MONTENEGRO'S OPPOSITION, GOVERNMENT TO BACK EU

C O N F I D E N T I A L SECTION 01 OF 02 BELGRADE 000299

SIPDIS

SIPDIS

E.O. 12958: DECL: 02/24/2016
TAGS: PREL PGOV PBTS SR MW
SUBJECT: MONTENEGRO'S OPPOSITION, GOVERNMENT TO BACK EU
PACKAGE FOR REFERENDUM

REF: BELGRADE 237

Classified By: Ambassador Michael Polt, reasons 1.4 (b,d)


1. (C) Summary: The Montenegrin Parliament is expected to
meet February 28 to adopt the question, date, and rules for
the referendum -- the "EU package." The opposition was
quicker to support the package than the GoM, which engaged in
a last-minute campaign to persuade the EU to lower the
threshold from 55 percent of valid votes cast. The EU
Council of Ministers will likely reiterate its support for
the package at its February 27 meetings. Meanwhile,
Podgorica is considering measures that would disrupt State
Union governmental structures in the event the referendum
results in a yes vote that falls in the "grey zone" of 50-54
percent. End summary.

Opposition Backs EU Proposal
--------------


2. (U) The small opposition People's Party (NS) was the first
to announce its support for the "EU package" (reftel) for the
referendum. It was followed by the (even smaller) Democratic
Serb Party (DSS) and, on February 22, by the influential Serb
People's Party (SNS). The SNS's Andrija Mandic had sat out
the discussions with EU Envoy Lajcak over the package. The
Socialist People's Party (SNP),which led the pro-Union bloc
in the talks, is expected to solidify its commitment to
package over the weekend of February 25-26 in talks with its
local chapters.


3. (SBU) Mandic's re-entry into the game is a disappointment
to the pro-Independence bloc, as Mandic had been firm in his
statements that the SNS would boycott if the threshold was
less than 50 percent of all registered voters. Without the
SNS's votes (about 30,000),the pro-Union bloc had no chance
of thwarting a "yes" vote for independence in excess of 55
percent of all valid votes (the "EU package"). In a private
conversation with acting Principal Officer on February 21,
however, Mandic showed less confidence than usual in being
able to rally his voters to the position espoused by SNS
leadership. Comment: The SNS is heavily reliant on a small
leadership core to rally its voters, a reliance that is
stressed by a republic-wide campaign. End comment.

Independence Bloc Pushes Counter-Proposal
--------------


4. (U) Even before the SNS re-entered, the pro-Independence
bloc was unhappy with the EU proposal that independence would
require 55 percent "yes" votes of all valid votes. They
prefer the "Danish model" of 40 percent of all registered
voters, even offering to raise the threshold slightly to 41
percent. Forty percent is 186,400 from 466,000 registered
voters; 41 percent is 191,000 votes; in the 2001
parliamentary election the pro-Independence parties polled
195,000 votes and in 2002 they garnered over 200,000 votes.


5. (U) The GoM has intensively lobbied the EU and member
states the past week, trying to lower the proposed 55 percent
to 52 or 53 percent. EU Envoy Lajcak has stated publicly
that the EU Council of Ministers, which has the Montenegrin
referendum on its February 27 agenda, will reiterate its
support for the "EU package" that he had tabled. Christina
Gallach, spokesperson for EU High Representative Solana,
stated February 23 that the package could not be altered.
Olli Rehn, the EU Commissioner for Enlargement, concurred
even while observing that the EU member states do not have
identical views on the proposal. Radio Free Europe also
reported Rehn as stating, apparently for the first time, that
the EU has a "Plan B" for Montenegrin accession to the EU in
case of independence.

The "Grey Zone"
--------------


6. (U) Between a flat rejection of independence (over 50
percent "no" votes - which is implausible),and clear, legal
approval of independence (over 55 percent "yes" votes),lies
the "grey zone." The blocs are understandably divided on
what entering the "grey zone" means for Montenegro. The
pro-Union bloc, arguing from the language of the EU proposal,
without reference to anything outside of the proposal, sees a
54.9 percent "yes" vote as being the same as a 49.9 percent
vote. Dragan Soc, former leader of the Opposition NS, said a
GoM move to declare independence with less than 55 percent of
the vote would be tantamount to "a declaration of civil war."



7. (U) The pro-Independence bloc counters that refusing to
recognize independence for any vote above 50 percent "yes" is

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unjust. Several private-sector EU, SaM, and US experts opined
February 20 at a forum in Montenegro that if the "yes" votes
fell between 50 percent and 55 percent, the EU could not or
would not make an organizational decision to recognize
Montenegro, should it declare independence. Instead, the EU
would leave the decision up to its individual member states,
without guidance from Brussels.

Krivokapic: GoM will Accept 55 (With an Asterisk)
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8. (C) On February 24, the Ambassador met with Montenegrin
Speaker of Parliament Ranko Krivokapic to discuss the
referendum. The Speaker said that the Government of
Montenegro will accept the EU's proposal for a 55 percent
super-majority. If the referendum fails with more than 50
percent of the vote, however, he said that the GOM will take
all legal measures it can to cease the State Union's
functionality in order to force further international
mediation on Montenegro,s relationship with Serbia.
Krivokapic said his tour of European capitals to drum up
support for the GoM counterproposal did make inroads with
several influential Members of the European Parliament (MEP)
and other European commentators, who voiced objections to a
standard for independence in excess of 50 percent of valid
votes cast. Ultimately, though, he said the support was more
moral than substantial - none of his interlocutors was
willing to step away from supporting the EU consensus
position. PM Milo Djukanovic and President Filip Vujanovic,
meanwhile, publicly stated this week that they can surpass 55
percent of the vote. They caveated, however, that the EU
would have the responsibility of resolving any contention
resulting from a referendum loss that scored above 50
percent.

No Independence = Bigger Army, Return to Dinar
-------------- -


9. (U) The small pro-Union People's Party (NS) and Democratic
Serb Party (DSS) have called for a larger military and a
return to the dinar if independence fails. The independent
Central Bank of Montenegro (CBCG) strongly criticized the
call, calling it "pernicious," leading to a drop in
Montenegro's credit rating, the reintroduction of 20 percent
inflation (with the Euro, inflation in Montenegro in 2005 was
2.5 percent),and higher transaction costs, even after
absorbing significant conversion expenditures. The respected
government Montenegrin Investment Promotion Agency (MIPA)
adds that foreign direct investment (FDI) would be harmed as
well. SNS had earlier called for a reintroduction of the
dinar, but the SNP has been silent and is less likely to
support the call.

Comment
--------------


10. (C) The decision by the two sides to accept the EU,s
plan sets the stage for the referendum to be held, but may
only forestall (and potentially increase the likelihood of)
further dysfunction in the State Union resulting from the
referendum. Polls currently suggest that a result in the
gray zone is the most likely scenario, which will put
Podgorica on a course of further "legal" obstruction of the
already anemic State Union. Engagement by the EU, supported
by us, is important to ensure both sides in Montenegro act
responsibly whatever the outcome of the referendum. In the
event of a grey zone finish, we should join the EU in
convincing Djukanovic not to take rash actions to destabilize
the State Union and to instead work to improve relations
between the two republics.
POLT