange. BYuT wants to create a number of
agricultural institutions -- an agrarian fund, agrarian stock
exchange, insurance fund, land bank -- and to provide
subsidies to farmers to improve financing for environmentally
safe and healthy agricultural production. OU-PSD argues for
giving 20,000 UAH ($4,000) in start-up money and free housing
to recent graduates who agree to work in rural areas for
three or more years. (Note. Despite the appearance of a land
market in their platforms, both Regions and BYuT voted to
override the presidential veto of the moratorium on land
sales in January 2007. End note.)


14. (SBU) Energy independence is actually one of the only
times that Russia comes up in all three party programs. Both
Regions and OU-PSD suggest implementing energy-saving
technologies, using alternative sources of energy, and
diversifying fuel imports. BYuT advocates reducing
dependence on imported natural gas, integrating with the EU
energy market, creating a complete nuclear fuel cycle in
Ukraine, completing the Odesa-Brody-Gdansk pipeline, and
constructing a gas pipeline from the Caspian. Although not
part of its official platform, Tymoshenko has been an
outspoken advocate of removing shady middleman RosUkrEnergo
from the natural gas business.


15. (C) Comment. Dzerkalo Tyzhnya reported that an economic
program drafted by McKinsey and Company commissioned by
Regions powerbroker Akhmetov could eventually replace
Regions's economic platform. According to the newspaper,
people who have read the plan say it includes a lot of
unpopular measures, but that it has been admired by
Yanukovych and praised by Yushchenko. However both Akhmetov
and his right-hand man Kolesnikov told the Ambassador that
they were waiting to unveil the plan until after the
elections so that it would not get caught up in campaign
rhetoric. We have not seen the plan, but expect it to be
more economically progressive than Regions's, or any of the
others being promoted by the big three. End comment.

Political/Judicial Reform Gets a Mention
--------------


16. (SBU) All three parties address Ukraine's endemic
corruption and talk about the need to fight it. They also
all push for further political and/or constitutional reform,
including creating an independent judiciary, although these
plans are for the most part less detailed than their economic
and social counterparts. Regions advocates moving to a full
parliamentary system and increasing autonomy of local
governments. OU-PSD wants to eliminate immunity and
privileges for parliamentary deputies, establish an
anti-corruption bureau, and enforce income declarations for
top officials. (Note. Since OU-PSD made eliminating
parliamentary immunity the cornerstone of its campaign,
Regions has jumped on the bandwagon -- the issue is now
featured in some Regions tv ads and was the driving force
behind its agreement to take part in a September 4
extraordinary Rada session called by Socialist Speaker Moroz.
End note.) BYuT's platform lays out the idea of holding a
referendum now on the concepts of a new constitution,
followed by a drafting commission, and a second referendum.
BYuT also advocates creating a special commission to find
ways to remove loopholes from existing legislation that allow
corruption, giving the Rada opposition control of the Chamber
of Accounts (like the USG's GAO) and increasing penalties for
state official caught in corrupt acts.

Language, Culture, and Foreign Policy
--------------


17. (C) Only on language/cultural policy and foreign policy
do the parties show sharper differences. Regions is
promoting a "two languages, one people" slogan tied to their
proposal to make Russian a second official language. In
contrast, the OU-PSD platform is clear that strengthening the
Ukrainian language is part of protecting national identity,
although they promise to defend the right of minorities to
speak other languages. OU-PSD also discusses other ways to

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increase Ukrainian culture, including funding museums,
theaters, and book stores, and working for a unified orthodox
church. BYuT has emphasized its Ukrainian roots -- at its
party congress, at campaign stops -- but it does not directly
address issues of language and culture in its Ukrainian
Breakthrough program.


18. (SBU) Only Regions has an entire section on its foreign
policy in its official platform. The key aspects are:
promoting Ukraine's non-bloc status, that Ukrainian
membership in NATO can only be decided by a referendum, that
EU and WTO membership are not an end in themselves but a way
to improve the welfare of ordinary Ukrainian citizens, a
balanced foreign policy where Russia and West are equally
important, and the importance of the Single Economic Space.
In contrast, OU-PSD only addresses foreign policies that have
an economic focus -- WTO accession, a free trade agreement
with EU, and new agreements with key countries on social and
labor rights of Ukrainian workers abroad. BYuT does not
address foreign policy at all in its official platform, the
Ukrainian Breakthrough, but does have a link to its key
external goals. These include EU membership as a strategic
priority and WTO membership. They advocate government-led
education campaign for NATO, but membership only after a
referendum. BYuT calls Russia a strategic partner with which
Ukraine needs good relations, but they add that "no country
has the right to veto Ukraine's European future." They also
mention that the Black Sea Fleet's status is temporary.


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