UKRAINE: CRACKS IN THE COALITION

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E.O. 12958: DECL: 04/16/2018
TAGS: PGOV PREL PINR UP
SUBJECT: UKRAINE: CRACKS IN THE COALITION


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


1. (C) Summary. Although the President, Prime Minister,
OU-PSD, and BYuT all say they want the democratic coalition
to last, public infighting, growing distrust, and mutual
recriminations are making the tenuous majority even shakier.
An April 16 spat erupted over the vote for the President's
law on the Cabinet of Ministers and BYuT walked out of the
session, allowing more than half the proposed amendments to
fail before Speaker Yatsenyuk postponed the rest of the
voting. BYuT faction leader Kyrylenko then issued an
"ultimatum" telling Yushchenko to stop trying to destroy the
coalition and to stop interfering in the Cabinet's work.
Privately, BYuT MPs told us that they believed Yushchenko was
blocking all Cabinet activities that could bring Tymoshenko
budget funds for her programs. OU-PSD MPs have also said
publicly and privately that the coalition was in danger.
Exacerbating the situation is Presidential Secretariat Head
Baloha and his team's continued public attacks on the
Tymoshenko government, and the Secretariat's strains with
parts of OU-PSD as well.


2. (C) Comment. The coalition has been tenuous since its
inception, but frustrations on all sides are starting to
bubble to the surface. Although both parties still strive
toward the same goals, personal ambitions are starting to
overshadow shared values of European integration, including
MAP, and market reforms. One thing that may hold the
coalition together for now is the lack of immediately viable
alternatives. Rumors of new Rada elections continue to
circulate, but may not be possible until October at the
earliest given constitutional limitations -- there are still
some legislative items that have broad support that they may
want to pass before then, which speaks against dissolution.
Concerns voiced by some in OU-PSD and Regions that to fire
Tymoshenko now would give her a political edge in the
presidential elections may also delay hasty changes. End
summary and comment.

Marathon Coalition Meeting Resolves Little
--------------


3. (C) The coalition met for four hours on April 14 to try to
reach agreement on key issues moving forward. Very few
details of the meeting were released to the press, although
afterwards OU-PSD leader Vyacheslav Kyrylenko said that he
believed the coalition was on the verge of collapse. Among
the items discussed was a resolution to ask Yushchenko to
fire Baloha, which was supported by BYuT, PSD, and Rukh.
OU-PSD MP Tarasyuk told Deputy Assistant Secretary Merkel and
the Ambassador early on April 16 that the Presidential
Secretariat was the villain in the current drama and that

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something needed to be done about the Presidential
Secretariat. Interestingly, Baloha told the Ambassador April

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15 that the discussion about him was the work of a
"hysterical" PM who initially managed to convince Tarasyuk
and Lutsenko and their MPs to support her in the effort to
force Baloha's removal, but then actually lost support of 50
deputies because of her continued discussion of the topic.
(Note. Baloha seemed pleased that the coalition spent two
and a half hours discussing him. End note.)

Agreement Falls Through
--------------


4. (C) Tarasyuk told DAS Merkel and the Ambassador that the
coalition had struck a deal to move two legislative
priorities forward. OU-PSD had agreed to support BYuT's law
on eliminating deputy's benefits -- the law would remove
certain monetary perks and give the factions greater rights
to remove noncompliant MPs from the Rada (imperative mandate)
-- in exchange for BYuT's support to approve the President's
law on the Cabinet of Ministers in its second reading.
However, ten minutes later, when Yatsenyuk called the session
to order and OU-PSD MP Yuriy Kluchkovskiy stood up at the
rostrum to introduce the CabMin bill, the entire BYuT faction
walked out of the session hall and did not return for almost
2 hours. BYuT MP Stepan Kurpil admitted that there had been
a deal between the two coalition factions about supporting
each other's legislation, but claimed that OU-PSD had
violated the agreement because the version of the CabMin law
up for vote violated the constitution. He also admitted that
the vote on CabMin was a final reading, while the vote on
eliminating perks and instituting imperative mandate was only
a first reading, making the deal inherently unfair. (Note.
Tarasyuk admitted that his faction was only planning to
support the bill in the first reading, unless imperative
mandate was explicitly limited in the law to a short period,
such as 2-3 years. End note.) BYuT MP Nataliya Korolevska
told us that eliminating these benefits would return 200
million hryvnia to the budget; Kurpil said that the

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Presidential Secretariat did not want the Cabinet to see
those budget funds returned because it was hoping to see the
Cabinet fail to implement its promises.


5. (SBU) In the end, the vote on the CabMin law did not go
well. After considering amendments one by one for the entire
morning, not one had passed. At that point, Yatsenyuk
adjourned the Rada until April 17. Afterwards at a press
conference, the Speaker said that he had saved the coalition
by not putting the full CabMin law to a vote.


6. (SBU) Immediately after the Rada session, BYuT faction
leader Ivan Kyrylenko issued an ultimatum to Yushchenko on
behalf of his bloc. Kyrylenko said that the conflict between
Yushchenko and his team versus Tymoshenko had gone so far
that Tymoshenko could no longer remain silent. He said that
the Secretariat's criticisms of the Cabinet were
unsubstantiated and he implied that Yushchenko supports shady
gas and land deals. He urged Yushchenko to stop trying to
split the coalition, retract all his bills and decrees that
contradict CabMin decisions, and dismiss "random people" from
the NSDC (presumably a comment about newly appointed deputy
secretary and former Yanukovych adviser Konstantyn

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Gryshchenko.) OU-PSD's Kyrylenko then made his own statement
to the press, criticizing BYuT for creating a "show" in the
Rada. He said BYuT MPs should not walk out of session every
time they have a legislative disagreement with OU-PSD.
Kyrylenko also said that Tymoshenko's irritation with Baloha
was not a reason for her to try to collapse the coalition.
(Embassy note. PM Tymoshenko is in Strasbourg for a PACE
event. End note.)

Doubts About Stability
--------------


7. (C) Kurpil said that of course they would like the
coalition to last, but it seems very difficult when Baloha's
sole goal in life was to get Tymoshenko removed. When asked
what Baloha wanted aside from Tymoshenko's removal, Kurpil
said that the Chief of Staff would either push for a broad
coalition with Regions or new Rada elections. He would force
compliance from OU-PSD members by telling them they would be
removed from the party list if they did not back a broad
coalition. Kurpil said that the response to the coalition's
request for Yushchenko to fire Baloha was the President's
harsh accusations from Warsaw that the Cabinet was corrupt,
in particular that its decision to hold land auctions was
corrupt (see below).


8. (C) At a dinner for DAS Merkel on April 15, BYuT MP Andriy
Shevchenko reacted strongly to a statement that Tymoshenko
was lukewarm on NATO MAP, saying that the coalition was in
dire straits, but NATO was one area where the coalition
agreed. However, he did not see how the coalition could be
dissolved unless new elections were part of the package.
Justice Minister Onishchuk tried to be more circumspect when
the Ambassador asked him on April 14 about the state of the
coalition, but did admit it was in danger. He repeated that
Yushchenko had told OU-PSD that there was no alternative to
the current coalition, but quietly blamed Tymoshenko for many
of the problems, and then said that both parties were
directed by business interests that were pushing the factions
in different directions. Baloha told the Ambassador April 15
that if Tymoshenko and BYuT insisted on pushing ahead with
creating a special Rada commission on a new constitution, to
compete with Yushchenko's National Constitutional Commission,
then the "coalition was finished."


9. (C) There are also ruptures between OU-PSD and the
Presidential Secretariat, which increase instability in the
coalition. Two of the President's priority bills have now
been killed -- on creating a national guard from the Interior
Ministry troops and on the use of natural monopolies. Both
times, OU-PSD MP and former Defense Minister Hrytsenko spoke
out strongly against them. The OU-PSD faction also strongly
supports amendments to the law on local elections to make the
May 25 Kyiv's mayoral race a two-round event -- Yushchenko
has already said he will veto such a law. Yushchenko held a
meeting with his faction on March 20, where he tried to stem
their criticisms of the Secretariat. According to MP David
Zhvaniya, the President told his MPs, "You must listen to
Viktor Baloha's words. Baloha is me."

Yushchenko, Baloha Strike Back
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10. (C) BYuT has accused Yushchenko of overstepping his
bounds to limit their activities. From Warsaw, Yushchenko on
April 15 sharply criticized the Cabinet's proposal on land
auctions for municipal land. In addition, Yushchenko issued
decrees canceling the privatization of the Odesa Portside

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Plant and suspending a CabMin resolution that had dismissed
the deputy heads of the State Property Fund and appointed
their replacements. Deputy PM Turchynov responded that
Yushchenko did not have the power to issue these decrees and
that the President was undermining the budget by blocking the
government's privatization plans. More clearly partisan were
Baloha's criticisms of the government for failing to address
Ukraine's economic problems, when he said the economic
ministers in the Cabinet should take responsibility for
rising inflation and prices and resign. Baloha has also
continued to publicly allege that Tymoshenko has ties to
former Kuchma chief of staff Medvedchuk, the bogeyman of the
orange revolution. Privately, Baloha told the Ambassador
that Medvedchuk was "a magnet on her body pulling her toward
Russia" and he reiterated his public claims that Medvedchuk
had drafted a new constitution for BYuT to propose.


11. (C) Comment. Yushchenko's objections to the land
auctions may have been reasonable because Tymoshenko
reportedly wanted to create a new bureaucracy to handle the
sales, possibly leading to a situation similar to that of the
now defunct Tender Chamber. Moreover, his action was fairly
consistent with his past comments on land sales -- last
summer Yushchenko vetoed a law on agricultural land because
he said it created parallel bureaucracies. It is harder to
tell who is in the right on the Odesa Portside Plant.
However, Yushchenko could also make his comments in a less
public way and without the implications of broad, high-level
corruption. These do little for the stability of the
government. End comment.


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