DS, DSS Inch Toward Coalition Agreement

C O N F I D E N T I A L SECTION 01 OF 02 BELGRADE 000352

SIPDIS

SIPDIS

E.O. 12958: DECL: AFTER FORMATION OF SERBIAN GOVT
TAGS: PGOV PREL SR
SUBJECT: DS, DSS Inch Toward Coalition Agreement



1. (c) SUMMARY: Talks between a de facto DSS/G-17 bloc on the one
hand and DS on the other continued in earnest the week of March 12.
DSS remains confident a deal will be struck before the end of March
that will keep Kostunica as PM; some DS senior officials are now
admitting as much privately as well. Talks have been complicated by
G-17 president Dinkic's hard push to retain the Finance Ministry in
the next government - a move DS complains is emboldening DSS and
dragging out talks. Bottom line, a Kostunica-led government still
looks likely before the May 15 deadline - beyond that, it's still an
open question to whom many of the key ministries will fall. End
summary.


2. (sbu) Talks between (primarily) DS and DSS continued March 13,
on the heels of a contentious March 6 meeting that saw the DSS side
raise the idea of formal power-sharing of the President and Prime
Minister posts - the so-called "sixth principle" called for by DSS as
a condition for forming the government. DS rejected the principle as
a non-starter, noting it already held the presidency and the
plurality of democrats in parliament - and hence the "right" to claim
the mandate for establishing a government and taking the PM's seat.
In protest of this, DS VP's say, they postponed talks planned for
March 8 to March 13. At that meeting, they announced a new "zero
principle," which mandated DSS cutting all ties to Radical and
Socialist coalitions at the municipal level.


3. (c) Behind the headlines, though, both DS and DSS appear
increasingly, if warily, confident that a government will be formed
before the end of March, or at the very least before the May 15
deadline. DSS VP's remain certain that they will keep the PM job,
but beyond that have been reluctant to reveal portfolio preferences.
There appears to be a strong push by DSS to keep at least Interior,
and particularly to keep sitting Minister Dragan Jocic in the job.
DSS has also floated candidates for FONMIN (Vladeta Jankovic) and
some other jobs, but the prevailing opinion among DSS senior
leadership is that there will be plenty of ministerial posts to go
around.


4. (c) At the same time, key DS leaders and Tadic advisors are
hinting ever more strongly - and in some cases admitting outright -
that a Kostunica-led government is the most likely outcome, and that
it could happen as soon as the end of March. In a meeting with the
Ambassador and DCM March 14, DS PM candidate Bozidar Djelic gave the
impression that he doesn't really expect to come out of this process
as the PM, and instead has his sights on DPM (Euro-integration)
and/or Finance Minister. He told the Ambassador DS is intent on
getting over 50 percent of the Cabinet seats, since government
decisions are taken on the basis of simple majority (Note: However,
under the new constitution, parliament must pass a new Law on
Government, so that principle could change. End note.) He believes
that the DS will get, inter alia, Finance, Justice, and BIA or MUP.
DS will NOT, he said, allow DSS to have both MUP and BIA.


5. (c) Tadic advisor Vuk Jeremic told us much the same story,
emphasizing that the "zero principle" and a hardline DS stance on
passing a conciliatory resolution on Srebrenica in the parliament
amount to what he called "Kostunica insurance" - an attempt to break
DSS bonds with the Radicals and sour their relationship so that DSS
would have no other option than to go with DS. Jeremic said Tadic
and DS realize they are facing a loss of up to 50 percent of their
support in the polls if they keep Kostunica on as PM - he said their
focus now is on making that loss temporary by securing a voting
majority in the cabinet so they can move forward aggressively with
pro-NATO and pro-ICTY cooperation policies in the hopes that
successes there, coupled with a final verdict in the Djindjic
assassination trial, will overcome the lag in the polls from
retaining Kostunica. Jeremic also said DS was considering ceding to
DSS many of the power ministries - including notably Interior - in
exchange for "iron-clad" guarantees that the government would be able
to continue with defense reform activities so that the military will
be prepared to join NATO if and when Serbia applied for membership.


6. (c) Dinkic, meanwhile, seems hell-bent for the Finance job,
despite (as Jeremic put it) Tadic's categorical refusal to put it on
the table from the outset. Many in DS believe Dinkic was the driving
force behind the "sixth principle," and that he tied his future to
Kostunica through this gambit in a bid to retain Finance. While the
"sixth principle" does not seem to have legs on its merits, Jeremic
noted it had changed the negotiating dynamic - the DSS-G17 bloc now
controls 64 seats to DS's 62, which Jeremic said has made DSS much
more inflexible not only on the PM slot, but increasingly over
Interior and other jobs. Djelic told the Ambassador that Dinkic
might settle for the Economy Ministry (owing to its purview over
privatization and bankruptcy),perhaps coupled with the DPM-ship for
Regional Development.


7. (c) COMMENT: In the short term, the bottom line is a probable
deal that keeps Kostunica at the helm of the government, with a
continuing DS push to keep over half of all ministries to secure a
majority vote in the cabinet, as soon as the end of March but not
later than May 15. Aside from the continuing fight over Interior,
and Dinkic's continued insistence on Finance, there doesn't seem to
be much rancor in the negotiations. Given the DS penchant for being
outmaneuvered, they may end up in a position of accepting more of the

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inconsequential ministries just to get over the 50 percent hump - and
then face a fight in the redrafting of the Law on Government.
Jeremic's comments smack of putting good spin on an increasingly weak
negotiating position. But since officials in all the parties have
all but declared themselves unprepared for, and unwilling to risk the
threat of new elections, the likely winner in these coalition talks
may be the LCD: the least common denominator.

POLT