GAS CRISIS: RADA WEIGHS IN

C O N F I D E N T I A L KYIV 000091

SIPDIS

E.O. 12958: DECL: 12/31/2019
TAGS: PGOV PREL PINR UP RS
SUBJECT: GAS CRISIS: RADA WEIGHS IN

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

SUMMARY
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1. (C) On January 13 the Rada created an investigative
commission to examine the causes of Ukraine's gas dispute
with Russia. The commission, led by Party of Regions, is
likely to investigate allegations linking President
Yushchenko to corruption in the energy sphere. Rada contacts
accused the President of involvement with shady gas
intermediary RosUkrEnergo and scuttling a last minute gas
deal with Russia prior to the cutoff. They said the Party of
Regions' call for ousting the Tymoshenko government over its
handling of the gas crisis has little support in the Rada.
Pro-Yushchenko MPs stress the need for unity with the
Tymoshenko-led government in the face of Russian pressure.
The gas shutoff is exacerbating divisions within Party of
Regions and preventing the party from presenting an
alternative to the government's actions. Presidential Chief
of Staff Viktor Baloha predicted that the crisis would unite
political forces against Russia if it continued for another
two weeks. Baloha's deputy dismissed the investigative
commission as a stunt. End Summary.

RADA INVESTIGATORY COMMITTEE CREATED
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2. (U) The Rada voted 222 to 13 on January 13 to establish an
11 member temporary commission to investigate the contract
negotiations and eventual cutoff of Russian natural gas to
Ukraine. (Only 150 votes are needed to create a temporary
commission.) The vote received almost unanimous support from
The Party of Regions, Communist Party and Lytvyn Bloc, and
will be led by Regions MP Inna Bogoslovska. All but two MPs
from the Tymoshenko Bloc (BYuT) and all Our Ukraine-People's
Self Defense bloc (OU-PSD) abstained or voted against setting
up the commission. Bogoslovska said that the commission's
initial goal will be to help restore gas flow to Ukraine and
then to determine responsibility for the gas shutoff.


3. (C) Presidential Deputy Chief of Staff Roman Bezsmertniy,
meeting with the Ambassador January 15, dismissed the
commission as "a toy army." Past commissions amounted to
little more than vehicles of self-aggrandizement for their
chairmen. He recalled the recent commission examining the
GOU's transfer of arms to Georgia. That commission was a
publicity stunt prompted by the FSB's leakage of some
documents to its agent, Regions MP Konovalyuk. "They thought
they could start a revolution," Bezsmertniy remarked,
mockingly.

ROSUKRENERGO
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4. (C) Regions MP Nestor Shufrych told us that the temporary
commission's investigation is aimed at President Yushchenko.
Shufrych claimed that Yushchenko's intervention in the gas
negotiations on the morning of December 31 scuttled a deal
that had gas priced at 235 USD per thousand cubic meters.
Tymoshenko was supposed to sign it in Moscow later that day.
Shufrych claimed that Yushchenko's last minute insistence
that Russia retain RosUkrEnergo (RUE) as a gas intermediary
threw the negotiations into confusion and the deal with
Gazprom fell through.


5. (C) Rada contacts across the political spectrum have
echoed Shufrych's claims of Yushchenko's willingness to
intervene for RUE's benefit - or to deny Tymoshenko a
political victory. Communist Party leader Petro Symonenko,
in a speech prior to the vote on the creation of the
investigative commission, repeated an often-heard accusation
that Yushchenko's brother Petro, himself an OU-PSD MP, has
ownership interests in RUE. Yushchenko publicly denied
allegations that he intervened in gas talks or that he has
any ties to RUE and has threatened to bring libel suits
against his accusers.


INSUFFICIENT SUPPORT FOR VOTE OF NO CONFIDENCE
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6. (C) Regions party head and former Prime Minister Viktor
Yanukovych called for a vote of no confidence in Prime
Minister Yuliya Tymoshenko's government over her handling of
gas negotiations. Despite a motion for a vote being
registered in parliament on January 12, Regions contacts tell
us that a no confidence vote is unlikely to succeed. A
unified Regions would need the backing of the Communist Party
and at least twenty-four Our Ukraine-People's Self Defense
MPs.


7. (C) Regions Deputy Faction head Volodomyr Makeienko told
us that Regions is not seriously pursuing a vote to remove
Tymoshenko and that everything done by the parties should be
viewed through the prism of this year's presidential
election. He said that the Communist Party has told Regions
that it will not support a no confidence vote and that
Regions could expect a handful of its own deputies to defect
as well. Shufrych told us that Regions knows that Tymoshenko
would win a no confidence vote and that there is no internal
party effort to line up deputies for a vote. He said that
Yanukovych could still push for a vote knowing that Regions
would lose, in order to show that he did all he could in his
efforts to thwart Tymoshenko.


8. (C) Pro-Yushchenko OU-PSD MPs told us that they would not
vote with Regions to bring down the Tymoshenko government.
MP Kseniya Lyapina said that the Rada needs to present a
united front to Russia during the gas negotiations and that
pro-presidential MPs would not vote to oust the Tymoshenko
government over the gas crisis. MP Lylya Grygorovych told us
that a vote of no confidence is just a political game being
played by Yanukovych that will fail. She also reiterated
Yushchenko's public statement that pro-presidential MPs need
to work with the Tymoshenko government and show a united
front to Russia in order to resolve the gas crisis.


PARTY OF REGIONS DIVIDED ON GAS
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9. (C) Regions' conspicuous silence the week following the
Russian gas cutoff and limited recent criticism are a result
of internal party splits over how to handle the gas crisis,
according to maverick Regions faction MP Taras Chornovil. He
told us (as have others) that the gas crisis had further
widened divisions on two levels between the Dmitri
Firtash/RUE group (which includes MPs Yuriy Boyko, Serhiy
Lyvochkin, and Hanna Herman) and the group led by oligarch
Rinat Akhmetov. First, the Firtash group opposes any efforts
to remove RUE as an intermediary in the gas trade with
Russia. The Akhmetov group and other industrialists receive
no benefits from RUE and see it as an obstacle to a long-term
gas contract for Ukraine with Gazprom. Second, RUE's
exclusion from the Russian-Ukrainian gas trade would be a
serious blow to its ability to financially compete for
control of Regions with the Akhmetov group. Chornovil
emphasized that because of these internal rifts, Regions'
criticism has focused on general charges of government
incompetence and unprofessionalism without providing
specifics on the gas crisis.


10. (C) These divisions were much in evidence January 14 when
Regions Deputy Shufrych (reputed to be Tymoshenko's paramour)
publicly attacked his fellow Regions MP Boiko over Boiko's
comments that Tymoshenko was the one at fault for scuttling
the gas deal with Russia. Boiko claimed (as do others) that
Tymoshenko seeks to create a gas intermediary headed by
former Kuchma Chief of Staff Viktor Medvedchuk to replace
RUE. Shufrych dismissed it all as a deliberate lie.

BALOHA WEIGHS IN
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11. (C) In a January 13 meeting, Presidential Chief of Staff
Viktor Baloha told the Ambassador that Ukraine would unite in
opposition to Russia if the crisis continued for two more
weeks. He said that Russia was challenging Ukraine's
sovereignty, and any president would have the same problems
with Russia that Yushchenko is having. Baloha stressed that
Ukraine must be united in the face of continued Russian
pressure, and he refrained from his usual vitriolic attacks
on Tymoshenko and her government, saying he would reserve his
comments on domestic politics for another time.


COMMENT
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12. (C) Rada sessions thus far have largely avoided
nationalist rhetoric. There is little sign as yet in the
Rada of the broad-based opposition to Russia that Baloha
foresees. Regions leaders continue to focus their criticism
on Yushchenko and Tymoshenko. While Yushchenko lacks the
political capital to unite the country, former Orange
coalition forces seem to be coming together, temporarily at
least, behind Tymoshenko.

TAYLOR