UKRAINE: FRUSTRATION UP IN ORANGE CAMP AS

C O N F I D E N T I A L SECTION 01 OF 04 KYIV 002533 SIPDIS SIPDIS E.O. 12958: DECL: 10/05/2017 TAGS: PGOV PREL UP SUBJECT: UKRAINE: FRUSTRATION UP IN ORANGE CAMP AS YUSHCHENKO SEEMS TO LEAN BLUE REF: KYIV 002522 KYIV 00002533 001.2 OF 004 Classified By: DCM James Pettit for reasons 1.4(b,d). ¶1. (C) Summary. Key players in the past two days have told us that they believe President Yushchenko is leaning towards a broad coalition, although BYuT and part of Our Ukraine-People's Self Defense are fighting hard for an orange government. An ebullient Presidential Administration head Baloha told the Ambassador that everything now depended upon Yushchenko, as it should be, and that he would honor his promise to orange; however, with only a thin majority and the promise of an unstable government, Tymoshenko would fail to be elected as PM and the President would have to come forward with a plan for a national unity government between OU, Regions and Lytyvn. Baloha noted that Yushchenko was eager to hear Washington's views. A frustrated Tymoshenko told the Ambassador October 5 that a wing of the President's team, led by Chief of Staff Baloha and NSDC Secretary Plyushch, were pushing hard for a broad coalition, a choice she called unstable. If that happened, BYuT would go into the opposition, but would also work for early presidential elections, which she believed Regions also wanted. A relaxed Lytvyn told the Ambassador October 4 that he supported Yushchenko, but would never join an all orange coalition. He thought that the decision rested with the President, and that Yushchenko was under tremendous pressure from both sides and did not know what to do. Regions oligarch Akhmetov told the Ambassador that he wanted a broad coalition and had even offered to back Yushchenko's reelection bid in 2009. Number 5 on the OU-PSD list Mykola Katerynchuk said that he hoped Yushchenko would honor his electorate's desires and stay with Tymoshenko, but thought it could go either way. Tymoshenko, Lytvyn, and Katerynchuk all warned that Regions might boycott the new Rada session if it found itself in opposition -- a move Tymoshenko said BYuT would not make if left out of the government -- but Akhmetov said he did not support such a tactic. ¶2. (C) Comment. The Ambassador has continued to reiterate to all sides that we have no preferred outcomes, but that we would like to see a government formed soon that would get down to work and that repeat elections will be destabilizing. Baloha confirmed that a meeting for the Ambassador with Yuschenko would be arranged soon so that he could hear Washington views directly. Baloha and Lytvyn seemed relaxed and relishing the political game ahead, while our other interlocutors seem subdued, frustrated, and even defeated. With the exception of Baloha, all sides seemed to have expected election results that would have more decisively pointed towards one coalition or another. Instead, Ukraine is back in the position it occupied in spring 2006, with Yushchenko having to decide between Tymoshenko and Yanukovych, neither of whom he trusts or likes. One reality that has become increasingly clear is that no matter which choice Yushchenko makes, his chances of reelection are slim at best. Tymoshenko has indicated that her promises to back him in 2009 may be easily broken, while cooperation with Regions could irretrievably damage his standing with his electorate. Yushchenko's lack of options and his history of making self-sacrificing choices for what he sees as the good of the country appear to be leading him to believe that a broad coalition would be more stable, although neither variant is likely to be particularly effective. A probable side effect of the dual coalition negotiations may be to bring OU-PSD closer to a split, as the OU-PSD leaders and the presidential team, backed by the old school members of OU who are out of power within the bloc, advocate different positions. End summary and comment. Baloha: Ready for a "Unity Coalition" When Orange Fails -------------- -------------- ¶3. (C) Presidential Administration Head Baloha, relaxed and confident, told the Ambassador October 5, that the election results, and the narrow "majority" held by the orange team had put President Yushchenko in the driver's seat, right where he should be. Baloha said that he had hoped for a 225-225 split, but that this close race was just as favorable for Yushchenko and his team as the political parties began their "war of nerves." He criticized both Tymoshenko and Yanukovych for acting like the winners, noting that they should "not go beyond their competence." He said that Tymoshenko and her "young" allies in OU-PSD were busily dividing up positions and dreaming of power, but that Yushchenko worried that orange would be an extremely unstable coalition, depending upon just a few votes to stay in power. At the same time, Yanukovych and his team had made many mistakes along the way and had not received the votes needed to stay in control of the process. In fact, Yushchenko and KYIV 00002533 002.2 OF 004 his team were fully in control and he was happy to lay out for the Ambassador the presidential team's proposed way ahead that would allow Yushchenko to meet his commitments to both Tymoshenko and Yanukovych. ¶4. (C) According to Baloha, the presidential team was meeting with Tymoshenko and OU-PSD leaders Lutsenko and Kyrylenko, derisively referred to several times as "kids," with a list of presidential demands for an orange government, including agreement on repealing the CabMin law, passage of laws repealing immunity and privileges for Rada deputies, passage of a package of anti-corruption legislation and agreement to participate in a new process to amend the constitution. Baloha said that Tymoshenko wanted to amend the constitution to restore presidential powers, similar to those held by Kuchma, but Yushchenko and Regions both preferred a constitution that divided executive power between the President and PM; all that was needed was fine-tuning and clarification as to the powers of each. According to Baloha, discussions would go on for the next 40 days (presumably a reference to 10 more days for the CEC to publish official results and then 30 days to seat the new Rada),give or take a few days. At that point, the orange team would forward Tymoshenko's name to the President as the candidate to be PM. He would then submit her name to the Rada and, given the small majority, Baloha was confident that the nomination would fail. In Baloha's view, not even all the members of BYuT in the Rada would support her candidacy. And Lytvyn was clear that he would not be in a government that reported to Tymoshenko. ¶5. (C) At that point, per Baloha, Yushchenko would turn back to the other parties in the Rada and, with the stability and future of the country in mind, he would propose a kind of national east-west unity government to put forward a candidate. He said that no one wanted to talk about a "broad coalition" anymore; that had become a kind of political "swear word." Baloha thought that in this case, an OU-PSD, Regions and Lytvyn bloc coalition would have enough votes to form a coalition and propose a candidate for PM. This would happen sometime in November. What was needed was a government with 240-260 seats in order to be stable and govern the country. He thought that Lytvyn might make a good speaker (although he also suggested that he would be a good candidate himself, easily getting more than 400 votes from all parties, including BYuT; however, he was not interested in the post),but anticipated that Tymoshenko would choose pure opposition instead. The Ambassador repeated what he has said at all of his meetings -- that we did not have a preferred outcome, but looked forward to the formation of a coalition and a government as soon as possible. Baloha said that Yushchenko and the presidential team were eager to hear what Washington was thinking about a future Ukrainian government. Tymoshenko: We're Losing the President -------------- ¶6. (C) A clearly-frustrated Tymoshenko said October 5 that BYuT would continue to push for an orange coalition, but thought that it was more likely that Yushchenko will pick the broad option. He was being pushed strongly in this direction by Baloha, Plyushch, former PM Yekhanurov, and former Environment Minister Kostenko. In addition, Deputy PM Andriy Klyuyev had a pot of money designated to buy 10 OU MPs to vote against her nomination for PM, should Yushchenko submit it to the Rada; this would seal the deal with Regions. Yushchenko was making the same mistakes he made in 2005 and 2006; Regions will dominate the coalition and the President's ratings will drop two times. Moreover, a broad coalition would be very unstable and racked with constant fighting, just as it was in the fall of 2006 when seven OU ministers stayed in the Yanukovych Cabinet. ¶7. (C) Tymoshenko said she saw few ways to stop the broad coalition other than continuing to negotiate with OU-PSD, but she warned that they would go public soon with Klyuyev's efforts. Two thirds of OU-PSD opposed a broad coalition, she argued, but one-third will push for it. However, one-third of OU-PSD, plus Regions and Lytvyn would still be less than 226 seats, so they would need to invite the Communists in. She also said that they were expecting the Constitutional Court on October 9 to hear the case on imperative mandate, which would allow Rada factions to expel from parliament MPs who broke ranks. The Presidential Secretariat was trying to stop this, but if the CC ruled in BYuT's favor, this would stop part of OU from joining with Regions. There were three conditions that needed to be met to make an orange coalition work: 1) the CC would have to confirm the legitimacy of imperative mandate; 2) the President would need to control KYIV 00002533 003.2 OF 004 the anti-Tymoshenko wing of his team; and 3) BYuT would have to take steps to calm Yanukovych and Akhmetov, primarily through the adoption of a generous law on the opposition. ¶8. (C) If there was an orange coalition, they would invite Lytvyn in, but they would not make him Speaker. She saw OU head Kyrylenko as the best choice for Speaker. Tymoshenko also dismissed giving Regions multiple Cabinet positions. They could have the deputy prime minister for liaising with the Rada, but that was it -- to hand over other ministerial portfolios to the opposition would be destabilizing. In addition, while they would consider giving Regions the Speakership, their starting negotiating position would be First Deputy Speaker. Moreover, the candidacy of Raisa Bohatyreva would be much more palatable than Yanukovych. And BYuT would never, ever give Regions any governor positions. ¶9. (C) Tymoshenko acknowledged that Regions might not take its seats in the new Rada in the event of an orange coalition and would force new Rada elections. This would keep the Yanukovych government in place two more months and allow Regions to prepare much more wide scale and successful falsifications in a new vote. She also said that in the reverse situation, if an OU-Regions coalition happens, BYuT will take its seats in the Rada and work in the opposition. ¶10. (C) The Baloha group was telling Yushchenko that he would never win reelection in 2009 if Tymoshenko became PM, but the opposite was true. If Yushchenko chose to work with Regions, the latter will move to impeach the President in two to three months and BYuT will support their efforts. Even if Yushchenko supported Tymoshenko as PM, she could only promise to support him as President in 2009 under certain conditions. She said that if think tanks and analytical centers said Yushchenko would definitely beat Yanukovych, then she would back Yushchenko, but if they say he won't, she will not let Regions take the presidency (implying that she will run.) ¶11. (C) She asked for U.S. help in convincing Yushchenko to do the right thing and in calming Yanukovych. She wanted Western countries to acknowledge the freeness and fairness of the September 30 elections and say that they oppose repeat Rada elections. The Ambassador confirmed that the U.S. position was that the elections had generally met international standards and that the U.S. did not want new elections, but hoped a new government would be formed quickly. He also reminded her that the U.S. did not support specific coalition options -- that was a choice only Ukrainians could make. Lytvyn: Broad Coalition Is Best Option -------------- ¶12. (C) Former Rada Speaker Lytvyn, looking relaxed and amused, told the Ambassador October 4 that he thought a broad coalition was the only stable path. He was not interested in a coalition with just BYuT and OU-PSD; he supported Yushchenko, but not many other leaders in OU. The future of the Rada and the government was in Yushchenko's hands now, Lytvyn argued. The President's statement on October 3 that all parties in the Rada should enter into negotiations was proper and civilized. ¶13. (C) Lytvyn warned that Tymoshenko was exerting powerful influence on OU leaders and taking advantage of their competing ambitions to benefit herself; Yushchenko was under tremendous pressure. A solely orange government, he argued, would last six months at best, then Tymoshenko and Yushchenko will have a falling out, and Ukraine will wind up with early presidential elections. (Note. Presumably as a result of a deal between Tymoshenko and Regions. End note.) A 228-member coalition was inherently unstable. Moreover, Regions was already working on finding 10-20 MPs from BYuT/OU-PSD to make sure they won't participate in the new Rada. ¶14. (C) A four party coalition would be difficult because there can only be one PM. Yushchenko had to control the ambitions of the OU leaders. BYuT would only support a broad coalition if Tymoshenko was PM, which she knows is unacceptable to Regions. She cannot be in a government with Regions because it will hurt her presidential ratings. The technical coalition would be ideal, but was unrealistic. The next PM will either be Tymoshenko or Yanukovych. ¶15. (C) Lytvyn said he met with Yanukovych on October 3. The PM had expressed a clear message -- he was ready to cooperate with OU-PSD to unite the country and he was willing to back Yushchenko's reelection bid. Yanukovych and Lytvyn had both told this to Yushchenko, but it was clear the President was KYIV 00002533 004.2 OF 004 getting other information. Yanukovych also said that they will block the Rada's work if the coalition is BYuT-OU. Regions will defend themselves by going on the offensive; they become more united when threatened. ¶16. (C) Lytvyn thought one possible scenario was for Yushchenko to agree to the orange coalition and nominate Tymoshenko as PM, but with the understanding that some in OU-PSD will vote against her and her bid will fail. Then OU-PSD will be clear to form a coalition with Regions. Akhmetov: Pushing for Broad Coalition -------------- ¶17. (C) The Ambassador met with Regions oligarch Rinat Akhmetov late on October 4 to hear his version of Regions' position. Akhmetov said that his ideal scenario would be Yanukovych as PM, Tymoshenko as Speaker, and the Communists in the opposition, but this was not a realistic possibility since Yuliya will not agree. A coalition of OU-PSD and BYuT with just 228 seats would not be a long-lasting coalition. In his view, Yushchenko had two options -- orange coalition or Regions-OU with possibly Lytvyn. If Yushchenko picks broad, Akhmetov will back his reelection campaign in 2009. Akhmetov met with Yushchenko earlier that day, where Yushchenko reiterated his public statement that he wanted all parties to engage in negotiations. However, Akhmetov believed Yushchenko was leaning towards broad. The Ambassador emphasized the key points that we have been delivering to all sides -- the elections were pretty free and fair and we will work with any government that the Ukrainian parties form. However, we would like to see a new government formed soon and get to work, so would be very disappointed to see Regions boycott the new Rada and force new elections, which would lead to turmoil and instability. Akhmetov said he did not personally support boycotting the elections. Katerynchuk: Down, But Holding Out Hope for Orange -------------- -------------- ¶18. (C) A glum Katerynchuk -- number 5 on the OU-PSD list, but now estranged from Lutsenko -- said October 4 he had not given up hope of an orange coalition. He said that the OU-PSD presidium had confirmed October 1 that orange was the only coalition they would back. A broad coalition would be a betrayal of their electorate. In terms of reconciling Regions to a BYuT-led government, he said they would offer the opposition key Rada positions, like the Budget Committee and the Accounting Chamber, but they would not bring them into the Cabinet. The agreement OU-PSD signed with BYuT gave BYuT the PM, OU-PSD the Speaker, then the parties would take turns filling ministerial portfolios. He added that Foreign and Defense Ministers were outside negotiations. He added that he believed post allocations within the OU-PSD quota would be non-transparent and undemocratic, with decisions made by a handful of individuals. ¶19. (C) Katerynchuk thought that Regions would be radical opposition and would continue to push for more influence. He thought they would also ask the Russians to raise the gas prices to increase pressure on Tymoshenko. He also said he could not rule out the possibility that Regions would refuse to take their seats in the new Rada, which would keep the Yanukovych government in office. Moreover, changes in the law gave the current Cabinet greater control over the budget than previous ones, so they could stay afloat longer without a parliament. ¶20. (C) Katerynchuk also admitted that Yushchenko was worried about Tymoshenko running for president in 2009. He added that there would be other candidates too, including possibly Lytvyn, Lutsenko, and maybe himself. ¶21. (U) Visit Embassy Kyiv's classified website: www.state.sgov.gov/p/eur/kiev. Taylor