U.S. AND EU DISCUSS W. BALKANS

C O N F I D E N T I A L SECTION 01 OF 03 BRUSSELS 000774

SIPDIS

E.O. 12958: DECL: 03/07/2016
TAGS: PREL EAID ZL EUN USEU BRUSSELS
SUBJECT: U.S. AND EU DISCUSS W. BALKANS

Classified By: Political Officer Vincent Carver for reason 1.5 (b/d).

SUMMARY
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1. (C) EUR/SCE Director English met in Brussels March 1 with
EU and Austrian Presidency officials to discuss the Western
Balkans. EU officials characterized U.S.-EU cooperation on
the Balkans as "excellent." English noted how EU accession
prospects continue to serve as a major catalyst for reform in
the region and urged the EU to increase assistance to the
region, particularly to Serbia (once it cooperates fully with
ICTY),to help meet SAA requirements aimed at eventual EU
membership. Both sides agreed to discuss the timing of their
respective responses to Belgrade's continued lack of full
cooperation with the ICTY. English noted U.S. expectations
that the EU will play the lead role in a post-final status
civilian international presence in Kosovo and assured the EU
that the U.S. would also continue to play a key role there.
English and the EU discussed the need for Kosovar officials
to form a new government quickly following the March 1
resignation of PM Kosumi and not lose time needed for
standards and decentralization implementation. Both sides
agreed to continue to send consistent messages on the
Montenegrin independence referendum. English thanked the EU
for support for constitutional reform in BiH, noted that the
reform package likely would not be "perfect," but would
represent a significant step forward from the Dayton
Constitution and would help BiH in preparations for eventual
EU membership. EU officials urged U.S.support for a regional
free trade agreement in the region. English's separate
meeting with Heather Grabbe, Rehn advisor on the Balkans,
reported septel. See penultimate para for participant list.
END SUMMARY

Kosovo
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2. (C) English discussed U.S. thinking on Kosovo and
stressed the need for more progress on decentralization,
including the protection of minority rights and Serbian
Orthodox property issues. Pristina's position that it will
begin to implement decentralization once final status is in
place is unacceptable. The Austrian Presidency agreed; the
Council Secretariat noted that EU Envoy to the Final Status
Talks, Stefan Lehne, had clearly argued this point with
Pristina. English observed that a new UNSCR will have to
address further international supervision for Kosovo to both
monitor a status agreement and to provide Pristina needed
guidance. He added that a donors' conference for Kosovo will
be needed around the time status is determined. While the
U.S. will be an active contributor, we also hope the EU will
bring significant resources to help secure Kosovo's future.
English underscored the expectation that the EU will play the
lead role in an international civilian supervisory presence
in Kosovo and assured the EU that the U.S. expects to play a
strong supportive role as well. All agreed on the
desirability of a negotiated status for Kosovo but
acknowledged that this might not be possible absent increased
realism from Belgrade. Yannis of the Council Secretariat
underscored that continued U.S.-EU cooperation on Kosovo is
critical and observed that the U.S. was invited and
participated in the latest UNMIK Steering Group meeting.
Yannis noted that an EU fact-finding mission is currently in
Kosovo and likely will be followed in April by a planning
team to begin work aimed at a post-final status EU presence
in 2007.


3. (C) COWEB participants welcomed the breaking news of
Kosovar PM Kosumi's March 1 resignation and expressed hope
that this would energize the Kosovar Unity Team negotiators.
The Council Secretariat and English agreed to urge the
Kosvars that they should form a new government quickly and
not lose time; the Unity Team should continue work on
standards and decentralization.


4. (C) Turning to Serbia, English noted the need to advance
strategic engagement with Serbia by demonstrating that its
Euro-Atlantic integration is on track. In this regard, the
EU, English emphasized, could increase its assistance to help
Serbia reach its SAA goals. Commission rep Priebe noted the
challenge the EU faced in advancing Serbia's case given
Serbia's continuing lack of cooperation with the ICTY. He
indicated that Enlargement Commissioner Rehn would be guided
by the opinion of ICTY prosecutor Carla Del Ponte in
determining whether the conditions of "full cooperation" are
being met to allow April's formal SAA negotiating session to
go forward. Responding to a question from the Council
Secretariat, English noted that the Secretary would have to

SIPDIS
make her decision in May as to whether to certify Serbia's
cooperation, and the congressional language had specific
requirements that had to be met for that decision. The two
sides agreed to discuss the respective actions to coordinate
message and timing.

MONTENEGRO
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5. (C) Council Secretariat official Gentilini outlined EU
Envoy Lajcak's efforts and the agreement reached between the
government and the opposition in Podgorica regarding an
independence referendum scheduled for May 21. Gentilini
stressed that the EU had suggested but never imposed
conditions on the parties and had not prejudged the
referendum's outcome so as to help ensure the legitimacy of
the referendum. English called the agreement a critical
achievement and agreed with the EU on the need to send
consistent messages on the referendum and its outcome. EU
officials said that, while ministers have not discussed the
issue in detail, they doubted any EU member state would
recognize Montenegrin independence if the vote falls in the
"grey zone" of between fifty and the required fifty-five
percent favoring independence. The EU noted that initial
reports coming out of Belgrade indicate that the Serbian
leadership is satisfied with the referendum modalities. The
Commission noted that, while trade aspects of the SAA are
already being negotiated with Montenegro and Serbia
separately, Montenegrin independence would necessitate a new
SAA process for Podgorica and an amended SAA process for
Belgrade. The Commission opined that there was not a great
possibility that any member state would oppose the revised
SAAs (contingent on cooperation with ICTY).

BiH
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6. (C) The Austrian Presidency voiced support for
constitutional reform efforts in BiH and noted that
Schwarz-Schilling's position will evolve from "High Rep" to
EU Rep" and that a Peace Implementation Council (PIC)
Steering Board should re-examine the Bonn powers, but only
after the October elections. The Commission said that
technical aspects of the SAA negotiations with BiH are going
well but that BiH must still meet EU requirements on ICTY
cooperation, police reform and education for an SAA to be
concluded by the end of 2006. The EU would remind BiH
President Tihic of this during his visit to Brussels the week
of March 6. English noted DAS DiCarlo was in Sarajevo, in an
effort to convince HDZ-BiH President Covic and others to
support constitutional reform and observed that, the reform
package likely will not be perfect but would improve
considerably on the Dayton Constitution and help BiH better
prepare itself for EU accession. Commission Rep Priebe said
that the EU does not want to make constitutional reform a new
condition in the SAA process. English noted that reform
would help BiH meet its SAA obligations. He also noted that
the PIC Steering Group may consider creating a body that
could provide advice on further constitutional reform after
the BiH elections in October. English agreed that
Schwarz-Schilling should be the last High Rep, adding that
the termination of this office would signal to the BiH people
that they have full responsibility for running their country.
Both the EU and the U.S. agreed on the need to monitor the
BiH case against Serbia in the International Court of
Justice.

MACEDONIA
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7. (C) The incoming Finnish Presidency portrayed Macedonia
as a "success story" of the SAA process, particularly given
its meeting the Copenhagen Criteria and its willingness to
share its decentralization experience with the Kosovars.
Skopje now wants a clear signal regarding a date when EU
accession negotiations will begin. Brussels, however, wants
Macedonia to focus on SAA implementation, particularly on
police, judicial, and electoral reforms and the fight against
organized crime and corruption. The Finns also noted that a
future FTA could help Macedonia's stagnant economy, that the
EU considered Macedonia's name to be a bilateral issue
between Skopje and Athens. English briefed on the Adriatic
Partnership ministerial held recently in Washington,
emphasizing the complementary and reinforcing nature of the
NATO and EU processes for countries in the region. He also
raised proposed return of the ICTY cases as a potential
problem. Both sides agreed on the need to ensure that this
issue does not damage internal Macedonian stability.

ALBANIA
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8. (C) Priebe noted that the SAA with Albania would be
formally signed soon and that the trade treaty component of
the SAA likely would enter into force in July. Then a "long
period" of ratification of the SAA would begin. Priebe
observed that, while Albania had made much progress over the
past several years, it still has a long way to go. He
predicted that Tirana will face one of the longest accession
periods of any potential member before actually joining the
EU.

SAA PROCESS
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9. (C) Priebe characterized the SAA process as a forceful
catalyst for reforms in the region and as a way to maintain
the countries' perspective for membership in the EU. He
noted that each of the countries in the Western Balkans had
moved one step closer to accession over the past year,
emphasizing that this is evidence of the efficacy of the SAA
process. He said that he had recently initialed the SAA with
Albania and that the EU hopes to conclude SAA negotiations
with SaM (conditioned on full cooperation with ICTY) and BiH
by the end of 2006. Priebe noted that Instruments for
Pre-Accession (IPAs -- replacing the current CARDS) will
align EU financial and technical assistance to the countries
with EU political priorities. He observed that, while the
EU's financial framework for 2007-13 likely will have 20
percent less in foreign assistance than the Commission had
originally requested (NOTE: But possibly a few percentage
points higher than the current financial framework budget),
EU aid to the Balkans will remain more or less constant.
Priebe added that, in light of Kosovo's likely post-status
talks needs, however, the EU and other donors will have to
assist and suggested that USAID coordinate informally in the
coming months with the Commission on future aid programming.
He stressed that the EU would fail, "like UNMIK," if it were
to assume all responsibility to administer Kosovo while
simultaneously trying to engage it in an SAA process.
English assured the EU that, while it views the EU as taking
the lead role in a civilian international presence in
post-status Kosovo, particularly on police and justice
issues, the U.S. will play a role as well.

STABILITY PACT, FREE TRADE AGREEMENT
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10. (C) Priebe noted he favors beginning a transition moving
the Stability Pact (SP) to regional ownership after the SP's
May Regional Table Meeting. He also supported the creation
of a modest secretariat to be located in the region. Priebe
underscored the desirability of continued support from non-EU
players for whatever organization the SP evolves into.
Priebe also emphasized the advantages of a regional free
trade agreement (FTA) in the region and asked if the U.S.
continued to disagree with the proposal. English noted
support for the SP but acknowledged that the Administration
continues to have reservations about a regional FTA.


PARTICIPANTS
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11. (U) Austrian Presidency:

Thomas Schnoell, Head of Western Balkans Unit, MFA
Karl Ehrlich, Austrian Mission, Brussels

Incoming Finnish Presidency:

Juha Ottman, Director, Balkans Unit, MFA
Mikko Hautala, Finnish Mission, Brussels
Kim Kuivalainen, Finnish Mission, Brussels

Council Secretariat:

Lene Hove, Balkans Policy Unit
Alexandros Yannis, Balkans Policy Unit
Fernando Gentilini, Balkans Policy Unit

Commission:

Reinhard Priebe, Director, Western Balkans
Dirk Lange, Head of Unit
Axel Wallden
Therese Sobieski

U.S.:

Charles English, EUR/SCE
Patricia Manso, USAID, Brussels
Aaron Cathey, USEU/POL
Vincent Carver, USEU/POL


12. (U) EUR/SCE Director English has cleared this message.
GRAY
.