SERBIAN FM TELLS AUSTRIANS BELGRADE MUST

C O N F I D E N T I A L SECTION 01 OF 02 VIENNA 000401 SIPDIS DEPARTMENT FOR EUR/SCE AND EUR/CE E.O. 12958: DECL: 04/02/2019 TAGS: PGOV PREL KV SR AU SUBJECT: SERBIAN FM TELLS AUSTRIANS BELGRADE MUST "RECALIBRATE" EU PERSPECTIVE Classified by: Economic-Political Counselor J. Dean Yap for reasons 1.4 (b) and (d). ¶1. (C) Summary: Serbian FM Jeremic said during a March 30 visit to Vienna that the Serbian government had to "recalibrate" its European perspective, as the economic crisis had sapped the EU's enthusiasm for enlargement. According to an MFA contact, Jeremic claimed in his meeting with Austrian FM Spindelegger that the EU had failed to launch a Stabilization and Association Agreement (SAA) with Serbia despite Belgrade's cooperation with the International Criminal Tribunal for the former Yugoslavia (ICTY). Jeremic said he was grateful for the decision of Austrian banks not to withdraw funds from Serbia. He said Serbia would accept Kosovar representatives in international fora, but only if they were seated next to UN officials. Spindelegger replied that the GOA supports an SAA with Serbia, but stressed that Serbia needs to overcome Dutch objections. He said he hopes Serbia can meet the security benchmarks to allow Serbian citizens to travel without visas in the EU states by year's end. End Summary. Economic Crisis is Top Concern -------------- ¶2. (C) Thomas Schnoell, MFA Unit Chief for Southeast Europe, told us Jeremic's top priority was the financial crisis. Jeremic stressed to Spindelegger that a decision by Austrian banks -- which comprise one-third of Serbia's financial sector -- to pull funds out of Serbia would be "disastrous." Spindelegger replied that there were "clear signs" that Austrian banks would not withdraw funds, noting that bank managers had made statements to that effect. Schnoell said Jeremic seemed satisfied with the response, which he highlighted in a subsequent press conference. ¶3. (C) Nevertheless, Jeremic said the economic and financial troubles had dampened Serbs' enthusiasm for Europe. Partly due to the crisis, the EU countries were feeling "enlargement fatigue," and the EU had "failed to keep its promises" to Serbia and other prospective member states, he said. The Serbian government had made many promises to its public regarding the benefits of a European perspective. It would now have to "recalibrate" expectations to match Serbia's diminished prospects, he said. No Progress on SAA -------------- ¶4. (C) In particular, Jeremic claimed, Serbia had done "all it could" to cooperate with the ICTY, and yet was still being denied an SAA. Spindelegger said the GOA supports an SAA with Serbia, but stressed that Serbia must persuade the Dutch and ICTY Prosecutor Brammertz. (Note: Schnoell told us that the Netherlands is the only EU member blocking the SAA. He said the GOA is hoping that Brammertz's June report to the UNSC on Serbia will be positive enough to give the Dutch a face-saving way to back down. End Note). Visa-Free Travel to EU States -------------- ¶5. (C) Spindelegger told Jeremic he hoped that Serbian citizens could be permitted to travel to EU countries without a visa by the end of the year. He said this was the one meaningful measure that could be completed in the short term to revive Serbs' enthusiasm for Europe. He emphasized, however, that progress depended on Serbia meeting the benchmarks regarding border control, biometric passports, and anti-corruption and organized crime measures. (Note: Schnoell told us that visa-free travel for Serbs would anger voters in Austria and other EU countries unless it were clear that Serbia had met a high security standard. End Note). Cooperation with Kosovo, Under Conditions -------------- ¶6. (C) Jeremic averred that Serbia wanted to engage in "constructive cooperation" with the Kosovo government. He said Serbia had, for example, supported the EULEX mission in Kosovo. Serbia had no objection to having Kosovo participate in international fora, as long as Kosovar representatives were accompanied by UN officials and identified with a sign reading, "UNMIK/Kosovo." This was a "red line" for Serbia, he said. Spindelegger replied that this was not "satisfactory" for the GOA, which had recognized Kosovo as an independent nation. But Spindelegger did not press the point, according to Schnoell. ¶7. (C) At this point, Austrian PolDir Stefan Lehne, a Balkans VIENNA 00000401 002 OF 002 expert, asserted that although Jeremic was claiming a willingness to cooperate with Kosovo, the Serbian government was refusing to discuss practical bilateral issues such as energy, law enforcement, justice, and customs. Lehne said he understood that Serbia was not prepared to recognize Kosovo, but a political dialogue could serve the interests of both sides. Jeremic maintained that discussions on such issues would imply recognition. ¶8. (C) Jeremic also complained that Kosovar authorities were refusing to allow Serbian government officials to enter northern Kosovo, which he claimed was a violation of UNSCR ¶1244. Spindelegger advised Jeremic to raise the issue with the Kosovars, adding that Serbia continued to insist on speaking only with UNMIK. KILNER