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 -------------- -------------- ¶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 According to the agreement, the right of use for immoveable property could not be amended or repealed without the agreement of all signatories.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