VZCZCXRO4224
PP RUEHAG RUEHAST RUEHDA RUEHDF RUEHFL RUEHIK RUEHKW RUEHLA RUEHLN
RUEHLZ RUEHPOD RUEHROV RUEHSR RUEHVK RUEHYG
DE RUEHBW #0559/01 1610949
ZNR UUUUU ZZH
P 090949Z JUN 08
FM AMEMBASSY BELGRADE
TO RUEHC/SECSTATE WASHDC PRIORITY 0006
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE
RUZEJAA/JAC MOLESWORTH RAF MOLESWORTH UK
RHEHNS/NSC WASHINGTON DC
RHMFIUU/SECDEF WASHINGTON DC
RUZEHAA/USEUCOM JIC VAIHINGEN GE

UNCLAS SECTION 01 OF 02 BELGRADE 000559 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: PGOV PREL SR
SUBJECT: SERBIA: DEMOCRATS AND SOCIALISTS CLOSER TO FORMING 
GOVERNMENT 
 
Ref:  A) BELGRADE 533, B) BELGRADE 519 
 
SUMMARY 
------- 
 
¶1.  (SBU) It now appears likely that Boris Tadic's Democratic Party 
will form a coalition government with the Socialists, perhaps as 
early as next week.  Recent actions by the Socialists (SPS) and 
further intransigence by Prime Minister Kostunica's party regarding 
Serbia's European future have tipped the scales toward a 
pro-European government.  The Democratic Party (DS) and SPS are 
reportedly poised to start negotiations, as talk of a possible 
Radical-Democratic Party of Serbia-Socialist government has faded. 
Remaining hurdles for the Democrats include the need to reach 
agreement between two feuding Sandzak parties and to address the 
G-17's concern that it is getting squeezed out, in favor of the 
Socialists.   The Democrats and Socialists are now at the closest 
they have been to forming a coalition; however, egos, greed, or 
political miscalculations could still derail the train.  End 
Summary. 
 
 
Socialists Lock in MPs 
---------------------- 
 
¶2.  (SBU) On June 3, the Socialists' 300 person Main Board approved 
the list of the party's 12 members of parliament and gave effective 
control over their mandates to party leader Ivica Dacic.  (Mandates 
belong to the parties rather than the MPs, who sign undated 
resignation letters as soon as they are confirmed; this gives party 
leadership great leeway to wheel and deal.)  With these mandates in 
hand, Dacic can now begin public negotiations with President Boris 
Tadic and his "For a European Serbia" coalition.  According to daily 
media Vecernje Novosti, once negotiations with the democratic block 
are complete, the SPS Main Board will vote on which coalition to 
join. SPS leader Dacic's chief of staff assured us after the June 3 
meeting that "everything will be OK" with forming a government with 
the DS coalition. 
 
Kostunica's Party Terms SAA "Null and Void" 
------------------------------------------- 
 
¶3.  (SBU) Rumors that the SPS had reached an impasse in negotiations 
with the Radicals and Kostunica's Democratic Party of Serbia (DSS) 
were reinforced by the June 4 DSS announcement, and then by PM 
Kostunica's June 6 press conference, that its legal experts had 
concluded that the Stabilization and Association Agreement (SAA) 
with the EU was "legally null and void" due to shortcomings 
regarding Kosovo, and could not be ratified without revisions. 
 
¶4.  (SBU) Most observers believe that this announcement makes 
further coalition talks between the SPS, DSS, and Radicals highly 
unlikely given the insistence of SPS's coalition partners on 
ratification of the SAA.  In a June 5 meeting, Defense Minister 
Dragan Sutanovac (DS) told us that Kostunica's decision on the SAA 
was "political suicide" since it provided no alternative to 
Socialists than to begin talks with the Democrats.  Even DSS MP 
Milos Aligrudic expressed his dissatisfaction to us on June 6 that 
the analysis had been released without proper explanation; he 
claimed the bottom line was that the DSS remains pro-European, and 
would work for a better SAA text. 
 
¶5.  (SBU) United Serbia (JS) leader and SPS coalition partner Dragan 
Markovic (aka Palma) told the press on June 5 that due to the DSS 
position on the SAA, his party considered coalition talks with the 
Radicals and DSS to be over.  (Over the past several days, Palma has 
frequently reiterated his insistence that any coalition he joined 
support the passage of the SAA.)  "Since we don't have anything to 
negotiate with the DSS, it's clear that the government will be 
formed with the DS-led coalitions, or there will be new elections," 
Markovic told state television on June 5.  Palma continued to up the 
pressure on Dacic to make a decision on June 6, telling the press 
that he would not accept Kostunica as Prime Minister. 
 
Speculation on Ministerial Appointments 
--------------------------------------- 
 
¶6.  (SBU) Speculation on what a DS-SPS cabinet would look like is 
the new focus.  Over the past few days, the pro-DS daily Blic has 
offered numerous possible scenarios.  The DS reportedly might offer 
one deputy prime minister slot for SPS leader Dacic and another for 
his coalition partner Jovan Krkobabic (Pensioners); the SPS might 
also receive two or three other ministries, including Capital 
Investments, to be led by Mirko Mirkonjic, and the Kosovo Ministry. 
Blic suggested that SPS official Zarko Obradovic could be offered 
either the role of Speaker of Parliament or Mayor of Belgrade, 
implying that a national level DS-SPS agreement would obviate the 
 
BELGRADE 00000559  002 OF 002 
 
 
deal between SPS, DSS, and SRS for Belgrade.  On June 6, Blic 
reported that Dacic might refuse an offer to be Prime Minister.  Our 
contacts in the international community speculate the Socialists 
would not want the PM job because they will need to disassociate 
themselves from unpopular government decisions further down the 
road, including handing over war criminals Mladic and Karadzic to 
the Hague War Crimes Tribunal in order to satisfy the EU 
Stabilization and Association Agreement. 
 
Other Mouths to Feed:  Sandzak and G-17 
---------------------------------------- 
 
¶7.  (SBU) In addition to accommodating the Socialist and their 
coalition partners, the DS needs to maintain the support of the 
right of center G-17 Plus party, as well as the two rival Sandzak 
minority parties led by current Novi Pazar SDA (Sandzak Democratic 
Action Party) Mayor Suleiman Ugljanin and current SDP (Sandzak 
Democratic Party) Minister for Social Affairs Rasim Ljajic. 
According to Blic, Ugljanin's "For a European Sandzak" coalition 
could get the Ministry for Sustainable Regional Development in 
return for their two parliamentary seats.  Under this scenario, 
Ljajic, as leader of the Sandzak Democratic Party, would keep his 
current position as Minister for Social and Labor Affairs. Left to 
be decided, however, would be which Sandzak party would secure 
control of the hotly contested mayorship of Novi Pazar. 
 
¶8.  (SBU) The G-17 Plus, led by current Economic and Regional 
Development Minister Mladjen Dinkic, has voiced concerns that the DS 
may offer too much to the SPS in coalition negotiations. Suzana 
Grubjesic, chair of the G-17 Plus parliamentary group, told us on 
June 2 that her party would not accept Dacic as Prime Minister; they 
could agree to a deputy PM slot for him, and possibly an SPS person 
as speaker of parliament.  The G-17 Plus has also said it would not 
accept a national coalition with the SPS unless the SPS annuls its 
current Belgrade city coalition agreement with the DSS and SRS. 
Dinkic told us on June 4 that his party is considering creating a 
right of center block within the coalition, to include Hungarians 
and Bosniaks, in order to strengthen its position within any future 
DS-SPS led coalition and also to join the European People's 
Party-European Democrats (EEP-ED)group in the European Parliament. 
 
How Long is Needed: Days or Weeks? 
---------------------------------- 
 
¶9.  (SBU) Sources in the DS believe the final pieces could fall into 
place very quickly, making a DS-SPS government possible by next 
week. Miki Rakic, President Tadic's Chief of Staff, told us on June 
4 that while he expected furious attacks from the DSS/Radicals, 
"with any luck" the deal between the DS and SPS would move ahead in 
the course of next week.  Other sources are more cautious, such as 
Foreign Minister Vuk Jeremic (DS), who told us on June 5 that he 
expected it would take a "few more weeks" to put the final coalition 
together. 
 
Comment 
------- 
 
¶10.  (SBU) With the SPS having exhausted talks with the Radicals and 
DSS, and with Dacic now holding his party's mandates firmly in hand, 
conditions seem right for the Democrats and Socialists to conclude 
negotiations.  While pieces may come together relatively quickly, it 
is also  probable that a few key politicians may hold out a little 
longer to secure the best deal they can get from the DS. 
Ultimately, the Democrats most likely will succeed in forming their 
coalition with the Socialists, but they will have to manage how they 
swallow portions of the Socialist agenda, in order to retain their 
democratic constituency and remain credible in Europe.  End 
Comment. 
 
BRUSH