COMMITTING CROATIA'S FY-2003 FMF BUDGET

C O N F I D E N T I A L ZAGREB 001278

SIPDIS


STATE FOR EUR (BOGUE) AND PM (LINO)
DEFENSE FOR OSD/DASD-EURASIA (RICARDEL),OSD-P (RIGGENBERG)
AND DSCA-ERASA
USEUCOM FOR J4

E.O. 12958: DECL: 06/05/2013
TAGS: MARR PREL KTIA ABUD MASS HR KICC NATO
SUBJECT: COMMITTING CROATIA'S FY-2003 FMF BUDGET

REF: A. STATE 139892

B. ZAGREB 1238

CLASSIFIED BY: POLOFF A.F.GODFREY FOR REASONS 1.5 (B,D)

SUMMARY
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1. (C) IF CROATIA ACTS QUICKLY, IT CAN COMMIT THE FY2003
FUNDS AT RISK OF SUSPENSION UNDER THE AMERICAN
SERVICEMEMBER'S PROTECTION ACT BEFORE CUTOFF DATE. AS
INSTRUCTED (REFTEL A),ON JUNE 4 WE INFORMED THE GOC HOW IT
CAN COMMIT THE USD 5.5 MILLION ALLOCATED FOR FY2003 TO AN
EXISTING FMF CASE IN TIME FOR THESE FUNDS TO BE OBLIGATED BY
JULY 1. END SUMMARY.


2. (C) CROATIA IS UNLIKELY TO SIGN AN ARTICLE 98 AGREEMENT
BEFORE UNOBLIGATED FMF AND IMET FUNDS ARE SUSPENDED ON JULY

1. AS INSTRUCTED IN REF A, DEFENSE ATTACHE, ODC CHIEF AND
POLOFF MET ON JUNE 4 WITH DEPUTY DEFENSE MINISTER ZLATKO
GARELJIC TO INFORM HIM THAT THE USD 5.5 MILLION ALLOCATED TO
CROATIA IN FMF FUNDING COULD BE OBLIGATED BEFORE SUSPENSION
ON JULY 1. WE UNDERSCORED TO GARELJIC THAT THE FAILURE OF
CROATIA TO CONCLUDE AN ARTICLE 98 AGREEMENT WOULD STILL HAVE
A STRONG NEGATIVE IMPACT ON THE BILATERAL RELATIONSHIP;
NEARLY USD 6 MILLION IN FMF AND IMET SUPPORT ANTICIPATED IN
FY 2004 WOULD CERTAINLY BE SUSPENDED. MORE IMPORTANTLY, WE
ADDED, CROATIA'S UNWILLINGNESS TO CONCLUDE AN AGREEMENT WOULD
BE A BLOW TO THE BROADER BILATERAL RELATIONSHIP.


3. (C) AS DESCRIBED IN REF B, WE EXPLAINED TO DEPUTY DEFMIN
GARELJIC THAT, DUE TO THE SHORT TIME REMAINING BEFORE THE
JULY 1 CUTOFF, THE ONLY WAY CROATIA CAN COMMIT THE FY2003 FMF
FUNDS IS TO COMMIT THEM TO AN EXISTING CASE. THE ONLY "OPEN"
CASE WHICH COULD BE MODIFIED IN TIME IS FOR COMMUNICATIONS
EQUIPMENT. AS ADDITIONAL VHF RADIO EQUIPMENT HAS BEEN
IDENTIFIED AS A PRIORITY, CROATIA SHOULD ACT QUICKLY TO
MODIFY THIS CASE. WE TOLD GARELJIC CROATIA MUST SEND A
LETTER OF REQUEST TO MODIFY THE EXISTING FMF CASE BY FRIDAY,
JUNE 6, IN ORDER FOR EXPERTS IN WASHINGTON TO OBLIGATE THE
FUNDS IN TIME TO PREVENT THEM FROM BEING SUSPENDED. ODC
PROVIDED GARELJIC WITH A DRAFT LETTER, PROPOSING A MIX OF
AVAILABLE VHF RADIO EQUIPMENT WHICH WOULD MEET NEEDS
IDENTIFIED BY MOD PLANNERS. THE MOD HAS FLEXIBILITY WITHIN
THIS FMF CASE TO CHANGE THE MIX OF EQUIPMENT, BUT MAY NOT
APPLY FY 2003 FUNDS TO ANY OTHER CASE.


4. (C) IN A SEPARATE MEETINGS ON JUNE 4 WITH ASSISTANT
DEFENSE MINISTER (POLICY) JELENA GRCIC POLIC AND WITH MFA
NORTH AMERICA DEPARTMENT HEAD MIROSLAV KOVACIC, WE
UNDERSCORED THAT THE DECISION ON HOW TO IMPLEMENT PROVISION
OF THE ASPA WAS MADE IN WASHINGTON AND APPLIES EQUALLY TO ALL
COUNTRIES WHICH ARE RECIPIENTS OF FMF AND IMET FUNDING AND
ARE SUBJECT TO THE JULY 1 CUTOFF. NEVERTHELESS, BOTH KOVACIC
AND GRCIC POLIC WERE GRATEFUL, AND SAID THAT THE FMF
ASSISTANCE IS VITAL TO CROATIA'S PROGRESS TOWARD NATO
MEMBERSHIP.


5. (C) UPON HEARING THAT CROATIA MIGHT YET BE ABLE TO TAKE
ADVANTAGE OF FY 2003 FUNDS, GARELJIC, GRCIC POLIC AND KOVACIC
ALL EXPRESSED GRATITUDE, STATING THEIR ASSUMPTION THAT THE
USG'S DECISION WAS BASED ON RECOGNITION OF CROATIA'S CURRENT
REQUEST FOR EXEMPTION FROM ASPA PROVISIONS DUE TO ITS
PURPORTED "UNIQUE CIRCUMSTANCES." IN ORDER TO MINIMIZE OUR
FMF REPROGRAMMING EFFORT, THUS UNDERCUTTING OUR DIPLOMACY FOR
AN ARTICLE 98 AGREEMENT, WE MADE CLEAR TO ALL THREE THAT THIS
SAME INTERPRETATION OF U.S. LAW IS BEING APPLIED TO ALL
COUNTRIES SUBJECT TO SUSPENSION OF MILITARY ASSISTANCE UNDER
ASPA AND REPEATED OUR REQUEST THAT THE GOC ENGAGE SERIOUSLY
IN UPCOMING DISCUSSIONS ABOUT A POSSIBLE ARTICLE 98 AGREEMENT
WHEN PM/B'S AMBASSADOR LINO VISITS ZAGREB NEXT WEEK. THEY
WERE A BIT DEFLATED BY OUR RESPONSE.
ROSSIN

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