EU CONSTRAINED ON NEXT STEPS WITH SERBIA

C O N F I D E N T I A L BRUSSELS 002944

SIPDIS

E.O. 12958: DECL: 07/09/2014
TAGS: PREL EAID ETRD ZL EUN USEU BRUSSELS
SUBJECT: EU CONSTRAINED ON NEXT STEPS WITH SERBIA


Classified By: Rick Holtzapple, PolOff, Reasons 1.4 B/D

ICTY COOPERATION
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1. (C) PolOff spoke on July 8 with Stefan Lehne, Solana's key
advisor on the Balkans, almost immediately after Lehne's
return from Belgrade, where he had attended the Contact Group
session with U/S Grossman. Lehne said that in his separate
meetings with Serb officials the GoS was focused on the
Mladic issue, a priority that tracked closely with the
message delivered by U/S Grossman in the Contact Group
meeting. Lehne noted that he "worried a bit" about the focus
on Mladic, because of the risk that it might turn out that
"the guy is not there." He drew a distinction with the EU's
approach on the ICTY cooperation issue, which has been to (as
in the Croatia case) to say that the necessary condition is
to satisfy ICTY. From the EU perspective, "the issue is what
Del Ponte and Meron say." The same principle would apply to
the possibility of transferring cases for domestic
prosecution. The EU would not get involved in negotiations
with Belgrade on this; and if ICTY agrees to the strategy,
the EU would go along.

LIMITED EU CARROTS
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2. (C) But Lehne acknowledged it is an open question what the
EU could do even if the Serbs attained a clean bill of health
from Del Ponte. The Commission's feasibility study for a
Stability and Association Agreement (SAA) is being held up on
three conditions: ICTY cooperation; effective implementation
of the Internal Market Action Plan, especially regarding
tariffs; and a functioning state Union. The third criteria
was flexible and somewhat subjective, but even if Belgrade
satisfied ICTY, the Commission would still face the hurdle of
the tariff issue. And that problem, Lehne said, is as stuck
as ever, with Montenegro's Djukanovic hardening his line. In
Lehne's view Djukanovic, worried about failure in an
independence referendum, was just trying to annoy Belgrade so
much that the Serbs would tell Montenegro to leave. This was
a serious miscalculation, Lehne thought, as neither Kostunica
nor Tadic appeared inclined to see Montenegro become
independent.


3. (C) This situation leaves the EU with a limited supply of
carrots for Serbia. There is no prospect of serious
additional cash in the EU's CARDS assistance program, and SAA
negotiations will remain bogged down over the dysfunctional
Belgrade-Podgorica relationship. Beyond supportive rhetoric
about Serbia's European future (such as we are told to expect
from the Conclusions of the July 12 EU FMs' meeting),there
is not much the EU can do. (We heard much the same
perspective last week from the Dutch chair of the EU's
Balkans working group.) Two possible sweeteners may be
available, but still need more negotiation. One is possible
resolution of the ongoing EU-SaM dispute about fraudulent
sugar trade, which the Commission hopes may be solved by
August, but on which the EU will find it hard to agree unless
Belgrade improves its customs procedures. Another would be
conclusion of a textile trade agreement, but it appears this
would take at least a couple more months.

COMMENT
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4. (C) The EU has a long list of things it would like to
change about Belgrade. ICTY cooperation is a big one, and
remains a precondition for much else. While not all Member
States have taken such a reactive approach, it is clear the
EU as a body has sub-contracted out to ICTY the decision on
what specifically Belgrade must do.