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

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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

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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

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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