GlACIAL COALITION TALKS SHOWING SIGNS OF

UNCLAS SECTION 01 OF 02 BELGRADE 000301

SIPDIS

SENSITIVE
SIPDIS
DEPT FOR EUR/SCE

E.O. 12958: N/A
TAGS: PGOV PREL KDEM SR
SUBJECT: GlACIAL COALITION TALKS SHOWING SIGNS OF
MOVEMENT?


SUMMARY
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1. (SBU) President Tadic's Democratic Party (DS) and Prime
Minister Kostunica's Democratic Party of Serbia (DSS) began
formal talks on assembling a working coalition government
March 2, but so far they remain deadlocked over which party
should hold the PM position. DS and DSS officials mostly
toe the party line on retaining the PM position both in
private and publicly, but their positions are more nuanced
behind the scenes, suggesting the increasing likelihood of
a compromise as both parties seek to avoid new elections.
The two parties have agreed on a set of five general
principles that will underlie a future coalition
government. End Summary.

CLOCK TICKING ON GOVERNMENT FORMATION
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2. (SBU) According to the new Serbian constitution,
Belgrade has 90 days from the constitutive session of
parliament -- held on February 14 -- to form a government.
If Serbian leaders are unable to do so, parliament will
dissolve, and the country must hold new elections by July

14. In the meantime, Belgrade faces another deadline --
March 31 -- to approve a budget; otherwise temporary
financing theoretically should expire. G17 Plus chairman
Mladjan Dinkic has publicly declared that his party would
not support the renewal of temporary financing past 31
March unless serious government negotiations were underway
at that time.

PARTIES DAWDLE ON GOVERNMENT TALKS
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3. (SBU) DS and DSS leaders have repeatedly reassured the
public that they will be able to form a government,
although both sides have stated publicly and privately that
the prospects for compromise on the PM position are bleak.
DS and DSS representatives began formal talks March 2 that
succeeded in reaching agreement on coordinated policies on
Kosovo, European integration, and cooperation with the
International Criminal Tribunal for the former Yugoslavia
(ICTY). A DSS party leader told us February 28 that, while
general red lines on Kosovo have been agreed upon, there is
still much work to be done on harmonizing Serbia's policy
and reactions toward a possible status decision they would
oppose. This official added that the delegations would
soon begin to formally duke it out on the PM position as
well, expressing confidence that a deal could be struck
before March 31 that would leave Kostunica in the PM's
chair.

DS STRATEGY: HOLD THE LINE, HOPE FOR A MIRACLE
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4. (SBU) DS officials maintain, even in private, that they
still intend to put Djelic forward as PM. One senior DS
parliamentarian told us recently that the DS leadership is
unwilling to entertain any possibility of forming a
government with Kostunica at the helm; either Djelic will
be PM or there will be new elections. These officials,
though, talk about the way things "should" be, and are
reluctant to speculate on the way things might turn out.
Tadic's personal advisors are less categorical, but
complain about the difficulty of negotiating with a
Kostunica they perceive as "disengaged" from the status
process. One advisor said most of the work on portfolio
allocation is either done or can be worked out quickly, the
sole real sticking point is the PM's job.

DSS: LACKING CONTINGENCY PLAN
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5. (SBU) DSS officials also remain on message for now,
reluctant to engage even privately on their coalition red
lines. One DSS VP noted, for example, that because G17
Plus and New Serbia supported Kostunica as PM and together
outweighed Tadic's support base, Kostunica remaining as PM
(somehow) reflected the will of the majority of Serbian
democratic voters. Interestingly, at least some DSS
officials have acknowledged to us that new elections would
be particularly bad for DSS, in part because of expected
poor turnout due to voter apathy (which would hurt
democratic parties more than the highly-organized
Radicals),but also because DS could blame Kostunica for
causing the failure of coalition talks, which could depress
DSS turnout and energize DS. DSS officials also did not
rule out the possibility of a minority DS government
supported by DSS, but admitted such an outcome is unlikely
to be supported by DS.

POSSIBLE WIGGLE ROOM FOR BOTH PARTIES
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6. (SBU) Although most DS and DSS officials continue to
publicly and privately maintain their party lines, press
reports indicate that some party leaders are privately more
flexible. DS officials continue to contend -- as Tadic has
privately stated -- that the "instruments of power" within
the government are more important than the PM slot.
According to press reports, Djelic himself in informal
talks has not ruled out the possibility of Kostunica
serving as PM. DSS party whip Milos Aligrudic has publicly
stated that the party has alternative plans in case DS
refuses to cede the PM post, although he reaffirmed that
the PM post is of utmost importance to the party.

COMMENT
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7. (SBU) Overall, there seems to be an increasing sense in
Belgrade, from officials from both parties, that a
coalition deal will be struck, perhaps even as early as the
end of March. The agreement on coalition principles over
the weekend sends a signal that the parties are serious
about the potential of working together ?- although it is
not yet clear to what extent the DS will be willing to
compromise its basic goals to reach agreement with the DSS.
Tadic's problem will be explaining to party faithful why
Kostunica was allowed to keep his post (still the most
likely outcome) when DS won the plurality among coalition
partners. Some analysts suggest Tadic is well-served by
delay, hoping that personal ambition and impatience in his
party leadership will eventually lead them to accept the
reality of a Kostunica-led coalition so they can take over
long-desired portfolios.


8. (SBU) Kostunica's main problem seems to be that his
policy is adrift -- DSS can't get beyond simple
rejectionism on Kosovo, and can't get beyond Kosovo into a
broader platform of issues on which to lead the country.
Many believe Kostunica is simply using the coalition talks
as a tool to drag out the Kosovo status process -- DSS
hints that the March 31 government budget deadline could be
fudged fuel perceptions that DSS is bent on dragging out
talks indefinitely.

POLT