Scenesetter for the Secretary of Defense's Visit to

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SIPDIS

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: PREL KDEM SR PBTS PGOV PNAT MW

SUBJECT: Scenesetter for the Secretary of Defense's Visit to
Montenegro


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SENSITIVE BUT UNCLASSIFIED

This is a Podgorica cable. It was not cleared by Embassy Belgrade.

Summary
--------------


1. (SBU) Your visit comes as the Montenegrins celebrate their newly
regained independence following a successful referendum in May.
Most recently, during the 10 September parliamentary elections the
Montenegrin voters handed Prime Minister Milo Djukanovic's ruling
coalition another mandate with 41 out of 81 parliamentary seats or
approximately 50% of the vote. The pro-West, pro-American
Montenegrin leadership will provide a receptive interlocutor, eager
to develop strong ties with Washington and to prove itself a
reliable partner. Montenegrins are in agreement on the need to
implement democratic and economic reforms and make rapid progress on
Euro-Atlantic integration. End Summary.


Strategic Situation: Reporting for Duty...
--------------


2. (SBU) Your visit will center on Montenegrin Prime Minister and
Acting Minister of Defense Milo Djukanovic. The Montenegrin
leadership strongly believes their country's future lies within PfP,
and eventual NATO and EU Membership. All are forthright on
Montenegro's desire to have the United States as a strategic
partner. Further, the Montenegrin leadership possesses the
necessary political will for a security contribution to the Global
War on Terror (GWOT) commensurate with Montenegro's resources.


3. (SBU) Prime Minister Djukanovic appears ready to provide the
necessary leadership to energize his nation and military for
eventual participation in GWOT. Prime Minister Djukanovic has
stated his government's readiness to immediately sign SOFA and
negotiate Art 98 agreements as well as provide sufficient funding
for the Montenegrin Armed Forces (MAF) during this challenging
formative period. The Prime Minister has assumed Minister of Defense
duties in order to provide the required leadership and political
support during this critical time. PM Djukanovic is expected to
form his new cabinet in the next few weeks. There are no clear
indications who will be the next Minister of Defense or Minister of
Foreign Affairs.


4. (SBU) The Montenegrin Armed Forces (MAF) are led by Lieutenant
Colonel General Jovan Lakcevic. The Chief of Defense (CHOD) is
committed to transitioning the MAF into a deployable light-infantry
force numbering approximately 2600 officers and men with air and
naval support bases. The MAF's main missions would be national
defense, participation in peacekeeping, NATO or U.S.-led operations
as well as disaster relief. General Lakcevic envisions a potential
MAF security contribution of four platoons each having niche
capabilities such as special operations/counter-terrorism, military
police, combat engineers, and mountain infantry. The CHOD views
participation in U.S.-led operations as the best means to form the
nucleus of a professional, interoperable MAF trained to NATO
standards.


5. (SBU) You may want to use this opportunity to send an encouraging
message that the U.S. is committed to support Montenegro's efforts
towards Euro-Atlantic integration and its entry into PfP.
Additionally, the Montenegrins will be keen to hear your views and
guidance on the future development of our bilateral defense
relationship.


Political Situation: Rebirth of a Nation
--------------


6. (U) The independence referendum held in Montenegro on May 21 was
widely considered free, fair, and transparent by international
observers. The Republic Referendum Commission confirmed the
referendum's success on May 31. Turnout was 86.5 percent, with
230,661 voters (55.5 percent) supporting independence and 185,002
voters (44.5 percent) against.


7. (SBU) On June 3, parliament officially accepted the referendum
results and declared Montenegro independent, restoring sovereignty
after 88 years. The international community originally recognized
the Montenegrin state, which the Ottoman Turks never completely
conquered, on 13 July 1878 at the Congress of Berlin. It was

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subsumed by the Kingdom of Serbs, Croats, and Slovenes (later named
the Kingdom of Yugoslavia) in 1918 during the aftermath of World War
I following Serbian interference and a suspect act of parliament.


8. (U) As of September 17, over 70 countries including Serbia had
recognized Montenegro and the process continues apace. Montenegro
joined the OSCE on June 22 and the UN on June 28. The U.S.
recognized Montenegro on June 12, and announced the establishment of
diplomatic relations on August 15.

The Divided House Stands
--------------


9. (SBU) The political situation in Montenegro remains calm and
stable, despite a significant and emotional divide among the public.
Most Montenegrins have accepted the referendum outcome and are
adapting to their new, independent world. Nonetheless, a sizable
minority (about 30 percent, largely ethnic Serbs) continues to
question the legitimacy of the result. They are, however, limiting
themselves to public grumbling and violence remains highly
unlikely.


10. (SBU) Buoyed by his successful drive for independence, Prime
Minister Milo Djukanovic remains the head of a stable, pro-Western
coalition government, whose credibility is bolstered daily by the
flurry of international well-wishes and recognition. His
government's primary foreign policy goals are EU and NATO membership
and he would like to ally Montenegro closely with the United States.
Domestically, the government's track record on fully implementing
needed democratic and economic reforms is generally positive with
some room for improvement.

September 10 Parliamentary Elections
--------------


11. (U) Republic-wide parliamentary elections returned the Prime
Minister Djukanovic's ruling coalition to power with 41 of
parliaments' 81 seats, an absolute majority or approximately 49.5
percent of the vote. OSCE monitoring mission stated that the vote
was generally in line with international standards. Voter turnout
was 70 percent. Milo Djukanovic is expected to remain as Prime
Minister and with a convincing mandate is free to pursue his foreign
policy and domestic economic goals. Djukanovic is the most popular
political figure and even his detractors acknowledge that he is
clearly the most skillful politician in Montenegro.


12. (SBU) The Montenegrin Opposition is fractured among three groups
and split up 34 parliamentary seats. The Serbian List led by
Serbian people's Party (SNS) and Andrija Mandic is openly
pro-Serbian garnered 12 seats and displaced leading opposition
figure Predrag Bulatovic and his Socialist Peoples Party (SNP)which
finished with 11 seats. Newcomer Nebojsa Medojevic and The Movement
for Change (PzP) picked up ll seats in its first campaign. With the
exception of the SNS and Mandic all other Montenegrin opposition
leaders are committed to Montenegro and desire to see the state
succeed. The moderate opposition, most notably, Medojevic has
refused Djukanovic's offer to join his future government. Of note,
ethic minorities are represented in the Montenegrin parliament with
Albanians securing five seats and Bosniaks two.


13. (U) PM Djukanovic is expected to recommend his new cabinet to
his party ally President Vujanovic soon. Post expects a number of
changes but Djukanovic has kept his cards very close, particularly
as to key positions such as Defense Minister and Foreign Minister.



Fighting Corruption
--------------


14. (U) Djukanovic will need to move quickly to increase public
confidence in state institutions. To start, his administration must
focus on reigning in widespread corruption at all levels, which many
Montenegrins list as the country's biggest problem (along with low
living standards). In this process, implementation of existing
legislation will be key. The August 14 indictment of ten individuals
for the August 2005 assassination of the national police chief is
seen as both an important blow against organized crime, and a test
of the Government's commitment to the fight.

Attracting Investment
--------------

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15. (U) Montenegro has been successful in attracting foreign direct
investment (FDI). In 2005, FDI amounted to Euros 383 million (USD
490 million) - 23.3 percent of GDP or USD 750 per capita - the
highest in the region. Half of that was greenfield investments, as
Montenegro nears complete divestment of state-owned assets. The GoM
plans that over the next four years, foreigners will make over a
billion euros of direct foreign investments into Montenegro. The
Government has adopted a business-friendly investment climate (e.g.,
9 percent corporate tax rate, full repatriability of profits),urged
on by local NGOs.
POLT