VZCZCXRO4923
PP RUEHAG RUEHAST RUEHDA RUEHDF RUEHFL RUEHIK RUEHKW RUEHLA RUEHLN
RUEHLZ RUEHNP RUEHROV RUEHSK RUEHSR RUEHVK RUEHYG
DE RUEHPOD #0035/01 0371411
ZNR UUUUU ZZH
P 061411Z FEB 09
FM AMEMBASSY PODGORICA
INFO RUEKJCS/SECDEF WASHDC
RUEHC/SECSTATE WASHDC PRIORITY 1148
RUEHZL/EUROPEAN POLITICAL COLLECTIVE
RUEHPOD/AMEMBASSY PODGORICA 1236

UNCLAS SECTION 01 OF 04 PODGORICA 000035 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: PREL PGOV MW
SUBJECT: SCENESETTER FOR GENERAL LIBBY VISIT TO MONTENEGRO 
 
PODGORICA 00000035  001.2 OF 004 
 
 
¶1.  (SBU) SUMMARY: Welcome to Montenegro. Your visit comes as 
the Montenegrin leadership continues its pro-NATO, pro-western 
stance, having recognized neighboring Kosovo in October 2008 and 
formally applied for EU membership in December 2008. The 
Government of Montenegro (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 pursuing the Intensified 
Dialogue with NATO begun in 2008, working to increase 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 peacekeeping operations, 
including plans to deploy its own military units to ISAF. 
However, major decisions requiring legislative approval will be 
delayed until after parliamentary elections, scheduled for March 
¶29.  The economy has been fueled heavily by FDI in the tourism 
sector, but faces slower growth in 2009 due to the global 
economic crisis.  END SUMMARY 
 
 
 
 
 
NATO Membership a Top GoM Priority 
 
----------------------------------- 
 
 
 
¶2. (SBU) Following independence, the Ministry of Defense (MoD) 
-- led by Minister of Defense Boro Vucinic -- has built its 
organization from the ground up.  Developing its human resource 
capacity is proving to be a major challenge. Other challenges 
include prioritizing requirements, building the legal and 
regulatory framework for its volunteer force, and establishing a 
functioning procurement system. 
 
 
 
¶3. (SBU) The Montenegrin Armed Forces are led by Chief of 
Defense 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outdated, ill-equipped military that is still working to 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 force projection and peacekeeping operations. 
The latest Montenegrin Strategic Defense Review (SDR) calls for 
a 2,400-person force (plus 300 reservists) structure under a 
combined service of naval, ground, and air assets. Their goal is 
a combat capable, fully professional force which serves their 
nation not only in operations outside its borders, but also is 
capable of homeland defense, assisting the Ministry of Interior 
in crisis management. 
 
 
 
¶4. (SBU) Montenegro continues to make forward progress in 
establishing its nascent defense institutions and future 
military structure.  The GoM has stated that NATO Membership is 
a strategic goal for the nation. Montenegro was invited to 
Intensified Political Dialogue at the NATO Bucharest Summit in 
April 2008.  GoM officials are hopeful an invitation to the 
Membership Action Plan (MAP) will be forthcoming at the NATO 
summit this spring. 
 
 
 
¶5. (SBU) Montenegro's progress toward NATO was validated by a 
NATO assessment team, which last month gave the GoM high marks 
for its reforms to date, particularly in the defense sector. The 
MoD touts its potential niche capabilities in the areas of naval 
salvage and recovery operations, a regional demining diving 
center, mountain infantry, military medical teams, and 
potentially a regional helicopter training center. 
 
 
 
¶6. (SBU) In June 2008, Montenegro completed the destruction of 
1,500 Strela Man Portable Air Defense Systems (MANPADs) under a 
two million dollar USG demilitarization program.  This was an 
important contribution in support of the WOT, 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 1,500 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.  As a result of the recent PARP 
assessment, Montenegro may have additional items to donate or 
sell that are now considered surplus. 
 
 
 
PODGORICA 00000035  002.2 OF 004 
 
 
 
¶7. (SBU) Montenegro signed an Article 98 Agreement with the U.S. 
and has stated its intention to contribute military units to 
support NATO operations in Afghanistan.  A three-man medical 
team will deploy in August as part of a larger contingent from 
the region.  MoD has said privately it plans to deploy an 
infantry platoon to the International Security Assistance Force 
(ISAF) operations in late 2009. 
 
 
 
¶8. (SBU) The MoD has been negotiating with private firms to 
assist in preparing their infantry company for deployments in 
support of ISAF this year. It will look to the Maine National 
Guard for additional training in support of this deployment and 
future NATO activities. 
 
 
 
¶9. (SBU) Vice-Admiral Samardzic visited Joint Forces Command - 
Naples (JFC Naples) February 1-2, 2009.  Admiral Fitzgerald 
committed to a U.S. ship visit in April.  As part of this ship 
visit, Montenegro will have crew on the ship for two weeks 
through the Sea Rider program.  Samardzic committed Montenegro 
to providing a liaison officer (LNO) by June 2009 as an active 
PfP member and as part of the JFC Naples staff. 
 
 
 
 
 
GoM Decision to Recognize Kosovo 
 
-------------------------------- 
 
 
 
¶10. (SBU) In possibly its biggest foreign policy decision since 
independence, the GoM announced Montenegro's recognition of 
Kosovo as an independent country in October 2008.  The GoM faced 
fierce opposition to this decision domestically (32 percent of 
the population consider themselves Serbs) and from the 
Government of Serbia.  The establishment of full diplomatic 
relations with Pristina continues to be a delicate political 
issue for the GoM. 
 
 
 
 
 
Stable Political Situation, But Elections in March 
 
--------------------------------------------- ----- 
 
 
 
¶11. (SBU) Almost three years after the split from Serbia, no 
major political parties actively question Montenegro's 
independence.  The May 2006 referendum and subsequent September 
2006 parliamentary and April 2008 presidential contests met 
international standards for free and fair elections.  In October 
2007, Montenegro adopted a new Constitution through democratic 
debate. 
 
 
 
¶12. (SBU) In late January, at the request of the GoM, Parliament 
voted to curtail its mandate.  President Vujanovic then set 
March 29 as the date for election of a new parliament (ahead of 
the regular election scheduled for   late 2009).  The election 
campaign will be in its early stages at the time of your visit 
and is likely to delay major political decisions until later in 
the year.  The ruling Democratic Party of Socialists (DPS) - 
Social Democratic Party (SDP) coalition is the heavy favorite to 
return to power. 
 
 
 
¶13. (SBU) Montenegro signed a Stabilization and Association 
Agreement (SAA) with the European Union in October 2007, and 
formally applied for candidate status in December 2008. 
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). 
 
 
 
¶14. (SBU) President of the ruling Democratic Party of Socialists 
 
PODGORICA 00000035  003.2 OF 004 
 
 
(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 has stated repeatedly that his government's 
primary foreign policy goals are EU and NATO membership, and he 
speaks candidly about the U.S. as Montenegro's "strategic 
partner." 
 
 
 
¶15. (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 has been slow, as the smaller coalition partner, 
the Social Democratic Party (SDP), is hesitant to cede state 
control in these sectors. Though the DPS and SDP have differing 
opinions on the state's role in strategic industries, they have 
put them aside and agreed to run again as a coalition in the 
parliamentary election this March. 
 
 
 
¶16. (SBU) The opposition is fractious and to date has been 
ineffective in presenting a serious challenge to the DPS. 
Several opposition parties are currently discussing the 
possibility of cooperating in the March elections.  Most 
opposition parties either oppose or straddle the fence on the 
issue of NATO membership for Montenegro.  Almost all, however, 
are in favor of EU membership. 
 
 
 
 
 
Fighting Corruption 
 
------------------- 
 
 
 
¶17. (SBU) As in other southeastern European countries, 
corruption exists at all levels of government and society. Many 
Montenegrin citizens list corruption as the country's biggest 
problem (along with low living standards).  The GoM has 
published an Action Plan for fighting corruption, and issues 
semiannual reports on its progress, but successful prosecutions 
and punishment are still rare. 
 
 
 
 
 
Attracting Investment 
 
---------------------- 
 
 
 
¶18. (U) Montenegro has been successful in attracting significant 
foreign direct investment (FDI), though so far little of that 
has been from the U.S.  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 percent 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 (nine percent) 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. 
 
 
 
¶19. (SBU) 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. 
 
 
 
 
PODGORICA 00000035  004.2 OF 004 
 
 
¶20. (U) Despite impressive recent trends, the global economic 
crisis will not completely bypass Montenegro. The country's GDP 
growth of the past two years - seven percent in 2007 and eight 
percent in 2008 - is likely to slow considerably in 2009, with 
the IMF and World Bank estimating that it will fall to roughly 
two percent. 
MOORE