Reference ID Created Released Classification Origin
10KYIV107 2010-01-22 13:48 2011-08-30 01:44 CONFIDENTIAL Embassy Kyiv
OO RUEHDBU RUEHSL
DE RUEHKV #0107/01 0221348
ZNY CCCCC ZZH
O 221348Z JAN 10
FM AMEMBASSY KYIV
TO RUEHC/SECSTATE WASHDC IMMEDIATE 9180
INFO RHMFISS/DEPT OF ENERGY WASHINGTON DC IMMEDIATE
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC IMMEDIATE
RUEATRS/DEPT OF TREASURY WASHINGTON DC IMMEDIATE
RUEHZG/NATO EU COLLECTIVE
C O N F I D E N T I A L SECTION 01 OF 03 KYIV 000107
DEPT FOR EUR, EUR/UMB
E.O. 12958: DECL: 01/21/2020
TAGS: EFIN ETRD PGOV PINR PREL UP XH EREL
SUBJECT: POSSIBLE NEW UKRAINIAN PM TIHIPKO CASTS SELF AS
Classified By: Ambassador John F. Tefft for Reasons 1.4 (b) and (d)
¶1. (C) Summary. Serhiy Tihipko may accept the position of
Prime Minister of Ukraine, but only if he is guaranteed
support from the new President and the Rada (parliament) to
tackle economic and administrative reforms, and only after
the presidential race concludes. Having just finished third
in Ukraine's January 17 first round presidential election,
Tihipko told the Ambassador that he would support neither
Yulia Tymoshenko nor Viktor Yanukovych prior to the February
7 second round vote. Tihipko said he had been underestimated
and unsupported by elites in Ukraine and abroad, but his lack
of political debts now provided him leverage and
independence, especially in ongoing negotiations with
Ukraine's major faction leaders and in his upcoming trip to
Moscow. End summary.
PRESIDENTIAL ELECTION SECOND ROUND
¶2. (C) Millionaire businessman and former Deputy Prime
Minister and National Bank Governor Serhiy Tihipko, who
placed third in Ukraine's January 17 first round presidential
election, told the Ambassador on January 21 that he would
"stay away from the fight" between Yanukovych and Tymoshenko
before the second round. Tihipko's primary rationale was
that he did not want to take responsibility for what either
candidate would say on the campaign trail. He noted that
both were "bad alternatives" for Ukraine, since neither alone
would make the "democratic changes and economic
modernizations" the country needed. Tihipko commented that
each had served as Prime Minister twice and had already
received plentiful chances. Voters were now faced with a
choice of the "lesser evil."
¶3. (C) Tihipko said there was a danger the second round
election results could be delayed due to litigation, and he
feared the courts would be unable to resolve the situation.
Tihipko said any extended delay or cancellation of the
election would be "bad for Ukraine but good for me." He
reasoned that if second round election results were cancelled
because of Party of Regions-BYuT fighting in the courts,
Ukrainians would vote in droves against both candidates in a
new election. Tihipko confidently projected that, in such an
instance, he would become Ukraine's next President, since the
country's population had learned that a vote cast for Tihipko
would not be wasted.
¶4. (C) Tihipko told the Ambassador that he had talked to
incumbent President Yushchenko earlier in the day about the
possibility of a declaration of emergency. Tihipko said he
would back Yushchenko if extreme post-election stasis
prevented an announcement of the second round results.
Noting that both he and the President "knew what to do and
where to support each other," Tihipko described Yushchenko as
a "democrat" who had retained enough support from the
population to make such a bold decision.
PRIME MINISTER JOB ON THE TABLE
¶5. (C) Although he would not endorse Tymoshenko or
Yanukovych or accept either's offer to become Prime Minister
prior to the second round, Tihipko said he would continue to
"conduct all political negotiations." After the presidential
election, Tihipko said it was "possible" he could agree to
become Prime Minister, but only under very clear conditions.
He would need an 18-month "guarantee of support from the
President through the Rada" to allow him to undertake
¶6. (C) Tihipko reasoned that if Yanukovych won the
presidency, the Party of Regions would be able to construct a
coalition and remove Tymoshenko as Prime Minister.
Yanukovych would not need to call early elections to
accomplish this, since the Lytvyn and Our Ukraine blocs would
migrate to the new power center. Tihipko noted that talks in
the Rada were already underway, and that forming a new
coalition without pre-term parliamentary elections would be
"very easy to do," implying that this could result in his
premiership. Tihipko said a decision to hold pre-term Rada
elections would also work in his favor, since he expected to
gain about 15% of the seats in parliament in a snap vote.
LOOKING AHEAD, LOOKING BACK
KYIV 00000107 002 OF 003
¶7. (C) As an alternative to the post of Prime Minister,
Tihipko said he had entertained the idea of running for Kyiv
mayor in the May 2010 municipal elections, while working at
the same time to build his political party. This would
enable him to run again for President in five years with a
strong party infrastructure in place throughout the country.
¶8. (C) Tihipko thought Ukraine's oligarchs would now fully
support him, since they trusted he could prevent a calamitous
two or three-fold fall in assets prices that would result
from ongoing political instability. Above all else, Tihipko
believed Ukraine's elites respected him because he owed
favors to no one. Gesturing with his thumb and forefinger
together, Tihipko emphasized he had taken "zero, not one
kopek" from others and had funded his campaign entirely with
his own money. It was the best possible position for a
politician emerging onto the national stage.
¶9. (C) Tihipko said that he had approached the campaign like
a business proposition. He had laid out a strategy to target
voters, cultivated a message, and delivered a product. He
told the Ambassador he had sought to attract young, well
educated, urban entrepreneurs and government workers by
staying away from populism. This strategy had been developed
in consultation with French advisors in charge of political
party building, along with American experts from a U.S.-based
"democratic institute." Tihipko acknowledged that
American-style campaigns were the "future" of politics in
Ukraine, since Americans tended to take a more business-like
approach, though he admitted that the lack of a party
infrastructure and support network in the regions had hurt
his presidential campaign.
TOP REFORM PRIORITIES
¶10. (C) Tihipko said he desired to be featured in Ukrainian
history as a reformer and that "he would not lose this
chance." His top priorities were the economic policy changes
the country needed to exit the crisis. Tihipko pledged to
balance the budget and get right with the IMF. Both steps
would be taken immediately, Tihipko said, sending prompt
signals to investors and foreign partners. Next, Tihipko
would focus on deregulation and tax reform to bring small and
medium firms "out of the shadows," where he said 40% of
business activity in Ukraine now resided. He would roll back
intrusive state inspections and streamline taxation to combat
corruption and bolster budget revenues.
¶11. (C) Tihipko also cited the need for energy,
agricultural, and transportation reforms. He told the
Ambassador he would immediately raise gas prices to levels
sufficient for cost recovery. It would not be necessary for
the next Prime Minister to "sell" such increases to the
public; the government "just needs to do it," while targeting
support for the most vulnerable populations. If people were
spoken to in an honest manner, Tihipko felt, there would be
no political backlash.
¶12. (C) Tihipko addressed the necessity to reform Naftohaz,
the state energy monopoly. He proposed first splitting the
company into two separate units, coinciding with its gas
transit and production functions. Then, Tihipko said,
Naftohaz should be turned into a joint stock company, with
Ukraine controlling 50%, and the remaining shares divided
evenly between the European Union (24.99%) and Russia
(24.99%). This would cause both East and West to take a
stake in the company's future, as well as diminish the demand
for alternative transit routes via the Nord and South Stream
pipelines. Tihipko proposed to use revenues from Naftohaz's
stock sale to modernize Ukraine's gas transit infrastructure,
as well as to pay off Naftohaz's mounting debts.
¶13. (C) Tihipko agreed with the Ambassador that Ukraine
could learn from steps Georgian President Saakashvili had
taken to lower corruption aQ reform Georgia's economy. Upon
hearing that Saakashvili still enjoyed an approval rating of
over 70%, Tihipko noted that Georgia's economy now ranked
among the world's most investor friendly. Tihipko added that
he was scheduled to meet with the Georgian ambassador later
in the day and was contemplating a visit to Georgia.
RELATIONS WITH MOSCOW
KYIV 00000107 003 OF 003
¶14. (C) Tihipko told the Ambassador that he planned to
travel to Russia in the coming days. He could "feel the
interest" of Moscow in his emergence as a leading politician.
Tihipko stated twice that he expected to be received "at the
highest level," noting that it was now easy for him to have
such consultations. Moscow had been even more skeptical than
Washington about his candidacy and had avoided engagement
until after the first round presidential election. Because
nobody had believed in him or helped his campaign (in Ukraine
or abroad), Tihipko said he could operate more independently
while holding talks with the Kremlin.
¶15. (C) Tihipko said Ukraine needed to improve relations
with Russia, but he felt "Russia always wanted to dominate."
Winning against Moscow meant being more competitive and
attractive to outsiders and having a better democracy and a
more open market economy. Tihipko was "afraid" both
Yanukovych and Tymoshenko misunderstand this and ultimately
would give into Russia. Such a conciliatory stance would
hurt both Ukraine and Russia, Tihipko felt, since Moscow was
prone to overplaying its hand. A Russian strategy of
domination would provoke a reaction "throughout all parts" of
Ukraine. If Russia did not follow a predictable, pragmatic
policy in the shared interests of Ukraine, there would be a
"second Maidan" – a reference to Kyiv's Independence Square
and the 2004 Orange Revolution.
¶16. (C) Ukraine's "Europe-oriented vector" would remain in
place, despite Russian attempts to constrain Kyiv, and
further EU integration was "priority number one" for the new
government, Tihipko said. NATO expansion needed to wait
until relations between Washington and Moscow improved. In
any case, Tihipko could not imagine NATO expansion under
current Russian leadership, saying it would cause the Kremlin
to unleash a fifth column to destabilize Ukraine. Tihipko
would maintain cooperation with NATO to build Ukraine's
military to NATO standards. Any government public relations
campaign on NATO should focus less on membership accession
and more on military reform.
RELATIONS WITH WASHINGTON
¶17. (C) Tihipko noted that he had enjoyed his recent
consultations in the U.S. He commented specifically about
his longstanding friendship with White House economic advisor
David Lipton, whom Tihipko said still served as a mentor and
sounding board. Tihipko mentioned that U.S. interlocutors
(specifically "former Ambassadors") had underestimated his
chances, but Moscow had underestimated him even more. He
said he hoped to visit the U.S. again soon to continue his
¶18. (C) Tihipko spoke in fluent, flawless Ukrainian with the
Ambassador, a language he has increasingly used in media
appearances during and since the presidential campaign. In
prior meetings with embassy officials and in speeches at
economic conferences, Tihipko had interacted solely in
¶19. (C) Leaning forward and communicating earnestly, Tihipko
engaged the Ambassador throughout the conversation,
responding succinctly to questions. His style of speech was
direct and without any unnecessary flourishes, except at the
outset when he went out of his way to praise the assistance
of U.S. government officials during Ukraine's economic
¶20. (C) Tihipko was in full command of his political
strategy, as well as his priority reform items, revealing how
his background as a banker and business leader would inform
his approach to the post of Prime Minister. While he
appeared to take satisfaction in his new found popularity,
his attacks on both Tymoshenko and Yanukovych showed that any
compromise with either could be fraught with tensions.
Thursday, August 5, 2010
Tigipko to be Yanukovych's Successor as Party of Regions Leader
By Taras Kuzio
In an interview in Kyiv's Segodnya Nestor Shufrych revealed that the gas lobby is financing Deputy Prime Minister Sergei Tigipko as a future leader of the Party of Regions to replace Viktor Yanukovych and Nikolai Azarov. Azarov and Yanukovych have shared leadership of the Party of Regions since it was established in 2001 and are now 62 and 60 years old, respectively.
Tigipko was the dark horse of the 2010 presidential elections, coming in third place as an allegedly 'new face candidate' with thirteen percent of the vote. Ukrainians joke that Tigipko and Tymoshenko were both born in 1960 and both entered politics in 1998 but somehow the former is a 'new face' and the latter an 'old hand'.
The RUE's (RosUkrEnergo) support for Tigipko is not out of character as it also initially invested in Arseniy Yatseniuk, who came fourth with seven percent, as another 'new face' in the early part of the 2010 election campaign. Yatseniuk – like Tigipko – was seen as the best alternative to Tymoshenko, whom the Party of Regions sees as the main opposition and threat to its interests. In a recent Ukrayinska Pravda interview Levochkin praised Yatseniuk, Tigipko and some other minor opposition politicians as exhibiting future potential but ignored Tymoshenko.
Both Yatseniuk and Tigipko have always supported a 'constructive opposition' stance, a peculiar mid-way position between being in power and in opposition, that does not exist in a typical European democracy. Tymoshenko has described 'constructivists' as a 'pocket opposition' loyal to the authorities.
Following the 2010 elections Tigipko agreed to join the Azarov government, after initially stating he would not, while Yatseniuk remained in 'constructive opposition'. 'Constructivists' like Yatseniuk have refused to join the Committee in Defence of Ukraine, established in May as an umbrella opposition group. One reason could be Yatseniuk's new source of funding being Deputy Prime Minister Borys Kolesnykov, a fact revealed to the author by a Ukrainian political consultant once close to Yatseniuk.
Yatseniuk has admitted that Viktor Pinchuk, Ukraine's second wealthiest oligarch and Kuchma's son-in-law, provided his 2010 election campaign with the largest amount of financing. In return, Pinchuk demanded in June 2009 that Yatseniuk replace his Ukrainian with Russian political consultants that proved to be disastrous and reduced his popularity.
Conspiracy theorists, such as the political consultant who talked with the author on the condition of anonymity, believed the switch to Russian consultants was undertaken deliberately to open up space for Tigipko as a late 'new face' candidate. With Shufrych revealing the Party of Regions future plans for Tigipko, we now know why the Yanukovych campaign wanted Tigipko to do well in this year's elections. Yatseniuk, who in the early part of the campaign was only a few percentage points behind Tymoshenko and could have therefore entered the second round, ended up in fourth place, receiving only half of Tigipko's vote.