C O N F I D E N T I A L SECTION 01 OF 04 SARAJEVO 001899

SIPDIS

EUR/SCE (HYLAND, FOOKS), NSC FOR HELGERSON

E.O. 12958: DECL: 12/23/2018
TAGS: EUR SCE HYLAND FOOKS NSC FOR HELGERSON
SUBJECT: BOSNIA - DODIK, TIHIC, COVIC WORK TO KEEP PRUD
ALIVE; DODIK WILLING TO TALK ABOUT BRCKO AMENDMENTS

REF: A. A. SARAJEVO 1869

B. B. SARAJEVO 1655

C. C. SARAJEVO 1862

Classified By: Ambassador Charles English. Reasons 1.4 (b) and (d).


1. (C) SUMMARY: In an effort to sustain momentum on the
November 8 Prud Agreement (ref A), the three signatories to
the agreement -- Party of Democratic Action (SDA) chairman
Sulejman Tihic, Croatian Democratic Union (HDZ-BiH) chairman
Dragan Covic, and Alliance of Independent Social Democrats
(SNSD) chairman Milorad Dodik -- met on December 22 to devise
a strategy for implementing elements of Prud. The three men
signed three documents -- addressing the 2009 budget, the
census and return of refugees and displaced persons, and
constitutional reform -- and drafted an annex dealing with
state property. The state property annex, by calling for the
establishment of an Agency for State Property and
establishing a deadline for adopting the Law on State
Property, portends some concrete progress in this area.
However, the State Property Commission in its December 22
meeting came no closer to an agreement, largely because of
contention over the details of the property registration
process.


2. (C) SUMMARY CONTINUED: On Brcko, Dodik stressed to
Ambassador at a December 22 meeting that international
engagement had led him to reassess his position and that he
would consider constitutional amendments. Dodik, Tihic, and
Covic at their meeting also discussed the possible
reshuffling of the state government, which Tihic and Covic
subsequently raised with Social Democratic Party (SDP) leader
Zlatko Lagumdzija, whom Tihic and Covic are courting to join
the state and Federation governments -- or support a minority
coalition -- if the current coalitions fall. Lagumdzija and
SDP plan to deliberate on this proposal and reply to their
interlocutors within two days. We continue to applaud
efforts by the Prud signatories to make progress on the
agreement in order to assure the public and each other of
their commitment to its implementation. Yet given
intra-party rifts and inter-party battles over details, we
are a long way from realizing the promises of Prud. We are
also not ready to bank Dodik's promise that he

would support
constitutional amendments on Brcko, given his history of
walking back on private commitments to us. END SUMMARY

Tihic, Covic, Dodik Meet to Reinvigorate Prud
--------------


3. (SBU) On December 22, Tihic, Covic, and Dodik met in
Sarajevo to discuss the implementation of the Prud Agreement
(ref A). Speculation that Prud might collapse has grown in
recent weeks after: 1) the State Property Commission failed
to reach agreement on draft legislation consistent with Prud;
2) the Bosniak and Croat members of the Tri-Presidency --
Haris Silajdzic and Zeljko Komsic, respectively -- endorsed a
state budget inconsistent with Prud, over the objections of
Serb Tri-Presidency member Nebojsa Radmanovic; and 3)
parliamentary debate over census legislation became entangled
in a Bosniak-Serb dispute over plans by the Republika Srpska
(RS) to remove the adjective "Bosanski" from several towns in
the RS. At the same time, Prud opponent Haris Silajdzic has
been diligently seeking to discredit the agreement and drive
a wedge between Tihic and the more conservative wing of the
SDA by claming that Tihic's compromises with Dodik (and
Covic) pose a fundamental threat to Bosniak interests.


4. (SBU) Tihic, Covic, and Dodik at their December 22 meeting
signed three documents and drafted an annex, which were
designed to clarify elements of the Prud Agreement and
sustain the positive political momentum many observers
believed the initial agreement created. The three signed
documents deal with the 2009 budget, the census and return of
refugees and displaced persons, and constitutional reform.

-- On the budget, the three men re-endorsed the 2009 budget
framework as agreed by the National Fiscal Council, but
concluded that the allocation of funds within the budget was
a matter for the state parliament (and, in the case of the
entity budgets, the entity parliaments).
-- On the census/returns, the three men proposed that the
Council of Ministers create an inter-agency working group
charged with drafting a law on the census, devising a program

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of measures to assist sustainable returns for the period
2009-2014, and exploring the possibility of securing
favorable international loans or issuing bonds to finance the
program of measures.
-- On constitutional reform, the three men called on their
party caucuses in the state parliament to draft legislation
creating a special parliamentary commission that would
prepare amendments to the Constitution consistent with the
principles outlined in Prud. The commission would take
decisions by consensus.

State Property Annex Portends Progress, but Stalls
-------------- --------------


5. (C) The fourth document, the annex, deals with state
property, paving the way for incremental progress on this
element of Prud but languishing amid contentious discussions
within the State Property Commission on details. The annex
indicates which property would be subject to the Law on State
Property, calls for an inventory of all such property, and
conveys the necessity of a subsequent agreement between
executive bodies at all levels of government. That
agreement, per the annex, would first establish which
property would be required for the state government to
exercise its competencies, then enumerate the necessities for
the lower levels. Similarly, the annex proposes that all
property should first be registered as state-level property
and subsequently be registered at the lower levels. (Note:
Dodik told Ambassador on December 22 that he did not concede
this point. End Note) Finally, the annex states the need to
establish an Agency for State Property and gives a deadline
of January 31 for adopting the Law on State Property.


6. (C) Tihic, Covic, and Dodik sent this annex to the State
Property Commission for its December 22 meeting, but although
the Commission debated it, the discussion yielded no progress
toward an agreement. The group reached a stalemate on a
number of questions, such as the order in which the Law,
inventory, agreement, and registration should proceed. The
Commission also did not review any of the draft laws
submitted by the RS or Bosniak representatives or the
Commission chair, ultimately agreeing to task state-level
Public Attorney Dragica Miletic to devise a consolidated
draft Law from the three drafts submitted to the Commission,
taking into account the annex to Prud. The Commission plans
to deliberate on this draft at its next session, scheduled
for December 30 in Banja Luka.

Brcko: Potentially Constructive Step By Dodik
--------------


7. (C) At a December 22 luncheon with Dodik, Ambassador
welcomed the constructive dialogue that had produced Prud and
underscored the importance of maintaining momentum on the
agreement, particularly given efforts by some political
leaders to derail it. Ambassador stressed that the U.S. had
welcomed Prud after it was announced, adding that meaningful
compromises on reforms were necessary for Bosnia's
integration into Euro-Atlantic institutions and meeting the
PIC's 5-plus-2 agenda. (Note: Dodik has claimed publicly
that "certain foreign embassies" are working against Prud.
End Note) However, Ambassador reiterated that from a legal
perspective, the element pertaining to Brcko would not work.
(Note: We have been privately stressing this point with RS
leaders, senior members of Dodik's party, and key Dodik aides
since the November PIC. End Note) Ambassador urged Dodik to
reconsider his opposition to constitutional amendments on
Brcko and to return to the type of constructive dialogue on
Brcko that had characterized their exchanges in the first
half of 2008.


8. (C) Dodik confirmed that HighRep Miroslav Lajcak had
raised Brcko with him during a December 15 meeting in Banja
Luka, adding that this exchange -- coupled with his
discussions with U.S. officials on the margins of the PIC --
had persuaded him to take another look at the issue. Dodik
underscored that if ensuring Brcko's access to the
Constitutional Court was the only issue, then he was ready to
work with the Supervisor, OHR, and the U.S. to find
acceptable language for a constitutional amendment. Dodik
expressed concern about the first proposed amendment, which
he claimed "went beyond the Final Award." (Note: The first
of the two proposed amendments defines Brcko as an

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institution of Bosnia, using language drawn directly from the
Final Award. End Note) Dodik also proposed specific changes
to the second amendment, which deals with the Constitutional
Court issue. Ambassador welcomed Dodik's new approach and
urged him to present his specific proposals to OHR lawyers,
who would be best positioned to assess them.

Shuffling the State and Federation Governments
-------------- -


9. (C) After their meeting with Dodik, Tihic and Covic met
with Social Democratic Party (SDP) President Zlatko
Lagumdzija on December 22 to discuss their efforts to
implement Prud and their plans for shuffling the state and
Federation governments. Covic told us after the meeting that
he believes Lagumdzija is favorably disposed to joining the
Federation and state governments -- although he acknowledged
that Lagumdzija was often unpredictable -- but only under the
condition that SBiH and HDZ-1990 are not part of the
coalition. He also was sanguine about the prospect of Dodik
accepting Lagumdzija in the state government, which in the
past he has publicly refused to do. Lagumdzija told the
press after his discussion with Tihic and Covic that he had
scheduled an SDP meeting for December 23 to decide whether to
consider participating in a coalition government or
supporting a minority government, and that his party would
have an answer within two days. Covic noted, though, that
Tihic is balking at reshuffling the government in the near
future, citing the need to pass budget bills at the state and
entity level first. Covic assessed that Tihic's push for
passing these bills is a smokescreen for ensuring support
from the rest of SDA for the government reshuffle.

Comment
--------------


10. (C) Although the three signatories to Prud continue to
profess to support the agreement, we are scarcely closer to
implementation of any element of Prud than we were at its
signing. Numerous obstacles stand in the way of immediate,
tangible progress. Tihic still faces opposition from restive
elements of his party, particularly from SDA VP Bakir
Izetbegovic and his allies, which could hamper Tihic's
efforts to negotiate. Tihic admitted to us that he is
factoring this potential opposition into his careful steps on
Prud. Tihic needs to balance these risks with the immense
political capital he would gain from the successful
implementation of the Prud Agreement. The fall of the state
and Federation governments (government restructuring was part
of Prud) -- which strikes us as a serious possibility given
the negotiations underway with SDP -- could solidify Tihic's
leadership within the party, but a failed attempt at bringing
down the governments could politically finish him.


11. (C) Dodik, although notionally striking a more
conciliatory position on Brcko, has not yet convinced us that
he fully backs constitutional amendments or is willing to
make the tough compromises, such as those required on state
property, to ensure Prud's implementation. Izetbegovic has
told us that he does not believe Dodik is serious at all
about Prud. Even Covic has stressed to us the need to test
Dodik's sincerity. Dodik has a habit of walking back from
private promises to us and to others. Bearing this in mind,
we will continue to keep the pressure on him to do the right
thing, particularly on Brcko, even as we applaud all of the
Prud signatories for the steps they take toward implementing
the agreement. We will encourage them to bring the issues
that are closest to completion, such as immoveable defense
property, to closure as soon as possible so as to ensure
continued momentum on the agreement, and to take advantage of
Dodik's willingness, even if fleeting, to cooperate.

Addendum: Ambassador Cautions Dodik on Rhetoric
-------------- --


12. (C) At the conclusion of their lunch, Ambassador pulled
Dodik aside for a one-on-one exchange about Dodik's recent
rhetoric, specifically his repeated public attacks on PDHR
Gregorian (ref B). Ambassador warned Dodik that his
months-long campaign to vilify the PDHR had created an
environment that had the potential to transform threats,
however empty in themselves, into dangerous actions.
Ambassador made clear that the U.S. expects Dodik and his

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allies to cease and desist, stressing that the U.S. would
hold Dodik responsible if the RS media drumbeat against the
PDHR compromises Gregorian's security in any way. Dodik
responded that this expectation was "unfair," that the RS
feels that the PDHR has attacked them, and that he feels
obligated to respond. While rejecting possible
responsibility for breaching the PDHR's security, and without
agreeing to any course of action, Dodik nevertheless said
that he "understands" the U.S. position. Ambassador also
rebuked Dodik for accusing the U.S. of "misusing" Dodik's
comments about "Muslim" judges (ref C), stressing that
Dodik's comments were crystal clear and not subject to benign
interpretation. If Dodik wished to avoid criticism for such
clearly objectionable rhetoric, he ought to stop making such
statements, Ambassador concluded.
ENGLISH