VZCZCXYZ0001
RR RUEHWEB

DE RUEHBW #0799/01 2171200
ZNR UUUUU ZZH
R 051202Z AUG 09
FM AMEMBASSY BELGRADE
TO RUEHC/SECSTATE WASHDC 0125
INFO RUEHBW/AMEMBASSY BELGRADE

UNCLAS BELGRADE 000799 
 
SENSITIVE 
SIPDIS 
DEPT FOR EUR/OHI - JOHN BECKER AND EUR/SCE 
 
E.O. 12958: N/A 
TAGS: ECON KIDE KPRV CASC SR
SUBJECT: SERBIA: VOTE ON PROPOSED LAW ON PLANNING AND CONSTRUCTION 
DELAYED 
 
REF: BELGRAGE 725; BELGRADE 791 
 
SUMMARY 
------- 
 
¶1. (SBU) Serbia's parliament delayed voting on the controversial 
draft law on Planning and Construction, postponing it until August 
31, after the parliament's summer recess.   The law continues to be 
controversial due to its potential to negatively affect future 
restitution claims, causing the ire of U.S. citizens, the Serbian 
Orthodox Church, Jewish groups, and American and Serbian 
organizations (ref A).  In our continued efforts to voice our 
concerns about the proposed legislation and the need for a fair and 
transparent approach to restitution, the Charge spoke to President 
Boris Tadic's office, Finance Minister Diana Dragutinovic, and 
Parliament Speaker Slavica Djukic-Dejanovic.  Despite the controversy 
we expect the government will have a sufficient majority to pass the 
legislation through parliament.  End Summary. 
 
VOTING POSTPONED 
---------------- 
 
 
¶2.  (SBU) According to our sources and the media, the Law on Planning 
and Construction, along with 23 other pieces of legislation, was 
scheduled to go to Parliament for a vote on July 31.  However, 
Parliamentary Speaker Slavica Djukic-Dejanovic announced on July 30 
that voting on the laws was postponed for August 31.  She denied 
speculation that the postponement was due to disagreement within the 
ruling coalition over a disputed bill on changes and amendments to 
the media law (ref B).  The Planning and Construction Law would allow 
usage right holders to convert their usage right to full private land 
ownership, free of charge, while lease holders could convert to 
ownership by paying the whole lease amount plus one percent.  Usage 
rights acquired through privatization could be converted by paying 
the difference between the market value of the land at the time of 
conversion and the cost of acquiring the land.  Fifty percent of the 
proceeds from the conversions would go to local government budgets 
and 50% would go to a national restitution fund. 
SPEAKER DJUKIC-DEJANOVIC: THE LAW IS NEEDED 
------------------------------------------- 
 
¶3.  (SBU) On July 27, the Charge met with Speaker Djukic-Dejanovic to 
express our concerns that a restitution law would not precede the Law 
on Planning and Construction, that there is a lack of clarity about 
any proposed restitution, and that the Planning and Construction Law 
could have a negative effect on Serbia's investment climate.  In 
response to the Charge's concerns that a restitution law should 
precede the Construction Law, Djukic-Dejanovic said she understood 
the USG's concerns about restitution claimants from the diaspora in 
the United States and about the investment climate but that the 
Planning and Construction Law was needed and that the law's drafter, 
Minister of Environment and Zoning Oliver Dulic (DS), believed in the 
bill as drafted.  Djukic-Dejanovic said a forthcoming Restitution 
Law, was also a priority piece of legislation for later in the year, 
but that she could not tell any ministry to hurry up its work in 
drafting legislation.  But she said she hoped for a restitution law 
by the end of the calendar year. 
 
FINANCE MINISTER DRAGUTINOVIC: RESTITUTION IS COSTLY 
--------------------------------------------- ------- 
 
¶4.  (SBU) In a July 24 meeting with the Charge, Finance Minister 
Dijana Dragutinovic admitted that she had not closely followed the 
issues associated with the Planning and Construction legislation. 
She assured the Charge that the government understood the necessity 
to address restitution and that her ministry was preparing 
legislation for later in the year.  Her ministry's main concern, 
however, was to make certain that any future restitution law was not 
too great of a financial burden to Serbia.  Serbia needed a 
restitution law, and the future law should not create "new 
injustices," she said.  Dragutinovic said any future burden from 
restitution needed to be "feasible and fixable." 
 
ORTHODOX CHURCH: LACK OF PRIVATE CLAIMANT RESTITUTION LAW UNFAIR 
--------------------------------------------- ------------ 
 
¶5. (SBU) The Charge met with Serbian Orthodox Church (SOC) spokesman 
and Bishop of Backa Irinej on July 29 to discuss the SOC's messages 
to the government about the proposed law.  Irinej confirmed he had 
tried to speak with President Boris Tadic, Prime Minister Mirko 
Cvetkovic, and Minister Dulic to protest the legislation and to argue 
that a restitution law be enacted first.  Although Irinej did not 
speak to Tadic, he said he spoke to Tadic's chief of staff Miki Rakic 
and Minister Dulic, but neither was receptive to his message.  Irinej 
said it was unfair that there was already a restitution law for 
religious organizations, but not one for private claimants.  He was 
concerned, like many others, that the proposed Planning and 
 
 
Construction Law would restrict a future restitution law and prevent 
claimants from getting their land back.  He admitted that Serbia 
could not afford to compensate all restitution claimants, but said it 
needed to return something.  Irinej said Serbia should have settled 
restitution issues before privatizing companies, but Serbia should 
now compensate those claimants whose property was sold during the 
privatization process. 
 
PRESIDENT'S OFFICE:  LAW NEEDED TO PLACATE LABOR 
--------------------------------------------- ---- 
 
¶6.  (SBU) A Tadic advisor told the Charge on July 30 that the 
Planning and Construction Law was necessary and that the government 
was determined to see it through as soon as possible.  He said funds 
raised from the enactment of the Planning and Construction Law would 
be divided between future restitution claims and paying workers' 
benefits in the fall.  The law was an important gesture to workers, 
the source said. 
 
CLAIMANTS CONTINUE TO WEIGH IN 
------------------------------ 
 
¶7.  (U) On July 29, local organizations Club 21 and the Serbian 
League held a press conference to outline what they saw as the 
negative effects of the proposed law.  Club 21 Coordinator Dusan 
Janjic asserted that the law was designed to maintain tycoons' 
empires by giving them clear property titles that they could use to 
take out loans.  He added that the implementation of the law would 
delay Serbia's entry into the EU.  Mahmud Busatlija of Club 21 said 
the law would not solve Serbia's property rights issue.  He 
maintained that even if the law were passed, restitution claimants 
would challenge the law in domestic and international courts, seeking 
restitution in kind and further compensation. 
 
COMMENT 
------- 
 
¶8.  (SBU) Despite the numerous domestic and international concerns 
against the proposed Law on Planning and Construction, the GoS is 
determined to see it pass.  The parliament's delay on voting on the 
law is merely a temporary measure caused by larger controversies 
surrounding other pending legislation, specifically the media law. 
The government's ad hoc, stove-piped approach to developing and 
handling this legislation is a further indication of the deeper 
fractures facing the coalition.  Of equal concern is the government's 
intention to partially use potential funds for workers' benefits in 
order to placate growing social discontent with the government.  Its 
willingness to prefer short term solutions over necessary longer term 
structural change may ultimately cost Serbia in terms of future 
foreign investment and a transparent business climate.  End Comment. 
BRUSH