BOSNIA - A GLIMMER OF HOPE ON DEFENSE PROPERTY

C O N F I D E N T I A L SECTION 01 OF 02 SARAJEVO 001563

SIPDIS

SIPDIS

DEPARTMENT FOR EUR/SCE AND EUR/RPM; NSC FOR BRAUN; OSD FOR
FATA; USNATO FOR REID

E.O. 12958: DECL: 01/01/2015
TAGS: PGOV PREL PINR PARM MARR BK
SUBJECT: BOSNIA - A GLIMMER OF HOPE ON DEFENSE PROPERTY
ISSUES

REF: SARAJEVO 1209

Classified By: Ambassador Douglas McElhaney. Reason 1.4(b) and (d).


1. (C) SUMMARY: On July 12, the State and two Entity Prime
Ministers reached an "Agreement on Basic Principles" on
defense property, which holds out the prospect of finally
resolving a vexing issue that has hampered Bosnia's defense
reform efforts over the last several months. The principles
provide for State ownership of moveable property (e.g.,
weapons, ammunition and equipment),but only State "right of
use" for immoveable property (e.g., real estate). The NATO
Political Advisor and High Representative Lajcak are inclined
to support the principles outlined in the agreement even
though they fall short of previous NATO and OHR calls for
ownership of both moveable and immoveable property. That
said, NATO and OHR will not offer unqualified support to the
proposal of the three PMs until a detailed agreement is
reached. NATO will participate in a legal working group
established by the PMs charged with preparing such an
agreement and will attempt to ensure that the outcome is
consistent with NATO requirements. END SUMMARY

Agreement on Basic Principles for Defense Property
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2. (SBU) On July 12, Prime Minister Spiric, Republika Srpska
(RS) PM Dodik, and Federation PM Brankovic signed an
"Agreement on Basic Principles for Solving the Issues of
Moveable and Immoveable Property that will Continue to Serve
Defense Purposes." The agreement provides that the State
shall have the right of ownership for all moveable property
currently belonging to the Entities. The proceeds of any
sale of moveable property by the State after its transfers
from the Entities would be provided to the Entities. With
regards to immoveable property, the agreement provides that
the State shall have the right of use for "an indefinite
duration." If the State determines at a later date that any
immoveable properties are no longer needed, they would revert
to the Entities. According to the agreement, the right of
use for immoveable property could not be amended or repealed
without the agreement of all signatories. The three Prime
Ministers agreed to form a team of legal experts to develop
these Basic Principles into a full fledged legal agreement.
NATO, which was represented at the July 12 talks, was invited
to participate in the expert level talks as well.

Half A Loaf is Better than None
--------------


3. (C) The NATO Political Advisor in Bosnia and High
Representative Lajcak welcomed the agreement despite the fact
that it did not provide for ownership by the State of all
defense property, immoveable as well as moveable. NATO
representatives argued that the most pressing aspect of the
overall property issue is resolution of the ownership of arms
and ammunition, and the failure to clarify this issue has
hampered efforts to dispose of excess stocks. Some of the
ammunition is unstable, which poses a threat to public health
and safety, and most in the international community believe
that large stocks of ammunition around Bosnia are generally
detrimental to a safe and secure environment. NATO
representatives are hopeful that rapid progress on the
property Transfer Plan, which the legal working group must
now modify in light of the Agreement on Basic Principles,
would allow disposal of excess stocks to begin.


4. (C) The question of immoveable defense property has been
complicated by the politics associated with the broader
dispute between the State and the Entities, particularly the
RS, over property succession rights from the Federal Republic
of Yugoslavia (FRY). The RS insists that the FRY's property
in Bosnia legally and constitutionally belongs to the
Entities. The State insists the FRY's property belongs to
it. Both sides have been reluctant to conclude an agreement
on immoveable defense property that might prejudice
negotiations over the FRY's property. Lajcak, who
participated in the July 12 defense property negotiations,
told all three Prime Ministers that OHR would consider any
deal on immoveable defense property as sui generis. (Note:
Separately, the Bosnian State Property Commission is working
to meet an OHR-mandated deadline of September on FRY property

SARAJEVO 00001563 002 OF 002


issues. End Note). However, he also stressed that the deal
immoveable defense property would have to be "harmonized"
with the State Property Commission's decisions on the FRY's
property.

The Devil is in the Details
--------------


5. (C) At the July 13 Steering Board Ambassadors, Lajcak
acknowledged that the deal on immoveable defense property was
not ideal, but argued that he was encouraged by the fact that
the Agreement on Basic Principles was the result of a Bosnian
initiative. (Note: Prime Minister Spiric has been quietly
pursuing a deal on defense property for several months. End
Note.) In order to encourage "responsible ownership", Lajcak
said he was prepared to support quietly the process initiated
by the three PMs, but added that he would not openly endorse
a deal until the details were finalized. He would not
support a final deal inconsistent with the international
community's, particularly NATO's, interests, Lajcak said. In
this context, OHR representatives noted that it is unclear
how much coordination there was between Spiric and the
Ministry of Defense (MoD) prior to the July 12 meeting of the
three PMs. (Note: Defense Minister Cikotic was out of town
when the Agreement on Basic Principles was signed. End Note)

Comment: Some of the Details to Watch
--------------


6. (C) In a country where progress on any major reform has
been notably lacking over the past year, the Agreement on
Basic Principles is a welcome, if incomplete, step forward on
an issue critical to Bosnia's Euro-Atlantic future. The
challenge for the Bosnians now will be to move to turn the
principles into a detailed agreement in a timely fashion.
This would allow the MoD to focus its energies on other
defense reform issues, and the international community to
begin the process of disposing of excess ammunition and
weapons. If the technical talks bog down over the details
related to immoveable property, such as what property the
State asserts is necessary for current defense needs, we will
urge the parties to finalize an agreement on moveable
property first, since that is, as NATO has argued, the more
critical issue. In that context, the U.S. also has an
interest in ensuring that the Bosnian State retains the right
to transfer excess weapons and ammunition as it did recently
with its arms donation to Afghanistan police.
MCELHANEY