SERBIA: ECONOMIC CRISIS COULD UNDERMINE STABILITY

C O N F I D E N T I A L SECTION 01 OF 02 BELGRADE 000304 SIPDIS E.O. 12958: DECL: 04/09/2019 TAGS: PREL PGOV SR SUBJECT: SERBIA: ECONOMIC CRISIS COULD UNDERMINE STABILITY IN SANDZAK REGION REF: A) BELGRADE 272 B) BELGRADE 63 Classified By: Deborah Mennuti, Political Chief, reasons 1.4 (b,d) Summary -------------- ¶1. (C) Serbia,s Sandzak, the ethnically mixed region of Serbs and Bosniaks in the southwest part of the country, could face political instability as Serbia's economic situation grows darker. These days, observers find the region calmer than it has been for years. But that calm could be illusory. Both of the government's Bosniak ministers, who come from rival Sandzak-based parties, warned us that political stability could be undermined as the crisis worsens, particularly if Belgrade cuts financial support to the region. The Mayor of Novi Pazar, Sandzak's largest city, is increasingly suffering the consequences of his local rivals, collusion with national coalition member G-17 Plus that undermines his constructive efforts to face severe debts and budget shortfalls left by his predecessor. The fierce rivalry between the two main Bosniak parties, the on-going feud between the region's two Islamic communities, and increasingly dire economic straits will continue to raise the probability of political instability and popular unrest. End Summary. Ugljanin Reaches Out For Aid -------------- ¶2. (SBU) As the Serbian government searches for ways to meet IMF budgetary requirements (Ref A),both of the Serbian government,s Bosniak ministers have told us that anticipated cuts in funding from the central government to local governments may undermine political stability in the municipalities of Serbia's Sandzak region. Seeking to assume the mantle of Sandzak statesman, Minister Without Portfolio and President of the Sandzak Party for Democratic Action (SDA) Sulejman Ugljanin told the Ambassador on March 26 that he sought to direct GOS attention to Sandzak and was ready to work with the international community to develop projects to support the region,s economy. Warning that the economic crisis would divert Belgrade's attention and resources from Sandzak, Ugljanin said that he could assemble "multi-disciplinary teams" of experts from different ministries to focus on developing concrete solutions to the region,s economic problems. Ugljanin said that PM Cvetkovic supported the idea but that he continued to face obstacles from Minister of Economy Mladan Dinkic (the head of G-17 
Plus). (Ugljanin conveyed a similar idea to the DCM in late January but we have seen no indication of any action on it since then.) ¶3. (SBU) Ugljanin also noted the need for international support for infrastructure in the Sandzak region. He proposed three ideas: building a highway from Pozega to the Montenegrin border through Sandzak, building a 19 kilometer railroad between Raska and Novi Pazar, and modernizing the airports in Sjenica and Kraljevo for commercial use. (Both are former military airports that were targeted during the 1999 NATO intervention.) Ugljanin claimed that his relationship with his longstanding Bosniak rival, Sandzak Democratic Party (SDP) President and Minister for Social and Labor Policy Rasim Ljajic, was "perfectly normal" and said that he was willing to work with Ljajic on projects concerning the Sandzak. (Comment: Ugljanin is dissembling on this point. In March, he refused to attend a UK-Embassy sponsored conference on Sandzak economic issues where he would have shared the stage with Ljajic. End Comment.) Ugljanin also complained at length on the efforts of Novi Pazar Mayor Mirsad Djerlek (SDP) to undo public works contracts and dismiss competent (and previously SDA-appointed) officials from city government. Ljajic: Economic Crisis Threatens Radicalization -------------- -------------- ¶4. (C) Ljajic told the Ambassador on March 27 that Sandzak needed support from international donors to cover shortfalls in assistance from Belgrade and prevent the strengthening of radical political forces. Ljajic said that the Turkish aid agency TIKA would be a valuable partner in developing the region, but that the GOS continued to refuse to grant TIKA accreditation in Belgrade due to &bogus charges8 that TIKA was a front for Turkish security services. Ljajic said that radical groups would exploit the economic crisis for political advantage, possibly leading to destabilizing riots in Sandzak and throughout Serbia. ¶5. (C) Ljajic called the ongoing feud between the rival Islamic communities another obstacle to the region's BELGRADE 00000304 002 OF 002 development (Ref B). He said that Mufti Zukorlic, head of the Sarajevo-centered Islamic Community in Serbia, and Reis Adem Zilkic, leader of the Belgrade-based Islamic Community of Serbia, would not reconcile; only a political solution was realistic. Ljajic described both Islamic communities as corrupted "personal companies" of Zukorlic and Zilkic, adding that it was difficult to determine whether either community was "a Mercedes service or an Islamic community." Neither community served the interests of true-believing Muslims, Ljajic said, and urged us to focus our contact in Sandzak on political officials and economic assistance instead of the dueling clerics. National Political Pressures Wear on Novi Pazar -------------- -- ¶6. (SBU) In addition to the anticipated cuts in financial support from Belgrade, Novi Pazar Mayor Djerlek, who, although a political novice, we consider to be serious and determined to implement much-needed reforms, is facing counter-productive pressure from Ugljanin's G-17 Plus coalition partners. (G-17 Plus formed a coalition directly with SDA during national coalition negotiations in June 2008 to keep Ugljanin's two MPs from joining forces with the Democratic Party of Serbia or the Serbian Radical Party.) Novi Pazar contacts told us that Ugljanin convinced Dinkic to intervene in a court case over disputed SDA office space in the Novi Pazar municipal building, and that Dinkic had obliged in getting the District Court to refer a ruling unfavorable to Ugljanin back to the Municipal Court for reconsideration. The National Investment Plan Ministry (led by G-17 Plus member Verica Kalanovic) decided to fund projects that the City of Novi Pazar did not request (construction of a rural road) but has dragged its feet on following through with other projects that it agreed to only under pressure from Ljajic. Dinkic's Ministry of Economy has also not acted on a longstanding request to transfer property held by two bankrupt state enterprises to city control (Ref B). Comment -------------- ¶7. (SBU) While our sympathies for Mayor Djerlek are strong, our trust of Minister Ljajic significantly greater than in Minister Ugljanin, and our skepticism great about the duels between rival muftis, one point is clear: in coming months all players are vying with one another for the favor of western donors and business representatives. This provides the international community with an opening. The recent relative peace in Novi Pazar and elsewhere in the Sandzak has been fragile and may be threatened by the growing economic crisis. We have successfully mobilized the diplomatic and international community here through our "Friends of Sandzak" initiative that has assembled more than a dozen embassies and international organizations to coordinate aid efforts in the region as well as develop unified messages to convey to key officials in Belgrade. In the coming weeks, our British colleagues will convene a meeting of aid experts from our embassies to agree upon a set of concrete, small-scale projects proposed by Mayor Djerlek, and the OSCE Mission in Serbia has offered to host the third meeting of the &Friends of Sandzak8 at the ambassadorial level. The consensus message to our Serbian interlocutors is that Belgrade must deliver concrete support to the Sandzak, and that all must realize help from the international community is finite. End Comment. MUNTER