KOSOVO - KFOR MOVES ON POWER STATION

C O N F I D E N T I A L SECTION 01 OF 03 PRISTINA 000524 SIPDIS E.O. 12958: DECL: 11/22/2019 TAGS: PREL PGOV ENRG MARR ECON EAID PTER KV YI SUBJECT: KOSOVO - KFOR MOVES ON POWER STATION REF: A. PRISTINA 465 ¶B. PRISTINA 471 ¶C. PRISTINA 481 ¶D. PRISTINA 482 ¶E. KFOR FRAGO 4244 DTG 21 2200Z NOV 2009 Classified By: AMBASSADOR CHRISTOPHER DELL FOR REASONS 1.4 (B) AND (D) ¶1. (C) SUMMARY: In an unannounced deployment on November 23, KFOR, along with EULEX, sent forces to establish a dual security perimeter around the Valac electrical substation in northern Kosovo. The Valac substation, currently controlled by Serbian Power Company (EPS) employees, has been the focus of recent attempts by Belgrade to achieve "electrical sovereignty" over northern Kosovo (Refs A, B, C, and D). Our conversations with KFOR and the ICO as well as analysis of KFOR's deployment order (Ref E) suggest that KFOR was primarily concerned with preventing the Kosovo Energy Corporation (KEK),with the support of Kosovo law enforcement authorities, from reestablishing control of the substation. Sensing a potential crisis in the offing, COMKFOR properly moved first to establish a commanding presence before trouble could break out. However, at least until our intervention, the unintended consequence of this act would have been to facilitate EPS efforts to begin the illegal collection of payment for electricity provided to the north from Serbia (which flows through Valac) and provide a boost to Belgrade's unlawful plan to separate the three northern Serb-majority municipalities and north Mitrovica from Kosovo's electrical grid by excluding KEK from its facility in favor of continuing EPS control. KFOR maintains that this would have been consistent with its status neutral mandate to ensure a safe and secure environment. However, the Ambassador subsequently stressed in a telephone conversation with COMKFOR Bentler on November 23 that a "status neutral" approach was far from impartial and that if KFOR were to deny KEK access to its facility, it would, in fact, be abetting and rewarding clearly illegal actions. During the same conversation, the Ambassador and COMKFOR agreed that it was a positive step for KFOR and EULEX to maintain control over the perimeter and to allow several weeks to pass for renewed commercial talks between KEK and EPS to play out. COMKFOR accepted that if this did not result in an agreement and KEK sought to re-assert its control over Valac by any and all legal means, KFOR would coordinate to facilitate such an 
action. END SUMMARY THE BACKSTORY: EPS TAKES CONTROL OF VALAC -------------- ¶2. (SBU) On October 18, KEK was forced to cut power to north Kosovo for technical and weather-related reasons. Since October 20, the electrical supply to the north has been limited to delivery on one line from Novi Pazar, Serbia. On October 27, KEK notified EPS operators at Valac that repairs were complete and they were ready to restore power to the north. To date, Valac substation operators have refused to reconnect KEK's power feed and have taken control of operations at the substation. Beginning in early November, EPS, as the self-styled Mitrovica Electricity Distribution Company, has been reading meters and preparing local residents to pay for electricity provided from Serbia through radio and print media campaigns. Actual bill collection, which is slated to begin the week of December 1, would be illegal. Per UNMIK Regulation 2004/22 (which ultimately derives its authority from UN Resolution 1244),only licensed electricity providers can collect payment for electricity. KEK is the only licensed electrical distribution and supply company in Kosovo. EPS's blatant disregard for the law strengthens our concerns (Reftels) that Belgrade is attempting to achieve "electrical sovereignty" over north Kosovo. For six months, KEK has offered EPS a commercial relationship that would allow EPS to register a Kosovo entity to act as an Energy Service Company (ESCO) providing services on KEK's behalf, but Belgrade continues to drag its feet and has not responded substantively. Instead, it has chosen to take a commercial issue and turn it into a political dispute. KFOR DEPLOYS -------------- PRISTINA 00000524 002 OF 003 ¶3. (C) On November 23, KFOR, in conjunction with EULEX, deployed forces to establish a security perimeter around Valac to deter and prevent any seizure of the substation. According to KFOR's deployment order (Ref E),COMKFOR's intent is to control access to the substation, specifically, the FRAGO calls for KFOR to prevent any effort by Kosovo institutions to seize the substation because it would threaten the region's safety and security. Control of Valac is critical to what we increasingly believe is Belgrade's objective of separating the Serb-majority north from Kosovo's electrical grid. It is also critical to resolution of the commercial dispute between KEK and its non-paying electricity customers north of the Ibar, and KEK attempts to exercise its rights as the only legal, licensed electrical corporation in Kosovo. If it prevented KEK from reasserting control over its lawful assets, the intervention by KFOR and EULEX would facilitate Belgrade's attempts to politicize the electricity issue, indirectly advancing Belgrade's separatist agenda in the north, and remove any incentive for EPS to conclude its commercial negotiations with KEK over establishment of an ESCO. BENTLER AGREES KFOR WILL NOT BLOCK KEK ACCESS -------------- ¶4. (C) Late on November 23, International Civilian Representative (ICR) Pieter Feith briefed Quint heads of mission on the joint KFOR/EULEX deployment and its goals. The Ambassador made clear to ICR Feith and the Quint that it was a mistake to allow KFOR and EULEX to be instrumentalized by Belgrade and EPS to freeze the current (illegal) status quo at Valac. Feith asserted this had never been his intention and disassociated himself from any effort to block lawful access by KEK to its property. However, he did maintain that it was appropriate for the EU, through the Italian Ambassador, to try to craft a 'political solution' to the power issue. The Ambassador challenged this, nothing that this was a commercial matter in which no one disputed KEK's rights and that politicizing it only muddied the waters to Belgrade's advantage. Our fears were immediately confirmed by the French Ambassador's intervention in which he argued that KEK should only be allowed access to its facility on the basis of an agreement with Belgrade, adding that we have already accepted many "illegal" situations and one more in favor of calm and stability would "do no harm." The Ambassador also expressed concern that the process by which KFOR and EULEX had decided on this action -- with no consultation of the international community -- was seriously flawed. ¶5. (C) Following this briefing, the Ambassador had a lengthy telcon with LTG Markus Bentler, COMKFOR, to discuss the deployment and the issue of access to the Valac substation. During the conversation, the Ambassador stressed that a "status neutral" approach was not impartial and, if KFOR denied KEK access to its facility, it would effectively reward EPS's clearly illegal actions. The Ambassador and COMKFOR did agree that KFOR and EULEX's control over the substation's perimeter was a positive development, and decided to allow several weeks to pass to allow time for renewed commercial talks between KEK and EPS to play out. COMKFOR accepted that if talks failed, and KEK sought to re-assert its control over Valac through legal means, KFOR would coordinate and facilitate KEK's efforts. COMMENT -------------- ¶6. (C) For the moment we have beaten off the worst aspects of this action and possibly created the foundation for moving forward. It's just conceivable that this show of resolve will convince Serb hardliners that they should abandon their developing effort to establish "electrical sovereignty" in the north and cede control of Valac back to KEK and to reach agreement on an ESCO. In the more likely event that the hardliners decide to tough it out, there may still be an opening to re-establish KEK's control of the northern grid and eventually resume the process of regularizing electric payments in the north. But to get to that point KFOR and EULEX will have to keep the ICO and EU from confusing the picture by further politicizing what should properly be seen PRISTINA 00000524 003 OF 003 as a commercial matter. DELL