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03ZAGREB1927 2003-09-05 11:31:00 CONFIDENTIAL Embassy Zagreb
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					  C O N F I D E N T I A L  ZAGREB 001927 


E.O. 12958: DECL: 09/05/2013

REF: 02 ZAGREB 01295



1. (C) PM Racan has vowed that Croatia will ratify the Ploce
Port Agreement by the end of September despite continued
local and parliamentary opposition to the agreement. GOC and
GOBiH have met frequently in recent weeks to try to reach a
compromise that would provide Croatia the political cover to
move forward on ratification. Results have been encouraging,
but some stumbling blocks remain after the BIH side recently
voiced concerns that the new annex negotiated by the two
governments did not go far enough in addressing its concerns
over the method for settling future disputes. The Acting
Head of the Neighboring Relations Department, Davor Vidis,
was not optimistic: he told us that Racan appears determined
to bring the Ploce issue to closure, but it was too early to
tell if parliament would ratify the agreement anytime soon.
There is growing concern that the window of opportunity to
resolve the Ploce Port issue is closing as election season
heats up. End Summary.

Progress on Ploce Port Agreement


2. (C) While on an official trip to BiH in July, PM Racan
declared that the Ploce Port agreement, first signed in 1999,
would be resolved by the end of September. In agreeing to an
annex, GOC and GOBIH officials have eliminated the
international arbiter called for in the original agreement.
This was a central issue for the GOC because of concerns that
the international arbiter would be part of a seven-person
commission overseeing the port's activities, and would
theoretically be able to cast the deciding vote when disputes
arose. The Croatians have balked because this would give a
foreign mediator the right to make final decisions about a
Croatian Port on Croatian territory -- in their view
infringing on Croatia,s territorial sovereignty. Racan and
Picula were certain that parliament would not ratify the
agreement in its current form and without an annex.

But Time Running Out


3. (C) "The window of opportunity for a final agreement on
the Ploce Port is closing fast." This is what the Acting
Head of the Neighboring Relations Department Davor Vidis told
us when we met with him on August 27. Vidis claimed that GOC
officials accompanying Racan on the BiH visit were surprised
by his declaration because of continued local and
parliamentary opposition to the agreement. His reference to
the shrinking window of opportunity to resolve Ploce is
linked to the recent snag in the negotiations. Last week, a
member of the BiH presidency rejected the newly negotiated
annex to the current agreement because it did not contain a
specific deadline for the ratification of the agreement and
final procedures for establishing a commission to resolve
possible future disputes over management of the port. Vidis
said that GOBiH appeared to be backtracking on the annex.

4. (C) Vidis predicted that, if the Ploce Port Agreement were
not resolved within the next three weeks, it would languish
until next spring -- well after Croatia's elections. Foreign
policy issues, he said, would not receive much attention
during the campaign, and Ploce was in any case too divisive.
He commented that key parliament officials, including Deputy
Speaker of the Parliament Tomac, who strongly opposed
ratifying the agreement in its current form, have not
indicated whether they would support ratifying the Ploce
agreement if it contained a new annex. He noted that HSLS
president Budisa was already causing problems by voicing his
opposition to the agreement even if it contained the annex.

The GOC Strategy


5. (C) Vidis said the GOC strategy will be to lay low on the
Ploce issue to allow for a "cooling off" period. He stated
that the GOC would then try to resurrect negotiations in a
low-key fashion with the hopes of addressing GOBiH concerns
and reaching a final agreement. The GOC would then seek to
have parliament ratify the agreement through urgent
procedure. If this strategy failed, Croatia would have no
other option except to allow the new government to try to
resolve the issue. He noted that local opposition in Ploce
to ratifying the agreement was hardening, which is also
complicating matters and leaving the GOC little room to

maneuver. Political leaders in Ploce continued to lobby key
members of parliament against the agreement. He was not
optimistic that the GOC strategy would prevail but said that
the GOC had limited options.



6. (C) The Ploce Agreement was politically sensitive even
before Croatia's disagreement with Slovenia over declaration
of an Exclusive Economic Zone turned up the political heat on
border issues. In the current environment, we expect Racan
to back away from his declaration that he will secure Ploce
ratification in September and that this issue will languish
until the next government takes it up. During our meeting,
Vidis seemed desperate to reach a final agreement with the
GOBiH before elections. While stressing that the GOC would
do its part to reach an agreement in the next few weeks,
Vidis was not convinced that GOBiH officials shared the same
sense of urgency, particularly since the BiH parliament has
already ratified the agreement.