VZCZCXRO0674
OO RUEHIK
DE RUEHPS #0541/01 3421620
ZNR UUUUU ZZH
O 081620Z DEC 09
FM AMEMBASSY PRISTINA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 9528
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE
RUEHNO/USMISSION USNATO 1287
RUFOADA/JAC MOLESWORTH RAF MOLESWORTH UK
RUCNDT/USMISSION USUN NEW YORK 1824
RHFMIUU/AFSOUTH NAPLES IT
RHMFISS/CDR TF FALCON
RHEFDIA/DIA WASHDC
RUEKJCS/SECDEF WASHINGTON DC
RUEPGEA/CDR650THMIGP SHAPE BE
RHEHNSC/NSC WASHDC
RUEAWJA/DEPT OF JUSTICE WASHDC
RHMFIUU/DEPT OF HOMELAND SECURITY WASHDC
RUEHC/DEPT OF LABOR WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RUZEJAA/USNIC PRISTINA SR

UNCLAS SECTION 01 OF 02 PRISTINA 000541 
 
SIPDIS 
SENSITIVE 
 
DEPT FOR EUR/SCE, EUR/PGI, INL, DRL, PRM, USAID 
 
E.O. 12958: N/A 
TAGS: ECON ENRG PGOV KV SR
SUBJECT:  KOSOVO: SERBIA ATTEMPTS TO HIJACK ELECTRICAL SERVICE AREA 
IN THE NORTH 
 
REF:  A) PRISTINA 522 AND PREVIOUS 
      B) BELGRADE 1314 
 
PRISTINA 00000541  001.2 OF 002 
 
 
SENSITIVE BUT UNCLASSIFIED Q PLEASE PROTECT ACCORDINGLY 
 
¶1. (SBU) SUMMARY:  A dispute between Serbia and Kosovo over control 
of the Valac substation and electricity distribution in the northern 
part of Kosovo has escalated, with Serbian state-owned firms 
unilaterally declaring new "service territories" covering Kosovo's 
northern municipalities.  This reassignment of power lines is 
illegal under UNSCR 1244, as well as both a usurpation of property 
and an implicit expropriation of the Ujmani hydro-electric plant 
located in the north of Kosovo.  Serbia's electricity transport 
utility has also assigned an unlicensed entity as the "authorized" 
power distributor in these new service areas.  Claims by Serbian 
state-owned firms that their actions were taken to avert a 
humanitarian crisis ring false, as the Serbian side is yet to 
respond to six weeks of requests by the Kosovo Energy Corporation 
(KEK) to reconnect the North to additional power supply from Obilic. 
 Serbian entities also continue to ignore a proposed commercial 
resolution to the dispute tabled six months ago.  Regular monthly 
meter reading by KEK at Valac could serve as a test case to reassert 
KEK's access to its property, but Western powers should also 
demarche Belgrade at the highest levels to underscore that 
usurpation of property and partition are antithetical to Serbia's 
aspirations for European and Euro-Atlantic integration, and will be 
met with a determined response by the international community.  END 
SUMMARY 
 
SERBIA DECLARES NEW SERVICE TERRITORY BOUNDARIES 
--------------------------------------------- --- 
 
¶2. (SBU) On December 4, 2009, the Serbian state-owned electric power 
transport company Elektromreza Srbije (EMS) sent a fax to Kosovo's 
power transport firm KOSTT that effectively annexed the northern 
part of Kosovo as its service territory.  Though couched in 
technical language, the letter essentially told Kosovo's power 
distributor Kosovo Energy Corporation (KEK) and the Kosovo 
Electricity Transmission System and Market Operator (KOSTT) that 
there are new boundaries for electricity.  According to the letter, 
henceforth, lines connecting the south of Kosovo to Valac substation 
in Zvecan are "external links" connecting Kosovo to Serbian service 
territory, while a 110 kV line connecting Novi Pazar, Serbia with 
Valac is internal to EMS's system.  By extension, power lines within 
Kosovo that are the exclusive property of KOSTT, have been declared 
property of EMS.  Additionally, while not explicitly mentioned, the 
rearrangement of lines and the reassignment of service areas 
implicitly require the expropriation of the Ujmani hydro-electric 
plant, located in Zubin Potok. 
 
POWER DISTRIBUTION VIA A DISPUTED, UNLICENSED ENTITY 
--------------------------------------------- ------- 
 
¶3. (SBU) In addition, EMS's December 4 letter also assigns "P.E. 
Elektrokosmet Pristina" as the authorized power distributor for the 
northern part of Kosovo.  (Note:  We forwarded a copy of the letter 
to EUR/SCE and Embassy Belgrade on December 7.  End Note) 
Elektrokosmet does not hold a license for power distribution from 
Kosovo's Energy Regulatory Office, a body established by UNMIK 
regulation, and so such a designation is a violation of the law. 
Moreover, Elektrokosmet was one of the precursor companies to KEK, 
and its assets were explicitly assigned to KEK in December 2005 by 
UNMIK and the Kosovo Trust Agency. 
 
FALSE CLAIMS REGARDING NEOGTIATIONS 
----------------------------------- 
 
¶4. (SBU) The EMS letter further claims that "these steps were 
provoked by non-selective load shedding of the households supplied 
from SS Valac beyond any technical justification, and taken in order 
to avoid a possible humanitarian disaster and to ensure the security 
of supply for [the] winter season."  Such claims fail to pass the 
laugh test, since the Serbian side has ignored six weeks of offers 
 
PRISTINA 00000541  002.2 OF 002 
 
 
by KEK to reconnect Valac (and the north of Kosovo) to power 
generation capacity in Obilic, Central Kosovo that would 
substantially increase supply to the north.  Moreover, Serbian 
Government ministries and state-owned firms have failed to offer a 
substantive response to a potential commercial resolution of the 
dispute (through a subcontracting agreement) that has been on offer 
for six months. 
 
MONTHLY METER READ A TEST CASE 
------------------------------ 
 
¶5. (SBU) EMS's letter escalates the dispute over Valac, but the 
requirement for KEK to read the meters there could help KEK to 
reestablish access to, and reassert control of, its asset.  KEK 
employees, with an escort by the Kosovo Police, have read the meters 
on high voltage lines at Valac on a monthly basis for years.  This 
standard operating practice, which takes five minutes and was most 
recently done in October, is part of an effort to account for 
electricity received from and sent to Serbia from Kosovo.  Since 
KFOR and EULEX recently established perimeters around Valac (Ref A), 
the Kosovo Police sent KEK's most recent request, for the December 
read, to EULEX for action.  By facilitation of KEK's request for 
access to the station, EULEX and KFOR will establish that their 
security cordons are not designed to freeze an illegal status quo in 
place, but will be used to support freedom of movement and KEK's 
heretofore undisputed claims to its property.  COMKFOR has agreed to 
support such a request; Yves de Kermabon, head of EULEX, has punted, 
saying he requires guidance from Brussels. 
 
COMMENT 
------- 
 
¶6. (SBU) We deem it highly unlikely that EMS's letter, a serious 
action by a Serbian state-owned firm, was done without coordination 
with official Belgrade; this dashes any hopes we harbored that this 
dispute was simply the work of northern Kosovo hotheads.  Likewise, 
it is clear, in our view, that the commercial negotiations on an 
electricity services company (ESCO) agreement for the northern part 
of Kosovo have reached a dead end for now.  The monthly meter read 
by KEK provides an opportunity to reestablish access to Valac, and 
by extension KEK's ownership of northern electricity assets, and to 
demonstrate our resolve to defend KEK's rights (and by extension, 
Kosovo's sovereignty in the north).  We believe that a strong 
response, supporting KEK's access on the ground, coupled with a 
tough demarche in Belgrade is the best way to convince the GOS that 
its current course of action will fail and thus to get them to 
refocus on a commercial (ESCO) solution.  We would recommend that 
the demarche to Belgrade be delivered at the highest level and that 
it emphasize 1) that blatant disregard for UNSCR 1244 and moves to 
partition are illegal and inconsistent with Serbia's ambition for 
European and Euro-Atlantic integration; and, 2) continuing down this 
path will be met by a determined response from KFOR, EULEX and the 
international community.  Depending on the result of DAS Jones' 
discussions in Brussels December 10, such a message could be 
coordinated with Quint countries for increased effect. 
 
DELL