"YUGOSLAVIA" OFFICIALLY DISAPPEARS, GIVES WAY

UNCLAS SECTION 01 OF 03 BELGRADE 000278

AMEMBASSY ROME FOR MAUREEN GREWE

E.O. 12958: N/A
TAGS: PGOV PREL PBTS MW SR YI
SUBJECT: "YUGOSLAVIA" OFFICIALLY DISAPPEARS, GIVES WAY
TO "SERBIA AND MONTENEGRO"

SUMMARY
--------------

1. ON FEBRUARY 4, FOLLOWING THE ADOPTION OF THE
CONSTITUTIONAL CHARTER AND IMPLEMENTATION LAW, THE
YUGOSLAV PARLIAMENT OFFICIALLY PROCLAIMED THE END OF
THE FEDERAL REPUBLIC OF YUGOSLAVIA AND THE BEGINNING OF
THE STATE UNION OF "SERBIA AND MONTENEGRO." THIRTY
FEDERAL INSTITUTIONS IMMEDIATELY CEASED TO EXIST, SEVEN
-- INCLUDING THE NATIONAL BANK OF YUGOSLAVIA -- HAVE
BECOME SERBIAN BODIES, AND 15 SCIENTIFIC, CULTURAL, AND
TRANSPORTATION BODIES ARE NOW IN LIMBO.


2. THE IMPLEMENTATION LAW SETS A CLEAR TIMETABLE FOR
THE TRANSFORMATION OF THE JOINT STATE. A NEW UNION
ASSEMBLY IS SUPPOSED TO BE IN PLACE WITHIN TWO WEEKS,
AND THE STATE UNION'S FIRST PRESIDENT AND HIS CABINET
SHOULD BE APPOINTED BY MARCH 6. IN ADDITION, SERBIA AND
MONTENEGRO ARE OBLIGED TO AMEND OR REPLACE THEIR
CURRENT CONSTITUTIONS IN LINE WITH THE CONSTITUTIONAL
CHARTER BY JUNE 30, ALTHOUGH SERBIAN PRIME MINISTER
DJINDJIC ALREADY HAS POINTED TO SEPTEMBER AS A MORE
REALISTIC TIMELINE FOR THE ADOPTION OF A NEW SERBIAN
CONSTITUTION. THE ALREADY APPARENT DISREGARD OF KEY
OFFICIALS TOWARD THE PROVISIONS OF THE IMPLEMENTATION
LAW, AND THE NARROW MAJORITY THAT THE RULING SERBIAN
AND MONTENEGRIN COALITIONS WILL HAVE IN THE NEW UNION
ASSEMBLY, SUGGEST THAT THE ESTABLISHMENT OF A
FUNCTIONING JOINT STATE WILL TAKE LONGER THAN
ENVISIONED. EU HIGH REPRESENTATIVE SOLANA IS DUE IN
BELGRADE ON FEBRUARY 6 TO TRY TO SUSTAIN MOMENTUM FOR
THE TRANSFORMATION OF THE JOINT STATE AND THE DRAFTING
OF A DETAILED ACTION PLAN FOR ECONOMIC HARMONIZATION,
DUE NEXT MONTH. END SUMMARY.

FEDERAL PARLIAMENT PROCLAIMS CONSTITUTIONAL CHARTER
-------------- --------------

3. ON FEBRUARY 4, BOTH CHAMBERS OF THE YUGOSLAV
PARLIAMENT VOTED TO ADOPT THE CONSTITUTIONAL CHARTER
AND ITS ACCOMPANYING IMPLEMENTATION LAW, FOLLOWING
THEIR ADOPTION LAST WEEK BY THE SERBIAN AND MONTENEGRIN
PARLIAMENTS. THIS ACT WAS FOLLOWED IN THE EVENING BY A
PROCLAMATION CEREMONY OFFICIALLY MARKING THE END OF THE
FEDERAL REPUBLIC OF YUGOSLAVIA AND THE BEGINNING OF THE
STATE UNION OF "SERBIA AND MONTENEGRO." IN THE PROCESS,
THE FRY TRANSFERRED ALL OF ITS RIGHTS AND DUTIES TO THE
NEW STATE UNION.


4. SUPPORT FROM SERBIA'S RULING DOS COALITION AND THE
MONTENEGRO'S TWO MAJOR PARTIES -- THE RULING DPS PARTY
AND THE OPPOSITION SNP PARTY -- GUARANTEED RELATIVELY
EASY PASSAGE OF THE TWO DOCUMENTS IN BOTH HOUSES OF THE
FEDERAL PARLIAMENT. AS IN THE SERBIAN PARLIAMENTARY
VOTE, YUGOSLAV PRESIDENT KOSTUNICA'S DEMOCRATIC PARTY
OF SERBIA (DSS) WAS THE MOST NOTABLE DISSENTER, VOTING
FOR THE CONSTITUTIONAL CHARTER BUT AGAINST THE
IMPLEMENTATION LAW.

FEDERAL INSTITUTIONS INSTANTLY TRANSFORMED OR DISSOLVED
-------------- --------------

5. BASED ON ARTICLES 14, 15, AND 16 OF THE
IMPLEMENTATION LAW, THIRTY FEDERAL INSTITUTIONS --
INCLUDING THE MINISTRIES OF INTERNAL AFFAIRS, FINANCE,
JUSTICE, AND TRANSPORT -- CEASED TO EXIST UPON THE
PARLIAMENT'S PROCLAMATION OF THE CHARTER. ALSO
EFFECTIVE IMMEDIATELY, SEVEN FEDERAL INSTITUTIONS --
INCLUDING THE NATIONAL BANK OF YUGOSLAVIA AND THE
FEDERAL CUSTOMS ADMINISTRATION -- HAVE BECOME SERBIAN
BODIES, ALTHOUGH THE SERBIAN PARLIAMENT STILL IS
OBLIGED TO PASS NEW REGULATIONS FORMALIZING THEIR PLACE
IN THE SERBIAN BUREAUCRACY. FIFTEEN SCIENTIFIC,
CULTURAL, AND TRANSPORTATION BODIES ARE NOW IN LIMBO,
REMAINING IN OPERATION AT THE JOINT-STATE LEVEL "UNTIL
THEIR FINAL STATUS IS DEFINED."

OSTENSIBLY FIRM TIMETABLE SET IN MOTION
--------------

6. WITH ITS ADOPTION, THE IMPLEMENTATION LAW SETS A
CLEAR TIMETABLE FOR THE TRANSFORMATION OF THE JOINT
STATE AND THE COMPOSITION OF ITS EXECUTIVE,
LEGISLATIVE, AND JUDICIAL STRUCTURES. THE FOLLOWING IS
A CALENDAR OF DEADLINES SET FORTH BY THE LAW, ALTHOUGH
PAST EXPERIENCE SUGGESTS THAT NONE OF THESE DEADLINES
ARE LIKELY TO BE TREATED WITH STRICT OBEDIENCE:

-- FEBRUARY 14: SERBIAN AND MONTENEGRIN PARLIAMENTS
PASS RESPECTIVE LAWS ON INDIRECT ELECTION OF DEPUTIES
TO THE NEW UNION ASSEMBLY

-- FEBRUARY 19: INDIRECT ELECTION OF MPS TO THE UNION
ASSEMBLY

-- WEEK OF 24 FEBRUARY: THE FIRST SESSION OF THE UNION
ASSEMBLY IS HELD (WITHIN FIVE DAYS OF ELECTION OF MPS).
THIS SESSION, WHICH IS LIKELY TO LAST SEVERAL DAYS,
WILL ELECT THE ASSEMBLY SPEAKER AND VICE-SPEAKER AND
THE PRESIDENT OF THE NEW STATE UNION. IT WILL ALSO
ENACT THE LAW ON THE TEMPORARY FINANCING OF THE STATE
UNION.

-- AROUND END OF FEBRUARY: PRESIDENT PROPOSES
COMPOSITION OF THE COUNCIL OF MINISTERS (WITHIN 5 DAYS
OF THE PRESIDENT'S ELECTION).

-- MARCH 6: "ALL INSTITUTIONS OF THE STATE UNION WILL
BE CONSTITUTED, I.E. WILL BE ELECTED." (THIS APPARENTLY
IS THE DEADLINE FOR THE ASSEMBLY TO APPROVE THE
PRESIDENT'S PROPOSED CABINET).

-- MID-MARCH: APPOINTMENT OF JUDGES TO THE "COURT OF
SERBIA AND MONTENEGRO (WITHIN 25 DAYS OF THE
PRESIDENT'S ELECTION)

-- MID-MARCH: ADOPTION OF OMNIBUS LAW REGULATING THE
"ORGANIZATION, MODE OF WORK, AND SUPERVISIONS" OF THE
JOINT STATE'S INSTITUTIONS.

-- MARCH 31: COMPLETION OF DETAILED ACTION PLAN FOR THE
INTERNAL MARKET AND FOREIGN TRADE

-- APRIL 5: FORMATION OF COMMISSION ON THE DIVISION OF
FRY PROPERTY AND ASSETS

-- JUNE 30: REPUBLICS EITHER AMEND OR REPLACE CURRENT
CONSTITUTIONS IN CONFORMITY WITH THE CONSTITUTIONAL
CHARTER.

-- JULY 4: PROPERTY AND ASSET COMMISSION MUST FORWARD A
DRAFT LAW TO THE SERBIAN AND MONTENEGRIN PARLIAMENTS.

-- DECEMBER 31: REPUBLICS MUST HARMONIZE ALL OF THEIR
LAWS AND OTHER REGULATIONS WITH THE CHARTER AND THE
LAWS OF THE NEW UNION


7. ACCORDING TO ARTICLE 22 OF THE IMPLEMENTATION LAW,
"ALL THE DEADLINES DEFINED BY THE CONSTITUTIONAL
CHARTER WILL COME INTO EFFECT FROM THE DAY THE
CONSTITUTIONAL CHARTER COMES INTO EFFECT." HENCE,
DIRECT ELECTIONS FOR THE UNION ASSEMBLY'S DEPUTIES MUST
TAKE PLACE IN FEBRUARY 2005. LIKEWISE, NEITHER REPUBLIC
CAN SCHEDULE A REFERENDUM ON SECEDING FROM THE JOINT
STATE UNTIL FEBRUARY 2006, ALTHOUGH MONTENEGRO'S PRO-
INDEPENDENCE PARTIES STILL MAY TRY TO POINT TO MARCH
14, 2005, THREE YEARS AFTER THE SIGNING OF THE BELGRADE
AGREEMENT, AS THE EARLIEST DATE WHEN THEY CAN SLATE
SUCH A REFERENDUM.

COMPOSITION OF THE NEW UNION ASSEMBLY
--------------

8. THE NEW ASSEMBLY WILL COMPRISE 126 DEPUTIES, 91 FROM
SERBIA, 35 FROM MONTENEGRO. ACCORDING TO MIODRAG ISAKOV
OF SERBIA'S RULING DOS COALITION, DOS WILL HAVE 47
SEATS, DSS 16, THE SOCIALIST PARTY OF SERBIA (SPS) 12,
THE SERBIAN RADICAL PARTY 8, THE PARTY OF SERBIAN UNITY
4, NEW SERBIA 2, AND THE SPS SPLINTER SOCIALIST
PEOPLE'S PARTY (SNP) 2. OF THE 35 MONTENEGRIN SEATS,
SOURCES SAY THAT 21 WILL BE DISTRIBUTED AMONG THE
RULING COALITION OF THE DEMOCRATIC PARTY OF SOCIALISTS,
SOCIAL DEMOCRATIC PARTY (SDP),AND ETHNIC ALBANIAN
PARTY AND THE REMAINING 14 WILL GO TO THE OPPOSITION
TOGETHER FOR CHANGES BLOC.


9. THE TWO RULING COALITIONS THEREFORE HOLD A FEW SEATS
MORE THAN THE 64 SEATS NECESSARY FOR A MAJORITY VOTE IN
THE NEW UNION ASSEMBLY. IF THE TREND OF COOPERATION
BETWEEN THE RULING SERBIAN AND MONTENEGRIN COALITIONS
ESTABLISHED DURING THE DRAFTING OF THE CONSTITUTIONAL
CHARTER CONTINUES, OFFICIALS OF THE NEW UNION SHOULD BE
ABLE TO STICK CLOSELY TO THE TIMETABLE SET FORTH ABOVE.
NONETHELESS, THE 16 REMAINING PARTIES IN THE DOS
COALITION MAINTAIN VARYING DEGREES OF LOYALTY TO
SERBIAN PRIME MINISTER DJINDJIC, AND MONTENEGRIN PRIME
MINISTER DJUKANOVIC'S COALITION PARTNERS HAVE ALREADY
SHOWED THEIR INDEPENDENCE BY VOTING AGAINST ADOPTION OF
THE CONSTITUTIONAL CHARTER.

SOLANA SEEKS TO SUSTAIN MOMENTUM
--------------

10. EU DELEGATION OFFICIALS CONFIRMED TO POST THAT EU
HIGH REPRESENTATIVE JAVIER SOLANA PLANS TO VISIT
BELGRADE AND PODGORICA ON FEBRUARY 6 TO CONGRATULATE
OFFICIALS IN BOTH CAPITALS ON THE OFFICIAL ADOPTION OF
THE CHARTER AND THE ESTABLISHMENT OF THE STATE UNION OF
SERBIA AND MONTENEGRO. HIS PRIMARY MESSAGE WILL BE THAT
THE REAL WORK OF ESTABLISHING A FUNCTIONING JOINT STATE
AND IMPLEMENTING AN ACTION PLAN FOR AN INTERNAL MARKET
AND FOREIGN TRADE HAS ONLY JUST BEGUN.


COMMENT
--------------

11. ALTHOUGH AN IMPORTANT EVENT, THE END OF
"YUGOSLAVIA" AND THE BEGINNING OF "SERBIA AND
MONTENEGRO" WAS GREETED WITH LITTLE JOY IN EITHER
SERBIA OR MONTENEGRO. THE LONG DELAY IN CRAFTING THE
CONSTITUTIONAL CHARTER AND THE FRAGILITY OF THE NEW
UNION HAVE LEFT THE PUBLIC WITH AN APPREHENSIVE
FEELING. IT IS INAUSPICIOUS (ALBEIT NOT SURPRISING)
THAT KEY OFFICIALS ALREADY BEGAN IGNORING PROVISIONS OF
THE CONSTITUTIONAL CHARTER EVEN BEFORE ITS OFFICIAL
PROCLAMATION. FOR INSTANCE, SERBIAN PM DJINDJIC
INDICATED PUBLICLY THAT HE AND MONTENEGRIN PM
DJUKANOVIC HAVE AGREED THAT TWO SERBS WILL HOLD THE
FOREIGN AND DEFENSE MINISTER POSTS IN THE NEW UNION,
EVEN THOUGH ARTICLE 14 OF THE CHARTER SPECIFICALLY
STIPULATES THAT THESE TWO MINISTERS SHALL BE FROM
DIFFERENT MEMBER STATES. SIMILARLY, ON FEBRUARY 1,
DJINDJIC SAID THAT SERBIA'S NEW CONSTITUTION COULD BE
COMPLETED BY SEPTEMBER, EVEN THOUGH THE PARLIAMENT IS
OBLIGED BY THE CHARTER TO ADOPT THE NEW CONSTITUTION BY
JUNE 30.


12. ON THIS BASIS ALONE, WE CAN BE EXPECT THAT SERBIA
AND MONTENEGRO WILL NOT KEEP PACE WITH THE FIRM
TIMETABLE FOR ESTABLISHING A FUNCTIONING JOINT STATE
SET FORTH IN THE IMPLEMENTATION LAW. THE MOST
COMPELLING INCENTIVES FOR THE TWO MEMBER STATES TO DO
SO, HOWEVER, WILL CONTINUE TO BE PROVIDED BY THE
INTERNATIONAL COMMUNITY. IN THE NEAR-TERM, THE NEW
ASSEMBLY'S ENACTMENT OF A LAW ON THE TEMPORARY
FINANCING OF THE STATE UNION IS A PREREQUISITE FOR THE
IMF BOARD OF DIRECTORS TO HOLD AN ALREADY TWICE-DELAYED
MEETING TO REVIEW COMPLIANCE WITH THE FUND'S THREE-YEAR
EXTENDED ARRANGEMENT (EA) WITH SERBIA AND MONTENEGRO
AND TO APPROVE THE THIRD TRANCHE OF THE EA. IN
ADDITION, SOLANA IS LIKELY TO REMIND OFFICIALS THAT THE
LAUNCHING OF THE EU'S STABILIZATION AND ASSOCIATION
PROCESS, STARTING WITH A FEASIBILITY STUDY, IS
CONDITIONED ON THE DRAFTING OF A DETAILED ACTION PLAN
OF ECONOMIC HARMONIZATION BY THE END OF MARCH.


MONTGOMERY