DS-DSS COALITION MOST LIKELY AFTER SERBIAN

UNCLAS SECTION 01 OF 03 BELGRADE 000019

SIPDIS

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: PGOV PREL KDEM SR
SUBJECT: DS-DSS COALITION MOST LIKELY AFTER SERBIAN
ELECTIONS

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

1. (SBU) Although both DS and DSS officials deny that they
have a pre-cooked deal to share power after elections, a
coalition centered around the DS and DSS is the most likely
outcome of 21 January elections. Prime Minister Kostunica
has made clear his intention to retain his position in the
next government, and the DS has not tried hard to counter
the perception that the party is prepared to accept
Kostunica as head of a DS-DSS government. G17 Plus (and
possibly the Socialists) could further tip the scales in
favor of Kostunica, with party leader Mladjan Dinkic
rumored to have cut a deal with Kostunica. Although we
cannot completely count them out, the Radicals reportedly
see little chance that they can form the next government
and may be saving resources for presidential, local, and
Vojvodina elections later this year. Ceda Jovanovic's
Liberal Democratic Party also is preparing to sit in
opposition if its coalition passes threshold, but has not
ruled out supporting a minority DS-DSS government if
necessary to keep the Radicals out of power. In theory, a
series of deadlines imposed by Serbia's election law and
new constitution should lead to a new government being in
place by mid-March, although this is by no means a sure
thing. End Summary.

DS CLOSING GAP ON RADICALS
--------------

2. (SBU) The latest tracking polls from IRI show eroding
support for the Radical Party (SRS) and the Democratic
Party (DS) within striking distance of becoming the biggest
vote-getter in 21 January elections. The poll shows only
four parties--the SRS, DS, Democratic Party of Serbia
(DSS),and G17 Plus--definitively above the five-percent
election threshold. It also shows the United Pensioners
Party (PUPS) helping to put at risk the chances that the
Socialist Party (SPS) has to cross the threshold. Here are
the results of a survey conducted at the end of December:

SRS 26 percent
DS 24
DSS 18
G17 8
LDP 5
SPS 4
PUPS 2
SPO 2

DS INTENTIONS REMAIN AMBIGUOUS
--------------

3. (SBU) Serbian President Boris Tadic and his Democratic
Party (DS) continue to send mixed signals about their post-
election goals and expectations. Tadic's close adviser
Dragan Djilas recently stated publicly that the DS
prioritizes taking over the economic, health, and education
portfolios in the next government because these are the
domains in which the DS can best fulfill its promise of
securing a better life for Serbian citizens. Similarly,
other members of Tadic's cabinet have expressed privately
to Poloffs a willingness to accept a power sharing deal
with the Democratic Party of Serbia (DSS) in which DSS
leader Vojislav Kostunica remains prime minister, his party
retains control of the Interior and Justice Ministries as
well as the Security Information Agency, and the DS is
given a deputy prime minister slot, all major economic
portfolios, and the Ministries of Foreign Affairs and
Defense.


4. (SBU) The DS's refusal so far to put forward their own
prime minister candidate has reinforced the perception that
the party is prepared to accept Kostunica as head of a DS-
DSS government. On the other hand, in an interview with the
Blic daily published on 2 January, Tadic asserted that the
DS would surely win significantly more votes than the DSS
and therefore would be entitled to appoint the next prime
minister. He and other senior DS leaders have said that
the DS has at least five (unspecified) PM candidates, with
most pundits mentioning ex-Finance Minister Bozidar Djelic,
People's Office Director Dragan Djilas, ex-Minister Gordana
Matkovic, Ambassador to the US Ivan Vujacic, and Tadic
himself. Tadic said in an interview that appeared on 1/7
that he plans to run for re-election as President of Serbia
later this year.

DSS COUNTING ON LEADING THE NEXT GOVERNMENT
--------------

5. (SBU) DSS Executive Board President Jovan Palalic
denied to Poloffs that the DSS has made a pre-cooked deal
with the DS for a governing coalition headed by Kostunica.
He noted, however, that the Radical Party (SRS) and Liberal
Democratic Party (LDP) have already voluntarily opted out

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of any potential coalition with the DSS -- the SRS due to
party leader Vojislav Seselj's last will and testament that
identified Kostunica and DS leader Boris Tadic as equal
nemeses of the Radicals, and the LDP because of its
willingness to accept the reality of an independent Kosovo.
(Note: Kostunica in a recent interview with daily Vecernje
Novosti stated that the DSS will determine its coalition
partners first and foremost according to their stance on
Kosovo, which suggests he would be less disinclined to
cooperate with the SRS than with the LDP. Nevertheless, an
official in Kostunica's closest inner circle categorically
ruled out to us recently the possibility of DSS
participating in a coalition with the SRS. End note.)


6. (SBU) Palalic also confirmed that the DSS's firm goal
in any governing coalition is for Kostunica to remain as
prime minister and for the DSS and its main coalition
partner New Serbia to retain their most important current
ministry portfolios, including Interior, Justice, and
Capital Investments. Given the inordinate weight that
Kostunica continues to place on Kosovo during the campaign,
it can also be assumed that the DSS intends to retain
control over the government's Coordination Center for
Kosovo.

G17 PLUS COULD DECIDE WHO HEADS THE NEXT GOVERNMENT
-------------- --------------

7. (SBU) G17 Plus deputy leader Ivana Dulic-Markovic
(protect) told Poloffs that party chairman Mladjan Dinkic
almost certainly would refuse to join or support a
governing coalition unless he was reappointed Finance
Minister or offered a powerful Deputy Prime Minister
position. She dismissed the possibility that Dinkic would
settle for his old job as central bank governor as a
consolation prize in any potential government formation.
Dulic-Markovic also said she strongly suspected that Dinkic
had already cut a secret deal with Kostunica guaranteeing
Dinkic one of these plum portfolios in exchange for G17
Plus's support for Kostunica as head of the next
government, though she hastened to add that Dinkic would
never confirm this information with her because he knows
that she cannot stand Kostunica. Dulic-Markovic herself
does not intend to participate in the next government,
preferring instead to focus her attention on preparing G17
Plus for local elections in Novi Sad and Vojvodina's
provincial elections.

RADICALS FOCUSING ON ELECTIONS LATER IN THE YEAR
-------------- ---

8. (SBU) The Radicals continue to conduct a relatively
subdued campaign, apparently after soberly assessing that
they have little chance of forming a governing coalition
after elections. Post sources say that the SRS's top
officials expect the Socialist Party (SPS),their most
viable potential coalition partner, to struggle to pass the
election threshold and, even if they do, to continue to
gravitate toward the DSS away from the Radicals,
particularly after Ivica Dacic's victory as new SPS
chairman at last month's party congress. At the same time,
even before SRS leader Vojislav Seselj's last will and
testament, these same SRS officials reportedly had written
off any chance of enticing the DSS to form a coalition with
them.


9. (SBU) As a result, SRS acting leader Tomislav Nikolic
reportedly has decided to marshal the party's resources for
presidential, local, and Vojvodina elections due later in
the year. Nikolic appears to be counting on capitalizing on
a negative decision on Kosovo by the spring and ensuing
tensions within the DS-DSS government to defeat Tadic in
presidential elections. Perhaps an even bigger prize that
the SRS is eyeing is control of Belgrade, which SRS
Secretary General Aleksandar Vucic fell 7,000 votes short

SIPDIS
of claiming in the 2004 mayoral race against DS Vice
President Nenad Bogdanovic. Bogdanovic reportedly now is
suffering from cancer, which raises uncertainty about his
ability to run an effective campaign or for the DS to
produce another viable candidate to defeat Vucic. Winning
Belgrade would provide the SRS an almost limitless revenue
stream, in the form of kickbacks and bribes that the party
is reportedly carrying out on a smaller scale in Novi Sad,
Serbia's second biggest city, and its best opportunity yet
to sanitize its image and escape its pariah status at the
republic level.

LDP ANGLING TO SERVE IN OPPOSITION
--------------

10. (SBU) Liberal Democratic Party (LDP) leader Ceda
Jovanovic told Poloff that the LDP-led coalition, which
also includes the Civic Alliance (GSS),the League of
Social Democrats of Vojvodina, and the Social Democratic

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Union, has no intention of joining a governing coalition
that includes the DSS. He said that his goal is for the
coalition to win 10 percent of the vote on 21 January and
then serve as a forceful but constructive opposition. This
role would mean supporting a DS-DSS government on
legislation that moves Serbia in a pro-Western, reformist,
and civic direction and sharply criticizing and obstructing
the government when it pursues more nationalist and
populist policies. Jovanovic's public statements in which
he has ruled out joining a government that includes
Kostunica, Dinkic, or Velimir Ilic underscores his
preference to serve in opposition, since a government with
none of this trio is virtually inconceivable.


11. (SBU) GSS Vice President and one of the LDP
coalition's two deputy campaign managers Ivan Andric joked
to Poloffs that the coalition's leaders already have plans
to go into hiding to preempt any potential pressure by the
US or European countries for them to join a DS-DSS
government. He indicated that the coalition's leaders
already have a strategy that would enable them to go into
opposition but avoid helping the SRS ascend to power, if
necessary by supporting a minority DS-DSS government. LDP
Presidency member Dejan Randjic said that the LDP
coalition's guiding principle in such a role would be to
stiffen the DS's spine and "force the DS to be the DS."

COMMENT
--------------

12. (SBU) Coalition wrangling will be fierce regardless of
the election results, and the outcome of these negotiations
will depend on two main factors: how well the DS does
relative to the Radicals and the DSS and how many of
Serbia's smaller parties surpass the five-percent
threshold. For instance, the DS will have greater leverage
to dictate the terms of the ruling coalition, and Tadic
will face greater internal pressure to demand the
appointment of a DS official as prime minister, if the
party outpaces the DSS. Unless DSS's results are miserable
(and polling strongly indicates they will not be),we
expect the DSS to strongly demand that Kostunica retain the
PM job.


13. (SBU) On the other hand, with the LDP coalition's
plans to voluntarily consign itself to the opposition and
the SPS facing continuing marginalization and possibly
exclusion from parliament, G17 Plus could also emerge as
kingmaker of Serbia's next government. Although G17's rank-
and-file are more personally and ideologically inclined
toward the DS, a pre-electoral "deal" between party leader
Mladjan Dinkic and Kostunica could help tip the scales in
favor of the prime minister keeping his post and the DSS
gaining far greater weight in the government than its
popularity could command on its own. Kostunica could also
seek out Socialist support to strengthen his hand, if the
SPS crosses the threshold.


14. (SBU) In any event, the new constitution places time
constraints on the parties to form a governing coalition,
dictating that the parliament convene its first session
within 30 days of the certification of the election results
and that it elect the new government sometime during this
session. Since the Republican Election Commission is likely
to certify election results by early February, and this
first parliamentary session is likely to last a number of
days, it is theoretically possible for Serbia to have a new
government in place by mid-March. That said, the Kosovo
status process, combined with inter-party squabbling, could
conceivably delay this timetable.

MOORE