YUSHCHENKO WELL RECEIVED IN TORONTO

UNCLAS TORONTO 000168

SIPDIS
SENSITIVE

STATE FOR EUR/UMB

E.O. 12958: N/A
TAGS: PGOV PREL ECON CA UP
SUBJECT: YUSHCHENKO WELL RECEIVED IN TORONTO

Sensitive but unclassified - protect accordingly.


1. (U) SUMMARY: Ukrainian President Victor Yushchenko concluded a
three day trip to Canada with business meetings and a speech to the
prominent Economic Club of Toronto. Yushchenko's speech was
well-received, even though it was heavy on themes and short on
specifics. Several hundred people were in attendance, a mix of the
Ukrainian expatriate community (which numbers approximately one
million in Canada) and Canadian business executives interested in
investment opportunities in the former Soviet country. Yushchenko
painted a broad picture of his country, focusing on the need to
assert its independence and ties with the West through eventual NATO
and, further down the road, EU membership. While the 30 minute talk
was heavy on political background, the president also touched on the
need for increasing economic liberalization and stable energy
supplies. END SUMMARY.


2. (U) Yushchenko began by stressing the ties between Canada and
Ukraine and commented that in order to increase ties between the two
countries, he would like to see the visa regime abolished for most
categories of Canadians seeking to visit, study, or do business in
Ukraine. He painted a clear picture of the westward gaze of Ukraine
under his leadership, including highlighting the distinct
possibility of his country gaining associative relations with the EU
during France's 2008 EU presidency and an impending free trade
agreement with the EU. He particularly noted Canada's support for
Ukraine's NATO membership bid, calling membership essential to both
the territorial integrity and sovereignty of his country. Asserting
the logical connection between common values and a common defense,
he said NATO membership would be the path towards guaranteeing
Ukraine's independence - an independence he said had been declared
six times in the past century and lost five times. He acknowledged
that NATO membership is not favored by a majority of Ukrainians, but
noted progress by citing figures saying support had doubled in three
years from 17 to 36 percent, and was continuing to grow.


3. (U) Perhaps aware of his critics back home, Yushchenko heralded
what he termed the "new culture of serious macroeconomic stability"
in his country. He cited a list of positive developments, including
high returns for foreign investors, healthy trade balances, balance
of payments, GNP growth, new job creation, and WTO membership.
However, in perhaps a thinly-veiled critique of his political
rivals, he expressed dismay that his country is still suffering
because of "socialist policies." He specifically commented that the
food market needs to work more efficiently: currently strict
restrictions on grain exports despite increasing grain production
are preventing Ukrainian farmers from taking advantage of rising
world grain prices and distorting markets at home. He also
highlighted the need for stable energy supplies and policies in
Europe. Several agreements appear to be in process with the EU, he
noted that a long-planned Caspian pipeline from Baku, Azerbaijan
through Ukraine to Europe may be in the offing, and thanked Canada
for signing a nuclear energy agreement with Ukraine to develop
nuclear energy supplies.


4. (U) Finally, linking Ukraine's political and economic
aspirations, Yushchenko focused on the benefits his country expects
to reap from hosting the 2012 UEFA soccer finals. He commented that
Ukraine is the first Eastern European country to host the
championship and said this would be another shortcut to his goal for
Ukraine of EU integration and eventual membership. He said US$25
billion of investment is needed to prepare his country's
infrastructure for the event, including new hotels, new sports
stadiums, and including US$10 billion in road repairs and
construction.


5. (SBU) COMMENT: As the beneficiary of several standing ovations
and long, glowing introductions, it was obvious the president was in
front of an admiring crowd. While some in the audience displayed an
obvious interest in partnering with Yushchenko's westward-leaning
Ukraine in investment opportunities and the president's speech
appeared geared towards encouraging those aspirations, it was also
apparent from the undertone of the president's remarks that his
country's transformation remains a work in progress. Never far from
his talking points was the fact that partnerships with governments
of countries such as Canada and those in the EU will be critical to
seeing him achieve what he presented as his ultimate goals of
Western political, military, and economic integration. END
COMMENT.

NAY