SCENESETTER FOR ADM ULRICH VISIT TO MONTENEGRO

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SUBJECT: SCENESETTER FOR ADM ULRICH VISIT TO MONTENEGRO


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Summary

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1. (SBU) Welcome back to Montenegro. Your visit comes as the
Montenegrins debate their new draft constitution, and as the
opposition continues its misinformed attacks on the GoM-USG
SOFA, and our Article 98 agreement. The Montenegrin leadership
continues its pro-West, pro-American stance, while looking to
maintain good relations with Moscow. The GoM remains a receptive
interlocutor, eager to develop strong ties with Washington and
to prove itself a reliable partner. GoM membership in
Partnership for Peace drew limited criticism, and there has been
much publicity but little notice given to Montenegro's
involvement in the State Partnership Program (linked to Maine).
A DAO was established in late 2006, and the first resident DATT
will arrive in July 2007. End Summary.



Strategic Situation: SOFA and Article 98

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2. (SBU) The Montenegrin leadership strongly believes their
country's future lies within PfP, and eventually NATO and the
EU. Unfortunately, the opposition (even those supportive of a
good relationship with the U.S.) have seen the May 1 SOFA and
April 19 Article agreements as fulcrums upon which to lever
attacks on the GoM. A persistent pattern of attacks on both
agreements, fed by misinformation, has arisen. While the
opposition leadership has accurate information --post verified
this point -- they have told the embassy that they are looking
for hooks upon which to hang attacks on the GoM. They have
played up sharply the EU dislike of Article 98 agreements, and
have painted a false scenario whereby Montenegro would have to
choose between NATO and EU memberships. The GoM is aware of the
actual situation, but the message has gotten lost in the noise.
It is not clear what the public thinks about the controversy; it
is likely they view the attacks as the latest "scandal" to be
used by the opposition to beat up on the GoM.




3. (SBU) President Vujanovic appears ready to provide the
necessary leadership to energize his nation and military for
eventual participation in GWOT. In Washington in early May, he
told Secretary Gates that Montenegro wants to send a small
number of officers to GWOT (probably Afghanistan) in 2008.
Vujanovic signed the SOFA with Secretary Rice on May 1, and has
defended the GoM's conclusion of the Article 98 agreement on
April 19 through an exchange of diplomatic notes. The GoM has
established, and is rapidly expanding it Defense Ministry, and
the 2007 defense budget is 2.04% of GDP. The GoM delivered its
Presentation Document to NATO in early May, after joining the
Partnership for Peace on December 14.




4. (U) Montenegro's Presentation Document states it seeks to
become a member of NATO. It will conduct the Planning and Review
Process (PARP),and develop an Individual Partnership Program.
It seeks consultations on its Individual Partnership Action Plan
(IPAP) and Membership Action Plan (MAP). It has established both
a Mission to NATO, and a Partnership for Peace Council, chaired
by the PM.



Defense and Security

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5. (SBU) The Montenegrin Armed Forces (MAF) are led by
Lieutenant Colonel General Jovan Lakcevic. The Chief of Defense
(CHOD) is committed to transitioning the MAF into a deployable
light-infantry force numbering approximately 2400 officers and
men with air and naval support bases. The Navy is leaving Kotor
Bay for Bar later this year. The MAF's main missions would be
national defense, participation in peacekeeping, as well as
disaster relief. General Lakcevic envisions a potential MAF

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security contribution of four platoons each having niche
capabilities such as special operations/counter-terrorism,
military police, combat engineers, and mountain infantry. The
CHOD views participation in U.S.-led operations as the best
means to form the nucleus of a professional, interoperable MAF
trained to NATO standards.





Political Situation

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6. (U) The independence referendum held in Montenegro on May
21, 2006 was widely considered free, fair, and transparent by
international observers. The Republic Referendum Commission
confirmed the referendum's success on May 31. Turnout was 86.5
percent, with 230,661 voters (55.5 percent) supporting
independence and 185,002 voters (44.5 percent) against.




7. (U) On June 3, parliament officially accepted the referendum
results and declared Montenegro independent, restoring
sovereignty after 87 years.




8. (U) Montenegro joined the OSCE on June 22, 2006, the UN on
June 28, 2006, and the Council of Europe on May 11, 2007. The
U.S. recognized Montenegro on June 12, 2006, and announced the
establishment of diplomatic relations on August 15, 2006. The
U.S. Consulate officially became an Embassy on October 5, 2006;
nine other NATO countries have resident embassies in Montenegro.
Russia and China also have embassies in Montenegro.




9. (SBU) On September 10, 2006 Montenegro had its first
Republic-wide parliamentary elections, with the ruling DPS/SDP
coalition winning an absolute majority in parliament, with 41 of
81 seats. OSCE considered the voting "generally in line" with
international standards. The opposition is fractured into three
blocs, with the formal Leader of the Opposition being Andrija
Mandic, head of the nationalist Serbian People's Party (SNS).
Mandic, while personally disposed to pursue good relations with
the U.S., is not above creating controversy over agreements with
the U.S. in order to play to his nationalist voter base by
attacking the GoM. Mandic recently told post that he was going
to make transparency of the SOFA an issue, but he jovially
admitted that the GoM thwarted that tack by posting the
agreements on the GoM website

-- so he shifted to the process by which the GoM had concluded
the agreements, as well as to willful distortions of the
substance. SNS is in coalition with the Serbian Radical Party,
with the Radicals gaining one seat in the Montenegrin
Parliament. Unlike the other opposition groupings, a slim
majority of the "Serbian List" opposes NATO (but not EU)
membership for Montenegro.



Happy First Birthday

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10. (SBU) Your visit comes as Montenegro marks the first
anniversary of the referendum vote. A year on, no major
political figure raises objections to Montenegro's renewed
independence. Serbian nationalist opposition parties, such as
SNS, and centrist parties like the Socialist People's Party
(SNP) have yet to embrace the literal symbols of independence
(flag, anthem, etc.),even while they fully engage in the
political life of independent Montenegro.




11. (U) Prime Minister Zeljko Sturanovic took over from
long-time PM Djukanovic last fall as the head of a stable,
pro-Western coalition government. Like Djukanovic, Sturanovic's
primary foreign policy goals are EU and NATO membership and he
would like to ally Montenegro closely with the United States.

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Domestically, the government's track record on fully
implementing needed democratic and economic reforms is generally
positive, but with some room for improvement, particularly on
implementation .



Fighting Corruption

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12. (U) Sturanovic has created a broad-based task force to
tackle corruption and increase public confidence in state
institutions. He named his highly-capable Deputy Prime Minister
Gordana Djurovic to head the team, with day-to-day tasks
directed by Vesna Ratkovic, formerly a a deputy minister of
Justice and most recently in charge of USAID's Rule of Law
program. He also named opposition MP's and watchdog NGO members
to the force. Corruption is seen as existing at all levels, and
many many Montenegrins list corruption as the country's biggest
problem (along with low living standards). In this process,
implementation of existing legislation will be key.



Attracting Investment

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13. (U) Montenegro has been successful in attracting foreign
direct investment (FDI),but so far very little of that has been
American. In 2006, FDI amounted to over Euros 505 million (USD
650 million) - 28 percent of GDP - the highest in the region.
Most that was greenfield investments, as Montenegro nears
complete divestment of state-owned assets. The GoM plans that
over the next four years, foreigners will make over a billion
euros of direct foreign investments into Montenegro. Thanks to a
receptive attitude toward USAID funded macro-economic reform
initiatives, the Government has adopted a business-friendly
investment climate (e.g., 9 percent corporate tax rate, full
repatriability of profits). Much of the FDI in 2006 was
purchase of real property, with Russians, British and Irish
leading the way. In April 2007, a U.S.-based firm landed the
Euros 8 million (US$ 10 million) contract to produce independent
Montenegro's first passports.
BARNES