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Viewing cable 10BELGRADE88, SERBIA SAYS KOSOVO ELECTRICITY OFFER IS INSUFFICIENT AND

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Reference ID Created Released Classification Origin
10BELGRADE88 2010-01-19 11:14 2011-08-30 01:44 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Belgrade
VZCZCXYZ0020
RR RUEHWEB

DE RUEHBW #0088/01 0192244
ZNR UUUUU ZZH
R 191114Z JAN 10
FM AMEMBASSY BELGRADE
TO RUEHC/SECSTATE WASHDC 0614
INFO EUROPEAN POLITICAL COLLECTIVE
RHMCSUU/EUCOM POLAD VAIHINGEN GE
UNCLAS BELGRADE 000088 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: PREL PGOV ETRD ENRG KV SR
SUBJECT: SERBIA SAYS KOSOVO ELECTRICITY OFFER IS INSUFFICIENT AND 
INSINCERE 
 
REF: PRISTINA 23 AND PREVIOUS; 09 BELGRADE 1314 
 
SUMMARY 
 
------- 
 
 
 
1.  (SBU) Serbia's lead electricity negotiator, Assistant Minister 
for Kosovo Dragan Petkovic, insists Serbia wants to find a solution 
to the ongoing electricity dispute in northern Kosovo, but says 
KEK's proposal is insufficient and its willingness to reconnect the 
north is insincere.  While Petkovic claims Serbia's electricity 
company EPS could now efficiently meet energy demand in the north, 
he acknowledged that Serbia's actions - particularly the billing of 
customers - were on shaky legal ground.   While he acknowledged KEK 
had normalized and improved service in the south, he said he 
suspected that KEK would cut off customers in the north in order to 
extract payment if the north were reconnected to KEK's grid.  While 
Serbia continues to call for goodwill on both sides to resolve the 
dispute, it is clear that the GoS is more concerned with saving 
face and expanding influence rather than meeting the needs of 
Kosovo Serbs.  End Summary. 
 
 
 
Serbia Claims to Be Working Toward Solution 
 
--------------------------------------------- 
 
 
 
2.  (SBU) Serbia wants to find a solution to the ongoing 
electricity dispute in northern Kosovo (refs), Assistant Minister 
for Kosovo Dragan Petkovic told us and Ben Crampton, Deputy of the 
EU's Personal Representative Office, on January 14.  Petkovic said 
he and EPS would meet the week of January 18 with KEK 
representatives "in order to harmonize positions."  Petkovic 
admitted that although KEK had presented the Serbian side an energy 
services contract (ESCO) proposal in May 2009, the GoS had yet to 
respond in writing with a counterproposal and had only made verbal 
suggestions to date.  Petkovic acknowledged Serbia needed to put a 
proposal in writing to show it was sincere about resolving the 
issue and said he was currently doing so.  He said, however, that 
Serbia could not use the KEK proposal as a starting point, since 
that proposal had only dealt with a possible ESCO for the enclaves, 
before that issue had been resolved. 
 
 
 
3.  (SBU) In defining Serbia's position, Petkovic said Serbia 
ideally wanted to establish a secondary service provider for all 
Serb areas of Kosovo.  He said at a minimum, Serbia insisted that 
it be more than just a bill collector for KEK and cover more than 
just the north of Kosovo.  Petkovic said Serbia had no objection to 
registering the company in Pristina.  He said he hoped that EPS and 
KEK could reach an agreement somewhere between those two points, 
saying both sides needed "to swallow something" if there were to be 
an agreement.  However, he said both sides had dug in on their 
positions, leaving a significant gap between them.  Ultimately, the 
GoS "needed to have its needs met," Petkovic said, suggesting any 
solution had to be political.  "We can not have a situation in 
which KEK gets everything and we get nothing.  If that is the case, 
then there will be no solution," Petkovic said. 
 
 
 
EPS Supposedly Meeting Energy Demand in the North 
 
--------------------------------------------- ---- 
 
 
 
4.  (SBU) Petkovic alleged that EPS was able to fully meet the 
demand for electricity in the north, now that it had begun to 
collect for payment.  Despite EPS' initial claims that electricity 
was being delivered as humanitarian aid, Petkovic admitted to us 
that consumers could not continue to receive electricity without 
payment.  Since EPS began meter reading and collection in December 
2009, electricity consumption had plummeted 50% in the north, 
making it possible to meet demand, Petkovic said.  He said bill 
collectors had begun collecting payment and were transferring the 
 
 
funds to EPS. 
 
 
 
Serbia on "Shaky Legal Ground" 
 
------------------------------ 
 
 
 
5.  (SBU) Without explicitly admitting that Serbia's actions were 
illegal, Petkovic acknowledged that EPS was operating on shaky 
legal ground.  He pointed to that as a reason why Serbia wanted a 
deal.  We need to legalize the situation in the north so there are 
no grounds to object, Petkovic said.  He insisted that the current 
situation could only be temporary and that a permanent solution had 
to be found. 
 
 
 
Not In Favor of Partition 
 
------------------------- 
 
 
 
6.  (SBU) In response to our comments that Serbia's actions to date 
had given many in the international community the impression that 
Serbia was angling for partition, Petkovic flatly said that was not 
Serbia's intention.  "We are not in favor of partition and we are 
not in favor of partitioning Kosovo's energy sector either," 
Petkovic said.  Going further, Petkovic said it was KEK's current 
proposal (an ESCO for the north) that smacked of partition, since 
it geographically limited EPS' participation north of the Ibar. 
 
 
 
KEK Insincere in Offer to Reconnect the North 
 
--------------------------------------------- 
 
 
 
7.  (SBU) When urged to reconnect the north to the KEK grid and to 
allow KEK to provide electricity in the north while talks between 
the two sides continued, Petkovic claimed KEK's offer to reconnect 
was insincere.  If the north was reconnected to KEK, KEK would be 
unable to meet the surge in demand and would probably once again 
have to begin rationing electricity as it had done prior to October 
2009, Petkovic said.  As supposed proof that there would be 
rationing, he said KEK was currently unable to fully provide 
consistent power in the south and any increase in demand would 
further aggravate the situation.  Even if KEK were able to provide 
sufficient electricity to the north, Petkovic said KEK would 
immediately cut off power in the north as a way to twist consumers' 
arms to immediately start paying for consumed electricity.   In 
either scenario, Petkovic gauged KEK's offer as insincere and said 
it would be difficult for the GoS to allow Serbs in the north to 
once again experience KEK power cuts after EPS had "proven" it 
could meet their energy needs. 
 
 
 
KEK Relations with Enclaves Slowly Improving 
 
-------------------------------------------- 
 
 
 
8. (SBU) In contrast to the contentious relationship with northern 
Kosovo, Petkovic admitted that KEK's relations with the southern 
enclaves had improved since they had begun paying their bills in 
the summer of 2009.  He said that supply was more stable and there 
had been a slight improvement in quality of service.  He said, 
however, that some of the alleged promises KEK had made to the 
enclaves, such as hiring more Serbs, had yet to materialize. 
"Where are the jobs KEK promised," Petkovic asked.  He repeatedly 
emphasized that KEK had only been able to sign up the enclaves 
because of his personal involvement and support for doing so in the 
spring/summer of 2009. 
 
 
 
Manipulators on All Sides 
 
------------------------- 
 
 
9. (SBU) Petkovic insisted there were manipulators on all sides 
trying to undermine talks and to destabilize the situation.  In the 
north, he cited efforts by hardliners to influence the situation. 
He then pointed to the recent meter reading in Valac as an example 
of Albanian manipulation.  Petkovic alleged that during past years, 
meter reading happened only once or twice a year.  Now, he said, 
KEK had come twice in the past three weeks to read the meters.  He 
also insisted KEK officials were misleading the United States on 
KEK's intentions.  KEK negotiators were under pressure from 
Pristina and elsewhere and this was not in anyone's interest, 
"including the United States," Petkovic said. 
 
 
 
Need Goodwill from Both Sides 
 
----------------------------- 
 
 
 
10.  (SBU) Petkovic emphasized several times that there needed to 
be goodwill on all sides.  Asked to define what he meant, Petkovic 
suggested KEK providing an ESCO for the EPS subsidiary in Gracanica 
or Strpce as a starting point, or having KEK employ more Serbs in 
the south.  Without providing examples of Serbian goodwill, he 
again stated Serbia's maximalist negotiating positions. 
 
 
 
Comment 
 
------- 
 
 
 
11.  (SBU) Petkovic was firm on the GoS position but tried to 
appear conciliatory, as if he thought a commitment to keep talking 
with KEK would be sufficient to win points with parts of the 
international community.  After believing that he had  helped KEK 
to sign up the southern enclaves only to see GoS influence there 
diminish after Kosovo's November 2009 municipal elections, 
Petkovic, a Kosovo Serb, may worry that he personally and the GOS 
as a whole are losing influence with Kosovo Serbs.  Petkovic and 
the GoS now appear determined not to lose any further influence 
over the fractured Serb community and are willing to use EPS' de 
facto control over the northern Kosovo grid as that bargaining 
chip.  The needs of the Kosovo Serb community will continue to come 
second to the political needs of the Serbian government.  End 
Comment. 
PEDERSON