ORANGE COALITION ENDS; CLOCK STARTS ON NEW

C O N F I D E N T I A L KYIV 001860

SIPDIS

E.O. 12958: DECL: 09/15/2018
TAGS: PGOV PREL PINR UP
SUBJECT: ORANGE COALITION ENDS; CLOCK STARTS ON NEW
COALITION -- OR NEW ELECTIONS

REF: KYIV 1804

Classified By: Ambassador William Taylor for reasons 1.4(b,d).

Summary
--------------


1. (C) As expected, on September 16 Rada Speaker Yatsenyuk
announced the termination of the Orange Coalition, starting
the 30-day clock on formation of a new coalition and, failing
that, providing the option for President Yushchenko to call
new elections. With parties continuing to jockey for
advantage, a Tymoshenko Bloc (BYuT)/Regions alliance has
emerged as a leading coalition contender, while a return of
the terminated BYuT/OU-PSD coalition (possibly with inclusion
of the Lytvyn Bloc) appears less likely. Interior Minister
Lutsenko told Ambassador that a BYuT/Regions coalition was
the best available option because it would provide stability
and avoid another destabilizing round of parliamentary
elections which would only "help Russia." Lutsenko confessed
he could not fathom Yushchenko's motives; Yushchenko's
uncompromising stand was pushing the country toward new
elections which were likely to be disastrous -- for stability
in the country and for Yushchenko's OU. End Summary.

The End of the Coalition: The Rada Moves On
--------------


2. (U) Rada Speaker Arseniy Yatsenyuk opened the Rada plenary
session September 16 by announcing the end of the BYuT/OU-PSD
coalition. The announcement, widely anticipated, elicited no
visible reaction in the chamber. On September 17, Yatsenyuk
announced his resignation from the Speaker's chair, saying
that he would continue in his position until the Rules
Committee confirmed his resignation. Bills considered on the
first two days of the session were non-controversial,
including an amendment to environmental laws, and an
amendment to the law on private notaries.


3. (U) MP Roman Zvarych, Our Ukraine (OU) deputy faction
leader, issued a statement noting that if PM Tymoshenko did
not submit her resignation, OU cabinet members were likely to
submit their resignations independently. Regions MP Hanna
Herman called on Tymoshenko to follow Yatsenyuk's example and
resign, as called for in the coalition agreement. After the
collapse of the coalition, Tymoshenko on September 16
expressed hope that the current crisis would pass and her
cabinet would continue to work "for a long time." BYuT MP
Kozhemyakin, speaking for the party, said that BYuT would not
recommend Tymoshenko resign.

Interior Minister: BYuT/Regions Offers Stability
-------------- ---


4. (C) In a meeting September 16, Interior Minister and PSD
faction leader Lutsenko told the Ambassador that, although he
"didn't like it," he had come to the conviction that a
BYuT-Regions Coalition was the best way, perhaps the only
way, to achieve political stability in Ukraine at the present
time. Repeated elections are undermining respect for
democracy, disrupting economic and political reforms, and
accentuating divisions in Ukrainian society. Lutsenko
asserted that if there were early parliamentary elections
this year -- on top of parliamentary elections in each of the
last two years, and followed by presidential elections in
late 2009/early 2010 and local elections in 2011 -- the only
winner would be Russia. He underlined that an expression of
USG support for a Regions/BYuT coalition would be a helpful
signal.


5. (C) Lutsenko lamented that Yushchenko's OU would not
engage in discussions with BYuT to resurrect the Coalition.
He confessed he could not understand the motivations of
Yushchenko and Presidential Chief of Staff Baloha. They were
pushing Ukraine toward early elections which would not only
be destabilizing for the country, but also likely disastrous
for OU and Baloha's United Center party. Lutsenko reiterated
that constant elections were tearing Ukrainians apart.


6. (C) A BYuT/Regions coalition may not be palatable for all
their faction members, however. Lutsenko speculated that up
to 30 members of the Akhmetov grouping of Regions and up to
30 BYuT members might balk at the pairing. This would leave
a BYuT/Regions coalition with a comfortable majority, but
without the super-majority necessary to enact constitutional
changes. Lutsenko speculated that in a BYuT/Regions
coalition, Tymoshenko would remain Prime Minister with Viktor
Yanukovych as Speaker. He remarked that Tymoshenko seeks
power: if power rested at the Ministry of Culture, "she would
be Culture Minister."


7. (C) Lutsenko posited that a two-party system would be
dangerous for Ukrainian unity, leading to a possible
East/West split of the country. He said Ukraine needs to
maintain a third, center force to bind Ukraine together. He
said that his PSD had served as a force to bring Tymoshenko
and Yushchenko together. With the Orange split, PSD was
largely a spent force. "We will need a new force for the
center," he observed.

Jockeying for a Coalition -- or Early Elections
-------------- --


8. (C) MP Ksenia Lyapina (OU) told us that to reform the
coalition and add Lytvyn, BYuT would need to adopt OU's
position on Georgia and Russian aggression, including a
denunciation of the Black Sea Fleet's role, and repudiate
their September 2 votes with Regions on laws to weaken the
presidency. Taking a swipe at BYuT's position, MP Zvarych
told emboff that "Georgia is not just about Georgia - it is
about Russian aggression," and Ukraine cannot ignore that
fact. Zvarych said that if no coalition forms in 30 days, he
did not foresee Yushchenko calling new elections "on day 31,"
saying Yushchenko would wait to do so "when it is to his
advantage."


9. (C) PSD MP Kyrylo Kulikov told us that PSD is pushing for
an OU-PSD/BYuT/Lytvyn coalition, but OU members appeared
interested only in new elections. He said that OU "won't
face the reality" that they have little support and would
suffer in new elections, and that OU and PSD had "crossed the
Rubicon" and would not be together in future elections. He
speculated that PSD could try to form a new platform with
Chairman of the Rada's Security and Defense Committee,
Anatoliy Hrytsenko, and the Klitchko Bloc, or could move to
join BYuT, adding that "PSD cannot make it on its own."


10. (C) Kulikov predicted that BYuT and Regions would form a
coalition within 30 days, avoiding early elections. MP
Vitaliy Homutinik (Regions) was not so confident, telling us
that BYuT and Regions supporters are "too different." MP
Serhiy Sobolev (BYuT) told us not to expect a new coalition
for at least two weeks, noting that Regions would likely
procrastinate on any final coalition negotiations. Regions MP
Levochkin said that should BYuT and Regions form a coalition,
Regions would be entitled to the PM position in a new
government based on their greater Rada numbers.


11. (SBU) Factions are preparing for early elections even as
coalition talks continue. BYuT representatives say
Tymoshenko is mobilizing MPs to get ready to campaign.
Observers note recent opinion polls have encouraged
Tymoshenko to take a more positive view on her election
prospects.

Comment
--------------


12. (C) Since his party had allied with Yushchenko's OU,
Minister Lutsenko's call for a BYuT/Regions pairing is
significant. A BYuT-Regions pairing remains the leading
contender at present, although there are many snags that
could impede a deal. Lytvyn and BYuT appeared willing to
join with OU/PSD in a revived version of the Orange
Coalition, but OU's adherence to preconditions have made that
scenario less likely. Early elections or the continuation of
the present government without a coalition are two other
scenarios which will emerge should coalition formulation
fail. The first two days of the 30-day coalition formulation
period passed quietly, with little evident urgency to bring
the matter to a conclusion.

TAYLOR