UKRAINE: COALITION AGREEMENT TOO BROAD TO BE

C O N F I D E N T I A L SECTION 01 OF 02 KYIV 003036

SIPDIS

SIPDIS

E.O. 12958: DECL: 12/10/2017
TAGS: PGOV PREL PINR UP
SUBJECT: UKRAINE: COALITION AGREEMENT TOO BROAD TO BE
BINDING


Classified By: Polcouns Kent Logsdon for reasons 1.4(b,d).


1. (C) Summary. Should Yuliya Tymoshenko be confirmed as
Prime Minister -- a vote is scheduled for December 11 -- her
government program would be based on the coalition agreement,
a wide-ranging 81-page document that promises sweeping
reforms across the board with an emphasis on social programs,
economic reforms, and Western integration. The agreement,
which was signed by 227 MPs from BYuT and Our
Ukraine-People's Self-Defense (OU-PSD) and submitted to the
Rada on November 29, is mostly a rehash of the BYuT and
OU-PSD campaign platforms, which means it is a mix of
populist promises and stated economic reform goals. Several
of the program's items -- ending conscription, repaying
Soviet banking debts, Ukraine's relationship with NATO --
have stirred debate within the coalition, but more of the
struggle has been over senior positions, as well as 12 key
pieces of legislation that President Yushchenko wants passed
immediately.


2. (C) Given the agreement's overly extensive and varied list
of stated priorities, along with the strains already apparent
from Tymoshenko's ambitious campaign promises on the one hand
and President Yushchenko's legislative demands on the other,
this agreement will not be an exact roadmap of a Tymoshenko
government. For example, Tymoshenko and her team have tried
to downplay some of the commitments to NATO membership in the
agreement -- the one major addition to the document since its
2006 iteration when a similar document was first prepared for
a proposed OU, BYuT and Socialist orange government -- while
OU-PSD have fought against Tymoshenko's push to end
conscription immediately, repay Sberbank debts within two
years, and legislate imperative mandate. Instead, this
document serves as a catch-all that holds the interests for
all groups with BYuT and OU-PSD, and we expect to see it
implemented unevenly. End summary and comment.

What the Agreement Says
--------------


3. (SBU) The coalition agreement lays out the coalition's
agenda and policy priorities for both internal and foreign
affairs. It is 64-pages of text, followed by 10 detailed
pages of rules on the internal structure, leadership, and
etiquette of the coalition, as well as how the coalition
should interact with the President and cabinet, and ending
with a number of addenda that lay out the distribution of
positions in the Cabinet, executive branch, and Rada. There
is also an addendum listing 12 key pieces of legislation,
most of which are a Yushchenko priority.


4. (SBU) Three aspects of the agreement have been the subject
of debate both within the coalition.

--Conscription. Both BYuT and OU-PSD promised voters to move
to a professional army, but Tymoshenko advocated that the
change take place January 1, 2008. After much back and
forth, the only change made in the final coalition agreement
from the draft that was circulated for signatures this fall
was to replace the exact date with the language "when the
necessary logistical basis (both financial and
organizational) is formed." This was a key demand of Defense
Minister Hrytsenko who has said publicly that it was
impossible to move so quickly to eliminate conscription.

--Sberbank. Tymoshenko also promised voters that she would
repay within two years the debt owed to depositors by the
Soviet Sberbank (Oshchadbank in Ukrainian) -- estimated at
UAH 130 billion ($23.6 billion) after the collapse of the
USSR. (This also raised an outcry from OU-PSD, who argued
that such a rapid repayment schedule would bankrupt the
government. Nevertheless, this remains in the agreement.

--NATO. The 2007 coalition agreement is predominantly based
on the draft coalition agreement written for the proposed
orange coalition after the March 2006 elections. The most
significant change between 2006 and 2007 was the addition of
much stronger pro-NATO language to include phrases such as
"full-fledged NATO membership," which is used several times,
and the call for the adoption of laws necessary for MAP
accession. The language, however, still includes the
requirement of a nationwide referendum before membership.

Agreement Covers Range of Issues
--------------


5. (SBU) Beyond those few more noted clauses, the coalition
agreement spans the policy spectrum. In the social sphere,
it calls for the improvement of education and healthcare
through a variety of state-funded programs and an increase in

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subsidies for children. In the economic arena, the agreement
includes: diversification of energy supplies; introduction of
a land market, including all necessary laws and regulations;
pension reform; tax reform; reform of the housing utilities
sector; and combating corruption -- with many of these
sections including detailed lists of proposed measures. On
foreign policy, in addition to NATO, the agreement calls for:
EU membership; the preservation and strengthening of good
relations with Russia and other neighboring states; and
strengthening Ukraine's position in Eastern Europe and the
Black Sea Region


6. (SBU) The agreement includes a variety of internal
political policies. There is discussion of constitutional
reforms to improve checks and balances between different
branches of power, including limiting immunity for
parliamentary deputies to only official acts. It also calls
for abolishing other perks for parliamentarians, creating
rights for the opposition, and improving the proportional
election system. The agreement also proposes adopting new
laws on the Cabinet of Ministers, on central executive power
agencies, on referendums, and on political parties.

Addenda: The Real Focus of Debate
--------------


7. (C) Most of the hold-ups and internal debates about the
coalition agreement have focused on the addenda that
distribute positions within the coalition and that list top
priority laws. Under the agreement, each party was given a
quota of positions which it can fill as it sees fit.
Nevertheless, there have been objections over potential
nominees. On December 7, Tymoshenko said that she hoped that
the coalition would have worked out all personnel
disagreements by December 11. Under the terms of the
document, BYuT receives the prime ministership and all the
economic portfolios -- Agriculture, Ecology, Economics, Fuel
and Energy, Coal, Labor, Industrial Policy, Transportation
and Communications, and Finance. OU-PSD receives the
speakership and all the social and national security
portfolios -- Regional Development, Interior, Foreign
Affairs, Culture and Tourism, Emergency Situations, Defense,
Science and Education, Health, Justice, and Youth, Family,
and Sports. The coalition agreement also specifies which
ministers will control which state agencies, divides up the
special executive bodies (like the State Property Fund and
Anti-Monopoly Committee),and allocates control over the
three state-owned banks. The coalition has agreed that the
President will also be able to nominate the Interior Minister
directly; according to the Constitution, he already has the
right to nominate the Foreign and Defense Ministers.


8. (C) In addition, there are 12 laws, which the agreement
stipulates should be considered before the PM vote.
Yushchenko has mentioned this issue periodically in the past
few weeks and Baloha has been pushing hard to pass the laws
before confirming Tymoshenko, but it seems now that the Rada
is likely to vote first on the PM before taking up the
President's agenda. (Embassy Note: This would be difficult
given the lack of committees in the Rada and the opposition's
reluctance to agree to establish a special commission to
quickly review the draft laws before they come to the floor
for a vote. End Note.) Yushchenko's decision to submit
Tymoshenko's nomination to the Rada so quickly may have
signified his acceptance of this order of business. The 12
laws are: changing the constitution to eliminate
parliamentary immunity; amending the law on MPs to eliminate
other parliamentary perks; amending the CabMin law; a law on
the opposition; a law on imperative mandate (one of the few
Tymoshenko projects on the list); amending existing laws to
allow for early city council and mayoral elections in Kyiv;
amendments to the laws on city and local self-government; a
new law on Ukraine's internal troops; changes to the state
procurement system; amending laws to strip some state bodies
of their status as central executive bodies; and ratification
of the GUAM statute.


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