RIFT IN MONTENEGRO'S RULING COALITION (C-RE7-00522)

UNCLAS PODGORICA 000195 SIPDIS SENSITIVE SIPDIS E.O. 12958: N/A TAGS: PGOV ENRG MW SUBJECT: RIFT IN MONTENEGRO'S RULING COALITION (C-RE7-00522) REF: PODGORICA 94 SENSITIVE BUT UNCLASSIFIED - PLEASE HANDLE ACCORDINGLY ¶1. (SBU) A "principled" disagreement over privatization of the large thermo-electric plant in Pljevlja (TE Pljevlja) has led to a rift in Montenegro's ruling coalition. The larger Democratic Party of Socialists (DPS) is seeking to finalize the sale of TE Pljevlja to En+ Group, owned by Russian tycoon Oleg Deripaska. Deripaska is seeking a steady power supply for Kombinat Alumina Podgorica (KAP),which he bought in December 2004. The smaller Socialist Democratic Party (SDP) opposes privatization of TE Pljevlja, stating that monopoly public utilities should remain in state hands. ¶2. (SBU) PM Zeljko Sturanovic (DPS),and Parliamentary Speaker Ranko Krivokapic (SDP) are trying to patch the split between the parties. The difference of views, apparent for months (ref), grew pronounced in the past week after the opposition Socialist People's Party (SNP) proposed a parliamentary motion to advise the GoM that Parliament opposes privatizing TE Pljevlja. While the motion would not be binding on the GoM, the SDP was disposed to vote for it, against the wishes of its senior partner in government. Such a vote would further widen the GoM split, and affect its stability. Krivokapic told Charge June 7 that the SDP would withdraw from government, even at the cost of new elections, rather than support privatization of TE Pljevlja, but added that a coalition collapse before the new Constitution is agreed, probably in September or October, would be a catastrophe. He therefore plans to ask DPS to postpone the vote on the government's energy (and energy privatization) policy, now delayed until June 12, until after the Constitution is adopted. Note: Krivokapic is looking to strengthen his hold on the leadership of the SDP, in advance of the party's July 28 Conference, and may be trying to refute claims that he has become too close to the DPS and Djukanovic. End note. ¶3. (SBU) Comment: If the vote is postponed the opposition will rail against the maneuver, which does bend if not break parliamentary rules. But without an SDP vote against its governing partner (the DPS) on the books, the opposition would be unable to realistically seek a vote of no confidence in the GoM. However, winning support from centrist elements of the opposition is required if the constitution is to be adopted by a 2/3 vote in parliament. It is those same centrist elements that have introduced and most strongly support the motion objecting to the sale of TE Pljevlja. ¶4. (SBU) A central question is whether the DPS, particularly elements of its leadership (including former PM Milo Djukanovic),is willing to forego or postpone the sale of TE Pljevlja. New elections are unlikely to strengthen either party. New independent polling data is not expected for another ten days or so, but DPS and SDP are both assumed to have lost support since last September's election, when their coalition just managed to gain 41 of 81 parliamentary seats. It also assumed by many observers that if the SDP left the coalition, it would not clear the 3 percent vote threshold needed to stay in parliament. End comment. FERRILL