VZCZCXRO8184
RR RUEHFL RUEHKW RUEHLA RUEHROV RUEHSR
DE RUEHBW #0299/01 0551639
ZNY CCCCC ZZH
R 241639Z FEB 06 ZDK
FM AMEMBASSY BELGRADE
TO RUEHC/SECSTATE WASHDC 8042
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE
RUFOADA/JAC MOLESWORTH RAF MOLESWORTH UK

C O N F I D E N T I A L SECTION 01 OF 02 BELGRADE 000299 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: DECL: 02/24/2016 
TAGS: PREL PGOV PBTS SR MW
SUBJECT: MONTENEGRO'S OPPOSITION, GOVERNMENT TO BACK EU 
PACKAGE FOR REFERENDUM 
 
REF: BELGRADE 237 
 
Classified By: Ambassador Michael Polt, reasons 1.4 (b,d) 
 
¶1. (C) Summary: The Montenegrin Parliament is expected to 
meet February 28 to adopt the question, date, and rules for 
the referendum -- the "EU package." The opposition was 
quicker to support the package than the GoM, which engaged in 
a last-minute campaign to persuade the EU to lower the 
threshold from 55 percent of valid votes cast.  The EU 
Council of Ministers will likely reiterate its support for 
the package at its February 27 meetings.  Meanwhile, 
Podgorica is considering measures that would disrupt State 
Union governmental structures in the event the referendum 
results in a yes vote that falls in the "grey zone" of 50-54 
percent.  End summary. 
 
Opposition Backs EU Proposal 
---------------------------- 
 
¶2. (U) The small opposition People's Party (NS) was the first 
to announce its support for the "EU package" (reftel) for the 
referendum.  It was followed by the (even smaller) Democratic 
Serb Party (DSS) and, on February 22, by the influential Serb 
People's Party (SNS).  The SNS's Andrija Mandic had sat out 
the discussions with EU Envoy Lajcak over the package.  The 
Socialist People's Party (SNP), which led the pro-Union bloc 
in the talks, is expected to solidify its commitment to 
package over the weekend of February 25-26 in talks with its 
local chapters. 
 
¶3. (SBU) Mandic's re-entry into the game is a disappointment 
to the pro-Independence bloc, as Mandic had been firm in his 
statements that the SNS would boycott if the threshold was 
less than 50 percent of all registered voters. Without the 
SNS's votes (about 30,000), the pro-Union bloc had no chance 
of thwarting a "yes" vote for independence in excess of 55 
percent of all valid votes (the "EU package"). In a private 
conversation with acting Principal Officer on February 21, 
however, Mandic showed less confidence than usual in being 
able to rally his voters to the position espoused by SNS 
leadership.  Comment: The SNS is heavily reliant on a small 
leadership core to rally its voters, a reliance that is 
stressed by a republic-wide campaign. End comment. 
 
Independence Bloc Pushes Counter-Proposal 
----------------------------------------- 
 
¶4. (U) Even before the SNS re-entered, the pro-Independence 
bloc was unhappy with the EU proposal that independence would 
require 55 percent "yes" votes of all valid votes.  They 
prefer the "Danish model" of 40 percent of all registered 
voters, even offering to raise the threshold slightly to 41 
percent.  Forty percent is 186,400 from 466,000 registered 
voters; 41 percent is 191,000 votes; in the 2001 
parliamentary election the pro-Independence parties polled 
195,000 votes and in 2002 they garnered over 200,000 votes. 
 
¶5. (U) The GoM has intensively lobbied the EU and member 
states the past week, trying to lower the proposed 55 percent 
to 52 or 53 percent.  EU Envoy Lajcak has stated publicly 
that the EU Council of Ministers, which has the Montenegrin 
referendum on its February 27 agenda, will reiterate its 
support for the "EU package" that he had tabled.  Christina 
Gallach, spokesperson for EU High Representative Solana, 
stated February 23 that the package could not be altered. 
Olli Rehn, the EU Commissioner for Enlargement, concurred 
even while observing that the EU member states do not have 
identical views on the proposal. Radio Free Europe also 
reported Rehn as stating, apparently for the first time, that 
the EU has a "Plan B" for Montenegrin accession to the EU in 
case of independence. 
 
The "Grey Zone" 
--------------- 
 
¶6. (U) Between a flat rejection of independence (over 50 
percent "no" votes - which is implausible), and clear, legal 
approval of independence (over 55 percent "yes" votes), lies 
the "grey zone."  The blocs are understandably divided on 
what entering the "grey zone" means for Montenegro.  The 
pro-Union bloc, arguing from the language of the EU proposal, 
without reference to anything outside of the proposal, sees a 
54.9 percent "yes" vote as being the same as a 49.9 percent 
vote. Dragan Soc, former leader of the Opposition NS, said a 
GoM move to declare independence with less than 55 percent of 
the vote would be tantamount to "a declaration of civil war." 
 
 
¶7. (U) The pro-Independence bloc counters that refusing to 
recognize independence for any vote above 50 percent "yes" is 
 
BELGRADE 00000299  002 OF 002 
 
 
unjust. Several private-sector EU, SaM, and US experts opined 
February 20 at a forum in Montenegro that if the "yes" votes 
fell between 50 percent and 55 percent, the EU could not or 
would not make an organizational decision to recognize 
Montenegro, should it declare independence.  Instead, the EU 
would leave the decision up to its individual member states, 
without guidance from Brussels. 
 
Krivokapic: GoM will Accept 55 (With an Asterisk) 
--------------------------------------------- ---- 
 
¶8.  (C) On February 24, the Ambassador met with Montenegrin 
Speaker of Parliament Ranko Krivokapic to discuss the 
referendum.  The Speaker said that the Government of 
Montenegro will accept the EU's proposal for a 55 percent 
super-majority.  If the referendum fails with more than 50 
percent of the vote, however, he said that the GOM will take 
all legal measures it can to cease the State Union's 
functionality in order to force further international 
mediation on Montenegro,s relationship with Serbia. 
Krivokapic said his tour of European capitals to drum up 
support for the GoM counterproposal did make inroads with 
several influential Members of the European Parliament (MEP) 
and other European commentators, who voiced objections to a 
standard for independence in excess of 50 percent of valid 
votes cast.  Ultimately, though, he said the support was more 
moral than substantial - none of his interlocutors was 
willing to step away from supporting the EU consensus 
position.  PM Milo Djukanovic and President Filip Vujanovic, 
meanwhile, publicly stated this week that they can surpass 55 
percent of the vote. They caveated, however, that the EU 
would have the responsibility of resolving any contention 
resulting from a referendum loss that scored above 50 
percent. 
 
No Independence = Bigger Army, Return to Dinar 
--------------------------------------------- - 
 
¶9. (U) The small pro-Union People's Party (NS) and Democratic 
Serb Party (DSS) have called for a larger military and a 
return to the dinar if independence fails. The independent 
Central Bank of Montenegro (CBCG) strongly criticized the 
call, calling it "pernicious," leading to a drop in 
Montenegro's credit rating, the reintroduction of 20 percent 
inflation (with the Euro, inflation in Montenegro in 2005 was 
2.5 percent), and higher transaction costs, even after 
absorbing significant conversion expenditures. The respected 
government Montenegrin Investment Promotion Agency (MIPA) 
adds that foreign direct investment (FDI) would be harmed as 
well. SNS had earlier called for a reintroduction of the 
dinar, but the SNP has been silent and is less likely to 
support the call. 
 
Comment 
------- 
 
¶10.  (C) The decision by the two sides to accept the EU,s 
plan sets the stage for the referendum to be held, but may 
only forestall (and potentially increase the likelihood of) 
further dysfunction in the State Union resulting from the 
referendum.  Polls currently suggest that a result in the 
gray zone is the most likely scenario, which will put 
Podgorica on a course of further "legal" obstruction of the 
already anemic State Union.  Engagement by the EU, supported 
by us, is important to ensure both sides in Montenegro act 
responsibly whatever the outcome of the referendum.  In the 
event of a grey zone finish, we should join the EU in 
convincing Djukanovic not to take rash actions to destabilize 
the State Union and to instead work to improve relations 
between the two republics. 
POLT