UKRAINE: NATO/PFP TRUST FUND DESTRUCTION PROJECT

C O N F I D E N T I A L KYIV 000782

SIPDIS

SIPDIS

DEPT ALSO FOR EUR/UMB AND EUR/PRA

E.O. 12958: DECL: 04/17/2018
TAGS: MARR MOPS PREL PARM NATO PINR US UP
SUBJECT: UKRAINE: NATO/PFP TRUST FUND DESTRUCTION PROJECT
AND MANPADS UPDATES

REF: A. STATE 37937

B. STATE 30482

Classified By: Political Counselor Kent Logsdon for reasons 1.4(b,d)


1. (SBU) Summary: PolCouns, Polmiloff, and DATT met April 16
with Deputy Defense Minister Valeriy Ivashchenko to discuss
the status of the NATO PfP Trust Fund destruction project and
deliver the corresponding non-paper (ref A),and raise the
possible mid-May visit of the Special Envoy for MANPADS
Threat Reduction (ref B). Ivashchenko said he had spoken
with a Deputy Minister of Economy, who agreed to work with
him to find a solution that would allow destruction of
"Category Four" weapons, which currently under Ukrainian
legislation cannot be eliminated until they have been offered
for sale for five years. He emphasized the importance to
Ukraine of proceeding to the destruction of excess and
obsolete large-caliber munitions, but acknowledged the point
that it would be hard to move ahead with this phase of the
project until the issue regarding the provision of excess
small arms and light weapons for destruction was resolved.
Ivashchenko responded with the same points but had no further
update when Ambassador raised the subject during an April 18
meeting with EUR DAS David Merkel. In a separate April 16
meeting, MFA Arms Control Director Volodymyr Belashov said
some Ukrainian government officials advocated withdrawing
from the NATO PfP Trust Fund in order to allow all available
funding to be used immediately for destruction of
large-caliber munitions. He also reiterated that the current
stock of MANPADS were required for Ukraine's defense
requirements and therefore could not be made available for
destruction.


2. (C) Comment: Ivashchenko promises to be a good
interlocutor and action officer on both the destruction
project and MANPADS threat reduction. While new to the
topic, he seemed to have made a careful study of his staff's
briefing papers, citing numbers and figures for us. We were
also impressed by the fact that he had contacted the Ministry
of the Economy prior to our meeting on the issue. As a good
civil servant bureaucrat who has climbed the Ministry of
Defense ranks, Ivashchenko is likely to be a quick study and
be attentive to an issue that is important to us. He had
everyone from MOD who might play a role in resolving this
issue on his side of the table. End summary/comment.

MOD - Small Arms and Light Weapons
--------------


3. (U) Drawing from ref A and a telephonic consultation with
NATO Maintenance and Supply Agency (NAMSA) Project Manager
Steve Brown before the meeting, PolCouns highlighted U.S.
concern that nearly 300,000 of small arms and light weapons
(out of a total of 400,000 scheduled for destruction) had
been placed in a category that made them unavailable for
destruction. This problem with the supply of small arms and
light weapons (SA/LW) threatened the timely completion of the
project, but the U.S., as lead nation, was reluctant to
approve a project extension (also necessary to complete
munitions destruction) until it had assurances that the SA/LW
had been made available for destruction.


4. (SBU) Ivashchenko interrupted PolCouns's presentation,
indicating that he was aware that the supply of SA/LW for
destruction was the key issue, and stressed that the
Ukrainian government "Utilization Commission" had not made a
decision but only a recommendation regarding Ukraine's
commitments to NAMSA. He understood the project
implementation had slowed, since the project had nearly
exhausted the supply of "Category Five" weapons available for
immediate destruction. Unfortunately, according to Ukrainian
law, weapons in other categories, Category Four and higher,
could not be easily eliminated. (Note: NAMSA's Brown advises
that the weapons must normally be offered for sale for five
years without any offers to purchase before the Cabinet of
Ministers can authorize their destruction.) Ivashchenko said
he was working with other ministries and relevant authorities
to authorize the additional 280,000 weapons needed for the
destruction project. In this regard, he had met with Deputy
Minister of Economy (Valery) Muntiyan to emphasize that,
despite the legal and economic obstacles, Ukraine needed to
honor its international commitments. Muntiyan had agreed
with Ivashchenko's position and committed to cooperate in the
search for a solution.


5. (SBU) Note: Muntiyan's support is a promising development.

Former Minister of Economy Volodymyr Makukha appointed
Muntiyan and four other deputy ministers on March 14, 2007,
and Muntiyan has remained as Deputy Minister of Economy under
current Minister Bohdan Danylyshyn. Makukha announced that
Muntiyan would be working on financial policy, economic
strategy, and cooperation with international financial
institutions. Prior to his appointment, however, Muntiyan
had been a long-serving Ministry of Defense bureaucrat. He
rose to the position of Deputy Defense Minister on December
17, 2003, with responsibility for budget and economic matters
until then-President Kuchma dismissed Muntiyan on October 5,
2004, in what might have been a general house-cleaning
accompanying Yevhen Marchuk's September 22 departure as
Defense Minister. As Deputy Defense Minister, Muntiyan
appears to have been relatively outspoken about the need to
increase the defense budget. Earlier in his career, Muntiyan
was appointed head of MOD's Economic Department in 2007, and
then became the Defense Minister's adviser on budget
formation and financial and economic activity. End note.

MOD - Project Extension/Burden-sharing
--------------


6. (U) When PolCouns said that the U.S. would not agree to
extend the current project until the SA/LW problem had been
resolved, Ivashchenko noted that he had personally requested
the one-year extension during a meeting in Brussels. Even if
the SA/LW issue were to be resolved the next day and
destruction resumed in two, there would still not be enough
time remaining in 2008 to meet the project's original goals.
Additional time was needed to resolve the SA/LW problem on a
political level.


7. (U) Ivashchenko said that he had also met with the NATO
Liaison Office and NAMSA to propose a change in the financial
burden-sharing for munitions destruction. Disposal of
surplus large-caliber munitions, including artillery shells,
aerial bombs, land- and sea-mines, etc., was Ukraine's top
priority. The current project, however, targeted destruction
of smaller-caliber munitions. Storage of munitions up to
100mm was not a problem from a security or financial
perspective and posed no threat of reaching terrorist
organizations. While he was not requesting an immediate
change, Ivashchenko said Ukraine hoped to change current
financial arrangement, in which Ukraine bore 2/3 of the cost
of munitions destruction, to one in which the Trust Fund
funded 2/3 of the cost. (Note: NAMSA's Brown advised that
the additional cost to Ukraine originated when the munitions
destruction site was moved from the central Ukrainian town of
Kalinivka to five sites, mostly located in eastern Ukraine.
The change had increased the costs for Ukraine to transport
the munitions to the destruction facilities. Brown had
suggested that Ukraine modify the schedule of munitions to be
destroyed to include munitions located more conveniently to
the new destruction facilities.) PolCouns promised to convey
this information to Washington, but suggested that it would
be hard to discuss any changes in the plan to destroy
large-caliber munitions until the SA/LW problem was resolved.


8. (U) Ivashchenko then cited some specific problems related
to storage of large-caliber munitions. In the town of
Brukhovychy (just outside of Lviv city),for example, a
storage site has 3,500 tons that need to be eliminated. In
Khmelnytsyky region, in the town of Slavuta, an ammunition
storage site with 4,000 tons of munitions is located near the
Khmelnytsky nuclear power plant (which, despite its name, is
located in the north of Khmelnytsky region, not in the city
of the same name and by the town of Netishyn). While the
Ukrainian government was providing funds to the NATO PfP
Trust Fund for destruction of small-caliber ammunition for
rifles and machine guns, the danger remained that 200mm
rounds could explode near a nuclear power plant or in a city,
killing or injuring people. (Comment: The intensity with
which Ivashchenko made this point suggested that he was not
just parroting talking points, but was personally concerned
about the danger, and perhaps also the potential political
fall-out from an accidental explosion.)


9. (U) As the meeting drew to a close, we raised our interest
in obtaining additional MANPADS from the Ukrainian side for
destruction and reiterated that our offer of $5 million in
additional funding for large-scale munition destruction
remained on the table. Polcouns also handed over the full
text of the non-paper (Ref A) and the announcement of the
appointment of Ambassador Lincoln Bloomfield as the Special
Envoy for MANPADS Threat Reduction, which Ivashchenko

promised to review. Expressing surprise that the USG would
be concerned about the security of Ukraine's MANPADS
stockpile, he invited U.S. officials to visit a MANPADS
storage site, so they could be satisfied that the conditions
of storage precluded theft or unauthorized diversion of the
weapons. In addition to Ivashchenko, MOD participants
included Rocket and Ammunition Elimination Department
Director Petro Pyatybrat, Deputy Director Col. Yuriy
Brovchenko, International Cooperation Directorate Lt. Col.
Sergey Verbytsky, Deputy Minister Special Assistant Viktor
Miroshnychenko, and Military-Technical Cooperation Deputy
Director Yuriy Kharshenko.

MFA - Interagency battles
--------------


10. (U) During a separate meeting April 16, we briefed MFA
Arms Control Director Volodymyr Belashov and informed him
about Ambassador Bloomfield's interest in visiting Ukraine in
mid-May. Belashov was interested to hear that the Deputy
Minister of the Economy had supported the MOD view that
Ukraine should meet its commitment to destroy SA/LW despite
the legal obstacles in scheduling Category Four weapon for
elimination. He said destruction of munitions remained a
Ukrainian government priority and he had recently become a
member of a new interagency working group dedicated to three
topics: the NATO PfP Trust Fund project; elimination of
munitions, especially at the Novobohdanivka munitions storage
site; and elimination of melange rocket fuel. Although
Ukraine had an international commitment to NATO and to NAMSA,
some members of the interagency working group, such as the
Ministry of Economy, were arguing that Ukraine's support to
the Trust Fund project was siphoning funds needed for higher
priority munitions elimination. They were advocating
Ukraine's withdrawal from the Trust Fund project.


11. (U) Note: We were separately provided with the Ministry
of Economy (MOE) arguments. Noting that the Ukrainian state
budget normally allocates about 140 million hryvnia (U.S. $28
million) for weapons and munitions elimination, MOE argues
that the 40 million hryvnia, or almost a third of the state
budget for this task, required to support the NATO PfP Trust
Fund represents a diversion from Ukraine's highest
priorities. The funds to the Trust Fund results in the
destruction of munitions, 80% of which is small-caliber and
do not pose a danger at ammunition storage sites.


12. (C) Belashov also reiterated earlier points suggesting
that the Ukrainian government would be unlikely to part with
MANPADS. He said Ukrainian enterprises have stopped
manufacturing MANPADS, so the Ukrainian military needed to
rely on its current stock for its defense needs. Admitting
that he did not know the total number that Ukraine holds,
Belashov said Ukrainian experts believed that the operational
life of the MANPADS could be extended by additional
"decades." In addition, after Foreign Minister Ohryzko's
return from Moscow, Belashov said he had been given a number
of tasks, including the Ukrainian response to a Russian draft
agreement on mutual notification regarding transfer of
MANPADS to third parties. Belashov said the agreement would
eventually be concluded, since Ukraine wanted to know where
Russia was sending its MANPADS and, in the event MANPADS were
involved in a terrorist attack, to prove to Russia that the
missile in question had not originated in Ukraine. Implied
in Belashov's comments was the notion that, once the
agreement was in place, Ukrainian officials would be
reluctant to report to the Russians that they had transferred
MANPADS to the U.S. for political, vice commercial, reasons.


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