VZCZCXRO7637
PP RUEHDBU
DE RUEHKV #2204/01 2471313
ZNY CCCCC ZZH
P 041313Z SEP 07
FM AMEMBASSY KYIV
TO RUEHC/SECSTATE WASHDC PRIORITY 3587
INFO RUEHZG/NATO EU COLLECTIVE
RUCNCIS/CIS COLLECTIVE
RUEHLMC/MILLENNIUM CHALLENGE CORP WASHDC

C O N F I D E N T I A L SECTION 01 OF 04 KYIV 002204 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: DECL: 09/04/2017 
TAGS: PGOV PREL UP
SUBJECT: UKRAINE: PERSONALITIES, NOT PROGRAMS, 
DIFFERENTIATE THREE MAIN PARTIES 
 
 
KYIV 00002204  001.2 OF 004 
 
 
Classified By: Ambassador for reasons 1.4(b,d). 
 
¶1. (C) Summary.  The conscious decision of the three main 
parties in Ukraine to focus their campaigns on the same 
themes -- populist social and economic promises and 
anti-corruption slogans -- means that the vote will come down 
once again to personalities and perceived leadership types. 
The official platforms for Party of Regions, BYuT, and Our 
Ukraine-People's Self Defense (OU-PSD) all promise huge cash 
awards and subsidies to families with many children, 
increases in salaries and pensions, better access to 
healthcare, a renewed fight against corruption, and the need 
for political and judicial reform, a nod to the disgust with 
which many Ukrainians view this spring's political deadlock. 
 
¶2. (C) Summary continued.  The few issues where the platforms 
do differ, such as foreign policy, NATO and the status of the 
Russian language, have all taken a back-seat to economic 
well-being, but could become important, as they were in 2006, 
despite efforts by all three major parties to downplay them. 
Regions includes planks in its platform promoting non-bloc 
status for Ukraine, balanced relations between West and East, 
and official status for the Russian language.  OU-PSD talks 
about Ukraine as a European state in speeches, but avoids 
including it in the written platform other than to advocate 
for WTO membership and a free trade agreement with the EU. 
OU-PSD is also clear that they see Ukrainian as the only 
official state language.  BYuT's foreign policy goals are not 
part of the "Ukrainian Breakthrough" program, but they are 
described in a separate website, where they include moving 
towards EU membership while maintaining good ties to Russia, 
NATO membership only after a referendum, and support for WTO 
accession. 
 
¶3. (C) Comment.  In our view, voters will be more inclined to 
select parties based on leaders and leadership skills because 
there are not enough substantive differences to help voters 
choose.  This latter trend is already visible; Regions plays 
up Yanukovych as a strong leader who can promise stability 
and order, while Tymoshenko, as usual, is the only person 
shown on BYuT billboards and signs.  OU-PSD has emphasized 
Yushchenko's role as its leader, a change from 2006 when 
Yushchenko kept his distance from OU and the actual campaign. 
 The wild card is the approach to the issues of the fringe 
parties on both the left and the right.  If they decide to 
focus on the few differentiated issues, such as foreign and 
language policy, then these issues may become the center of 
the campaign and force all three major parties to address 
them.  End Summary and Content. 
 
The Platforms 
------------- 
 
¶4. (C) With names like "Stability and Wellbeing" (Regions), 
"The Ukrainian Breakthrough" (BYuT), and "For the People, not 
the Politicians" (OU-PSD), the three major parties are 
promising a broad array of social and economic improvements, 
and judicial and political reform, relegating cultural values 
and foreign orientation to a secondary status.  Respected 
newspaper Dzerkalo Tyzhnya (DT) expressed concern that 
because all the platforms are so broad -- to try to woo as 
many voters as possible -- the possibility of successfully 
implementing the programs is much lower.  In DT's assessment, 
based on platforms alone, even the right-center parties sound 
leftist. 
 
5.(C) Embassy Note.  Following DT's lead, we have tried to 
focus this assessment on parties' official written platforms. 
 However, it is important to acknowledge that the parties are 
also raising other issues not included in their platforms, 
such as the debate over what to do about the price of bread, 
a staple of their campaign stump speeches.  Moreover, we 
believe that the campaign platforms are not necessarily 
intended to correspond to what the parties may actually put 
forward as policies after the elections, but rather are a 
reflection of what the major parties think their voters want 
to hear.  Although, in some instances, these promises made 
for votes now may constrain how political leaders approach 
difficult issues in the future.  End Note. 
 
Populist Social Policies Dominate 
--------------------------------- 
 
¶6. (SBU) All three blocs promise significant improvements in 
voters' quality of life, offering incentives, subsidies, and 
stipends with abandon at the expense of the 2008 budget. 
OU-PSD envisions allocating three-quarters of the increase in 
budget revenues from 2006 to 2007 to social policies, like 
raising salaries, scholarships, and maternity allowances. 
Regions advocates spending two-thirds of the same budget 
 
KYIV 00002204  002.2 OF 004 
 
 
revenues on social policies.  BYuT proposes raising pensions 
to 80-90 percent of an average salary (70 percent is 
considered high).  Family subsidies seem to be one of the 
most popular campaign topics.  All three parties propose 
maternity allowances in the range of 10,000-50,000 UAH 
($2,000-$10,000), with increasing sums for each additional 
child, as well as generous subsidies for families with 
children. 
 
¶7. (SBU) OU-PSD and Regions call for specific wage and 
pension increases, although BYuT proposes better economic 
situations for all citizens.  OU-PSD wants 20 percent monthly 
bonuses for teachers, doctors, and welfare workers in rural 
areas.  All three parties pay more attention to pensioners -- 
who are more likely to vote than the rest of the population 
-- with Regions proposing personal accumulative bank accounts 
and removing obstacles to private pension insurance.  BYuT 
proposes unified standards in calculating pensions and 
immediately increasing pensions up to 80-90 percent of 
average wages.  OU-PSD suggests abolishing pensions for 
members of parliament and government, and supports a general 
35 percent pension increase. 
 
¶8. (SBU) The three parties also address the housing shortage. 
 Regions advocates creating a land auction, investing 
proceeds from housing construction back into building more 
housing, and giving apartments to state employees as a reward 
for long-term service.  They also say the government should 
subsidize free apartments for young families and new 
university graduates employed at major industrial 
enterprises.  BYuT proposes a land mortgage system, lowering 
credit interest to European levels, offering state funds and 
tax incentives for construction of low-income housing, 
providing long-term credits to young families, and giving 
government-funded housing to military and law enforcement 
officials.  OU-PSD wants government housing for all military 
servicemen by 2010, more land for mass residential 
construction, and priority housing for families with five or 
more children or who have triplets. 
 
¶9. (SBU) The promise of affordable healthcare is also a major 
topic for all parties.  Regions proposes free medical care 
for low-income people and new financing to allow hospitals to 
upgrade medical equipment in the next two years.  BYuT wants 
to provide low-cost medicines to the poor, increase access to 
healthcare for the rural population, and establish national 
medical centers.  OU-PSD promotes affordable medicines, 
compulsory medical insurance, assignment of family doctors to 
all families within the next five years, government-provided 
vehicles to rural medical centers, and is supporting a 
"children's hospital of the future". 
 
¶10. (SBU) With regard to education, Regions proposes at least 
half of university slots be government-funded, gradually 
increasing stipends for university students, and providing 
guaranteed first jobs for university graduates.  BYuT wants 
to give greater autonomy to institutions of higher education, 
high-speed internet access for universities, student stipends 
raised to subsistence minimum, and tax exemptions for 
students who work while studying.  OU-PSD advocates 
compulsory university entrance exams to eliminate 
bribe-paying to school officials and preferential acceptance 
for students from families with five or more children.  On 
the primary and secondary level, OU-PSD proposes internet 
connections for all rural schools by 2010, the development of 
new preschools to teach Ukrainian language and traditions, 
and providing buses for primary and secondary school students 
who have to travel more than 3 km to school. 
 
Economic Changes Also Emphasized 
-------------------------------- 
 
¶11. (C) The three parties center their economic proposals on 
improving Ukraine's tax system, opening a land market to help 
farmers, and decreasing energy dependence on Russia through 
diversification and technological breakthroughs.  There are 
few new ideas in the mix. 
 
¶12. (C) With both Minister of Finance Azarov and OU MP 
Katerynchuk touting new tax codes, tax policy has become an 
unlikely issue in an election season filled with populist 
slogans.  Azarov's tax code reduces corporate taxes, provides 
incentives for energy conservation, and reduces Value Added 
Tax (VAT) from 20 to 18 percent; Regions has also proposed 
five-year tax breaks for small and family-owned businesses. 
OU-PSD put forward the Katerynchuk tax code, which is 
supposed to simplify the tax system -- in part by reducing 
tax benefits and special economic zones for big business, 
reducing VAT to 17 percent, ending VAT reimbursement schemes, 
liquidating the tax police, and introducing a wealth/luxury 
 
KYIV 00002204  003.2 OF 004 
 
 
tax that will go to local budgets.  BYuT wants to abolish the 
VAT entirely, introduce sales and luxury taxes, and minimize 
tax privileges.  (Comment. VAT is a common European practice 
-- given Ukraine's European aspirations, the efficiency and 
fairness of an effective VAT regime and the importance of VAT 
for the budget,  it is surely a better policy to improve 
Ukraine's flawed VAT system rather than eliminate it 
entirely.   End comment.) 
 
¶13. (C) In agriculture, Regions proposes creating a land 
market, establishing a minimum rent for land, increasing 
investment in rural infrastructure, and creating a national 
grain exchange.  BYuT wants to create a number of 
agricultural institutions -- an agrarian fund, agrarian stock 
exchange, insurance fund, land bank -- and to provide 
subsidies to farmers to improve financing for environmentally 
safe and healthy agricultural production.  OU-PSD argues for 
giving 20,000 UAH ($4,000) in start-up money and free housing 
to recent graduates who agree to work in rural areas for 
three or more years.  (Note. Despite the appearance of a land 
market in their platforms, both Regions and BYuT voted to 
override the presidential veto of the moratorium on land 
sales in January 2007.  End note.) 
 
¶14. (SBU) Energy independence is actually one of the only 
times that Russia comes up in all three party programs.  Both 
Regions and OU-PSD suggest implementing energy-saving 
technologies, using alternative sources of energy, and 
diversifying fuel imports.  BYuT advocates reducing 
dependence on imported natural gas, integrating with the EU 
energy market, creating a complete nuclear fuel cycle in 
Ukraine, completing the Odesa-Brody-Gdansk pipeline, and 
constructing a gas pipeline from the Caspian.  Although not 
part of its official platform, Tymoshenko has been an 
outspoken advocate of removing shady middleman RosUkrEnergo 
from the natural gas business. 
 
¶15. (C) Comment.  Dzerkalo Tyzhnya reported that an economic 
program drafted by McKinsey and Company commissioned by 
Regions powerbroker Akhmetov could eventually replace 
Regions's economic platform.  According to the newspaper, 
people who have read the plan say it includes a lot of 
unpopular measures, but that it has been admired by 
Yanukovych and praised by Yushchenko.  However both Akhmetov 
and his right-hand man Kolesnikov told the Ambassador that 
they were waiting to unveil the plan until after the 
elections so that it would not get caught up in campaign 
rhetoric.  We have not seen the plan, but expect it to be 
more economically progressive than Regions's, or any of the 
others being promoted by the big three.  End comment. 
 
Political/Judicial Reform Gets a Mention 
---------------------------------------- 
 
¶16. (SBU) All three parties address Ukraine's endemic 
corruption and talk about the need to fight it.  They also 
all push for further political and/or constitutional reform, 
including creating an independent judiciary, although these 
plans are for the most part less detailed than their economic 
and social counterparts.  Regions advocates moving to a full 
parliamentary system and increasing autonomy of local 
governments.  OU-PSD wants to eliminate immunity and 
privileges for parliamentary deputies, establish an 
anti-corruption bureau, and enforce income declarations for 
top officials.  (Note. Since OU-PSD made eliminating 
parliamentary immunity the cornerstone of its campaign, 
Regions has jumped on the bandwagon -- the issue is now 
featured in some Regions tv ads and was the driving force 
behind its agreement to take part in a September 4 
extraordinary Rada session called by Socialist Speaker Moroz. 
 End note.)  BYuT's platform lays out the idea of holding a 
referendum now on the concepts of a new constitution, 
followed by a drafting commission, and a second referendum. 
BYuT also advocates creating a special commission to find 
ways to remove loopholes from existing legislation that allow 
corruption, giving the Rada opposition control of the Chamber 
of Accounts (like the USG's GAO) and increasing penalties for 
state official caught in corrupt acts. 
 
Language, Culture, and Foreign Policy 
------------------------------------- 
 
¶17. (C) Only on language/cultural policy and foreign policy 
do the parties show sharper differences.  Regions is 
promoting a "two languages, one people" slogan tied to their 
proposal to make Russian a second official language.  In 
contrast, the OU-PSD platform is clear that strengthening the 
Ukrainian language is part of protecting national identity, 
although they promise to defend the right of minorities to 
speak other languages.  OU-PSD also discusses other ways to 
 
KYIV 00002204  004.2 OF 004 
 
 
increase Ukrainian culture, including funding museums, 
theaters, and book stores, and working for a unified orthodox 
church.  BYuT has emphasized its Ukrainian roots -- at its 
party congress, at campaign stops -- but it does not directly 
address issues of language and culture in its Ukrainian 
Breakthrough program. 
 
¶18. (SBU) Only Regions has an entire section on its foreign 
policy in its official platform.  The key aspects are: 
promoting Ukraine's non-bloc status, that Ukrainian 
membership in NATO can only be decided by a referendum, that 
EU and WTO membership are not an end in themselves but a way 
to improve the welfare of ordinary Ukrainian citizens, a 
balanced foreign policy where Russia and West are equally 
important, and the importance of the Single Economic Space. 
In contrast, OU-PSD only addresses foreign policies that have 
an economic focus -- WTO accession, a free trade agreement 
with EU, and new agreements with key countries on social and 
labor rights of Ukrainian workers abroad.  BYuT does not 
address foreign policy at all in its official platform, the 
Ukrainian Breakthrough, but does have a link to its key 
external goals.  These include EU membership as a strategic 
priority and WTO membership.  They advocate government-led 
education campaign for NATO, but membership only after a 
referendum.  BYuT calls Russia a strategic partner with which 
Ukraine needs good relations, but they add that "no country 
has the right to veto Ukraine's European future."  They also 
mention that the Black Sea Fleet's status is temporary. 
 
¶19. (U) Visit Embassy Kyiv's classified website: 
www.state.sgov.gov/p/eur/kiev. 
Taylor