UKRAINE: NEGOTIATIONS CONTINUE, BALL IN BALOHA'S

C O N F I D E N T I A L SECTION 01 OF 02 KYIV 002555 SIPDIS SIPDIS E.O. 12958: DECL: 10/10/2017 TAGS: PGOV PREL UP SUBJECT: UKRAINE: NEGOTIATIONS CONTINUE, BALL IN BALOHA'S COURT? REF: A. KYIV 2533 ¶B. KYIV 2522 KYIV 00002555 001.2 OF 002 Classified By: Ambassador for reasons 1.4(b,d). ¶1. (C) Summary. Conversations on October 10 with key advisers for Yuliya Tymoshenko and PM Viktor Yanukovych, Hryhoriy Nemyria and Serhiy Lyovochkin respectively, underscore what we have been hearing for the past week -- the ball on coalition formation is in Yushchenko's court, but it may be Presidential Chief of Staff Baloha who is driving negotiations. Both BYuT and Party of Regions are wooing the Presidential Secretariat, even more than they are Our Ukraine-People's Self Defense, but it is unclear what Yushchenko and his team will decide to do. Nemyria described a series of demands Baloha passed to Tymoshenko that would greatly enhance the powers of the President and the Presidential Secretariat in exchange for Yushchenko's support for an orange coalition. The President's team has also asked Tymoshenko to sign a letter requesting a Membership Action Plan for NATO, which Nemyria argued was simply a provocation designed to start a fight between Tymoshenko and Regions and to hurt the former's chances in a presidential election. Lyovochkin requested his meeting to brief the Ambassador on Yanukovych's October 9 trip to Moscow, apparently seeking to reassure the USG that the trip was not connected to coalition building. He said that Regions has offered OU-PSD the same 50-50 division of posts that BYuT offered and is now dealing with bloc leader Yuriy Lutsenko, the biggest opponent of such an arrangement. ¶2. (C) Comment. Nemyria's report echoes what Baloha told us October 5 -- that Tymoshenko was not in control of the situation and that Baloha was laying out demands as the price for his (and presumably Yushchenko's) cooperation. At the same time, it is clear that negotiations between Baloha and Regions's representatives, including Rinat Akhmetov's lieutenant Borys Kolesnikov and the PM's team continue. A question that Nemyria raised and that others have been discussing is to what degree Baloha speaks for the President. Unfortunately, just as in past key junctures in Ukrainian politics, Yushchenko has chosen to leave the country, this time for trips to Lithuania and Slovakia, leaving everything in Baloha's hands. If Baloha were to be successful in his negotiations with either BYuT or Regions, he could find himself either the head of a stronger presidential administration, or even Prime Minister, the position that some believe is his ultimate goal. End comment. Nemyria: Baloha has Escalated his Demands -------------- ¶3. (C) Nemyria told the Ambassador October 10 that Baloha had given Tymoshenko a list of 14 demands, all of which were conditions for forming an orange coalition. He also said that Baloha began the enumeration of demands by saying, "Yuliya, please know -- the U.S. Government supports a broad coalition. David Kramer told me that." (Embassy note: The Ambassador quipped that DAS Kramer would be very surprised to hear such a quote attributed to him. End Note.) Nemyria said that Baloha's demands included: 1) the President be given control over the Interior Ministry, the State Tax Administration, and the Customs Service, in addition to the power ministries he already controls (Ministry of Defense, the SBU and the Prosecutor General's Office); 2) the constitution be amended to return Ukraine to a presidential system; 3) the law on the Cabinet of Ministers be amended to include the phrase that the government is obliged to obey instructions from "the apparatus of the NSDC and the Presidential Secretariat"; 4) all governors and raion heads be selected by the president; 5) these governors and raion heads must approve the appointment of all ministry representatives at the oblast and local level; 6) the President will pick the next mayoral candidate in Kyiv; 7) Tymoshenko will sign a public agreement to back Yushchenko in the next presidential election; and 8) Tymoshenko will appear at a rally with Yushchenko next week to greet officers from the Ukrainian Insurgent Army (UPA). In addition, Tymoshenko must agree that the newly seated Rada will vote, in order on 1) the Speaker, probably Kyrylenko with a Regions first deputy; 2) all the legislation connected to the first set of demands; and then 3) the Prime Minister. Finally, Baloha asked Tymoshenko to sign a letter that would come from her and Yushchenko to NATO Secretary General de Hoop Sheffer asking for a MAP at the upcoming Bucharest summit. ¶4. (C) Nemyria said these demands were clearly not confidence-building measures and some of them were simply unacceptable. BYuT did not like the empowerment of the presidency and Presidential Secretariat at the expense of the KYIV 00002555 002.2 OF 002 Cabinet. In addition, Tymoshenko did not want to publicly associate with UPA or ask for a MAP right now -- both would antagonize Regions and focus their attacks on her. Nemyria wondered to what degree Yushchenko was aware of Baloha's demands -- he said that Baloha had been blocking phone calls to Yushchenko from Georgian President Saakashvilli, a proponent of an orange coalition, a sign that Baloha was trying to isolate the President. Nemyria said he thought Baloha's end game was to make the demands so unpalatable for Tymoshenko that the orange coalition would collapse and Baloha could push through his "East-West Unity" coalition (ref A),with himself as Prime Minister. In fact, Nemyria believed Baloha may have already hinted at that scenario to Rinat Akhmetov's lieutenant Kolesnikov. ¶5. Note. A number of these demands appeared in online news site Ukrainska Pravda on October 10, but not with the level of detail supplied by Nemyria. BYuT and OU announced that they had formed working groups October 9 to develop three key pieces of legislation -- the law on the Cabinet of Ministers, the law on local administration, and the law on the opposition, so some effort is being made to meet the more palatable legislative requests. End note. ¶6. (C) In terms of who was really negotiating, Nemyria said the serious players were Baloha and NSDC Secretary Plyushch for the President, Tymoshenko and Turchynov for BYuT, and Kolesnikov and Akhmetov for Regions. There was a lower level of negotiations going on, he added, between members of OU and BYuT on economic and legal issues to try to work out all the other parts of a government program and some of the outstanding power sharing issues. Overall, Nemyria thought this level of cooperation was more positive, although he took the fact that former PM Yekhanurov refused to take part as a sign that part of OU was still inclined to a broad coalition. Lyovochkin: Regions Also Reaching out to Baloha -------------- -- ¶7. (C) Prime Minister Chief of Staff Lyovochkin asked to meet with the Ambassador on October 10 to brief him about PM Yanukovych's October 9 trip to Moscow, indirectly reassuring the USG that the trip had not been intended to get instructions on coalition negotiations from the Russians. According to Lyovochkin, the visit was about the gas deal and ongoing bilateral trade issues, including Ukrainian efforts to reopen Russian markets to Ukrainian meat and dairy products (halted since January 2006). Then Lyovochkin turned to Ukraine's political situation, echoing his boss's thoughts from last week (ref B). Baloha and Yushchenko had violated their agreements with Yanukovych regarding the holding of early parliamentary elections intended to result in a broad coalition -- by falsifying votes in the west and then negotiating with Tymoshenko -- which was why Regions was still not yet committed to taking their seats in the Rada. Lyovochkin said the new Rada should convene before a coalition is finalized. First the Rada should pick a Speaker; he said former Speaker Plyushch would be a good choice, but Kyrylenko -- OU-PSD's preferred nominee -- was just a boy. (Embassy note. The "boy" is several years older than Lyovochkin himself. End note.) Then coalition negotiations could take place and a prime ministerial candidate put forward. (Note. In the press, Regions said it would not take posts in a Tymoshenko Cabinet, since the opposition did not belong in the executive branch. End note.) ¶8. (C) Lyovochkin said that Regions was negotiating with Yuriy Lutsenko, who was the only OU-PSD leader opposed to a broad coalition. They were talking about offering him the head of the Kyiv City administration. (Note. Kyiv's special status, which puts it on par with an oblast, means that it has a head of administration position equivalent to an oblast governor. Traditionally the mayor of Kyiv has always been appointed head of the city administration, but it is not legally mandated. This would put Lutsenko one step closer to the mayor's office, a key goal for him. End note.) Lyovochkin said Regions was also offering OU-PSD the same 50-50 division of government positions that BYuT had offered, with some posts reserved for Lytvyn. Finally, Lyovochkin said that the McKinsey report Akhmetov had commissioned would be the basis of the economic program for a broad coalition, something of which Yushchenko approved. Now the President just had to deal with a minor issue -- the promises he made to Tymoshenko. ¶9. (U) Visit Embassy Kyiv's classified website: www.state.sgov.gov/p/eur/kiev. Taylor