FORMER PM DJUKANOVIC AGAIN IMPLICATED IN 1990S CIGARETTE

UNCLAS SECTION 01 OF 02 PODGORICA 000226 SIPDIS SENSITIVE SIPDIS DEPARTMENT ALSO FOR INR/B E.O. 12958: N/A TAGS: PGOV KCRM PINR MW SUBJECT: FORMER PM DJUKANOVIC AGAIN IMPLICATED IN 1990S CIGARETTE SMUGGLING PODGORICA 00000226 001.3 OF 002 SENSITIVE BUT UNCLASSIFIED - PLEASE HANDLE ACCORDINGLY ¶1. (SBU) SUMMARY: FORMER PM MILO DJUKANOVIC AGAIN FACES THE PROSPECT OF INDICTMENT IN BARI, ITALY, ON CHARGES OF CIGARETTE SMUGGLING AND MONEY LAUNDERING, ACCORDING TO ACCOUNTS FROM THE ITALIAN NEWS AGENCY ANSA. THE SMUGGLING, ALLEGEDLY UNDER COLOR OF GOM PERMISSION, BEGAN IN THE 1990S WHEN THE FEDERAL REPUBLIC OF YUGOSLAVIA, OF WHICH MONTENEGRO WAS A PART, WAS UNDER UN AND OTHER INTERNATIONAL SANCTIONS. THE ALLEGATIONS HAVE LONG BEEN PART OF THE POLITICAL ENVIRONMENT IN MONTENEGRO, DISMISSED AS POLITICALLY MOTIVATED BY DJUKANOVIC'S DEMOCRATIC PARTY OF SOCIALISTS (DPS),AND EQUALLY EMBRACED BY THE OPPOSITION. THE AFFAIR, WHILE SEEMINGLY SCANDALOUS, HAS LONG AGO BEEN FACTORED INTO POLITICAL CALCULATIONS BY PARTIES AND VOTERS ALIKE IN MONTENEGRO. AN INDICTMENT MAY CAUSE DJUKANOVIC TO TAKE A LOWER PROFILE IN HIS PARTY, BUT WOULD NOT BY ITSELF SERIOUSLY AFFECT THE BALANCE OF POLITICAL POWER IN MONTENEGRO, BARRING THE UNLIKELY CHANCE THAT THE DPS'S JUNIOR COALITION PARTNER CHOSE TO LEAVE THE GOM IN RESPONSE TO DJUKANOVIC'S INDICTMENT. END SUMMARY. SMUGGLING AND MONEY LAUNDERING -------------- ¶2. (U) IN 1999, ITALIAN PROSECUTORS IN NAPLES AND BARI BEGAN INVESTIGATIONS IN CIGARETTE SMUGGLING ACROSS THE ADRIATIC FROM MONTENEGRO AND ALBANIA. INTERROGATED BY PROSECUTORS IN 2000 AND 2001, ITALIAN ORGANIZED CRIME FIGURES STATED THAT THEY HAD HAD MEETINGS WITH PM DJUKANOVIC AND OTHER SENIOR GOM OFFICIALS BETWEEN 1993 AND 1996. IT IS ALLEGED THAT IN THOSE MEETINGS, DJUKANOVIC AND OTHER GOVERNMENT OFFICIALS GAVE THE CAMORRA (NEAPOLITAN ORGANIZED CRIME ORGANIZATION) PERMISSION TO USE MONTENEGRIN TERRITORY AS A BASE FOR SMUGGLING CIGARETTES BY SPEEDBOAT INTO ITALY. STORIES THAT RUSSIAN PLANES HAD BEEN BRINGING IN CIGARETTES TO PODGORICA, AND THAT THE GOM HAD EXACTED "TRANSIT FEES" OF US$30 MILLION A MONTH, HAD BEEN IN WIDE CIRCULATION THROUGHOUT THE 1990S. ¶3. (U) DJUKANOVIC HAS ROUTINELY DENIED THAT HE DID ANYTHING ILLEGAL IN CONNECTION WITH THE CIGARETTE TRADE, OR THAT HE EVER MET WITH ITALIAN ORGANIZED CRIME FIGURES. OTHER FORMER OFFICIALS IN THE GOM FROM THE 1990S HAVE SAID THAT THE "TRANSIT ;FEES" WERE A NECESSARY RESPONSE TO UN AND INTERNATIONAL SANCTIONS THAT WERE STARVING THE GOVERNMENT OF REVENUE. THE DEMOCRATIC PARTY OF SOCIALISTS (DPS),OF WHICH DJUKANOVIC IS PRESIDENT, HAS ROUTINELY RESPONDED THAT THE ITALIAN INVESTIGATIONS ARE POLITICALLY MOTIVATED. THE OPPOSITION HAS JUST AS ROUTINELY USED THE INVESTIGATION TO PAINT THE DPS AS A CORRUPT ORGANIZATION. (POST NOTES THAT THE INVESTIGATOR IN NAPLES ENDED HIS INVESTIGATION IN 2005, WITHOUT BRINGING INDICTMENTS.) IN CASE OF INDICTMENT -------------- ¶4. (SBU) MOST PARTIES AND VOTERS IN MONTENEGRO HAVE ALREADY FACTORED IN THE DRAWN-OUT ITALIAN INVESTIGATION INTO THEIR POLITICAL CALCULATIONS. THE MATTER IS NOW BEFORE AN INVESTIGATIVE JUDGE, AND THOSE NAMED HAVE TWENTY DAYS TO SUBMIT EVIDENCE, SO IT IS NOT CLEAR THAT INDICTMENTS ARE IMMINENT. AN INDICTMENT OF DJUKANOVIC'S ASSOCIATES IS UNLIKELY TO HAVE A SIGNIFICANT EFFECT ON THE DPSS STANDING IN THE LOCAL POLITICAL MARKET. POLITICALLY, AN INDICTMENT OF MILO DJUKANOVIC HIMSELF WOULD CREATE A PRESS FRENZY, BUT WOULD NOT NECESSARILY AFFECT VOTERS' SUPPORT FOR THE PARTY. DEPENDING ON THE TIMING, IT COULD HOWEVER RAISE HURDLES TO COOPERATION FROM OTHER PARTIES WITH THE DPS ON FINALIZING THE CONSTITUTION, AND REINVIGORATING ECONOMIC REFORMS AND PRIVATIZATION. ¶5. (SBU) THE RULING COALITION OF THE DPS AND THE MUCH SMALLER SOCIALIST DEMOCRATIC PARTY (SDP) HAS FRACTURED OF LATE, OVER THE DPS'S COMMITMENT TO ECONOMIC REFORM. AN INDICTMENT OF B T #0226 N -- END OF ERRORED MESSAGE -- PODGORICA 00000226 002.3 OF 002 DJUKANOVIC, FOR ACTIONS THE GOM TOOK BEFORE THE PRESENT COALITION FIRST TOOK FORM IN JUNE 1998, MAY PROMPT SOME IN THE SDP TO CALL FOR FURTHER WIDEN THE FRACTURE, BUT ABANDONING THE COALITION AND FORCING NEW ELECTIONS WOULD BE ALMOST SUICIDAL GIVEN THE SDP'S LOW POLLING NUMBERS. HAVING "WON" ON ITS ECONOMIC AGENDA, MANY IN THE SDP ARE NOW LOOKING TO FINALIZE THE CONSTITUTION, AND SHARE THE DPS VIEW THAT THE COALITION NEEDS TO STAY TOGETHER AT LEAST UNTIL THE CONSTITUTION IS ADOPTED AND THE MANTLE OF "FOUNDING FATHER" CAN BE BESTOWED. ¶6. (SBU) FOR THE FORMER PM HIMSELF, IT IS UNLIKELY THAT HE WOULD ACTUALLY STAND TRIAL, AT LEAST NOT ANYTIME SOON, EVEN IF INDICTED BY THE COURTS IN BARI. THE MONTENEGRIN CONSTITUTION FLATLY FORBIDS THE EXTRADITION OF ITS CITIZENS. WHILE THE BARI PROSECUTOR COULD ASK THAT A CASE AGAINST DJUKANOVIC TO BE TRANSFERRED TO MONTENEGRO, THERE ARE MANY DIFFICULTIES TO BE SURMOUNTED BEFORE SUCH A TRIAL BEGAN. FIRST, POST ASSUMES THE ITALIAN FOREIGN MINISTRY WOULD HAVE TO CONSENT TO TRANSFERRING THE CASE. AT THAT POINT, THE MONTENEGRIN STATE PROSECUTOR WOULD HAVE TO AGREE THAT A CASE FACTUALLY AND LEGALLY EXISTS - WHILE THE PROSECUTOR IS INDEPENDENT, SHE DOES ALSO HAVE ROOTS IN THE DPS. AT THAT POINT, THE MONTENEGRIN PARLIAMENT WOULD HAVE TO VOTE TO LIFT DJUKANOVIC'S IMMUNITY AS AN MP TO LOCAL PROSECUTION, A DUBIOUS PROPOSITION AT BEST, WITH THE DPS LIKELY CLOSING RANKS, AND EVEN THE OPPOSITION LEERY OF A TRIAL IN A LOCAL COURT WHERE THE FORMER PM COULD EXPECT A FAVORABLY BIASED HEARING. ¶7. (SBU) THE ITALIAN AMBASSADOR TO MONTENEGRO HAS TOLD POST THAT THE LEGAL PROCESS COULD TAKE YEARS, AND THAT HE DOUBTS THAT EXTRADITION WOULD BE SOUGHT IN THIS WHITE COLLAR CASE, UNLESS DJUKANOVIC WERE CONVICTED IN ABSENTIA AND SENTENCED TO PRISON. HE ADDED THAT PLANS ARE GOING AHEAD FOR FM ROCEN TO VISIT ROME, AND THE GOI CONTINUES TO STRENGTHEN ITS COOPERATION WITH THE GOM. BARNES B T #0226 N -- END OF ERRORED MESSAGE --