VZCZCXRO5974
PP RUEHAG RUEHAST RUEHDA RUEHDBU RUEHDF RUEHFL RUEHIK RUEHKW RUEHLA
RUEHLN RUEHLZ RUEHNP RUEHPOD RUEHROV RUEHSK RUEHSR RUEHVK RUEHYG
DE RUEHBW #0173/01 0601139
ZNR UUUUU ZZH
P 011139Z MAR 09
FM AMEMBASSY BELGRADE
TO RUEHC/SECSTATE WASHDC PRIORITY 1014
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE
RHEHNS/NSC WASHDC
RUZEJAA/JAC MOLESWORTH RAF MOLESWORTH UK
RHMFISS/HQ USEUCOM VAIHINGEN GE
RUCNDT/USMISSION USUN NEW YORK 0059

UNCLAS SECTION 01 OF 02 BELGRADE 000173 
 
DEPT FOR EUR/SCE (P. PETERSON) 
 
SENSITIVE 
SIPDIS 
 
E.O.12958: N/A 
TAGS: PGOV PREL SR
SUBJECT: SERBIA'S YEAR OF UNREALIZED FEARS AND UNFULFILLED 
POTENTIAL 
 
Summary 
------- 
 
¶1.  (SBU) One year after Boris Tadic's reelection as president of 
Serbia, the country has achieved several notable successes.  Rather 
than succumbing to nationalism in the wake of Kosovo's declaration 
of independence, its citizens elected a new government that declared 
European Union membership its top strategic goal, arrested war 
crimes indictee Radovan Karadzic, and took several important steps 
toward institutional reform and economic recovery.  Despite these 
achievements, however, the government has frequently strayed from 
its commitment to move the country forward, maintaining a rigid and 
unhelpful stance toward Kosovo, antagonizing the European Union, and 
strengthening its ties to Russia and the countries of the 
Non-Aligned Movement.  Tadic, though hesitant, is the only leader 
capable of refocusing Serbian political practices on the goal of a 
European future.  We should help him where we can, and press him 
where we must, to achieve what he set out to accomplish with his 
victory a year ago.  End Summary. 
 
 
Domestic Stability 
------------------ 
 
¶2.  (SBU) Following Boris Tadic's February 2008 reelection as 
president of Serbia by a narrow margin over then-Radical leader 
Tomislav Nikolic, it was not clear how the Serbian government then 
led by Democratic Party of Serbia (DSS) head Vojislav Kostunica 
would react to Kosovo's impending declaration of independence.  The 
worst-case scenarios involved widespread protests, violence and 
population movements; while those did not come to pass, the 
demonstrations orchestrated by DSS leadership that resulted in 
attacks on the U.S. and other embassies severely damaged Serbia's 
international image.  A year later, most Serbians have grudgingly 
accepted that Kosovo is no longer part of Serbia.  In recent polls 
the question of Kosovo has fallen to fifth or sixth place among 
citizens' priorities, trailing economic and other real-world 
issues. 
 
¶3.  (SBU) The Serbian public demonstrated its priorities in the May 
2008 parliamentary and local elections, in which Tadic's Democratic 
Party (DS) was able to cobble together a government committed to a 
platform of European integration and DSS lost power.  The coalition 
government formed in July 2008 under Prime Minister Mirko Cvetkovic 
identified European Union membership as its top goal.  In an 
important break with the past, the Socialist Party (SPS) of former 
strongman Slobodan Milosevic joined the democratic government after 
shifting the party's platform and rhetoric to explicitly support 
Serbia's EU aspirations.  The July 2008 arrest and extradition of 
ICTY indictee Radovan Karadzic, which triggered only limited public 
demonstrations, created high expectations that the new government 
would be willing and able to tackle the many sensitive issues facing 
the country. 
 
¶4.  (SBU) Despite its early successes and its clear mandate to take 
the country to Europe, the new government has not moved boldly.  A 
lack of strategic vision at the top has been compounded by the 
difficulty of achieving consensus among the 19 parties in the 
governing coalition, the lack of a true interagency coordination 
process, and the dominance of President Tadic in policy areas 
normally the domain of the Prime Minister.  The result has been a 
government of individual actors following their own visions rather 
than a team pursuing agreed goals.  While there have been a few 
tangible successes, including improved ICTY cooperation and the 
passage of important anti-corruption and judicial reform 
legislation, the government has been slow to propose reform 
legislation and the Parliament even slower to vote on it.  Much of 
the fall and winter was consumed with rumors of new parliamentary 
elections aimed at consolidating the Democratic Party's popularity 
gains; thankfully, the leadership appears to have realized that the 
Serbian public is sick of endless election cycles and decided to 
make the current coalition work for the time being. 
 
Economic Responsibility 
----------------------- 
 
¶5.  (SBU) The growing economic crisis was a definite factor in 
tamping down dreams of new and better parliamentary elections.  As 
the pinch of the financial crisis began to be felt in Serbia, in 
January President Tadic and his DS colleagues began to repeat the 
message that political stability was necessary to prepare Serbia for 
worse days ahead. 
 
¶6.  (SBU) Prime Minister Cvetkovic and his economic experts have 
taken several steps to shore up domestic and international 
 
BELGRADE 00000173  002 OF 002 
 
 
confidence in the Serbian economy, including agreeing to a Stand-By 
Arrangement with the IMF; backing the banking system with increased 
deposit insurance; postponing a problematic collective bargaining 
agreement; fighting to preserve the Fiat investment in Kragujevac; 
and unilaterally implementing the Interim Trade Agreement with the 
European Union in the face of significant political pressure. 
 
¶7.  (SBU) The government initially took some hits as a result of the 
Russia-Ukraine gas cutoff, which - coming on the heels of the 
agreement to sell the national oil company, NIS, to Gazprom at a 
bargain-basement price -- undermined the GOS argument that closer 
linkages with Russia would guarantee Serbia's energy security. 
President Tadic's success in obtaining emergency gas supplies from 
Hungary and Germany soon eclipsed the news stories about Russia, 
however, and even allowed Serbia to play the part of a responsible 
regional leader by sharing gas with Bosnia-Herzegovina. 
 
 
Aggressive and Inflexible Foreign Policy 
---------------------------------------- 
 
¶8.  (SBU) Unfortunately, Serbia's help to BiH during the gas crisis 
was one of the few bright spots in the country's relations with the 
region, the European Union, and the United States over the past 
year.  The expected chill in relations following Kosovo's 
declaration of independence was prolonged needlessly by a Serbian 
government "contact policy" barring cabinet-level or above meetings 
with the USG until October 2008.  While limiting his contact with 
the U.S. and the EU, for months Foreign Minister Jeremic traveled 
the globe to lobby against recognitions of Kosovo and for UN General 
Assembly support for an advisory opinion from the International 
Court of Justice on the legality of Kosovo's declaration of 
independence. 
 
¶9.  (SBU) The Serbian government argued that the ICJ referral would 
"compartmentalize" the Kosovo issue and allow it to address the real 
problems affecting the Serb minority in Kosovo; instead, the 
government has used the case to justify not taking any pragmatic 
steps that could possibly be construed as acknowledging Kosovo's 
sovereignty.  The GOS fought the deployment of the EULEX rule of law 
mission tooth and nail, acquiescing only after protracted UN 
negotiations resulting in the "Six Point Plan."  Although the 
Serbian government did then direct the Serb minority in Kosovo to 
accept rather than resist EULEX deployment, this significant step 
was immediately overshadowed by FM Jeremic's strident and puzzling 
condemnations of the EU for adding "new and unacceptable 
pre-conditions" for Serbia's membership.  The move not only negated 
EU goodwill resulting from the agreement on EULEX, it also ensured 
that EU countries would intervene only half-heartedly on Serbia's 
behalf with the Netherlands on the question of ICTY conditionality 
and unfreezing the Stabilization and Association Agreement.  The 
Serbian government's continued hesitation in engaging with EULEX has 
caused relations with the EU to deteriorate even further. 
 
¶10.  (SBU) While trumpeting EU membership as its top strategic goal, 
the Serbian government has devoted considerable energy to 
highlighting its relationship with Russia and to reclaiming the 
glory days of Yugoslav leadership of the Non-Aligned Movement.  It 
is not clear whether Serbian leaders are simply playing to the 
domestic audience, seeking to build up the country's importance in 
the eyes of the EU, establishing a network of ties to counterbalance 
the eventual obligations of EU membership, or simply preserving a 
"Plan B" in case the prospect of EU membership recedes. 
 
Comment 
------- 
 
¶11.  (SBU) Although today's Serbian government falls short of 
expectations, it is nevertheless a far cry from the belligerence of 
the Kostunica era and has the potential to be more constructive than 
it currently is.  The fact that the one-year anniversary of Kosovo's 
independence coincides with the arrival of the new U.S. 
administration provides an opportunity to urge the Serbian 
government to open a new chapter in its relations with its neighbors 
and the broader world.  Key to this process is President Tadic who, 
while often indecisive, remains broadly popular, free of the taint 
of corruption, and personally committed to a European future.  If 
Tadic moves forward, Serbia will move with him.  Yet this is still a 
traumatized country, given the events of the last two decades. 
Though many in Serbia will never fully recover from the final loss 
of Kosovo, a year marks a decent interval of mourning; we must 
continue to press Serbia to move beyond the conflicts of the past 
and claim its European future.  End Comment. 
 
MUNTER