VZCZCXRO0947
PP RUEHAG RUEHAST RUEHDA RUEHDF RUEHFL RUEHIK RUEHKW RUEHLA RUEHLN
RUEHLZ RUEHROV RUEHSR RUEHVK RUEHYG
DE RUEHPOD #0232/01 2411720
ZNR UUUUU ZZH
P 281720Z AUG 08
FM AMEMBASSY PODGORICA
INFO RUEHC/SECSTATE WASHDC PRIORITY 0940
RUEHNO/USMISSION USNATO PRIORITY 0076
RUEHZL/EUROPEAN POLITICAL COLLECTIVE
RUEHNP/AMCONSUL NAPLES 0001
RUEHPOD/AMEMBASSY PODGORICA 1027

UNCLAS SECTION 01 OF 03 PODGORICA 000232 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: PREL PGOV MARR MOPS MW
SUBJECT: SCENESETTER FOR ADMIRAL FITZGERALD VISIT TO MONTENEGRO 
 
PODGORICA 00000232  001.2 OF 003 
 
 
¶1.  (SBU) SUMMARY: Welcome to Montenegro. Your visit comes as 
the Montenegrin leadership continues its pro-West, pro-NATO, 
pro-American stance, while simultaneously looking to maintain 
good relations with Belgrade.  Its effort to maintain this 
balance is currently being put to the test over the issue of 
whether or not to recognize neighboring Kosovo.  The GoM remains 
a receptive interlocutor, eager to develop strong ties with 
Washington and to prove itself a reliable partner. The GoM also 
continues preparing for its goal of eventual NATO membership by 
beginning Intensified Dialogue with NATO in 2008, working to 
increase low public support for NATO membership, and lobbying 
for a Membership Action Plan (MAP) invitation at the 2009 NATO 
summit. The GoM is making continued contributions to the GWOT, 
including plans to deploy peacekeepers abroad.  The growing 
economy is being fueled heavily by FDI in the tourism sector 
along the Adriatic coast.  END SUMMARY 
 
 
 
 
 
NATO Membership a Top GoM Priority 
 
------------------------------------- 
 
 
 
¶2. (U) The GoM has stated NATO Membership as a strategic goal. 
Montenegro was invited to Intensified Political Dialogue at the 
NATO Bucharest Summit in April 2008 and began a government-wide 
NATO Communications Strategy to increase support for membership 
among the population (presently only about 30% favors 
membership, 30% oppose it, and the remainder appear undecided). 
Montenegrin officials are hopeful an invitation to the 
Membership Action Plan (MAP) will be forthcoming at the next 
summit in spring 2009. 
 
 
 
¶3. (U) Montenegro continues to make slow, but mostly forward 
progress in establishing its nascent defense institutions and 
future military force. The Montenegrin Armed Forces are led by 
Admiral Dragan Samardzic.  Montenegro inherited an outdated, 
ill-equipped military that is still working to organize itself 
as a modern, NATO-interoperable force capable of contributing to 
peacekeeping operations. Present plans call for a 2400-person 
force structure under a combined service of naval, ground, and 
air assets. This plan is currently under revision as part of a 
larger Strategic Defense Review expected to be concluded later 
this year. 
 
 
 
¶4. (U) Following independence, and unlike most other ministries 
in the GoM, the MoD -- led by Minister of Defense Boro Vucinic 
-- has had to build its organization from the ground up. 
Developing its human resource capacity is proving to be perhaps 
its biggest challenge. Other challenges include prioritizing 
requirements, building the legal and regulatory framework for 
its volunteer force, and establishing a functioning procurement 
system. 
 
 
 
¶5. (U) In June 2008, Montenegro completed the destruction of 
1500 Strela Man Portable Air Defense Systems (MANPADs) under a 
two million dollar USG demilitarization program.  This was an 
important contribution in support of the GWOT, and we are 
continuing the program to encompass the destruction of more than 
2,000 Sea Mines, rockets, and other outdated arms and 
ammunition.  Additionally, Montenegro officially donated more 
than 1500 small arms weapons and 200,000 rounds of ammunition to 
the Government of Afghanistan in September 2007.  In December 
2007, the GoM signed a Transit Agreement with NATO to facilitate 
the use of its territory to reinforce KFOR in the event reserves 
are needed in Kosovo.  Montenegro has signed an Article 98 
Agreement with the U.S. and plans on sending peacekeeping 
contingents to the Near East following adoption of necessary 
legislation in late September. 
 
 
 
 
 
GoM Delaying on Kosovo 
 
----------------------- 
 
 
 
 
PODGORICA 00000232  002.2 OF 003 
 
 
¶6. (SBU) The GoM has postponed making a decision on recognizing 
Kosovo's independence, but there are indications that a decision 
to recognize may be on the horizon. The GoM has been cautious on 
Kosovo, wishing neither to offend the USG, Albania, and its own 
ethnic Albanian minority (5% of the population) on the one hand, 
nor Serbia and its own ethnic Serbian population (32% of the 
population) on the other. (This balancing act has also 
influenced the GoM's effort to keep its head down on the 
Georgia-Russia issue.)  The central concern of the GoM is that 
stability, regionally but also particularly within Montenegro, 
be maintained. Kosovo recognition also will be politically risky 
for the GoM. A large majority here opposes recognition of 
Kosovo. Montenegro's largest pro-Serb opposition forces have 
promised mass protests if the government recognizes.  Montenegro 
has been consulting with Macedonia about the possibility of a 
joint recognition before the UNGA this September. 
 
 
 
¶7. (SBU) There was some concern that potential disturbances in 
Kosovo following its declaration of independence in February 
2008 could prompt refugees to enter Montenegro, but there have 
been no reports of new refugees entering the country. In 1999, 
over 100,000 IDPs from Kosovo (primarily ethnic Albanians but 
also including Serbs and Roma) entered Montenegro - equal to 1/6 
of the local population.  Most have returned home. 
 
 
 
 
 
Stable, but Somewhat Lackluster Political Situation 
 
--------------------------------------------- ------- 
 
¶8. (SBU) More than two years after independence, no major 
political parties are actively questioning Montenegro's 
independence.  The May 2006 referendum and subsequent September 
2006 parliamentary and April 2008 Presidential contests all met 
international standards for free and fair elections.  In October 
2007, Montenegro adopted a new Constitution through democratic 
debate. It has moved toward the EU, signing a Stabilization and 
Association Agreement (SAA) in October 2007, and is currently 
considering seeking formal candidate status before the end of 
this year.  Montenegro is a member of the United Nations (UN), 
Organization for Security and Coordination in Europe (OSCE), and 
the Council of Europe.  It has been a constructive regional 
player, building good relations with neighbors and participating 
in numerous regional initiatives (such as CEFTA, SECI, and the 
Stability Pact). 
 
 
 
¶9. (SBU) President of the ruling Democratic Party of Socialists 
(DPS) Milo Djukanovic, who led Montenegro from the 
reintroduction of multi-party democracy in 1991 to independence 
in 2006, declined to seek reappointment as Prime Minister after 
his party won the September 2006 parliamentary election. 
Djukanovic returned to office as PM in February 2008, when 
previous PM Sturanovic resigned for health reasons.  Prime 
Minister Djukanovic's primary foreign policy goals are EU and 
NATO membership and he speaks candidly about the U.S. as 
Montenegro's "strategic partner." 
 
 
 
¶10. (SBU) Domestically, the GoM's track record on fully 
implementing needed democratic and economic reforms is generally 
positive, with room for improvement (particularly in 
strengthening the rule of law). Privatization of remaining 
infrastructure (airports, railroad, and the port of Bar) and the 
energy sector is on hold, after the smaller coalition partner, 
the Social Democratic Party (SDP), sided with the opposition in 
June 2007 to halt the sale of a large thermoelectric plant and 
associated coal mine to firm owned by notorious Russian tycoon 
Oleg Deripaska. The DPS and SDP -- which differ over the state's 
control of strategic industries -- have sparred throughout the 
summer over control of various councils and laws regulating 
state assets. 
 
 
 
¶11. (SBU) The opposition is fractious and to date has been 
ineffective in presenting a serious challenge to the DPS. Most 
also remain somewhat on the fence about NATO membership for 
Montenegro, for many just as much because of the low public 
support for membership and because it provides a handy issue 
over which to disagree with the GoM than because of any 
principled disagreement with NATO. 
 
 
PODGORICA 00000232  003.2 OF 003 
 
 
 
 
¶12. (SBU) The two largest opposition blocks are the Movement for 
Change (PzP), headed by the charismatic and populist Nebojsa 
Medojevic, and Andrija Mandic's Serbian People's Party (SNS) and 
Serbian List (SL - a coalition of the SNS and small Serb 
parties). Mandic, who typically plays to a Serb nationalist 
voter base, claims to be personally disposed to pursue good 
relations with the U.S., but this summer he has elevated his 
nationalist rhetoric to attack NATO and U.S. foreign policy over 
the Russia-Georgia conflict.   Unlike the other opposition 
groupings, the SL opposes NATO (but not EU) membership for 
Montenegro. PzP is pro-independence, pro-EU, but lukewarm on 
NATO. 
 
 
 
Fighting Corruption 
 
------------------- 
 
 
 
¶13. (U) As in other transition countries in this region, 
corruption is present at all levels, and many Montenegrins list 
corruption as the country's biggest problem (along with low 
living standards). In this process, implementation of existing 
legislation will be key and the GoM has issued semiannual 
reports its progress. Post's new Resident Legal Advisor made a 
brief visit to Montenegro in August and will return in October 
to focus on rule of law issues. 
 
 
 
Attracting Investment 
 
---------------------- 
 
 
 
¶14. (U) Montenegro has been successful in attracting significant 
foreign direct investment (FDI), though so far little of that 
has been American.  The economy continues to expand, fueled by a 
boom in coastal tourism and investment.  In the last two years, 
the GoM has tamed inflation, moved closer to WTO membership, 
privatized almost 90% of the economy, and successfully created a 
generally business-friendly environment which has produced the 
highest per capita rate of FDI in the region.  The country 
established the lowest corporate tax rate in the region (9%) and 
dramatically improved its tax policy.  Tourism and 
tourism-related investments, particularly along the Adriatic 
coast, are booming, and the independent World Travel and Tourism 
Council has ranked Montenegro as the top-growing tourism 
destination in the world. 
 
 
 
¶15. (U) Montenegro currently is entering the largest investment 
cycle in its history as the GoM plans tenders totaling between 
15 and 20 billion euros in infrastructure, tourism, energy, and 
the privatization of the remaining state-owned companies over 
the next two years. Eager to change the impression that only 
Russians are investing in Montenegro, the GOM is carrying out an 
aggressive "invest in Montenegro" campaign around the world, 
including in the United States. 
 
 
 
¶16. (U) The GoM also is moving Montenegro full steam ahead into 
the WTO. Having reached agreement with the EU on terms of its 
WTO accession, the U.S. is now the main remaining bilateral 
partner with whom the GoM must reach an accord prior to joining 
the WTO.  They hope to wrap up all negotiations by the end of 
2008 and formally join the organization in early 2009. 
MOORE