PRESIDENT AND PM BURY THE HATCHET...FOR NOW

C O N F I D E N T I A L SECTION 01 OF 03 KYIV 000515 SIPDIS E.O. 12958: DECL: 03/23/2019 TAGS: PGOV PREL UP SUBJECT: PRESIDENT AND PM BURY THE HATCHET...FOR NOW REF: A. KYIV 0471 ¶B. KYIV 0419 Summary -------------- ¶1. (C) A series of meetings between President Yushchenko and PM Tymoshenko focused on the economic crisis and IMF requirements for a second funding tranche have raised some hope of enhanced cooperation between the President and PM. Cabinet of Ministers contacts noted the joint March 23 appearance by Yushchenko and Tymoshenko at an EU gas transportation conference in Brussels as a sign of cooperation, and described a "temporary cease fire" agreement between the two camps lasting until the July commencement of the Presidential campaign. Tymoshenko and Yushchenko outwardly projected a united front in Brussels, agreeing on the need to reform the energy/gas sector and requesting aid to increase Ukraine's transshipment capacity. Many politicians and political analysts remain skeptical of the potential for substantive cooperation, portraying the rift between the main protagonists as irreparable and the cooperation as superficial and intended solely to secure IMF funding. End Summary. Temporary Cease Fire -------------- ¶2. (C) President Yushchenko and PM Tymoshenko met twice in early March (ref A) to discuss the economic crisis and IMF conditionalities. Yushchenko also stated during a March 18 visit to Brussels that Ukrainian leaders could unite to reach a national economic anti-crisis plan, but cautioned that it was not Brussels' role to forge a compromise: "I would not want people somewhere in Europe to give advice on what to do. That is humiliating. No one will solve this matter except Ukraine." Scheduling difficulties have limited the number of meetings, but both sides have publicly restated their commitment to the process. ¶3. (C) Ihor Zhovkva, DPM Nemyria's Chief of Staff, on March 20 told us that the meetings between Yushchenko and Tymoshenko were largely symbolic, but did contain some substance, citing the agreement to jointly appear at the March 23 EU gas transport system donors' conference in Brussels. Zhovkva also claimed that a "cease-fire agreement" had been reached between the two camps lasting until the start of the Presidential campaign in July. Zhovkva ackowledged that the persistent bilateral engagement of the Ambassador and the multilateral engagement of the Group of Seven Ambassadors in urging unity between Tymoshenko and Yushchenko had helped propel them to the "cease fire." ¶4. (C) The recent reintroduction by the Presidential Secretariat of treason accusations against Tymoshenko were ascribed by Zhovkva to attempts by Yushchenko Chief of Staff Baloha to undermine the cease-fire. Tymoshenko would ignore the attacks and was willing to share the stage in Brussels even though it was the Cabinet of Ministers' staff who had done all the heavy lifting preparing the meetings, according to Zhovkva. He said that the President always "swoops in for the credit" once he sees a positive outcome guaranteed, and that Tymoshenko was willing for this to happen on the IMF deal to secure a positive result. Brussels Show of Solidarity -------------- ¶5. (SBU) Yushchenko and Tymoshenko presented a united front in Brussels at the March 23 EU gas transport system donor's conference. They spoke informally both before and after his speech, and both were in synch in recognizing Ukraine's need to reform their energy/gas sector, and in calling for support from donors in increasing Ukraine's gas transit capacity by 60 billion cubic meters. Friction Remains -------------- ¶6. (C) The Brussels show of solidarity and any further potential cooperation on the economic crisis/IMF front is playing out against continued frictions elsewhere in the relationship: - Gas: Yushchenko's public criticism of Tymoshenko's negotiated gas agreement with Moscow escalated with the March 4 SBU raid on Naftohaz headquarters (ref B.) - NSDC confrontation: During a mid-February NSDC meeting Yushchenko kept reporters in the room and attacked Tymoshenko and her gas deal with Moscow. Tymoshenko left the meeting and launched a counterattack in front of reporters on the KYIV 00000515 002 OF 003 sidewalk. - Treason Charges: A Presidential Secretariat deputy in mid-March relaunched accusations of treason against Tymoshenko. SBU Head Nalyvaichenko has publicly stated that no evidence had been found to support these charges. - Nemyria in Brussels: On direct orders from President Yushchenko DPM Nemyria was not granted access to NATO headquarters for the March 5 NATO-Ukraine Commission meeting. - Impeachment of Yushchenko: The possibility of a move in the Rada to start impeachment proceedings against Yushchenko continue to be raised by BYuT MPs. Observers Remain Skeptical -------------- ¶7. (C) A sampling of Rada members we contacted were uniformly unimpressed by the recent meetings. Mykola Katerynchuk, Head of the European Party in the pro-coalition wing of the OU-PSD, told us that "I wish there was real cooperation going on, but on a positive note it does put Yushchenko and Tymoshenko in a room together, something that hasn't happened in a long time." Kyrill Kulykov, pro-coalition OU-PSD MP, was less charitable, evaluating the recent Yushchenko/Tymoshenko meetings as "photo ops constructed for the IMF." The view from across the aisle was similarly skeptical, with Ostap Semerak, BYuT MP, stating that "no real cooperation was occurring because the President was figuring out how to keep Tymoshenko from getting any credit if the IMF team came back or the economy improved." ¶8. (C) Leading political analysts also discounted the potential for substantive cooperation. Viktor Nebozhenko, who runs a leading political analysis shop, told us that irrespective of any signs of cooperation in Brussels the gloves would come off as soon as the IMF released its next tranche, "when the IMF funds hit the National Bank the impeachment and treason issues will flame back to life -- there is no real cooperation possible." Mykhaylo Pohrebybsky, Director of the Kyiv Centre for Political Research and Conflict Studies, believes that Yushchenko will not enter the upcoming Presidential race and is now focused on damaging Tymoshenko's chances of succeeding him. Yushchenko plans to run for President again in five years and prefers a weak successor, possibly former Rada Speaker Yatsenyuk, according to Pohrebybsky. World Bank Shares Skepticism -------------- ¶9. (C) World Bank Senior Economist and acting Country Director, Pablo Saavedra, told us that "even if Tymoshenko wants to take measures to address the crisis, she won't do it because she would expose herself to the President's criticism." He noted that the political situation "is getting awful," with both the President and PM afraid to step forward. Yushchenko repeats that "a better budget is needed to solve the crisis," thereby transferring responsibility to the PM, according to Saavedra. Regarding the weekly anti-crisis meetings, Saavedra indicated that, to his knowledge, there have been three -- two focused on producing the IMF letter of intent, "which was to check box for the IMF," and a third which the PM did not attend (Embassy note: The PM was in France and therefore unable to attend the third meeting. End Note.) Saavedra concluded that the President and PM "can't get out of this situation - they are locked up - politics always trump cooperation." Comment -------------- ¶10. (C) The tentative steps at cooperation begun by the anti-crisis meetings and carried over into the March 23 joint appearance in Brussels underline that Yushchenko and Tymoshenko are still capable of dealing with each other when overriding economic interests are at stake. The overriding economic interest today is reengaging the IMF so that the second tranche of the standby loan can be disbursed. By March 31 the government and president must agree on a package of IMF-required legislative changes, submit it to the Verhovna Rada, and get it passed. If they do, the IMF team will return to Kyiv, complete their assessment and recommend disbursing the second tranche. The international community should continue to encourage the president and prime minister to cooperate on this task. KYIV 00000515 003 OF 003 TAYLOR