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

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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

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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