VZCZCXRO5377
PP RUEHAG RUEHAST RUEHDA RUEHDBU RUEHDF RUEHFL RUEHIK RUEHKW RUEHLA
RUEHLN RUEHLZ RUEHNP RUEHROV RUEHSK RUEHSR RUEHVK RUEHYG
DE RUEHPOD #0115/01 1241008
ZNR UUUUU ZZH
P 041008Z MAY 09
FM AMEMBASSY PODGORICA
INFO RUEHC/SECSTATE WASHDC PRIORITY 1307
RUEHZL/EUROPEAN POLITICAL COLLECTIVE
RUEHPOD/AMEMBASSY PODGORICA 1396 UNCLAS SECTION 01 OF 02 PODGORICA 000115 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS:        
SUBJECT: MONTENEGRO'S CEFTA PRESIDENCY 
 
REF: A) PODGORICA 92; B) PODGORICA 106; C) SARAJEVO 539 
 
PODGORICA 00000115  001.2 OF 002 
 
 
 1. (SBU) Summary: The GoM took over the CEFTA Presidency on 
January 1, 2009, and had hoped to use its term at the helm of 
the organization to showcase its role in leading regional 
initiatives.  However, CEFTA's activities have been beset by 
political challenges -- namely how to involve an independent 
Kosovo without alienating Serbia and managing the reaction to 
the global economic crisis by member countries.  GoM officials 
are hopeful that they can break the current impasse with Kosovo, 
but remain very concerned about the latest hiccup -- a proposed 
protectionist Bosnian law which, if enacted, they claim, could 
seriously undermine the CEFTA agreement.  End Summary. 
 
 
 
Background:  CEFTA to Encourage Regional Cooperation 
 
--------------------------------------------- ------- 
 
 2. (U) The Central European Free Trade Agreement (CEFTA) entered 
into force in 1994 and was designed to mobilize regional efforts 
to integrate into Western European institutions.  Original CEFTA 
signatories are Bulgaria, the Czech Republic, Hungary, Poland, 
Romania, Slovakia, and Slovenia.  As these former CEFTA members 
joined the EU, their membership in CEFTA ceased, but CEFTA was 
extended in 2006 to cover the rest of the Eastern European 
states, which already were involved in a matrix of bilateral 
free trade agreements through the framework of the Stability 
Pact for South Eastern Europe. The current members of CEFTA are: 
Albania, Bosnia, Croatia, Macedonia, Moldova, Montenegro, 
Serbia, and UNMIK (Kosovo). 
 
 
 
But Times Change... CEFTA As a Venue for Dispute? 
 
--------------------------------------------- ---- 
 
 3. (SBU) Montenegro took over the rotating Presidency of CEFTA 
on January 1 of this year with high hopes for promoting regional 
cooperation.  However, Kosovo's independence and the recognition 
of that independence by half of the current CEFTA signatories 
has become an issue for CEFTA states. 
 
 
 
 4. (SBU) On April 8, a Kosovo delegation walked out of a CEFTA 
agricultural market policy meeting in Podgorica to protest the 
fact that they were seated with UNMIK officials (REF A).  GoM 
officials, including Minister of Economic Development 
Gvozdenovic and FM Rocen, have stressed to us that the GoM's 
hands are tied because UNMIK, not the government of Kosovo, is 
the signatory to CEFTA.  Ministry officials also told us that 
the GoM had notified Pristina in January that UNMIK 
representatives should accompany Kosovo delegates to CEFTA 
meetings. 
 
 
 
 5. (SBU) Deputy Minister Goran Scepanovic (the Ministry's main 
point person for CEFTA) told us on April 29 that combining UNMIK 
and GoK representatives was the GoM's only legal option, and the 
only option that would keep Serbian representatives from staging 
their own walkout. Scepanovic stressed that, especially in this 
time of global economic crisis, it is important for all parties 
to participate in these working groups.  Many GoM officials, 
including Foreign Minister Rocen (REF B) have been expressing 
concern over potential repeat walk outs by the GoK at subsequent 
CEFTA events.  Scepanovic told us that he hopes UNMIK/GoK 
experts will attend the next CEFTA meeting scheduled for late 
May -- especially, he noted, as this is an "experts" meeting, 
not a political meeting.  The GOM has appealed to us for 
assistance in resolving this issue and has suggested that one 
solution would be for the GoK to apply the model used at a 
recent Gymnich meeting in Prague -- i.e., that the GoK 
representative sit at the table, with the UNMIK representative 
behind him or her. 
 
 
 
 6. (SBU) On a positive note, Scepanovic told us that he expects 
the other open issue with UNMIK/Kosovo, the use of new customs 
stamps for goods from Kosovo, to be resolved soon.  The GoM has 
yet to receive the official letter from UNMIK introducing the 
stamps -- a hard copy letter is required by customs authorities 
in Montenegro -- but Scepanovic assured us that as soon as it 
arrives Montenegro will begin accepting the stamps. (Note: UNMIK 
emailed a PDF file of the letter and stamp exemplars to all 
CEFTA signatories, and we have confirmed a hard copy is en route 
to Montenegro.  End note.) Further, Scepanovic told us that he 
did not see the stamps as a contentious issue for CEFTA, and 
noted that his Serbian Embassy contacts here in Podgorica had 
 
PODGORICA 00000115  002.2 OF 002 
 
 
raised no objection to the stamps. 
 
 
 
And More Trouble Ahead? 
 
------------------------ 
 
 
 
 7. (SBU) Scepanovic told us that while relations with Kosovo 
were moving -- albeit unsteadily -- forward, his primary concern 
now is a new law that the Bosnian parliament is considering, 
designed reportedly to provide better protection for local 
farmers against imported goods from neighboring countries (REF 
C).  According to Scepanovic, the law can "destroy CEFTA" and is 
likely to lead to a series of retaliatory measures by 
neighboring countries.  The GoM would do its best to stop such a 
snowball effect, but could not guarantee success should the law 
pass.  Scepanovic told us he hopes that somehow it will be 
killed even if that takes a "push" from the USG and 
international community. 
 
 
 
Comment 
 
------- 
 
 8. (SBU) The GoM has hoped to use its CEFTA presidency to prove 
itself as a regional leader, and therefore is disappointed that 
political drama has overshadowed recent meetings.  The GOM has 
told us it is committed to maintaining focus on the tangible 
economic benefits the organization can bring and that it shares 
our goal of facilitating maximum participation by CEFTA 
signatories. 
MOORE