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RAAUZYUW RUEHPOD0182 1551155-UUUU--RHMCSUU.
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R 041155Z JUN 07
FM AMEMBASSY PODGORICA
TO RUEHC/SECSTATE WASHDC
INFO EUROPEAN POLITICAL COLLECTIVE
RUFOADA/JAC MOLESWORTH RAF MOLESWORTH UK
RUEHNO/USMISSION USNATO
RUEHC/USAID WASHDC
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UNCLAS SECTION 01 OF 04 PODGORICA 000182 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: PGOV PREL ECON MARR MW
SUBJECT: MONTENEGRO MARKS ONE YEAR OF INDEPENDENCE (C-RE7-00522) 
 
REF: A. A) 06 BELGRADE 1475 
 
     ¶B. B) 06 BELGRADE 1646 
     ¶C. C) 06 BELGRADE 1858 
     ¶D. D) 06 BELGRADE 0865 
     ¶E. E) 07 PODGORICA 032 
     ¶F. F) 07 PODGORICA 064 
     ¶G. G) 07 PODGORICA 100 
 
PODGORICA 00000182  001.3 OF 004 
 
 
SENSITIVE BUT UNCLASSIFIED - PLEASE HANDLE ACCORDINGLY. 
 
 
 
¶1. (SBU) SUMMARY: ON MAY 21 MONTENEGRO MARKED THE FIRST 
ANNIVERSARY OF INDEPENDENCE. MANY HAVE DESCRIBED MONTENEGRO AS A 
SOUTH EUROPEAN SUCCESS STORY, REFERRING TO THE PEACEFUL 
RESOLUTION OF THE INDEPENDENCE QUESTION AND THE VISIBLE PROGRESS 
THE COUNTRY HAS ACHIEVED ON ECONOMIC DEVELOPMENT AND 
EURO-ATLANTIC INTEGRATION. HOWEVER, MANY PROBLEMS FROM THE PAST 
REMAIN. MONTENEGRO CONTINUES TO BE A LARGELY DIVIDED SOCIETY -- 
THE GAPS BETWEEN RICH AND POOR, AS WELL AS BETWEEN THE NORTHERN, 
AND SOUTHERN PARTS OF THE COUNTRY HAVE GROWN. SHOULD MONTENEGRO 
REALLY WISH TO SEIZE ITS EURO-ATLANTIC FUTURE IT WILL NEED TO 
ACCELERATE PROGRESS TOWARD THE FULL DEMOCRATIZATION OF SOCIETY, 
AND IMPLEMENTATION OF RULE OF LAW THROUGH MORE PROFESSIONAL AND 
EFFICIENT INSTITUTIONS. END SUMMARY 
 
 
 
MODEST CELEBRATION OF INDEPENDENCE 
 
---------------------------------- 
 
 
 
¶2. (U) MONTENEGRO PROCLAIMED INDEPENDENCE ON JUNE 3, 2006, 
FOLLOWING A REFERENDUM HELD ON MAY 21, IN WHICH 55.5% SUPPORTED 
INDEPENDENCE AND 44.5% VOTED AGAINST, WITH AN 86% TURNOUT. ON 
MAY 21, 2007, MONTENEGRO MARKED THE FIRST ANNIVERSARY OF THE 
REFERENDUM, BUT CELEBRATIONS WERE MINIMAL AND SUBDUED. AT THE 
CENTRAL CELEBRATION ON MAY 20 IN CETINJE, PRESIDENT FILIP 
VUJANOVIC SAID THE STRATEGIC AIM OF MONTENEGRO WAS FASTER 
INCLUSION INTO EURO-ATLANTIC INSTITUTIONS - FULL MEMBERSHIP IN 
NATO AND EU. PARLIAMENT SPEAKER RANKO KRIVOKAPIC LAID A WREATH 
AT THE MAUSOLEUM ON MOUNT LOVCEN, THE GRAVE OF THE FAMOUS 
MONTENEGRIN WRITER PRINCE PETAR II PETROVIC-NJEGOS (1813-51), A 
SYMBOL OF MONTENEGRIN INDEPENDENCE. MOST OPPOSITION FIGURES 
STAYED AWAY FROM THE TWO EVENTS.  THERE WERE NO 
GOVERNMENT-ORGANIZED EVENTS IN THE CAPITAL, PODGORICA, ALTHOUGH 
THERE WAS A WELL-ATTENDED CONCERT THAT EVENING. 
 
 
 
MEMBERSHIP IN MAJOR INTERGOVERNMENTAL ORGANIZATIONS 
 
--------------------------------------------- ------ 
 
 
 
¶4. (U) INDEPENDENCE HAS BROUGHT VISIBLE RESULTS. MONTENEGRO HAS 
JOINED SEVERAL RELEVANT INTERNATIONAL ORGANIZATIONS: THE UN 
(JUNE 28, 2006), THE OSCE (JUNE 26, 2006), THE COUNCIL OF EUROPE 
(MAY 11, 2007), NATO'S PFP (NOVEMBER 28, 2006), THE WORLD BANK 
AND THE IMF (JANUARY 18, 2007, AND JANUARY 28, 2007, 
RESPECTFULLY). ON MARCH 15, 2007 A STABILIZATION AND ASSOCIATION 
AGREEMENT (SAA) BETWEEN MONTENEGRO AND THE EU WAS INITIALED. THE 
SAA WILL PROBABLY BE FORMALLY SIGNED IN OCTOBER. MONTENEGRO HAS 
ALSO INITIALED AGREEMENTS ON VISA FACILITATION AND READMISSION 
WITH THE EU, AND HAS SIGNED THE CENTRAL EUROPE FREE TRADE ZONE 
AGREEMENT (CEFTA), WHICH SHOULD ENTER INTO FORCE IN JULY 2007. 
 
 
 
EMBASSIES OPEN IN THE COUNTRY; MONTENEGRO OPENS EMBASSIES 
 
--------------------------------------------- ------------ 
 
 
 
¶5. (U) BESIDES THE U.S., THE FOLLOWING COUNTRIES HAVE OPENED 
EMBASSIES IN MONTENEGRO: AUSTRIA, BULGARIA, CHINA, FRANCE, 
GERMANY, GREECE, CROATIA, HUNGARY, ITALY, MACEDONIA, ROMANIA, 
RUSSIA, SLOVENIA, THE UK AND ALBANIA. MONTENEGRO TO DATE HAS 
BEEN FORMALLY RECOGNIZED BY 103 COUNTRIES AND HAS FORMALLY 
ESTABLISHED DIPLOMATIC RELATIONS WITH 80 COUNTRIES. 
 
 
 
¶6. (U) MONTENEGRO'S AMBASSADOR TO THE U.S. IS IN PLACE AND 
MONTENEGRIN EMBASSIES HAVE OPENED IN SERBIA, CROATIA, MACEDONIA, 
FRANCE, THE UK, ITALY, THE VATICAN, BOSNIA AND HERZEGOVINA, AND 
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PODGORICA 00000182  002.6 OF 004 
 
 
SLOVENIA. IT HAS ALSO OPENED PERMANENT MISSIONS TO THE UN, EU 
AND OSCE. MONTENEGRO'S AMBASSADOR TO NATO (BRUSSELS) IS TO 
ASSUME HIS POSITION SOON, AND A MILITARY LIAISON TO NATO-SHAPE 
(MONS) HAS BEEN ANNOUNCED. IN ITS JUNE 3, 2006, DECLARATION OF 
INDEPENDENCE, MONTENEGRO STATED THAT IT ACCEPTED ALL RELEVANT 
INTERNATIONAL OBLIGATIONS OF THE FORMER STATE UNION. 
 
 
 
POLITICS AS USUAL 
 
----------------- 
 
 
 
¶7. (U) AS REQUIRED, A PARLIAMENTARY ELECTION WAS HELD SEPTEMBER 
10, 2006, AT THE END OF THE 2002 PARLIAMENTS MANDATE.  THE 
ELECTION WAS GENERALLY IN ACCORDANCE WITH INTERNATIONAL 
STANDARDS AND SAW NO SHIFT IN POWER, WITH THE DEMOCRATIC PARTY 
OF SOCIALISTS (DPS) AND SOCIAL DEMOCRATIC PARTY (SDP) HOLDING ON 
TO POWER WITH 41 OF 81 SEATS. EVEN WITH NO PARTY BOYCOTTING THE 
VOTE, TURNOUT WAS "ONLY" 70 PERCENT, BELOW PAST ELECTIONS. THE 
REAL SURPRISE CAME A MONTH AFTER THE VOTE, WHEN MILO DJUKANOVIC 
STEPPED BACK FROM OFFICE AFTER 17 YEARS AS EITHER PRIME MINISTER 
OR PRESIDENT. (REF A, B) THE NEW GOM, LED BY FORMER JUSTICE 
MINISTER STURANOVIC, HAS GENERALLY HEWED CLOSE TO THE LINE SET 
BY DJUKANOVIC, WHO WAS REELECTED AS PARTY LEADER OF THE DPS ON 
MAY 19, 2007. 
 
 
 
ECONOMIC PARAMETERS LOOK PROMISING 
 
---------------------------------- 
 
 
 
¶8. (SBU) THE FIRST YEAR OF INDEPENDENCE SAW BOOMS IN BOTH STOCK 
AND REAL ESTATE (PRICES DOUBLED AND TRIPLED IN BOTH MARKETS IN 
THE PAST TWELVE MONTHS), AN INCREASE OF FOREIGN INVESTMENTS TO 
EUROS 506 MILLION IN 2006 (COMPARED TO XXX IN 2005), AND A MORE 
PRONOUNCED AND NOTICEABLE DIVISION BETWEEN THE RICHER SOUTH 
(WHICH CONTINUES TO ATTRACT THE BULK OF FOREIGN INVESTMENT, 
PARTICULARLY REAL ESTATE SALES, AND TOURISM) AND THE POORER 
NORTH. 
 
 
 
¶9. (U) ACCORDING TO OFFICIAL DATA, INFLATION HAS BEEN KEPT AT 
THE LEVEL OF EUROPEAN UNION COUNTRIES, THE UNEMPLOYMENT RATE HAS 
BEEN REDUCED FROM 18 TO 13.87 PER CENT, AND THE AVERAGE MONTHLY 
SALARY ROSE 16 PERCENT IN THE LAST YEAR TO EUROS 326. REAL GDP 
GROWTH IN 2006 WAS 4.5 PERCENT. 
 
 
 
¶10. (U) IN THE TOURISM SECTOR, THE MILITARY SHIPYARD "ARSENAL" 
IN TIVAT WAS SOLD TO CANADIAN BUSINESSMAN PETER MONK; HE PLANS 
TO DEVELOP A FULL-SERVICE HARBOR FOR YACHTS AND MEGA-YACHTS. 
FURTHER DOWN THE COAST, THE ELITE HOLIDAY RESORTS SVETI STEFAN, 
MILOCER AND QUEEN'S BEACH WERE LEASED TO SINGAPORE'S AMAN 
RESORTS GROUP. 
 
 
 
REFORM OF MILITARY AND DEFENSE SYSTEM BEGINS FROM SCRATCH 
 
--------------------------------------------- ------------ 
 
 
 
¶11. (U) FOLLOWING THE INVITATION TO JOIN THE PARTNERSHIP FOR 
PEACE, WHICH WAS EXTENDED IN NOVEMBER 2006 AT NATO'S RIGA 
SUMMIT, MONTENEGRO HAS STARTED AN OVERALL REFORM OF ITS DEFENSE 
SYSTEM. THE SO-CALLED "BRUSSELS" GOVERNMENT (I.E., THE PRIMARY 
INTERNATIONAL GOAL OF THE GOM IS EU AND NATO) OF PM ZELJKO 
STURANOVIC HAS FOR THE FIRST TIME IN MONTENEGRO'S HISTORY 
ESTABLISHED A DEFENSE MINISTRY. IN OCTOBER 2006 U.S. DEFENSE 
SECRETARY RUMSFELD VISITED MONTENEGRO. THE STATE PARTNERSHIP 
 
SIPDIS 
PROGRAM BETWEEN MONTENEGRO AND THE STATE OF MAINE HAS BEEN 
ESTABLISHED. THE WARSHIPS USS ANZIO AND USS EMORY S. LAND 
VISITED MONTENEGRO IN OCTOBER 2006 AND MAY 2007; A FOUR-NATION 
NATO SQUADRON (INCLUDING THE USS ROOSEVELT) VISITED IN APRIL 
¶2007. 
 
 
 
¶12. (SBU) THE GOM SEES MILITARY COOPERATION WITH THE USG AS ITS 
STRATEGIC GOAL, AND LOOKS FOR AMERICAN SUPPORT IN EQUIPPING AND 
 
PODGORICA 00000182  003.3 OF 004 
 
 
TRAINING MONTENEGRO'S MILITARY STAFF. THE DEFENSE MINISTRY HAS 
ANNOUNCED THAT IT WILL SOON FORWARD BILLS ON THE MILITARY, ON 
DEFENSE, AND ON DEFENSE DOCTRINE TO THE PARLIAMENT FOR APPROVAL. 
 THE GOVERNMENT HAS ALSO ANNOUNCED IT WILL START A NATO 
MEMBERSHIP AWARENESS CAMPAIGN. 
 
 
 
VARIOUS PERCEPTIONS OF THE RESULTS ACHIEVED 
 
------------------------------------------- 
 
 
 
¶13. (U) AFTER CONCLUDING A SOFA AND AN ARTICLE 98 AGREEMENT WITH 
THE USG AND A TRANSIT AGREEMENT WITH EUFOR, THE MONTENEGRIN 
LEADERSHIP WAS SUBJECT TO UNEXPECTEDLY HARSH CRITICISM FROM THE 
OPPOSITION.  HOWEVER, NO NEGATIVE COMMENT WAS MADE ON 
MONTENEGRO'S JOINING THE GLOBAL INITIATIVE FOR COMBATING NUCLEAR 
TERRORISM, JOINING THE PROLIFERATION SECURITY INITIATIVE, OR 
SIGNING A "SECTION 505" DEFENSE ARTICLE END-USE AGREEMENT -- ALL 
CONCLUDED AFTER THE SOFA/ARTICLE 98 AGREEMENTS. 
 
 
 
¶14. (U) THE RULING COALITION OF THE DEMOCRATIC PARTY OF 
SOCIALISTS (DPS) AND THE SOCIAL DEMOCRAT PARTY (SDP) HAS 
PROMISED THAT CITIZENS WILL SOON START TO FEEL CONCRETE BENEFITS 
FROM INDEPENDENCE, THROUGH THE COMPLETION OF PRIVATIZATION, 
INCREASED FOREIGN INVESTMENTS, AND FURTHER DEVELOPMENT OF 
TOURISM. HOWEVER, THE OPPOSITION HAS REMAINED SHARPLY CRITICAL 
OF THE GOVERNMENTS ACHIEVEMENTS. PRO-SERBIAN PARTIES (15 SEATS 
IN THE 81-MEMBER PARLIAMENT) ASSERT THAT THE DISSOLUTION OF THE 
STATE UNION WITH SERBIA HAS LED TO A CONTINUATION OF SMUGGLING 
AND CORRUPTION, AN INCREASE OF CRIME, AND FOREIGN DOMINATION OF 
THE COUNTRY. THE MOVEMENT FOR CHANGE (PZP, ELEVEN PARLIAMENTARY 
SEATS) HAS CRITICIZED ALLEGED GOVERNMENT CORRUPTION AND THE 
PRIVATIZATION PROCESS, STATING THAT "MONTENEGRO HAS BEEN TURNED 
INTO A PRIVATE STATE." 
 
 
 
¶15. (SBU) THE ENERGY SECTOR HAS BECOME AN ISSUE WITHIN THE 
RULING COALITION. THE PRIVATIZATION OF THE THERMO POWER PLANT 
AND THE COAL MINE OF PLJEVLJA HAS NOT BEEN COMPLETED. WHILE THE 
DPS REMAINS FIRMLY DETERMINED TO COMPLETE THE PRIVATIZATION OF 
THE TWO COMPANIES, A FACTION IN THE JUNIOR PARTNER SDP IS 
STRONGLY AGAINST THE PRIVATIZATION, PARTICULARLY IF THE SALE IS 
TO THE LEADING BIDDER, THE EN+ GROUP OWNED BY THE RUSSIAN TYCOON 
OLEG DERIPASKA (WHO BOUGHT KAP IN DECEMBER 2004 - KAP CONSUMES 
ABOUT 40% OF MONTENEGRO'S ELECTRICITY). 
 
 
 
PENDING ISSUES 
 
-------------- 
 
 
 
¶16. (SBU) ONE YEAR AFTER INDEPENDENCE THE NEW CONSTITUTION HAS 
NOT YET BEEN ADOPTED. ABOUT 90 PERCENT OF THE TEXT HAS BEEN 
AGREED, AND LEGISLATION SPECIFYING PROCEDURES FOR ADOPTION OF 
THE NEW CONSTITUTION WAS APPROVED. CONTENTIOUS POINTS SUCH AS 
THE OFFICIAL LANGUAGE, RELIGION, AND THE SELECTION OF THE 
JUDICIARY ARE STILL UNRESOLVED. IF THE NEW CONSTITUTION IS NOT 
APPROVED BY A TWO-THIRDS MAJORITY IN PARLIAMENT (54 OF 81 SEATS; 
THE RULING COALITION HAS 41), A PUBLIC REFERENDUM MUST BE HELD. 
THE DESIGNATED PERIOD OF PUBLIC DEBATE ON THE NEW CONSTITUTION 
HAS JUST BEEN COMPLETED, BUT IT IS NOT CLEAR THAT THE "DEBATE," 
WHICH WAS LACKADAISICAL AT BEST, RESOLVED ANY OF THE OUTSTANDING 
QUESTIONS. POST DOES NOT EXPECT A PARLIAMENTARY VOTE BEFORE THE 
EARLY FALL. 
 
 
 
COMMENT 
 
------- 
 
 
 
¶17. (SBU) UNTIL THE QUESTION WAS RESOLVED A YEAR AGO, THE ISSUE 
OF MONTENEGROS STATE STATUS OVERSHADOWED ALL OTHER TOPICS. 
CURRENTLY, INDEPENDENCE IS ACCEPTED BY ALMOST ALL, INCLUDING 
THOSE WHO HAD CAMPAIGNED AGAINST IT. IT IS NOW LITERALLY LAST 
YEAR'S ISSUE. THE STRUGGLE FOR A BETTER ORGANIZED AND MORE 
PROSPEROUS MONTENEGRO IS FINALLY STARTING. THE GENERAL PUBLIC'S 
PERCEPTION IS THAT THINGS HAVE NOT CHANGED MUCH SINCE 
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PODGORICA 00000182  004.3 OF 004 
 
 
INDEPENDENCE; THEY ARE NEITHER BETTER NOR WORSE. MONTENEGRO HAS 
GAINED ITS INTERNATIONAL POLITICAL IDENTITY, BUT PEOPLE HAVE YET 
TO PERCEIVE AN IMPROVEMENT IN THEIR PERSONAL LIVING STANDARDS. 
THE CHALLENGE FOR MONTENEGRO'S LEADERSHIP IS TO TRANSFORM A 
STRONG MACROECONOMIC BASE AND THE RIGHT TO MAKE ITS OWN 
DECISIONS INTO BALANCED MICROECONOMIC GROWTH, PUTTING MONTENEGRO 
INTO THE MAINSTREAM AND LEAVING ITS BACKWATER STATUS BEHIND. 
END COMMENT. 
FERRILL 
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