TIGIPKO TAPPED UKRAINE CRISIS COORDINATOR

C O N F I D E N T I A L SECTION 01 OF 02 KYIV 000311 SIPDIS DEPT FOR EUR, EUR/UMB, EEB/OMA E.O. 12958: DECL: 02/13/2019 TAGS: EFIN EREL ETRD PGOV PREL XH UP SUBJECT: TIGIPKO TAPPED UKRAINE CRISIS COORDINATOR REF: A. KYIV 250 ¶B. KYIV 295 Classified By: AMBASSADOR WILLIAM B. TAYLOR, REASONS 1.4 (B) AND (D) ¶1. (C) Summary. Sergey Tigipko told the Ambassador on February 11 that he has accepted a position as PM Yulia Tymoshenko's Deputy Prime Minister for economic affairs. Tigipko's daunting task will be to coordinate the GOU's anti-crisis efforts, reaching across political divides that have thus far stalled any harmonized approach. Tigipko was precise in his description of a "discredited" President Yushchenko and a "deficient" Tymoshenko, leaders who nonetheless need to jointly develop and implement a strategy that would utilize Ukraine's "best (human) resources." While cautious about the feasibility of real economic restructuring, given weak leadership at the National Bank of Ukraine (NBU) and the Ministry of Finance and impending presidential elections (planned for early 2010),Tigipko described the need to fulfill IMF expectations for pension reform and fiscal belt tightening. Tigipko is traveling on February 13 and not able to comment on rumors that he may succeed Viktor Pynzenyk, who abruptly resigned on February 12 as Finance Minister. End comment. ¶2. (C) Tigipko told the Ambassador on February 11 that he has accepted Yulia Tymoshenko's proposal to move from his position as Chairman of Swedbank/Ukraine for one year, taking on the role of DPM for economic affairs "without liabilities or desires to go further in politics." Tigipko will join the government because efforts to combat Ukraine's severe crisis remain "without a single strategy." The GOU also lacks capacity right now, he said. What it "needs most is a banking expert, since everything is at stake in the financial sphere." Tigipko was previously NBU Governor (2002-2004) and founder of the TAS banking group, sold to Sweden's Swedbank in 2007 for over $1 billion. (Ref A). ¶3. (C) Laying out a plan to create working groups on bank stabilization, business support, deregulation, and fiscal policy, Tigipko vowed to engage all interested parties, specifically mentioning the NBU, the PM's office, the Ministry of Finance, the Rada, and the Presidential Administration. His method would be collaborative, he said, emphasizing joint brainstorming sessions so that every stakeholder can ultimately say the "chosen strategy is his." This type of organizational structure and philosophy is consistent with proposals from the IMF, which has been informed of Tigipko's possible elevation as DPM and economic coordinator. (Note: The IMF has agreed to pay staff costs for the economic coordinator's office. End note.) ¶4. (C) Tigipko cautioned that implementing an anti-crisis strategy, especially pension reform, would occur only after the presidential elections. His coordinating group will nonetheless prepare near-term "compromises" on the budget and banking sector to satisfy the IMF, while honing in on longer-term objectives that are now too politically decisive to fully embrace. The main task is to stabilize unemployment, the exchange rate, and bank depositor anxiety. "The banking sector is especially miserable," he said. ¶5. (C) Tigipko had few words of praise for Ukraine's current leadership. He suggested to the Ambassador that a "discredited" President Yushchenko and a "deficient" Tymoshenko needed to come together, at least out of the public eye, to forge a compromise over the country's anti- crisis measures. Critical also of both NBU Governor Volodymyr Stelmakh ("who needs to go to rehabilitation" -- "he's 70 years old and done his time") and (now former) Finance Minister Viktor Pynzenyk, who resigned from office on February 12 (Ref B),Tigipko offered a "soft solution" that would install presidential aide Oleksander Shlapak as Deputy Governor, de facto elevating him to Acting Governor in Volodymyr Stelmakh's continued absence. Tigipko agreed to contact Shlapak to help arrange a combined meeting with the President, the Prime Minister, and Rada Speaker Lytvyn that would take place at the behest of G-7 ambassadors, the IMF, and the World Bank. ¶6. (C) Comment. Tigipko is traveling outside of Ukraine until February 19. We have received no comment from him on rampant rumors in the media about his possible role as Finance Minister, following the February 12 resignation of KYIV 00000311 002 OF 002 Viktor Pynzenyk. PM Tymoshenko has been quoted as saying that a new Finance Minister will be named next week, perhaps in conjunction with her announcement of Tigipko as the DPM and overall economic policy coordinator. Our sources suggested on February 13 that Tigipko may also take over the third position, filling Pynzenyk's vacated seat. End comment. TAYLOR