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OO RUEHAG RUEHAST RUEHDA RUEHDBU RUEHDF RUEHFL RUEHIK RUEHKW RUEHLA
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DE RUEHPOD #0119/01 1321716
ZNR UUUUU ZZH
O 121716Z MAY 09
FM AMEMBASSY PODGORICA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 1313
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE
RUEHPOD/AMEMBASSY PODGORICA 1402

UNCLAS SECTION 01 OF 04 PODGORICA 000119 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: PREL PGOV ECON MW
SUBJECT: SCENESETTER FOR THE VISIT OF THE DEPUTY SECRETARY TO 
MONTENEGRO 
 
PODGORICA 00000119  001.2 OF 004 
 
 
¶1. (SBU) SUMMARY:  You are the highest-level State Department 
official to visit Montenegro since its independence in 2006, and 
your arrival represents a major milestone in our bilateral 
relationship and a great opportunity for us to advance our 
broader goals in this region.  I recommend that two themes 
dominate the visit:  a) building on our close bilateral 
partnership, and b) promoting Montenegro as a positive model 
that can help bring lasting stability throughout the Balkans. 
 
 
 
¶2. (SBU) We have a significant interest in helping Montenegro 
become the next Balkan success story, an achievable goal that 
would generate positive reverberations in Serbia, Bosnia, and 
elsewhere.  Alone among the non-NATO ex-Yugoslav states, 
Montenegro faces no daunting obstacles to NATO and the EU, and 
the country's stable, pro-U.S. leadership is intent on bringing 
Montenegro into those organizations as soon as possible. 
Moreover, Montenegro is unique in the Balkans in having built 
positive relationships with all other countries in the region 
(including Kosovo) and can potentially play a moderating role. 
 
 
 
¶3. (SBU) Your visit can help accelerate Montenegro's timeline 
for success by building on the encouraging signals from the 
April NATO Summit.  Montenegro hopes to be invited into NATO's 
Membership Action Plan (MAP) in 2009 and will appreciate your 
views as to its prospects.  Given Montenegro's strong ties with 
all the other Balkan countries, you could also encourage the 
President and Prime Minister to help us move our agenda forward 
elsewhere.  END SUMMARY. 
 
 
 
Stable, Pro-Western Democracy 
 
----------------------------- 
 
 
 
¶4. (SBU) Montenegro has come a long way in the three years since 
independence from the state union with Serbia.  The country has 
held democratic elections, built state institutions, privatized 
and grown its economy, adeptly managed relations among its 
ethnic groups (Montenegrins, Serbs, Muslims, Bosniaks, 
Albanians, Croats, Roma, and others), and launched an ambitious 
drive for full Euro-Atlantic integration.  There is a general 
societal consensus for EU membership (although not yet for 
NATO), and the Government is wholeheartedly gunning for early 
accession to NATO and the EU.  Moreover, none of the complex 
obstacles tripping up other non-NATO Balkan states 
(constitutional issues, name disputes, recognition, ICTY, 
Kosovo, etc.) stands between Montenegro and achievement of this 
goal. In short, Montenegro has all the ingredients to be a 
success story -- a market-based democracy anchored in the key 
Euro-Atlantic institutions.  Such success would reverberate 
positively throughout the region, especially in Serbia and 
Bosnia. 
 
 
 
¶5. (SBU) A few possible bumps lie in the road.  One is 
Montenegro's small size - despite its progress, it has had 
difficulty getting the attention of its Western partners. 
Secondly, some European states continue to lean in the direction 
of instinctively lumping Montenegro in with other countries in 
the region, rather than fostering Montenegro as a positive model 
that can have a "pulling effect" on other Balkan states lagging 
behind.  Finally, Montenegro has a major challenge in overcoming 
an at least partly-deserved reputation for problems in the rule 
of law area   (more below). 
 
 
 
¶6. (SBU) Pre-term parliamentary elections in late March resulted 
in a landslide victory for Prime Minister (PM) Djukanovic's 
ruling Democratic Party of Socialists (DPS) - Social Democratic 
Party (SDP) coalition - now including Bosniak and Croat parties 
- over a fragmented and fractious opposition.  As was the case 
with the 2006 independence referendum and subsequent polls, the 
OSCE assessed this election as generally meeting international 
standards.  PM-designee Djukanovic, who will head the GoM for 
the sixth time, has pledged to intensify Montenegro's drive for 
EU and NATO membership. 
 
 
 
Strong Bilateral Relationship 
 
----------------------------- 
 
PODGORICA 00000119  002.2 OF 004 
 
 
 
 
 
¶7. (SBU) Montenegro's pro-American leadership views us as a 
strategic ally and is genuinely grateful for critical U.S. 
assistance which helped keep the country afloat after Montenegro 
broke with Milosevic in the late 90s.  The GoM generally 
supports U.S. priorities, sometimes at considerable political 
risk.  For example, the GoM is enthusiastically pursuing NATO 
membership despite limited public support, and it recognized 
Kosovo in October 2008 over virulent domestic opposition and 
dire warnings from neighboring Serbia. 
 
 
 
¶8. (SBU) In addition, since independence, Montenegro has signed 
Article 98 and Status of Forces agreements and destroyed almost 
90 percent of its Man Portable Air Defense Systems (MANPADs) 
under a USG program.  In September 2007, at the USG's behest, 
Montenegro donated more than 1,500 small arms weapons and 
200,000 rounds of ammunition to Afghanistan.  In December 2007, 
it signed a transit agreement allowing NATO to supply KFOR. 
None of these actions was domestically popular. 
 
 
 
¶9. (SBU) In October 2007, at the USG's request, the GoM 
committed to send troops from its fledgling military to Iraq. 
Before that commitment could be fulfilled, the GoM agreed to a 
new USG request to deploy an infantry platoon to the 
International Security Assistance Force (ISAF) mission in 
Afghanistan.  In late April, Montenegro contracted U.S. firm 
MPRI to train two platoons, one of which is expected to deploy 
with a German outfit by the end of the year (the other will 
rotate in after six months).  Montenegro also will send a 
three-man medical team to the ISAF in August.  I suggest that 
you ask the Prime Minister to provide a firmer timeline as to 
when the first Montenegrin platoon will arrive in Afghanistan. 
 
 
 
¶10. (SBU) Embassy Podgorica is almost alone among EUR posts in 
not issuing visas.  This is a major bilateral issue which we 
hear about almost daily from a wide range of interlocutors. 
While we have made no public announcements, we expect to begin 
issuing visas in mid-July.  You may wish to inform the President 
and Prime Minister of our plans to do so. 
 
 
 
Pushing Hard For EU and NATO 
 
---------------------------- 
 
 
 
¶11. (SBU) EU and NATO membership are the GoM's top strategic 
goals.  Montenegro applied for candidate status in the EU in 
December 2008.  In April, the European Commission began its 
assessment (the "avis"), which could eventually result in 
Montenegro being granted formal candidate status, perhaps in the 
latter part of 2010. 
 
 
 
¶12. (SBU) The GoM also is pushing hard to integrate with NATO - 
and has made notable progress.  Montenegro was invited to 
Intensified Political Dialogue at the 2008 Bucharest Summit, and 
it received a very positive PARP assessment earlier this year. 
The April 2009 Summit communiqui was a major success for 
Montenegro, as the Alliance sent strong signals that Montenegro 
is on the fast track to MAP. 
 
 
 
¶13. (SBU) The GoM hopes to receive a MAP invitation at or before 
the December NATO ministerial, and initial soundings suggest 
that Allies believe this is achievable.  The GOM would welcome 
your views as to whether the USG will support Montenegro joining 
MAP in 2009. 
 
 
 
¶14. (SBU) Public support for NATO is still somewhat tepid, in 
significant measure due to memories of the 1999 NATO 
intervention.  According to recent polls, public support stands 
slightly above 30 percent, with another 40 percent opposed and 
the remainder undecided.  The GOM, assisted by NGOs, has 
initiated an aggressive communications strategy to increase 
public support for membership. 
 
 
PODGORICA 00000119  003.2 OF 004 
 
 
 
 
Positive Regional Role 
 
---------------------- 
 
 
 
¶15. (SBU) Montenegro has been a constructive regional player, 
building good relations with all its neighbors.  It actively 
participates in numerous regional initiatives (such as CEFTA, 
which it currently chairs, SECI, the Stability Pact, etc.). 
Montenegro and Croatia recently agreed to refer a dispute over 
their maritime border (at the entrance to Kotor Bay) to the ICJ, 
offering a potential model for resolution of similar disputes 
elsewhere in the region. 
 
 
 
¶16. (SBU) The GoM recognized Kosovo in October over widespread 
opposition, including large demonstrations.  Ethnic Serbs, a 
third of the population, were particularly incensed.  The GoM 
put off establishing diplomatic relations with Pristina until 
after the March elections, and continues to treat the issue 
gingerly.  Nevertheless, the governments of Montenegro and 
Kosovo continue to interact regularly at senior levels, and 
there has been substantial cooperation among police, border, and 
customs officials.  Moreover, the GoM joined us in supporting 
Kosovo's membership in the IMF and World Bank. 
 
 
 
¶17. (SBU) President Vujanovic has announced that he wants the 
GoK to officially recognize Kosovo's Montenegrin minority and to 
establish conditions for the return of some of the 16,000 
refugees from Kosovo (many of whom are Roma) who now live in 
Montenegro.  However, the President has assured us that these 
are not conditions, and FM Rocen told us recently that the GoM 
still intends to establish diplomatic relations soon (he said 
the GoM is still waiting for a diplomatic note from Pristina to 
initiate the process of establishing relations).  I recommend 
that you ask the Prime Minister as to when he expects diplomatic 
relations to be formalized. 
 
 
 
¶18. (SBU) Kosovo recognition strained official relations with 
Serbia, which promptly expelled Montenegro's ambassador last 
October.  However, bilateral trade and working level cooperation 
in other areas have continued.  Moreover, President Vujanovic 
will meet with President Tadic on May 18 in Belgrade in a bid to 
place relations on a stronger footing.  You may wish to discuss 
with President Vujanovic and the PM ways in which the GOM can 
urge other leaders in the region to play more helpful roles. 
 
 
 
Achilles Heel:  Rule of Law? 
 
---------------------------- 
 
 
 
¶19. (SBU) Montenegro has made significant progress in overcoming 
its 1990s reputation as an organized crime hub.  According to 
Transparency International and Freedom House rankings, it is 
about even with or ahead of most of its neighbors in corruption 
perceptions (as well as in most other democracy measures). 
However, as in other transition countries, it still faces 
significant rule of law challenges. 
 
 
 
¶20. (SBU) Montenegro is located at an historic smuggling 
crossroads, and law enforcement officials and the judiciary are 
underfunded and underequipped.  Many Montenegrins list 
corruption among the country's biggest problems, and some worry 
that the ruling coalition's dominance will dampen the GoM's 
desire to vigorously identify and prosecute graft.  The Embassy 
has made strengthening Montenegro's ability to fight crime and 
corruption a top priority, and we recently established a 
Resident Legal Advisor office headed by a veteran U.S. federal 
prosecutor.  GoM leaders understand that rule of law issues must 
be addressed for Montenegro to enter the EU and NATO.  Still, I 
would recommend that you remind them that continued progress in 
this area will be critical to sustained momentum toward full 
membership in NATO and the EU. 
 
 
 
Global Crisis Meets Booming Economy 
 
PODGORICA 00000119  004.2 OF 004 
 
 
 
----------------------------------- 
 
 
 
¶21. (SBU) Montenegro's economy, fueled by a boom in coastal 
tourism and investment, expanded rapidly over the past few 
years.  During this period the GoM also tamed inflation, moved 
closer to WTO membership, privatized almost 90 percent of the 
economy, and created a generally business-friendly environment. 
The result has been the highest per capita rate of FDI in the 
region. 
 
 
 
¶22. (SBU) Although we recently helped establish an AmCham and a 
U.S.-Montenegro Business Council, U.S. trade and investment 
remain at disappointingly low levels.  However, the GoM plans 
billions of euros worth of tenders over the next two years in 
infrastructure, tourism, and energy, and is eagerly courting 
U.S. investors, in part to balance against heavy Russian 
investment, most of which occurred earlier in the decade.  (In 
2008, Russia ranked number one in terms of aggregate FDI to 
date).  We have not seen indications that the Russian economic 
presence has translated into political or diplomatic influence. 
 
 
 
¶23. (SBU) Montenegro's narrow economic base makes it vulnerable 
to the global economic crisis, which is expected to bring growth 
(eight percent in 2008) to a virtual standstill this year. 
Montenegro's largest employer, a Russian-owned aluminum plant, 
is near bankruptcy, tourist numbers are down (tourism accounts 
for about 20 percent of GDP), the country's largest domestic 
bank (majority-owned by the PM's family) required a bailout in 
December, and the rest of the banking sector remains vulnerable. 
 
 
 
 
¶24. (SBU) The economic crisis could exacerbate economic 
conditions in northern Montenegro, which trails the more 
prosperous south and center of the country in virtually every 
developmental index.  This region is potentially vulnerable, as 
it is home to the majority of Montenegro's anti-independence 
Serbs, as well as significant numbers of Muslims and Albanians. 
To mitigate risks, the Embassy has launched a $10 million USAID 
program to stimulate private sector growth in this region. 
MOORE