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

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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