SERBIA: VOTE ON PROPOSED LAW ON PLANNING AND CONSTRUCTION

UNCLAS BELGRADE 000799

SENSITIVE
SIPDIS
DEPT FOR EUR/OHI - JOHN BECKER AND EUR/SCE

E.O. 12958: N/A
TAGS: ECON KIDE KPRV CASC SR
SUBJECT: SERBIA: VOTE ON PROPOSED LAW ON PLANNING AND CONSTRUCTION
DELAYED

REF: BELGRAGE 725; BELGRADE 791

SUMMARY
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1. (SBU) Serbia's parliament delayed voting on the controversial
draft law on Planning and Construction, postponing it until August
31, after the parliament's summer recess. The law continues to be
controversial due to its potential to negatively affect future
restitution claims, causing the ire of U.S. citizens, the Serbian
Orthodox Church, Jewish groups, and American and Serbian
organizations (ref A). In our continued efforts to voice our
concerns about the proposed legislation and the need for a fair and
transparent approach to restitution, the Charge spoke to President
Boris Tadic's office, Finance Minister Diana Dragutinovic, and
Parliament Speaker Slavica Djukic-Dejanovic. Despite the controversy
we expect the government will have a sufficient majority to pass the
legislation through parliament. End Summary.

VOTING POSTPONED
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2. (SBU) According to our sources and the media, the Law on Planning
and Construction, along with 23 other pieces of legislation, was
scheduled to go to Parliament for a vote on July 31. However,
Parliamentary Speaker Slavica Djukic-Dejanovic announced on July 30
that voting on the laws was postponed for August 31. She denied
speculation that the postponement was due to disagreement within the
ruling coalition over a disputed bill on changes and amendments to
the media law (ref B). The Planning and Construction Law would allow
usage right holders to convert their usage right to full private land
ownership, free of charge, while lease holders could convert to
ownership by paying the whole lease amount plus one percent. Usage
rights acquired through privatization could be converted by paying
the difference between the market value of the land at the time of
conversion and the cost of acquiring the land. Fifty percent of the
proceeds from the conversions would go to local government budgets
and 50% would go to a national restitution fund.
SPEAKER DJUKIC-DEJANOVIC: THE LAW IS NEEDED
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3. (SBU) On July 27, the Charge met with Speaker Djukic-Dejanovic to
express our concerns that a restitution law would not precede the Law
on Planning and Construction, that there is a lack of clarity about
any proposed restitution, and that the Planning and Construction Law
could have a negative effect on Serbia's investment climate. In
response to the Charge's concerns that a restitution law should
precede the Construction Law, Djukic-Dejanovic said she understood
the USG's concerns about restitution claimants from the diaspora in
the United States and about the investment climate but that the
Planning and Construction Law was needed and that the law's drafter,
Minister of Environment and Zoning Oliver Dulic (DS),believed in the
bill as drafted. Djukic-Dejanovic said a forthcoming Restitution
Law, was also a priority piece of legislation for later in the year,
but that she could not tell any ministry to hurry up its work in
drafting legislation. But she said she hoped for a restitution law
by the end of the calendar year.

FINANCE MINISTER DRAGUTINOVIC: RESTITUTION IS COSTLY
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4. (SBU) In a July 24 meeting with the Charge, Finance Minister
Dijana Dragutinovic admitted that she had not closely followed the
issues associated with the Planning and Construction legislation.
She assured the Charge that the government understood the necessity
to address restitution and that her ministry was preparing
legislation for later in the year. Her ministry's main concern,
however, was to make certain that any future restitution law was not
too great of a financial burden to Serbia. Serbia needed a
restitution law, and the future law should not create "new
injustices," she said. Dragutinovic said any future burden from
restitution needed to be "feasible and fixable."

ORTHODOX CHURCH: LACK OF PRIVATE CLAIMANT RESTITUTION LAW UNFAIR
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5. (SBU) The Charge met with Serbian Orthodox Church (SOC) spokesman
and Bishop of Backa Irinej on July 29 to discuss the SOC's messages
to the government about the proposed law. Irinej confirmed he had
tried to speak with President Boris Tadic, Prime Minister Mirko
Cvetkovic, and Minister Dulic to protest the legislation and to argue
that a restitution law be enacted first. Although Irinej did not
speak to Tadic, he said he spoke to Tadic's chief of staff Miki Rakic
and Minister Dulic, but neither was receptive to his message. Irinej
said it was unfair that there was already a restitution law for
religious organizations, but not one for private claimants. He was
concerned, like many others, that the proposed Planning and


Construction Law would restrict a future restitution law and prevent
claimants from getting their land back. He admitted that Serbia
could not afford to compensate all restitution claimants, but said it
needed to return something. Irinej said Serbia should have settled
restitution issues before privatizing companies, but Serbia should
now compensate those claimants whose property was sold during the
privatization process.

PRESIDENT'S OFFICE: LAW NEEDED TO PLACATE LABOR
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6. (SBU) A Tadic advisor told the Charge on July 30 that the
Planning and Construction Law was necessary and that the government
was determined to see it through as soon as possible. He said funds
raised from the enactment of the Planning and Construction Law would
be divided between future restitution claims and paying workers'
benefits in the fall. The law was an important gesture to workers,
the source said.

CLAIMANTS CONTINUE TO WEIGH IN
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7. (U) On July 29, local organizations Club 21 and the Serbian
League held a press conference to outline what they saw as the
negative effects of the proposed law. Club 21 Coordinator Dusan
Janjic asserted that the law was designed to maintain tycoons'
empires by giving them clear property titles that they could use to
take out loans. He added that the implementation of the law would
delay Serbia's entry into the EU. Mahmud Busatlija of Club 21 said
the law would not solve Serbia's property rights issue. He
maintained that even if the law were passed, restitution claimants
would challenge the law in domestic and international courts, seeking
restitution in kind and further compensation.

COMMENT
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8. (SBU) Despite the numerous domestic and international concerns
against the proposed Law on Planning and Construction, the GoS is
determined to see it pass. The parliament's delay on voting on the
law is merely a temporary measure caused by larger controversies
surrounding other pending legislation, specifically the media law.
The government's ad hoc, stove-piped approach to developing and
handling this legislation is a further indication of the deeper
fractures facing the coalition. Of equal concern is the government's
intention to partially use potential funds for workers' benefits in
order to placate growing social discontent with the government. Its
willingness to prefer short term solutions over necessary longer term
structural change may ultimately cost Serbia in terms of future
foreign investment and a transparent business climate. End Comment.
BRUSH