VZCZCXRO5596
PP RUEHAG RUEHAST RUEHDA RUEHDF RUEHFL RUEHIK RUEHKW RUEHLA RUEHLN
RUEHLZ RUEHPOD RUEHROV RUEHSR RUEHVK RUEHYG
DE RUEHBW #0745/01 2061907
ZNR UUUUU ZZH
P 241907Z JUL 08
FM AMEMBASSY BELGRADE
TO RUEHC/SECSTATE WASHDC PRIORITY 0194
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE
RHEHNS/NSC WASHDC
RUZEJAA/JAC MOLESWORTH RAF MOLESWORTH UK
RHMFISS/HQ USEUCOM VAIHINGEN GE

UNCLAS SECTION 01 OF 03 BELGRADE 000745 
 
SENSITIVE 
SIPDIS 
 
E.O.12958: N/A 
TAGS: PGOV PREL EINV SR
SUBJECT: SERBIA: KEY MUNICIPAL GOVERNMENTS FORMED, BELGRADE STILL 
PENDING 
 
REF: BELGRADE 648 AND PREVIOUS 
 
Summary 
------- 
 
¶1. (SBU) After more than two months of negotiations, many key 
municipalities in Serbia have now formed their new local 
governments.   Many local coalition agreements were dependent on the 
formation of the national coalition government, which took place 
July 7.  Only in Central Serbia and Vojvodina, where there were 
either clear-cut local victories by one party or "natural 
coalitions," were local governments able to form more quickly. 
Noticeably absent, however, are both Belgrade and the central 
Serbian city of Nis (Serbia's third largest city), where 
negotiations continue.  Ultimately, the stability and competency of 
these local governments will be tested by their ability to work with 
their local coalition partners and with the central government to 
deliver needed economic opportunities to their localities.  End 
Summary. 
 
Constitutional Changes Slow Municipal Process 
--------------------------------------------- 
 
¶2.  (SBU) The current process for forming local governments has 
taken longer than it did following the last round of municipal 
elections in 2004, when mayors were directly elected.  In addition 
to many municipalities waiting for the July 7 formation of the 
republican government, the current process was further slowed by 
constitutional and legal changes in the procedure for choosing 
mayors.  With the adoption and implementation of Serbia's new 
Constitution in 2006 and the implementation on the law on local 
government in 2007, Serbia changed the method of selecting mayors 
from direct, popular election, to election by local assemblies. 
These legal changes further consolidated the power of political 
parties, and resulted in some popular mayors falling from power in 
certain cities, such as Novi Sad. 
 
Novi Sad 
-------- 
 
¶3.  (U) The Vojvodina city of Novi Sad was one of the earliest 
municipalities to form a new government.  On June 16, the Novi Sad 
city assembly elected a new mayor and speaker of the assembly.  The 
DS-led coalition For a European Novi Sad, the LSV-led coalition 
Together for Novi Sad, and the Hungarian Coalition formed a 
government with 41 of 78 seats in the assembly.  The new mayor, 
Democratic Party (DS) Igor Pavlicic, replaced former Serbian Radical 
Party (SRS) mayor Maja Gojkovic.  The assembly elected Aleksandar 
Jovanovic, head of the League of Vojvodina Social Democrats (LSV), 
as speaker. 
 
¶4.  (SBU) Jovanovic told us on June 27 that the ruling coalition's 
goal was to get Novi Sad's economy, stalled during four years of 
Radical rule, back on track.  To that end, the coalition's 
priorities were to build infrastructure, including a new railway 
bridge and the Horgos-Pozega highway, revive the development of an 
industrial park, expand the service sector, and attract tourism and 
investment to the city. 
 
¶5.  (SBU) Pavlicic echoed many of the same themes in a July 2 
meeting, emphasizing that after four years of Radical rule city hall 
was now "open for business" with foreign investors.  Heineken had 
already purchased a local brewery that it planned to use as a 
regional distribution center, and other potential investors were 
calling.  Pavlicic also outlined plans to expand the tax base, 
downsize the public sector, and curb corruption.  He said that the 
results of the May 11 elections were not an indication of major 
shifts in party allegiances, but were due to high turnout among DS 
voters (who are carefully tracked and cultivated by the local party 
organization) and low turnout by SRS voters.  Gojkovic, who 
capitalized on her considerable popularity as mayor to win seven 
seats in the local assembly after breaking with the SRS prior to 
January's presidential elections, by her own account, drew support 
from Radical voters, youth, LDP supporters, and the undecided.  In a 
June 27 conversation with poloffs, Gojkovic speculated that her 
group would have won an outright majority in Novi Sad, had national 
issues such as Kosovo and the EU not overshadowed local concerns. 
 
Cacak 
----- 
 
¶6. (SBU) In the central Serbian city of Cacak, the hometown of the 
former infrastructure Minister Velimir Ilic and stronghold of his 
New Serbia party (NS), the city assembly formed a government on June 
¶2.  The local government composed of NS, Democratic Party of Serbia 
(DSS), the Socialist Party of Serbia (SPS), and the Radicals (SRS), 
controls 45 of 75 seats in the city assembly.  The assembly elected 
Velimir Stanojevic (NS) mayor for the second consecutive term, while 
 
BELGRADE 00000745  002 OF 003 
 
 
Veljko Negovanovic of SPS was elected speaker of the assembly. 
 
Novi Pazar 
---------- 
 
¶7.  (SBU) In the predominantly Muslim Sandzak city of Novi Pazar, 
the local assembly formed its government on July 7.  A local 
coalition of strange bedfellows was formed between Social Welfare 
Minister Rasim Ljajic's Sandzak Democratic Party (SDP) and the local 
United Serbian list, which is composed of the SRS, DSS, NS and SPS. 
This ruling coalition controls 29 out of 47 seats in the city 
assembly.  Mirsad Djerlek of SDP, who is a medical doctor by 
profession, was elected mayor, while Milan Veselinovic, head of the 
local Radical Party branch, was elected assembly speaker. 
 
¶8.  (SBU) Negotiations on forming the national level government had 
significant repercussions for Sulejman Ugljanin's Party of 
Democratic Action (SDA) in Novi Pazar.  SDA, which had run the city 
for the past decade, could have remained in power with the support 
of the United Serbian List.  SDP Secretary General Mirsad Jusufovic 
told us on May 20 that both DSS and NS were adamant to "punish 
Ugljanin" for supporting President Tadic's DS rather than them in 
forming a national government with the Radicals.  In return for his 
DS support, Ugljanin was awarded a ministerial position in the new 
government (reftel) but ultimately surrendered control of Novi Pazar 
to the SDP.  Although the SDA is currently in opposition in the city 
assembly, Ugljanin said he expected the SDA would ultimately replace 
the SRS and DSS in the city government coalition.  "We will work as 
a team" with the SDP, Ugljanin told local media on July 12. 
Djerlek, however, told us on July 21 that he expected the SDP-United 
Serb List coalition would be stable for the foreseeable future, 
emphasizing that the coalition showed his commitment to 
multi-ethnicity in Novi Pazar. 
 
¶9.  (SBU) Belying Ugljanin's assertions that he and SDA would return 
to the municipal government, Belgrade is rife with reports that 
Ugljanin and his people had stripped bare the Novi Sad municipal 
offices.  "They even took the curtains" SDP whip Meho Omerovic told 
us. 
 
South Serbia 
------------ 
 
¶10.  (SBU) Local governments in two Albanian-majority towns of South 
Serbia were constituted hours before the deadline that would have 
resulted in new elections.  The towns of Presevo and Bujanovac both 
created mono-ethnic local authorities, to the dissatisfaction of 
local Serb leaders and the Government of Serbia's Coordination Body. 
In Vranje, less than 25 miles away, the DS-led coalition governs the 
nearly homogeneous Serb population. 
 
¶11. (SBU) After several unsuccessful attempts, Presevo's municipal 
assembly finally elected a speaker on July 12.  After two months of 
negotiations, MP Riza Halimi's Party for Democratic Action (PDA) and 
the rival Democratic Party of Albanians (DPA) of former Presevo 
Mayor Ragmi Mustafa united to form a majority government.  Ragmi 
Mustafa was elected speaker of the assembly.  On July 22 the new 
assembly elected its new mayor -- Nadir Sadiku of PDA.  The new 
coalition has an overwhelming majority of 25 of 38 seats in the 
assembly.  Though both Halimi and Mustafa told us of their parties' 
commitment to long-term cooperation, local politicians doubt the 
longevity of the new coalition.  Skender Destani of the Democratic 
Union of the Valley (Halimi's coalition partner in 2007 
parliamentary elections) told us on July 15 that DPA and PDA's 
diametrically opposed positions regarding cooperation with state 
institutions, alone, would undermine coalition stability in short 
order; he said his priority would be to tear it down.  (Both Halimi 
and Mustafa said that Destani's demands for a disproportionate share 
of the government seats and power had left his party out in the cold 
-- at least for the time being.) 
 
¶12. (SBU) During its July 13 session, the Bujanovac assembly formed 
a municipal majority composed of PDA, the Movement for Democratic 
Progress (MDP) led by Jonuz Musliu, and the Democratic Union of 
Albanians (DUA) led by Mejdi Zeqiri.  The new ruling coalition 
controls 22 out of 41 seats in the municipal assembly.  Shaip 
Kamberi of PDA was elected mayor and Musliu was elected assembly 
speaker.  Previous negotiations with the Democratic Party (DS) and a 
Serb citizens' group failed to reach agreement on a multiethnic 
government.  Kamberi told us on July 14, however, there was still 
room for a "technical coalition" with the DS and that the coalition 
had reserved three posts in the local government and control of two 
state-owned enterprises for Serbs.  Nagip Arifi of PDA told us on 
July 24 that negotiations with DS were still ongoing.  Local Serb 
leader Stojanca Arsic and Sima Gazikalovic of Serbia's Coordination 
Body office in Bujanovac, however, criticized PDA's attempt 
set-asides as "not serious" and "humiliating." 
 
 
BELGRADE 00000745  003 OF 003 
 
 
Belgrade and Nis 
---------------- 
 
¶13.  (SBU) The Serbian capital and the third largest city, Nis, are 
still without new governments with deadlines for imposing temporary 
measures and having new elections quickly approaching. 
 
¶14.  (SBU) Belgrade's city assembly met on July 14 to verify 
mandates; it adjourned without electing officers due to lack of a 
coalition agreement.  Despite numerous previous statements by DSS, 
SRS and SPS leaders that they would form the city government, the 
SPS backed out of the deal on July 13 on the grounds that it would 
jeopardize the newly formed SPS-DS national coalition government. 
The assembly met again on July 21 and elected Branislav Belic (DS), 
the oldest member, as interim speaker, with the support of the DS, 
SPS, and LDP.  The move extends the formal deadline to complete the 
city government by electing a mayor until August 22.  The next 
session has been called for July 28, however, at which time most 
observers expect the final details of the coalition agreement to be 
ironed out and Dragan Djilas (DS) to be elected mayor. 
 
¶15.  (SBU) The new Nis city assembly verified mandates on July 14 
but was also unable to form a city government.  Negotiations among 
DS, SPS and G-17 Plus stalled over the distribution of positions in 
public companies.  The deadline for constituting Nis's city assembly 
is August 4. 
 
COMMENT 
------- 
 
¶16.  (SBU) After taking so long to form their local governments, 
Serbia's municipal leaders must focus on improving local governance 
and delivering on election promises.  However, the very nature of 
some of these local coalitions makes it probable that party politics 
will continue to interfere.  The continued absence of municipal 
governments in Belgrade and, to a lesser degree, Nis will also have 
a significant impact on Serbia's economy and political stability. 
These key cities need to form coalition governments soon that are 
able to work with the new central government in order for Serbia to 
begin moving toward Europe.  That dastardly types such as Novi Pazar 
Mayor Ugljanin have been replaced by the electoral process is an 
encouraging sign that Serbia continues to develop as a democracy. 
End comment. 
 
BRUSH