UKRAINE: COALITION TOGETHER FOR NOW, BUT

C O N F I D E N T I A L SECTION 01 OF 04 KYIV 000960

SIPDIS

E.O. 12958: DECL: 05/21/2018
TAGS: PGOV PREL PINR UP
SUBJECT: UKRAINE: COALITION TOGETHER FOR NOW, BUT
ALTERNATIVES IN THE WINGS

REF: A. KYIV 00954


B. KYIV 00873

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


1. (C) Summary. For now, Ukraine's fragile coalition is
holding itself together -- barely-- for a variety of reasons
and in spite of the public bickering and threats, and could
continue to muddle along for weeks or months. All parties
are reluctant to return to expensive and time-consuming new
elections, both orange parties are suffering from dropping
ratings in the polls, and there is no agreed upon alternative
coalition/government in the wings. However, should
intra-coalition relations continue downhill there are a
number of ways this could play out. A formal decision to
terminate the coalition would result in an acting government
and could evolve in one of several directions. If enough Our
Ukraine deputies would agree, it is possible that a new broad
coalition could be formed with Regions and the Lytvyn Bloc,
although it is an open question as to whether Yanukovych
could reclaim the premiership. Another alternative might be
a technocratic solution, with no new coalition and a new
government approved by a situational majority of MPs,
apparently a favorite of Presidential Chief of Staff Baloha
but quite possibly unconstitutional. More radical solutions
would be the holding of new elections or agreement on a new
constitution.


2. (C) The most likely scenario in the short term is that the
coalition will somehow manage to stick together and
sporadically accomplish items in the Rada and Cabinet.
President Yushchenko and Prime Minister Tymoshenko continue
to insist that they are committed to the current coalition,
in spite of their constant sniping in the press, and
Tymoshenko's BYuT and the Cabinet have made several
concessions since May 16 to try to ease tensions. Moreover,
voting in the Rada on May 16 and 20 shows that the coalition
can get its act together when it needs to, although it
sometimes needs outside support to get bills passed.
However, the refusal by some in OU-PSD to support all of
BYuT's anti-inflation laws on May 16 after they promised to
do so, the announcement that the Prosecutor General is filing
criminal charges against the BYuT-nominated head of the State
Property Fund, the harsh public battle over Vanco,
Yushchenko's strongly worded accusations May 17-18 that
Tymoshenko had violated the coalition agreement, and
Tymoshenko's equally strongly-worded May 20 rebuttals,
suggest the coalition could still crack under pressure. End
summary and comment.

Muddling Through
--------------


3. (C) There are a number of incentives for the coalition to
stick it out for at least a few more months. Neither side
seems prepared for early elections and there are political
and legal impediments to any of the other scenarios outlined
below. In addition, there seems to be a sense from political
observers, which was also echoed to us by Regions MPs
Lyovochkin and Kolesnikov, that Yushchenko does not want
Tymoshenko to leave office until her ratings have dropped
sufficiently to hurt a future bid for the presidency, the
consensus being that once she is back in the opposition, her
ratings will not fall farther. Lyovochkin told us that it
could take a few more months to see her ratings drop into the
low teens. Deputy Head of the Presidential Secretariat
Chaliy predicted to the Ambassador on May 20 that the May 25
Kyiv mayoral election would be Tymoshenko's first big defeat.
He added that this loss, the declining economic situation,
and her inability to get Regions' support, would cause her
political star to fall. (Note. Reliable polls are somewhat
hard to come by in Kyiv, but there has been no noticeable
drop in Tymoshenko's ratings, which hover in the 23-26%
range, since she became PM in December 2007. In contrast,
Yanukovych's numbers may be seeing an up-tick, rising above
25%. End note.) For the opposite reason, Tymoshenko may
want to stay in office while she fights inflation and rising
prices to protect her image.


4. (C) Another sign that the coalition might hold it together
is that the Rada managed to pass legislation on May 16 and

20. On May 16, the coalition passed the CabMin law and the
law amending customs tariffs (in the first reading),although
the latter only with Regions' help. On May 20, the Rada
passed in the first reading the Labor Code, a WTO law on
fish, a WTO law on veterinary medicine, and the tender
chamber law -- in three of the four votes, the coalition had
enough votes alone, although other factions voted for some of
them as well (the tender chamber law would have failed
without the Communists). There may also be a few left on

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both sides who see keeping the democratic coalition together
as important for achieving goals, such as NATO MAP, increased
foreign investment, Euro 2012 preparations, and a free trade
agreement with the EU.

The Mechanics - The Range of Possible Changes
--------------


5. (C) Before any alternative scenarios could take place,
one team or the other would have to officially end the old
coalition or force a scenario that calls for the Rada to be
dismissed. One faction can withdraw from the coalition
agreement if a majority of MPs agree to it -- this would mean
37 OU-PSD MPs, which for now is still an uncertain number. A
simple majority in the Rada can vote no confidence in the
government, which results in its dismissal, which may also
lead to the end of the coalition. Regions has been frank in
its readiness for a broad coalition, given the right
circumstances, which presumably involves a return of Viktor
Yanukovych to the premiership. We believe that Presidential
Secretariat Head Baloha is still trying to devise a situation
in which there is no formal coalition, just a situational
majority with some sort of technocratic government, possibly
with himself or Speaker Yatsenyuk as PM, although it is not
clear how to legally reach this goal. Should BYuT want to
change the status quo, it could either go into opposition or
once again resign en masse, depriving the Rada of its quorum.
The other possible route for change is constitutional reform
-- if any draft is passed, it is likely to involve some sort
of early elections and/or dramatic redistribution of power.

Terminating the Old Coalition
--------------


6. (C) The most straightforward way for the current coalition
to collapse would be for at least half of one of the two
factions to vote to withdraw from the coalition. The
departing faction must give 10 days notice to its coalition
partner, according to the old Rada rules of procedure, after
which the Speaker announces the MPs who are departing from
the coalition and their names are printed in Holos Ukrainy.
If the remaining MPs in the coalition number fewer than 226,
the coalition is terminated. In the present case, OU-PSD is
more likely to withdraw, which would mean 37 MPs would have
to vote to empower the faction to leave the coalition. We do
not believe that Presidential Chief of Staff Baloha -- one of
the main proponents of an alternative coalition -- currently
has 37 supporters, but there is growing frustration within
OU-PSD. Chaliy admitted that it was "very difficult to get
to 37." Rada rules say that if a coalition is terminated,
the Rada can terminate the authority of the ministers from
the party that left the coalition, but it does not say they
must.


7. (C) The other possible way to terminate the coalition
could be via a no confidence vote in the Cabinet. Article 87
of the constitution says that the President or 150 MPs can
initiate a vote of no confidence in the government -- a
simple majority (226) in favor results in the automatic
resignation of the PM and all ministers. Regions alone, with
its 175 deputies, could introduce a resolution calling for a
vote of no confidence. This option is also mentioned in the
Rada rules of procedure and is clarified in the new CabMin
law. Neither the constitution, the CabMin law, nor Rada
rules specify that this automatically means the termination
of the coalition, but given that a no-confidence vote could
only pass with the support of at least some OU-PSD MPs, such
an outcome is likely.

Broad Coalition
--------------


8. (C) Should the current coalition collapse, Regions MPs
have repeatedly confirmed to us that they are still hopeful
that a new coalition will be formed between their faction and
OU-PSD. Regions oligarch Akhmetov told the Ambassador on
March 3 that eventually he wanted to see this outcome,
Yanukovych confirmed to DAS Merkel on April 18 that they had
been working for a broad coalition since March 2006, and
Lyovochkin told us on May 13 that they all expected sooner or
later that the President and his faction would be ready to
reformat the ruling coalition. Lyovochkin also said that he
thought someone might soon register a no confidence
resolution, but he was coy about which faction might initiate
the action, implying it could be Regions to give OU-PSD
political cover.


9. (C) However, deciding who will be PM, and to a lesser
degree Speaker, is probably one of the key issues holding
back a broad coalition. Lyovochkin confirmed to us that

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Yanukovych would expect to be PM if a new coalition was
formed. However, Yushchenko and OU-PSD are likely looking
for a scenario with a PM who would not be such a political
liability for them and who would be more cooperative, and
Chaliy admitted to the Ambassador that "what to do with
Yanukovych" was a big stumbling block. He added that he was
sure that one condition Yushchenko would demand of a new
prime minister would be support for NATO MAP. Speaker
Yatsenyuk and Defense Minister Yekhanurov's names get thrown
around occasionally as possible "neutral" candidates, who
both sides might accept. (Note. Yatsenyuk was also the
consensus candidate for Foreign Minister in March 2007,
ending a Regions-OU dispute. End note.) A complicating
factor could be the role Lytvyn Bloc might play in a new
coalition. Both Regions and OU-PSD may want Lytvyn Bloc in
the coalition as a moderating factor, and if not all 72
OU-PSD MPs agree to the new coalition, they will need Lytvyn
Bloc for stability, and possibly to form the coalition at all
(since 175 Regions deputies plus 37 OU deputies would only
equal 212 seats and 226 are needed for a majority).
Presumably, in exchange for joining a coalition, Lytvyn Bloc
would hope to return Lytvyn to the Speaker's chair, but
between OU-PSD and Regions, whichever did not get the
premiership would probably want to run the Rada. It seems
that Yushchenko and most of OU-PSD would hesitate to move
toward this variant until these key issues are resolved. In
addition, they are probably concerned about their image being
further damaged by formally joining efforts with its former
opponents, especially with presidential elections and a
certain Tymoshenko candidacy on the horizon in early 2010.

Technocratic/Acting Government
--------------


10. (C) It appears that the preferred option for the
Presidential Secretariat is probably a technocratic
government backed by a situational majority, which wouldn't
have to deal with Yanukovych as PM or explain a broad
coalition to Yushchenko's electorate. Article 83 of the
constitution says that the Rada must form a new coalition
within 30 days of the termination of the previous coalition,
and article 90.2 says the President has the right to disband
the Rada if this does not happen. However, the constitution
does not say Yushchenko "must" disband the Rada and the
President is constrained by article 90.4 that says the powers
of a Rada elected in pre-term elections cannot be terminated
for a year. This leaves open the possibility of a
situational majority rather than a formal coalition with some
sort of technocratic government. We heard a lot of talk of
this from the Presidential Secretariat and others in the
winter, and Baloha may hope that he could be named acting PM
-- Yatsenyuk and Yekhanurov's names also come up in this
context. Chaliy said this could be the option they push
following a no confidence vote on Tymoshenko.


11. (C) However, this path is constitutionally dubious and
not covered in the constitution or Rada rules, a problem
Chaliy admitted to the Ambassador when he noted that this
would probably be on the "edge of legality." Technically,
Tymoshenko should remain as acting PM until a new PM is
confirmed in the Rada. Since coalitions name the PM, it is
not clear through what mechanism a PM could be named without
a coalition. Ukrainian politicians are skilled at reading
between the lines and exploiting loopholes, so we cannot rule
out this scenario. However, it would require Regions or BYuT
to join OU to vote for the new PM, so negotiations would
still have to occur.

Early Elections
--------------


12. (C) There are several ways to disband the Rada.
Yushchenko could take advantage of article 90 of the
constitution if there is no new coalition within 30 days or
no new government within 60 days. In addition, there is now
the precedent, after the spring 2007 political crisis, that
151 MPs resigning also causes the Rada to disband. However,
given article 90's restriction on holding pre-term elections
more often than once a year, no matter how the early
elections were brought about, no vote could be held before
October 1, 2008. This means, should Yushchenko disband the
Rada or 151 MPs resign, MPs would continue in acting capacity
until the new election.


13. (C) Moreover, there is also election fatigue among all
the parties. Lyovochkin told us May 13 that no one wanted
new elections -- most likely because of both cost and general
popular disgust with national politicians. OU-PSD are
worried that falling ratings would shrink their new faction
even more. Political analysts say that even BYuT is taking a

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hit in its ratings, although once again there is not enough
good published polling data to back this up. Moreover, many
are looking to the May 25 Kyiv mayoral and city council
elections as a bellwether for national elections, so the
outcome may influence how the major players view a new Rada
election. For example, CVU head Ihor Popov predicted BYuT
would do poorly on May 25, which could drop their results in
a new national election from 5-15 percentage points.


14. (C) However, reservations about new elections have not
quieted speculation and accusations that others are plotting
to bring them about. On May 17, Baloha accused BYuT of
working for pre-term elections by the end of the year.
Yanukovych said that Regions will not initiate new elections,
but is ready for them, should they happen. Yatsenyuk said
that if the coalition can't fix itself quickly, he thinks
early elections are likely.

New Constitution
--------------


15. (C) The final path to significant governmental change
would be the adoption of constitutional amendments or a new
constitution, which could occur with or without early
elections. All three parties have constitutional drafts in
play. BYuT legal adviser Zadorozhniy said the drafts from
BYuT and Regions are very similar in that they move Ukraine
toward a purely parliamentary system and the two parties are
in talks on future cooperation (ref B),although Regions has
publicly stated that it is not cooperating with BYuT on a
joint draft. Chaliy told the Ambassador that he thought this
scenario was impossible because an alliance with Regions was
"abhorrent" to Tymoshenko and Akhmetov opposed the idea as
well.


16. (C) BYuT did not introduce its constitutional draft in
the Rada the week of May 12 as Tymoshenko had publicly
threatened to do. Zadorozhniy had confirmed to us privately
that they planned to do so, but presumably they could do this
at any time. If Tymoshenko is serious about instituting her
proposed constitution by the end of the year, she will need
to act soon since the process takes time. As Zadorozhniy
pointed out, once the draft is registered with the Rada, they
need to establish a commission to review the draft and come
to a consensus. Then 226 votes are required to send it to
the Constitutional Court to ensure that it complies with all
requirements in the current constitution. When the CC
approves the draft, it goes back to the Rada for another 226
vote approving the text. If this is done by the end of the
spring session, the second vote of 300 MPs can take place in
the fall, allowing the constitution to be approved this year.
However, there are only four more weeks of plenary left in
the spring session, with July 11 the final date for voting.
Interestingly, the Venice Commission reported that the only
draft constitution it has received so far is from the
Presidential Secretariat. (Note. Venice Commission approval
is not required, but it gives constitutional reform a stamp
of legitimacy and European approval. The Venice Commission
offered opinions on constitutional drafts in 1996 and 2004.
End note.)


17. (C) If any constitutional draft is adopted, it will
include transitional language that lays out when the new
constitution comes into effect and under what circumstances.
For example, Tymoshenko has said that she would be willing to
include transitional provisions extending Yushchenko's
current term in office until 2013, albeit with reduced
powers. Neither Yushchenko nor Yanukovych have indicated how
or when they see their drafts coming into effect. Many
believe that any new constitution will come with new Rada
elections, as parties try to maximize their advantage in the
new system.


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