KOSOVO: READOUT OF MARCH 17 TALKS ON

UNCLAS SECTION 01 OF 05 VIENNA 000870

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E.O. 12958: N/A
TAGS: PGOV PREL KDEM SR YI AU UNMIK
SUBJECT: KOSOVO: READOUT OF MARCH 17 TALKS ON
DECENTRALIZATION IN VIENNA

REF: HOVENIER - EUR/SCE E-MAIL OF 3/19/06

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1. (U) The following is information gathered by the US
liaison officer to the UN Office of the Special Envoy for
Kosovo negotiations (UNOSEK) in Vienna.

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


2. (SBU) The March 17 talks on decentralization were largely
free of polemics and stuck to the agenda of the financing of
municipalities, inter-municipal cooperation, and links with
Belgrade. The Kosovo delegation accepted the principle of
inter-municipal cooperation, but stressed that it saw an
important role for the central government in many aspects of
municipal finance and were opposed to any "third layer of
government." All links between Belgrade and Serb-majority
municipalities must be restricted to previously agreed areas
and should be regulated by a Pristina/Belgrade MOU. The Serb
delegation rejected a central government role in municipal
finances and Pristina oversight in Belgrade's support to
Serb-majority municipalities. Belgrade also insisted on a
detailed structure to manage inter-municipal cooperation that
would be subject to constitutional guarantees. The UN Office
of the Special Envoy for Kosovo (UNOSEK) identified key areas
of common ground, despite the fundamental differences between
the two sides, and will produce a paper of decentralization
principles that will form the basis for the next round of
talks on April 3. End Summary.

AHTISAARI'S PRIOR MEETINGS WITH THE DELEGATIONS
-------------- --


3. (SBU) Prior to the meeting, UN Special Envoy for Kosovo's
final status process Martti Ahtisaari met separately with the
Belgrade and Pristina delegations. Ahtisaari told both
delegations that he would support any arrangements to ensure
the Serb community's survival in Kosovo, including "vertical
linkages" between Belgrade and Serb-majority municipalities.
He stressed to the Serbian delegation, however, that there
could be no separate Serb entity and that any "vertical
links" with Belgrade needed to be issue-oriented,
transparent, and in conformity with Kosovo's legal system and
structure. Serbian presidential adviser Leon Kojen and prime
minister's adviser Slobodan Samardzic supported these
principles. Kojen provided Ahtisaari with preliminary debt
information promised by Serbian Deputy Prime Minister Labus,
and pledged more detailed debt-related information in the
near future.


4. (SBU) The Serbian delegation registered their official
protest that Democratic Party of Kosovo leader Hashim Thaci
was chairing the Kosovar delegation, and, combined with the
election of Agim Ceku as Kosovo Prime Minister, expressed
concern that "former Kosovo Liberation Army members appear to
be amassing all power in Kosovo." Ahtisaari cut off
Kosovo-Serb hardliner Marko Jaksic's noting of the two-year
anniversary of "ethnic cleansing" in Kosovo, stressing that
the decentralization talks were about the future, not the
past. In Ahtisaari's meeting with the Kosovar delegation,
Thaci reassured the UN Special Envoy that "we did not come
here to win, but rather to achieve a joint success."

THACI'S OPENING REMARKS
--------------


5. (U) After Ahtisaari's deputy Albert Rohan warned the two
sides to avoid any political statements during the meeting,
Thaci read a prepared general statement pledging the
Kosovars' commitment to work with their Serbian counterparts
to ensure the full protection of human rights for all
minorities in Kosovo. Thaci made clear, however, that
minorities must be protected through integration, and cannot
be protected by the establishment of a separate entity that
established the de jure or de facto division of Kosovo along
ethnic lines. He stated that Kosovo Serbs must be ready to
live in peace in a democratic and independent state of
Kosovo.


6. (U) Thaci said that the Kosovar delegation supported
inter-municipal cooperation, but on the condition that it not
create an additional layer of government, pertained only to
tasks of joint interest, and was regulated by law.
Similarly, Pristina supports cross-border cooperation,
provided it is in accordance with a Constitutional framework,
and based on bilateral agreements between Belgrade and
Pristina on such issues as education, healthcare, and
culture. Finally, Thaci stated that Belgrade's assistance to
municipalities must be compatible with Kosovo's laws and
channeled through Pristina. Samardzic followed Thaci by
expressing the Serb delegation's wish to focus on the agreed
agenda and appealed for no more general statements.

LOCAL FINANCING ARRANGEMENTS
--------------


7. (SBU) Isa Mustafa laid out the Kosovo delegation's
principles on how to ensure that Kosovo's local authorities
can raise their own revenues. Pristina espouses a unified
taxation system and allowing two sources of revenues for
municipalities ) local tax collection and licensing, and
block grants from the central government that allows
municipalities to determine the allocation of funds, rather
than earmarked grants, which is the current practice. Bosko
Mijatovic from the Serbian delegation called for giving local
governments true autonomy to raise all direct taxes )- on
income, property, businesses, etc. -- with no central
oversight and minimal grants. Kosovo Minister for Local
Self-Government Lutfi Haziri replied that it was unlikely
that municipalities would conduct direct taxation in the same
manner as the central government and in turn increase their
own revenues in the short term and therefore an increased
need for grants was likely.


8. (SBU) Mustafa advocated that all public revenues be
maintained at the central Treasury, and Kosovar delegate
Ylber Hysa said that the central government, as the guarantor
of the rights of Kosovo's citizens, needed to have control
and oversight of municipal accounts. On the other hand,
Mijatovic and Kojen called for a more, decentralized flexible
system that would allow municipalities to keep their accounts
in commercial banks.

FUNDING FROM BELGRADE
--------------


9. (SBU) Similarly, the Kosovo delegation insisted that funds
from Belgrade needed to be distributed through the Kosovo
Treasury, and pledged that Pristina would not offset grants
to a municipality that received financing from Belgrade.
Kojen proposed that Belgrade be permitted to provide funding
directly and transparently to a municipality for a specified
need in a previously agreed area like education. The Serb
side acknowledged that this would result in a "dual system."
(Note: On the margins of the talks, Samardzic also admitted
that their objective was to "legalize the current parallel
structures." End note.) Kosovar presidential adviser
Skender Hyseni responded that Pristina would not accept
"dualism", and his colleague Ardian Gjini made clear that
Belgrade should provide funds in the same manner as other
donors.

INTERMUNICIPAL RELATIONS
--------------


10. (SBU) Samardzic noted that Kosovo's current
Constitutional Framework guarantees the right for
municipalities to associate and called for this right to be
protected with voluntary horizontal linkages between
municipalities on competencies that Belgrade believes should
belong at the municipal level: education, culture, social
welfare, police, judiciary, media, municipal property, urban
planning, and certain types of economic activity. Samardzic
proposed a Council for Inter-Municipal Cooperation to
regulate this comprised of mayors of the participating
municipalities and representatives of the Serbian Orthodox
Church. Functional inter-municipal committees would fall
underneath this council comprised of three persons from each
participating municipality. Samardzic concluded his
presentation by stating, "I insist that there be
Constitutional guarantees" for these structures and for the
right of Serb-majority municipalities to have links with
Belgrade.


11. (SBU) Ylber Hysa said that Samardzic's proposal "sounds
like a canton or entity" and was unacceptable. He insisted
that municipalities can cooperate through the Ministry of
Local Self-Government. Coordinator of Pristina's Unity Team
Blerim Shala interjected that the Kosovo delegation agrees
that the right of Serbs to protect their vital interests,
including through inter-municipal cooperation, should be
guaranteed in the Constitution, but cannot accept a
third-level of government or a separate political entity. He
stated that inter-municipal cooperation must be done in
specifically-designated areas like education, health, and
culture. Daniel Popescu of the Council of Europe noted that
the European Charter of Local Self-Government provides the
right to two inter-municipal structures: (1) a consortia of
municipalities to carry out tasks of common interest; and (2)
associations for the protection and promotion of common
interests.


12. (SBU) After Rohan cut off Kosovo-Serb hardliner Marko
Jaksic when Jaksic noted the two-year anniversary of violence
against Kosovo Serbs and the brutal expulsion of 200,000
Serbs from Kosovo, Jaksic noted that he already headed an
association of Serb-majority municipalities and this
association must be preserved. Jaksic added that no funds
from Serb municipalities should be going into the Kosovo
Treasury, remarking that Kosovo's central authority is
Belgrade, not Pristina. He concluded by stating that if the
Kosovar delegation "did not want Belgrade to rule over them,
they cannot expect that we will accept them ruling over us."
(Note: Samardzic and Kojen were visibly uncomfortable
throughout Jaksic's remarks. End note.)


13. (SBU) Kosovo-Serb politician Goran Bogdanovic said that
Kosovo Albanians should not see Belgrade's proposed model of
inter-municipal cooperation as a thinly-veiled attempt at
dividing Kosovo. Samardzic also reassured the Kosovars that
Belgrade does not seek a division of Kosovo but only the
effectiveness of inter-municipal cooperation on functional
issues. Serbian prime ministerial adviser Aleksandar Simic
echoed Samardzic's comments, noting that Belgrade did not
propose any "territorial corridors" and that it was only
concerned that inter-municipal linkages are functional.
Simic said that municipal associations should be allowed in
all areas of their competencies and should have a legal
personality with constitutional guarantees, at the same time
noting that the discussion had moved beyond status-neutral
issues.


14. (SBU) Shala replied to the Serbian presentations by
warning that Belgrade is trying to "legalize the existing
parallel structures and establish a superstructure." He
reiterated the Kosovar position that inter-municipal
cooperation must be permitted only in specified areas that
are vital interest to the minority communities.
Decisionmaking powers for municipal and intermunicipal bodies
should be allowed for operational, not political, decisions,
otherwise this could result in a third layer of government.

VERTICAL LINKS TO BELGRADE
--------------


15. (SBU) Kojen began the discussion on cross-boundary
cooperation by stating that Belgrade wants to provide
"issue-oriented", "functionally-justified" financial
assistance and human resources to Serb-majority
municipalities. Samardzic clarified that Belgrade plans to
provide assistance in 4-5 areas, citing education, culture,
religious/cultural site protection, and health care, while
noting that police and judicial functions would need to
shared by municipal and central authorities. Kojen insisted
that this support must be fully transparent but also direct,
without passing through any central Pristina institutions,
which themselves were not transparent, functional, or trusted
by Kosovo Serbs. Haziri responded that the Serbian proposal
appeared to be an effort to "try to create conditions for
partition."


16. (SBU) Gjini noted that Kosovo authorities also do not
trust Belgrade institutions, but the purpose of the
negotiations was to establish greater trust. Samardzic
countered that the object of these meetings was to ensure
that Serbs are "equal in decisionmaking to (Albanians) on
issues vital to their interest." Samardzic also took issue
with Gjini's perceived effort to speak for the Serb people.
Shala responded that Kosovo Albanians recognize that they do
not speak for Kosovo Serbs, but Belgrade had prevented the
Serb community from speaking for itself by forcing a Serb
boycott of Kosovo's institutions.


17. (SBU) Jaksic interjected that Kosovo Serbs had no need to
seek permission for links to Serbia or for "cross-boundary
cooperation" because Kosovo is a part of Serbia and no
boundary separates them. He warned that the two ways to
ensure that Serbs left Kosovo were for Serbian authorities to
tell them to leave or by the international community severing
their links to Belgrade. Hysa suggested that if Belgrade
insisted on such a model for cross-boundary cooperation than
Kosovo Albanians would insist on similar vertical linkages
with their brethren in Serbia's Presevo Valley.


18. (SBU) In response to a question from EU envoy Stefan
Lehne, Kojen said Belgrade does not plan to provide police or
security forces to Serb-majority municipalities, but
teachers, doctors, and other experts. This personnel would
be provided upon the request of a functional inter-municipal
committee and paid out of the municipalities' budgets. The
Kosovar delegation recognized Belgrade's right to assist
Serb-majority municipalities, but said that any
cross-boundary cooperation must be in clearly defined and
agreed-upon areas regulated by an MOU between Belgrade and
Pristina. Jaksic asserted that Belgrade could not conclude
an MOU with Pristina on any issue, and cited the situation of
the Bosniak community in the Sandjak as a good model for
Kosovo.


19. (SBU) In response to Rohan's proposal for
Belgrade/Pristina joint commissions in sensitive fields, like
education curricula, Gjini responded positively, provided
that this was regulated through bilateral agreements between
Belgrade and Pristina. Kojen stated that Belgrade is ready
to explore joint commissions in functional areas, but ruled
out bilateral agreements "if they imply that Belgrade
consents to treat Pristina as the capital of a sovereign
entity." He made clear that the Serbian delegation sees
Kosovo "as part of Serbia and hope it will remain so after
status is determined."

POLICE AND JUDICIARY
--------------


20. (SBU) Rohan asked the parties to respond to a proposal
that one of Kosovo's five district courts be designed as a
court of appeal for Serb-majority municipalities and how to
ensure minority representation in the courts. Kojen
expressed support for Rohan's proposal, conditioned on the
composition of this court. He proposed that the municipal
assembly select municipal judges and the municipal chief of
police, who would then be confirmed by the Justice and
Interior Ministries, respectively. Kojen suggested, however,
that the municipal assemblies could overrule the ministries
on police and judicial personnel selections. He also argued
that the Kosovo Supreme Court should have a "strong
international presence" for the foreseeable future.


21. (SBU) Gjini said that giving the municipal assemblies the
power to overrule Interior Ministry (MoI) decisions on police
appointments did not meet European standards. He also
expressed reservations about a "Serb Court of Appeals", but
acknowledged that courts must reflect the ethnic composition
of the communities they serve. Hysa invoked the Ohrid
Agreement as the appropriate model, in which the municipal
assembly selects a police chief from an MoI-provided list.
Shala added that the Kosovar team's "clear stance" was that
there can be no system parallel to the central judicial and
police authority.


22. (SBU) Kojen cited the U.S. as an example of a country
where police leadership is selected at the local level.
Simic also argued that the Serbian judicial model is not a
new model for Kosovo, noting that the 1974 Yugoslav
Constitution provides for the election of judges and
prosecutors by municipalities. Gjini said this was
misleading, since municipalities had no real autonomy in
personnel selection during communist times. Jaksic rejected
the Ohrid model for police appointments as unacceptable, and
Bogdanovic noted that Kosovo's judges were not trusted by
Serbs.

MITROVICA
--------------


23. (SBU) After Rohan raised the issue of the Mitrovica
University and hospital, and particularly the Mitrovica law
faculty's curriculum, Kojen proposed that the law faculty
should teach "both Kosovar and Serbian law." He also called
for the administration of the university and hospital in
Mitrovica to be "as autonomous as possible", governed by
inter-municipal healthcare and education boards.

CONCLUDING REMARKS
--------------


24. (SBU) Taking the floor for only the second time, Thaci
read a prepared statement describing the meeting as an
encouraging step forward that afforded each side a better
understanding of the other's positions. He made clear that
the Kosovar delegation favors inter-municipal cooperation in
all areas of local authority and accepts the principle of
cross-border cooperation, provided that they confirm with
Kosovo's Constitutional Law and regulated by a Law on Local
Self-Government, but rejects any third layer of governance or
special entities. He reiterated that Kosovo wishes to
conclude bilateral agreements with Serbia that regulates
cross-border cooperation.


25. (SBU) Samardzic assessed that the two sides were "far
apart" but that "any conversation with the other side is
good." He reiterated that Belgrade wanted to ensure that
Serbs have "self-government" in Kosovo through cooperation
between Serb-majority municipalities in six areas )
healthcare, education, social welfare, religion, cultural
monuments, and culture -- and links to Belgrade. Samardzic
called for the urgent scheduling of follow-up meetings on
competencies, financial arrangements, and the creation of new
municipalities.

KOSOVAR COMPLAINTS ABOUT THE CHAIRMAN'S CONCLUSIONS
-------------- --------------


26. (SBU) Rohan submitted his conclusions (reftel) to the two
sides, stressing that they represented his personal
impressions and have no official status. He said that UNOSEK
will produce a paper containing basic principles on
decentralization that would form the basis for the next round
of talks on April 3. He also indicated that a meeting on
municipal delimitation and Mitrovica would be scheduled for
mid-April.


27. (SBU) Rohan turned down Thaci's request for a ten-minute
break so that the Kosovar delegation could review the
Chairman's Conclusions and then register its concerns with
some of them, inviting the two sides to share any concerns
directly with UNOSEK. Ylber Hysa was visibly angry about the
conclusions, but failed to persuade Thaci to lodge an
official protest of the conclusions. Hysa stormed off, but
not before telling UNOSEK officials that the Kosovo
delegation would register its official objections to the
Chairman's Conclusions in writing to Ahtisaari. The rest of
the delegation greeted the conclusions with more equanimity,
agreeing that they were a reasonably fair reflection of the
discussions, despite certain concerns that they had.


28. (SBU) The Kosovo delegation's concerns were largely
semantic. They said that they agreed only to "additional",
not "significant", municipal revenues, and to inter-municipal
"mechanisms", not "structures," as the Chairman's Conclusions
provided. They also reacted negatively to the term "links"
used in the conclusions to describe cooperation with
Belgrade. The Kosovars similarly objected to the idea that
inter-municipal structures could have "legal personality,"
though UNOSEK officials pointed out that the European Charter
on Local Self-Government provided for this possibility, that
the Kosovar delegation had not objected to this proposal in
the meeting, and that a legal personality was quite different
from a "legal entity." Finally, they insisted that they had
not agreed that Belgrade could provide personnel, although
they had not objected to Kojen's example of Belgrade
providing a Greek/Latin teacher to Serb schools.
McCaw