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 --