This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS SECTION 01 OF 05 VIENNA 000870 
 
SIPDIS 
 
SENSITIVE 
 
STATE FOR EUR/SCE 
 
E.O. 12958: N/A 
TAGS: PGOV PREL KDEM SR YI AU UNMIK
SUBJECT: KOSOVO: READOUT OF MARCH 17 TALKS ON 
DECENTRALIZATION IN VIENNA 
 
REF: HOVENIER - EUR/SCE E-MAIL OF 3/19/06 
 
THIS CABLE IS SENSITIVE BUT UNCLASSIFIED.  PLEASE HANDLE 
ACCORDINGLY. 
 
¶1. (U) The following is information gathered by the US 
liaison officer to the UN Office of the Special Envoy for 
Kosovo negotiations (UNOSEK) in Vienna. 
 
SUMMARY 
------- 
 
¶2. (SBU) The March 17 talks on decentralization were largely 
free of polemics and stuck to the agenda of the financing of 
municipalities, inter-municipal cooperation, and links with 
Belgrade.  The Kosovo delegation accepted the principle of 
inter-municipal cooperation, but stressed that it saw an 
important role for the central government in many aspects of 
municipal finance and were opposed to any "third layer of 
government."  All links between Belgrade and Serb-majority 
municipalities must be restricted to previously agreed areas 
and should be regulated by a Pristina/Belgrade MOU.  The Serb 
delegation rejected a central government role in municipal 
finances and Pristina oversight in Belgrade's support to 
Serb-majority municipalities.  Belgrade also insisted on a 
detailed structure to manage inter-municipal cooperation that 
would be subject to constitutional guarantees.  The UN Office 
of the Special Envoy for Kosovo (UNOSEK) identified key areas 
of common ground, despite the fundamental differences between 
the two sides, and will produce a paper of decentralization 
principles that will form the basis for the next round of 
talks on April 3.  End Summary. 
 
AHTISAARI'S PRIOR MEETINGS WITH THE DELEGATIONS 
--------------------------------------------- -- 
 
¶3. (SBU) Prior to the meeting, UN Special Envoy for Kosovo's 
final status process Martti Ahtisaari met separately with the 
Belgrade and Pristina delegations.  Ahtisaari told both 
delegations that he would support any arrangements to ensure 
the Serb community's survival in Kosovo, including "vertical 
linkages" between Belgrade and Serb-majority municipalities. 
He stressed to the Serbian delegation, however, that there 
could be no separate Serb entity and that any "vertical 
links" with Belgrade needed to be issue-oriented, 
transparent, and in conformity with Kosovo's legal system and 
structure.  Serbian presidential adviser Leon Kojen and prime 
minister's adviser Slobodan Samardzic supported these 
principles.  Kojen provided Ahtisaari with preliminary debt 
information promised by Serbian Deputy Prime Minister Labus, 
and pledged more detailed debt-related information in the 
near future. 
 
¶4. (SBU) The Serbian delegation registered their official 
protest that Democratic Party of Kosovo leader Hashim Thaci 
was chairing the Kosovar delegation, and, combined with the 
election of Agim Ceku as Kosovo Prime Minister, expressed 
concern that "former Kosovo Liberation Army members appear to 
be amassing all power in Kosovo."  Ahtisaari cut off 
Kosovo-Serb hardliner Marko Jaksic's noting of the two-year 
anniversary of "ethnic cleansing" in Kosovo, stressing that 
the decentralization talks were about the future, not the 
past.  In Ahtisaari's meeting with the Kosovar delegation, 
Thaci reassured the UN Special Envoy that "we did not come 
here to win, but rather to achieve a joint success." 
 
THACI'S OPENING REMARKS 
----------------------- 
 
¶5. (U) After Ahtisaari's deputy Albert Rohan warned the two 
sides to avoid any political statements during the meeting, 
Thaci read a prepared general statement pledging the 
Kosovars' commitment to work with their Serbian counterparts 
to ensure the full protection of human rights for all 
minorities in Kosovo.  Thaci made clear, however, that 
minorities must be protected through integration, and cannot 
be protected by the establishment of a separate entity that 
established the de jure or de facto division of Kosovo along 
ethnic lines.  He stated that Kosovo Serbs must be ready to 
live in peace in a democratic and independent state of 
Kosovo. 
 
¶6. (U) Thaci said that the Kosovar delegation supported 
inter-municipal cooperation, but on the condition that it not 
create an additional layer of government, pertained only to 
tasks of joint interest, and was regulated by law. 
Similarly, Pristina supports cross-border cooperation, 
provided it is in accordance with a Constitutional framework, 
and based on bilateral agreements between Belgrade and 
Pristina on such issues as education, healthcare, and 
culture.  Finally, Thaci stated that Belgrade's assistance to 
municipalities must be compatible with Kosovo's laws and 
channeled through Pristina.  Samardzic followed Thaci by 
expressing the Serb delegation's wish to focus on the agreed 
agenda and appealed for no more general statements. 
 
LOCAL FINANCING ARRANGEMENTS 
---------------------------- 
 
¶7. (SBU) Isa Mustafa laid out the Kosovo delegation's 
principles on how to ensure that Kosovo's local authorities 
can raise their own revenues.  Pristina espouses a unified 
taxation system and allowing two sources of revenues for 
municipalities ) local tax collection and licensing, and 
block grants from the central government that allows 
municipalities to determine the allocation of funds, rather 
than earmarked grants, which is the current practice.  Bosko 
Mijatovic from the Serbian delegation called for giving local 
governments true autonomy to raise all direct taxes )- on 
income, property, businesses, etc. -- with no central 
oversight and minimal grants.  Kosovo Minister for Local 
Self-Government Lutfi Haziri replied that it was unlikely 
that municipalities would conduct direct taxation in the same 
manner as the central government and in turn increase their 
own revenues in the short term and therefore an increased 
need for grants was likely. 
 
¶8. (SBU) Mustafa advocated that all public revenues be 
maintained at the central Treasury, and Kosovar delegate 
Ylber Hysa said that the central government, as the guarantor 
of the rights of Kosovo's citizens, needed to have control 
and oversight of municipal accounts.  On the other hand, 
Mijatovic and Kojen called for a more, decentralized flexible 
system that would allow municipalities to keep their accounts 
in commercial banks. 
 
FUNDING FROM BELGRADE 
--------------------- 
 
¶9. (SBU) Similarly, the Kosovo delegation insisted that funds 
from Belgrade needed to be distributed through the Kosovo 
Treasury, and pledged that Pristina would not offset grants 
to a municipality that received financing from Belgrade. 
Kojen proposed that Belgrade be permitted to provide funding 
directly and transparently to a municipality for a specified 
need in a previously agreed area like education.  The Serb 
side acknowledged that this would result in a "dual system." 
(Note: On the margins of the talks, Samardzic also admitted 
that their objective was to "legalize the current parallel 
structures."  End note.)  Kosovar presidential adviser 
Skender Hyseni responded that Pristina would not accept 
"dualism", and his colleague Ardian Gjini made clear that 
Belgrade should provide funds in the same manner as other 
donors. 
 
INTERMUNICIPAL RELATIONS 
------------------------ 
 
¶10. (SBU) Samardzic noted that Kosovo's current 
Constitutional Framework guarantees the right for 
municipalities to associate and called for this right to be 
protected with voluntary horizontal linkages between 
municipalities on competencies that Belgrade believes should 
belong at the municipal level: education, culture, social 
welfare, police, judiciary, media, municipal property, urban 
planning, and certain types of economic activity.  Samardzic 
proposed a Council for Inter-Municipal Cooperation to 
regulate this comprised of mayors of the participating 
municipalities and representatives of the Serbian Orthodox 
Church.  Functional inter-municipal committees would fall 
underneath this council comprised of three persons from each 
participating municipality.  Samardzic concluded his 
presentation by stating, "I insist that there be 
Constitutional guarantees" for these structures and for the 
right of Serb-majority municipalities to have links with 
Belgrade. 
 
¶11. (SBU) Ylber Hysa said that Samardzic's proposal "sounds 
like a canton or entity" and was unacceptable.  He insisted 
that municipalities can cooperate through the Ministry of 
Local Self-Government.  Coordinator of Pristina's Unity Team 
Blerim Shala interjected that the Kosovo delegation agrees 
that the right of Serbs to protect their vital interests, 
including through inter-municipal cooperation, should be 
guaranteed in the Constitution, but cannot accept a 
third-level of government or a separate political entity.  He 
stated that inter-municipal cooperation must be done in 
specifically-designated areas like education, health, and 
culture. Daniel Popescu of the Council of Europe noted that 
the European Charter of Local Self-Government provides the 
right to two inter-municipal structures: (1) a consortia of 
municipalities to carry out tasks of common interest; and (2) 
associations for the protection and promotion of common 
interests. 
 
¶12. (SBU) After Rohan cut off Kosovo-Serb hardliner Marko 
Jaksic when Jaksic noted the two-year anniversary of violence 
against Kosovo Serbs and the brutal expulsion of 200,000 
Serbs from Kosovo, Jaksic noted that he already headed an 
association of Serb-majority municipalities and this 
association must be preserved.  Jaksic added that no funds 
from Serb municipalities should be going into the Kosovo 
Treasury, remarking that Kosovo's central authority is 
Belgrade, not Pristina.  He concluded by stating that if the 
Kosovar delegation "did not want Belgrade to rule over them, 
they cannot expect that we will accept them ruling over us." 
(Note: Samardzic and Kojen were visibly uncomfortable 
throughout Jaksic's remarks.  End note.) 
 
¶13. (SBU) Kosovo-Serb politician Goran Bogdanovic said that 
Kosovo Albanians should not see Belgrade's proposed model of 
inter-municipal cooperation as a thinly-veiled attempt at 
dividing Kosovo.  Samardzic also reassured the Kosovars that 
Belgrade does not seek a division of Kosovo but only the 
effectiveness of inter-municipal cooperation on functional 
issues.  Serbian prime ministerial adviser Aleksandar Simic 
echoed Samardzic's comments, noting that Belgrade did not 
propose any "territorial corridors" and that it was only 
concerned that inter-municipal linkages are functional. 
Simic said that municipal associations should be allowed in 
all areas of their competencies and should have a legal 
personality with constitutional guarantees, at the same time 
noting that the discussion had moved beyond status-neutral 
issues. 
 
¶14. (SBU) Shala replied to the Serbian presentations by 
warning that Belgrade is trying to "legalize the existing 
parallel structures and establish a superstructure."  He 
reiterated the Kosovar position that inter-municipal 
cooperation must be permitted only in specified areas that 
are vital interest to the minority communities. 
Decisionmaking powers for municipal and intermunicipal bodies 
should be allowed for operational, not political, decisions, 
otherwise this could result in a third layer of government. 
 
VERTICAL LINKS TO BELGRADE 
-------------------------- 
 
¶15. (SBU) Kojen began the discussion on cross-boundary 
cooperation by stating that Belgrade wants to provide 
"issue-oriented", "functionally-justified" financial 
assistance and human resources to Serb-majority 
municipalities.  Samardzic clarified that Belgrade plans to 
provide assistance in 4-5 areas, citing education, culture, 
religious/cultural site protection, and health care, while 
noting that police and judicial functions would need to 
shared by municipal and central authorities.  Kojen insisted 
that this support must be fully transparent but also direct, 
without passing through any central Pristina institutions, 
which themselves were not transparent, functional, or trusted 
by Kosovo Serbs.  Haziri responded that the Serbian proposal 
appeared to be an effort to "try to create conditions for 
partition." 
 
¶16. (SBU) Gjini noted that Kosovo authorities also do not 
trust Belgrade institutions, but the purpose of the 
negotiations was to establish greater trust.  Samardzic 
countered that the object of these meetings was to ensure 
that Serbs are "equal in decisionmaking to (Albanians) on 
issues vital to their interest."  Samardzic also took issue 
with Gjini's perceived effort to speak for the Serb people. 
Shala responded that Kosovo Albanians recognize that they do 
not speak for Kosovo Serbs, but Belgrade had prevented the 
Serb community from speaking for itself by forcing a Serb 
boycott of Kosovo's institutions. 
 
¶17. (SBU) Jaksic interjected that Kosovo Serbs had no need to 
seek permission for links to Serbia or for "cross-boundary 
cooperation" because Kosovo is a part of Serbia and no 
boundary separates them.  He warned that the two ways to 
ensure that Serbs left Kosovo were for Serbian authorities to 
tell them to leave or by the international community severing 
their links to Belgrade.  Hysa suggested that if Belgrade 
insisted on such a model for cross-boundary cooperation than 
Kosovo Albanians would insist on similar vertical linkages 
with their brethren in Serbia's Presevo Valley. 
 
¶18. (SBU) In response to a question from EU envoy Stefan 
Lehne, Kojen said Belgrade does not plan to provide police or 
security forces to Serb-majority municipalities, but 
teachers, doctors, and other experts.  This personnel would 
be provided upon the request of a functional inter-municipal 
committee and paid out of the municipalities' budgets.  The 
Kosovar delegation recognized Belgrade's right to assist 
Serb-majority municipalities, but said that any 
cross-boundary cooperation must be in clearly defined and 
agreed-upon areas regulated by an MOU between Belgrade and 
Pristina.  Jaksic asserted that Belgrade could not conclude 
an MOU with Pristina on any issue, and cited the situation of 
the Bosniak community in the Sandjak as a good model for 
Kosovo. 
 
¶19. (SBU) In response to Rohan's proposal for 
Belgrade/Pristina joint commissions in sensitive fields, like 
education curricula, Gjini responded positively, provided 
that this was regulated through bilateral agreements between 
Belgrade and Pristina.  Kojen stated that Belgrade is ready 
to explore joint commissions in functional areas, but ruled 
out bilateral agreements "if they imply that Belgrade 
consents to treat Pristina as the capital of a sovereign 
entity."  He made clear that the Serbian delegation sees 
Kosovo "as part of Serbia and hope it will remain so after 
status is determined." 
 
POLICE AND JUDICIARY 
-------------------- 
 
¶20. (SBU) Rohan asked the parties to respond to a proposal 
that one of Kosovo's five district courts be designed as a 
court of appeal for Serb-majority municipalities and how to 
ensure minority representation in the courts.  Kojen 
expressed support for Rohan's proposal, conditioned on the 
composition of this court.  He proposed that the municipal 
assembly select municipal judges and the municipal chief of 
police, who would then be confirmed by the Justice and 
Interior Ministries, respectively.  Kojen suggested, however, 
that the municipal assemblies could overrule the ministries 
on police and judicial personnel selections. He also argued 
that the Kosovo Supreme Court should have a "strong 
international presence" for the foreseeable future. 
 
¶21. (SBU) Gjini said that giving the municipal assemblies the 
power to overrule Interior Ministry (MoI) decisions on police 
appointments did not meet European standards.  He also 
expressed reservations about a "Serb Court of Appeals", but 
acknowledged that courts must reflect the ethnic composition 
of the communities they serve.  Hysa invoked the Ohrid 
Agreement as the appropriate model, in which the municipal 
assembly selects a police chief from an MoI-provided list. 
Shala added that the Kosovar team's "clear stance" was that 
there can be no system parallel to the central judicial and 
police authority. 
 
¶22. (SBU) Kojen cited the U.S. as an example of a country 
where police leadership is selected at the local level. 
Simic also argued that the Serbian judicial model is not a 
new model for Kosovo, noting that the 1974 Yugoslav 
Constitution provides for the election of judges and 
prosecutors by municipalities.  Gjini said this was 
misleading, since municipalities had no real autonomy in 
personnel selection during communist times.  Jaksic rejected 
the Ohrid model for police appointments as unacceptable, and 
Bogdanovic noted that Kosovo's judges were not trusted by 
Serbs. 
 
MITROVICA 
--------- 
 
¶23. (SBU) After Rohan raised the issue of the Mitrovica 
University and hospital, and particularly the Mitrovica law 
faculty's curriculum, Kojen proposed that the law faculty 
should teach "both Kosovar and Serbian law."  He also called 
for the administration of the university and hospital in 
Mitrovica to be "as autonomous as possible", governed by 
inter-municipal healthcare and education boards. 
 
CONCLUDING REMARKS 
------------------ 
 
¶24. (SBU) Taking the floor for only the second time, Thaci 
read a prepared statement describing the meeting as an 
encouraging step forward that afforded each side a better 
understanding of the other's positions.  He made clear that 
the Kosovar delegation favors inter-municipal cooperation in 
all areas of local authority and accepts the principle of 
cross-border cooperation, provided that they confirm with 
Kosovo's Constitutional Law and regulated by a Law on Local 
Self-Government, but rejects any third layer of governance or 
special entities.  He reiterated that Kosovo wishes to 
conclude bilateral agreements with Serbia that regulates 
cross-border cooperation. 
 
¶25. (SBU) Samardzic assessed that the two sides were "far 
apart" but that "any conversation with the other side is 
good."  He reiterated that Belgrade wanted to ensure that 
Serbs have "self-government" in Kosovo through cooperation 
between Serb-majority municipalities in six areas ) 
healthcare, education, social welfare, religion, cultural 
monuments, and culture -- and links to Belgrade.  Samardzic 
called for the urgent scheduling of follow-up meetings on 
competencies, financial arrangements, and the creation of new 
municipalities. 
 
KOSOVAR COMPLAINTS ABOUT THE CHAIRMAN'S CONCLUSIONS 
--------------------------------------------- ------ 
 
¶26. (SBU) Rohan submitted his conclusions (reftel) to the two 
sides, stressing that they represented his personal 
impressions and have no official status.  He said that UNOSEK 
will produce a paper containing basic principles on 
decentralization that would form the basis for the next round 
of talks on April 3.  He also indicated that a meeting on 
municipal delimitation and Mitrovica would be scheduled for 
mid-April. 
 
¶27. (SBU) Rohan turned down Thaci's request for a ten-minute 
break so that the Kosovar delegation could review the 
Chairman's Conclusions and then register its concerns with 
some of them, inviting the two sides to share any concerns 
directly with UNOSEK.  Ylber Hysa was visibly angry about the 
conclusions, but failed to persuade Thaci to lodge an 
official protest of the conclusions.  Hysa stormed off, but 
not before telling UNOSEK officials that the Kosovo 
delegation would register its official objections to the 
Chairman's Conclusions in writing to Ahtisaari.  The rest of 
the delegation greeted the conclusions with more equanimity, 
agreeing that they were a reasonably fair reflection of the 
discussions, despite certain concerns that they had. 
 
¶28. (SBU) The Kosovo delegation's concerns were largely 
semantic.  They said that they agreed only to "additional", 
not "significant", municipal revenues, and to inter-municipal 
"mechanisms", not "structures," as the Chairman's Conclusions 
provided.  They also reacted negatively to the term "links" 
used in the conclusions to describe cooperation with 
Belgrade. The Kosovars similarly objected to the idea that 
inter-municipal structures could have "legal personality," 
though UNOSEK officials pointed out that the European Charter 
on Local Self-Government provided for this possibility, that 
the Kosovar delegation had not objected to this proposal in 
the meeting, and that a legal personality was quite different 
from a "legal entity."  Finally, they insisted that they had 
not agreed that Belgrade could provide personnel, although 
they had not objected to Kojen's example of Belgrade 
providing a Greek/Latin teacher to Serb schools. 
McCaw