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2003-07-25 12:11:00
Embassy Zagreb
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						C O N F I D E N T I A L  ZAGREB 001674 


E.O. 12958: DECL: 07/24/2013

Classified By: Ambassador Ralph Frank, for reasons
1.5 (b) and (d)


C O N F I D E N T I A L ZAGREB 001674


E.O. 12958: DECL: 07/24/2013

Classified By: Ambassador Ralph Frank, for reasons
1.5 (b) and (d)


1. (C) During their first meeting, on July 23, Prime
Minister Racan said he wanted good ties with the newly
arrived U.S. Ambassador. He alluded to sometimes rocky
relations in the past, and stressed that it would be
important to keep in regular contact, both formally and
informally. Racan was optimistic about upcoming elections in
Croatia, indicating he expected more or less the same
coalition to return to power -- although he suggested that he
may be ready to step aside as Prime Minister. Racan
underscored Croatia's role in the region as a source of
stability. That included Croatia's role in the war on
terrorism, which his government takes very seriously. He
said that Croatia remained committed to overcoming its
wartime legacy, including by cooperating with ICTY. End

Racan Wants Strong U.S.-Croatia Relations

2. (C) PM Racan opened his July 23 one-on-one meeting with
Ambassador Frank by saying that the U.S. had special
importance for him; while he usually lets the President and
the Foreign Minister deal with foreign diplomats, he wanted
to maintain regular contact, formally and informally, with
the U.S. Ambassador. It was a positive theme that dominated
the one-and-half-hour introductory meeting. Both the
Ambassador and Prime Minister agreed to look to the future,
to build on what the Ambassador described as a very good,
solid bilateral relationship. Racan wanted to ensure that
the interests of the U.S. in Croatia were well taken care of,
and he would view acts of anti-Americanism as acts against
Croatia. He said Croatia was with the U.S. in the fight
against terrorism.
Force of Stability

3. (C) Throughout the discussion, Racan stressed the
importance of stability, both for Croatia and the region,
both of which had only recently emerged from war. He saw
Croatia as a force of stability, and saw it as the country's
"duty" to play that role effectively. He contrasted
Croatia's role with that of Bosnia next door, where the

"Islamic lobby" figured more prominently. To illustrate
this, Racan referred to his recent visit to Sarajevo and his
initiative for Croatia to help build a highway in Bosnia
along the European 5C route. He said he made the proposal
despite knowing he was touching a "hornet's nest." He said
BiH authorities had already secured capital for the project,
and suggested the influence of "Islamic capital" could
destabilize Bosnia and the region. Racan referred to the
fact that as many as 150 mosques had been built in recent
years in Sarajevo, which he did not mind as a religious
phenomenon, but he did mind if this upset the balance of all
religious/ethnic groups in Bosnia.

4. (C) Racan cited a number of recent GOC initiatives as
examples of Croatia's role in improving regional stability,
including suspending visas requirements for SAM citizens, and
its costly decision to compensate ethnic Serb returnee
holders of tenancy rights. The Prime Minister emphasized --
sometimes implausibly -- that the GOC always had in mind the
wider regional situation, even when making decisions that
might result in differences with the U.S. He argued that the
GOC decision to sign the Vilnius Group declaration -- which
was generally supportive of the U.S. position on Iraq -- was
made out of a desire to preserve regional stability. When
the GOC subsequently back-pedaled on the declaration, and
stated Croatia's opposition to the war in Iraq, Racan said he
was upset to have his "leadership" questioned. This was not
about leadership, Racan argued, but rather about preserving
stability in the country. Anti-war sentiment, about 80
percent of the population, could not be ignored.

U.S. and EU Share Views on Croatia

5. (C) The Ambassador noted that the U.S. and Croatia had
sufficiently good relations that the two could disagree
privately -- not in the press -- on some subjects while
maintaining many common goals. The Ambassador stressed the
importance of regional stability, U.S. support for Croatia's
accession to Euro-Atlantic institutions, and the importance
for Croatia to press ahead on economic reforms and job
creation. He added that both the U.S. and its EU partners
shared the same goals with regard to Croatia, including full
cooperation with ICTY, the return of refugees, and the full
normalization of relations with its neighbors. The
Ambassador stressed that these issues, which emerged from

Croatia's wartime legacy, remained critical and could not be


6. (C) The Ambassador asked the Prime Minister to comment on
the upcoming elections. Racan replied that he did not expect
great changes, unless the coalition made some big mistakes.
Although Croatians are still dissatisfied with things this
government has failed to do (i.e. prosecute corruption in
privatization and reform the judiciary and state
administration), they do recognize the government's
achievements: general economic progress, including low
inflation; stronger regional cooperation; substantial
movement on NATO and EU accession; and road building and
railroad modernization. The positive trends will continue if
the current coalition stays in power. The return of the HDZ
would probably mean a return to the Tudjman era -- which
voters do not want. As for possible changes in the make up
of a new government, Racan somewhat unconvincingly suggested
he may not want to be Prime Minister again. He was
exhausted, he said.

HDZ: New and Improved?

7. (C) Speaking about the main opposition party, Racan said
that, although the HDZ leadership might be "new and
improved," the party base remained more or less the same --
one reminiscent of Tudjman times. The HDZ can complete its
transformation only if it loses elections. If it wins, the
current opposition phase of transformation would merely be
perceived as a temporary halt before the return to the same
kind of rule under Tudjman. Racan encouraged the Ambassador
to maintain contact with the HDZ leadership, if only because
such contact may encourage the reformers. But reform of that
party, he added, was a long way off. Racan noted that the
more reform-minded leaders of HDZ in Bosnia told him on his
recent visit that they would like to see Racan's government
-- rather than one led by HDZ -- win the next election.


8. (U) A pragmatic -- if sometimes phlegmatic -- politician,
PM Racan came across as somebody who wants improved relations
with the U.S. He will be busy in coming weeks preparing for
elections and cajoling his government to move forward on
Croatia's EU requirements, but he told the Ambassador that he
wanted to meet regularly. Racan suggested getting together
again at the end of August. As for Racan's hint that he may
be ready to step aside as Prime Minister, this was not
conveyed with Shermanesque certitude; few other such rumors
have circulated, and we suspect that, as of now, it should
not be taken seriously. Racan waited in the wings for years
to get to power. Assuming the ruling coalition wins, he will
want to remain Prime Minister a good while longer.