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Cablegate: Whoops: Ukrainian Govt Reverses Lifting of Grain

VZCZCXRO0276
PP RUEHLN RUEHVK RUEHYG
DE RUEHKV #0835 1200233
ZNR UUUUU ZZH
P 290233Z APR 08
FM AMEMBASSY KYIV
TO RUEHC/SECSTATE WASHDC PRIORITY 5460
INFO RUEHRC/USDA WASHDC
RUCPDOC/USDOC WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RUCNCIS/CIS COLLECTIVE

UNCLAS KYIV 000835

SIPDIS

SIPDIS
SENSITIVE

TREASURY FOR ALIKONIS
DEPT PLS PASS USTR FOR CKLEIN/PBURKHEAD/EPORTER
USDOC FOR 4231/ITA/OEENIS/NISD/CLUCYK
USDA/FAS/OCRA FOR JFLEMINGS/DADAMS
USDA/FAS/OGA FOR ROMEARA/JLAGOS
USDA/FAS/PECAD FOR MLINDEMAN

E.O. 12958: N/A
TAGS: ETRD EAGR WTRO UP
SUBJECT: WHOOPS: UKRAINIAN GOVT REVERSES LIFTING OF GRAIN
EXPORT RESTRICTIONS

REF: KYIV 807

Treat as Sensitive but Unclassified. Not for Internet.

1. (SBU) Summary: In contradiction to a public announcement
by Prime Minister Tymoshenko on April 23, a government
decree released on April 25 failed to eliminate grain
export restrictions, only relaxing the quotas instead. The
flip-flop was a complete surprise and followed an
outpouring of international support for lifting the
restrictions. Post will try to seek clarification and
continue to press the GOU to end the quota regime. End
Summary.

2. (U) Despite Prime Minister Yuliya Tymoshenko's April 23
announcement that her government had decided to lift the
country's grain export restrictions (reftel), the official
Cabinet of Ministers decree, dated April 23 but released to
the public only on April 25, called for a relaxing of the
grain quotas, not their outright abolishment. Cabinet of
Ministers Resolution #418 increased the quota on wheat from
200,000 tons to 1.2 million tons and the quota on barley
from 400,000 tons to 900,000 tons, both effective
immediately. The quota on rye remained at 3,000 tons. The
quotas are scheduled to remain in place until July 1, but
could be extended further.

3. (U) Publication of the government decree followed an
outpouring of international support for Tymoshenko's
announcement that restrictions would be eliminated
entirely. World Bank President Robert Zoellick phoned
Tymoshenko and President Viktor Yushchenko on April 24 to
thank Ukraine for removing the export restrictions, calling
the move "an important contribution to addressing the
global food crisis," according to a World Bank press
release. Even after publication of the decree, the
Ukrainian government website proudly featured a news story
on the Zoellick call to Tymoshenko. In addition, media
reports indicated that world wheat prices had fallen to a
six-month low on April 24, in part due to Tymoshenko's
announcement and the promise of more Ukrainian grain to
reach world markets.

Comment: Major Gaffe by GOU
---------------------------

4. (SBU) This turn of events is an extremely embarrassing
blunder by the GOU. That the Prime Minister would err in
announcing a government decree that she had supposedly
already signed leaves one only to wonder if the government
was deceitful, had a change of heart, or was just inept.
The relaxation of the grain quotas is still a positive
trend, but the GOU has likely destroyed any goodwill that
could have been generated by the move. In the meantime,
Post will seek clarification on what happened and continue
to press the GOU to lift grain export restrictions
entirely, an important WTO commitment. If it takes no
action to clarify the gaffe and the April 23 decree
remains, Ukraine will be in violation of its WTO
commitments as soon as it becomes a full member on May 16.
End comment.

TAYLOR

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