VZCZCXRO2399
PP RUEHAG RUEHAST RUEHDA RUEHDBU RUEHDF RUEHFL RUEHIK RUEHKW RUEHLA
RUEHLN RUEHLZ RUEHNP RUEHROV RUEHSK RUEHSL RUEHSR RUEHVK RUEHYG
DE RUEHPOD #0198/01 2531225
ZNR UUUUU ZZH
P 101225Z SEP 09
FM AMEMBASSY PODGORICA
INFO RUEHC/SECSTATE WASHDC PRIORITY 1457
RUEKJCS/SECDEF WASHDC
RHEFDIA/DIA WASHINGTON DC
RUEHZL/EUROPEAN POLITICAL COLLECTIVE
RHMFISS/HQ USEUCOM VAIHINGEN GE
RUEHPOD/AMEMBASSY PODGORICA 1546

UNCLAS SECTION 01 OF 04 PODGORICA 000198 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: PREL PGOV ECON MARR MOPS MW
SUBJECT: SCENESETTER FOR ADRIATIC CHARTER CHOD CONFERENCE, SACEUR 
VISIT TO MONTENEGRO 
 
PODGORICA 00000198  001.2 OF 004 
 
 
¶1.  (SBU) SUMMARY: Welcome to Montenegro. Your visit comes as 
the Montenegrin leadership continues on its pro-NATO, 
pro-western course, 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. The MoD and MFA 
leadership have responded positively to the NATO Communiqui 
released after the April summit.  The GoM is making 
contributions to NATO peacekeeping operations, including plans 
to deploy its own military units to ISAF. The economy has been 
fueled heavily by FDI in the tourism sector, but faces slower 
growth in 2009 due in large part to the global economic crisis. 
END SUMMARY 
 
 
 
 
 
NATO Membership a Top GoM Priority 
 
----------------------------------- 
 
¶2. (SBU) The GoM has stated that NATO Membership is a strategic 
goal.  Montenegro was invited to Intensified Political Dialogue 
at the NATO Bucharest Summit in April 2008. Public support for 
NATO is still 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 several NGOs, has initiated a communications 
strategy to increase public support for membership among the 
population.  Montenegrin officials were encouraged by the 
positive statements on Montenegro in the NATO communiqui, and 
are lobbying for a MAP invitation at or before the December NATO 
ministerial. 
 
 
 
¶3. (SBU) Following independence from the state union with Serbia 
in 2006, and unlike most other ministries in the GoM, the 
Ministry of Defense (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. 
 
 
 
¶4. (SBU) The Montenegrin Armed Forces are led by Chief of 
Defense Admiral Dragan Samardzic.  Montenegro's outdated, 
ill-equipped military is still working to organize itself as a 
modern, NATO-interoperable force capable of contributing to 
international operations.  The latest Montenegrin Strategic 
Defense Review (SDR) calls for a 2400-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 can join NATO, but also is capable of 
homeland defense, assisting in civilian crisis management. 
 
 
 
¶5. (SBU) Montenegro continues to make forward progress in 
establishing its nascent defense institutions and future 
military structure.  This was validated by NATO's assessment 
team, in-country 26-28 January 2009 to look at the Montenegrin's 
Planning and Review Plan (PARP).  The MoD has received positive 
feedback on their reforms to date. Potential niche capabilities 
are in the areas of salvage and recovery operations, a regional 
demining diving center, mountain infantry, deployable medical 
teams, and potentially a regional helicopter training center. 
 
 
 
¶6. (SBU) In June 2008, Montenegro completed the destruction of 
1500 Strela Man Portable Air Defense Systems (MANPADs) under a 
two million dollar USG demilitarization program.  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 
 
PODGORICA 00000198  002.2 OF 004 
 
 
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 excess. 
 
 
 
¶7. (SBU) Montenegro has signed an Article 98 Agreement with the 
U.S. and plans on sending peacekeeping contingents to the Near 
East.  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 a U.S. firm (MPRI) to train 
two platoons, one of which is expected to deploy with a 
Hungarian unit based in Pol-i-Khomri under the command of German 
led Regional Command (North) (RC(N)) in February 2010 (the other 
will rotate in after four months).  Montenegro also has a 
three-man medical team ready to deploy now.  Montenegro's MoD is 
in active negotiations with Norway, Hungary and Germany to 
deploy their medical team.  Additionally, Montenegro plans to 
deploy two liaison officers (LNO) to the RC(N) headquarters in 
Mazar-e-Sharif by the end of September 2009. 
 
 
 
¶8. (SBU) Montenegro has recently started their training cycle 
with both MPRI, the Hungarian Armed Forces, and German 
Bundeswehr to assist in preparing their infantry company for 
deployments in support of International Security Assistance 
Force (ISAF). The Montenegrin Armed Forces are scheduled to 
finish this training in December of this year.  Montenegro also 
will look to Germany to fill some of the shortfalls in equipment 
and in preparing their forces for NATO inter-operability. 
 
 
 
 
 
Stable, Pro-Western Democracy 
 
----------------------------- 
 
¶9. (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.  A majority of the 
population support EU membership, and Montenegro formally 
applied for EU candidate country status 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. 
 
 
 
¶10. (SBU) Montenegro's pro-Western leadership views the U.S. as 
a strategic ally and is grateful for substantial 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 warnings from 
neighboring Serbia. 
 
 
 
¶11. (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 noted some problems but assessed this 
election as generally meeting international standards.  PM 
Djukanovic, heading the GoM for the sixth time, pledged to 
intensify Montenegro's drive for EU and NATO membership. 
 
 
 
 
 
 
PODGORICA 00000198  003.2 OF 004 
 
 
Playing a Positive Regional Role 
 
-------------------------------- 
 
¶12. (SBU) Montenegro is a member of the United Nations (UN), 
Organization for Security and Coordination in Europe (OSCE), and 
the Council of Europe.  It also has been a constructive regional 
player, building good relations with all its neighbors. 
Montenegro actively participates in numerous regional 
initiatives (such as CEFTA, which it currently chairs, SECI, the 
Stability Pact, etc.).  Montenegro and Croatia 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. 
 
 
 
¶13. (SBU) The GoM recognized Kosovo in October 2008 over 
widespread opposition, including large demonstrations.  Ethnic 
Serbs, roughly a third of the population, were particularly 
incensed.  The GoM has not yet established official diplomatic 
relations with Pristina, 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. 
 
 
 
 
 
Achilles Heel:  Rule of Law? 
 
---------------------------- 
 
¶14. (SBU) Montenegro has made significant progress in overcoming 
its 1990s reputation as a hub for smuggling and organized crime. 
 According to Transparency International and Freedom House 
rankings, it is about even with 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. 
 
 
 
¶15. (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 
leadership tells us that they understand that rule of law issues 
must be addressed for Montenegro to enter the EU and NATO. 
Still, the GoM will have to strengthen its record -- 
particularly in the enforcement area -- if it is to pass muster 
for full membership. 
 
 
 
Global Crisis Meets Booming Economy 
 
----------------------------------- 
 
¶16. (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. 
 
 
 
¶17. (SBU) Although the Embassy 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. 
 
 
 
 
PODGORICA 00000198  004.2 OF 004 
 
 
¶18. (SBU) Despite impressive recent trends, the economic growth 
seen in the past two years -- seven percent in 2007 and eight 
percent in 2008 -- is likely to slow considerably in 2009. 
Montenegro's narrow economic base makes it particularly 
vulnerable to the global economic crisis.  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. 
MOORE