GOC RECEIVES POOR GRADES ON RETURNS-RELATED ISSUES

C O N F I D E N T I A L ZAGREB 002144

SIPDIS


E.O. 12958: DECL: 10/06/2013
TAGS: PREL PREF PGOV ECON HR BK
SUBJECT: GOC RECEIVES POOR GRADES ON RETURNS-RELATED ISSUES

REF: A. (A) ZAGREB 1474


B. (B) ZAGREB 1084

C. (C) STATE 96439

Classified By: Darren Taylor, Political Officer, for reasons 1.5 (b) an
d (d).

SUMMARY
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1. (C) Since its declarations this spring and June 12
initiative aimed at providing subsidized housing to refugees
who enjoyed "tenancy rights" under the old Yugoslav system,
the GOC has made little progress on key return-related
issues. The number of refugees returning to Croatia lags
behind those in recent years. Representatives from key IC
organizations, including UNHCR, OSCE, and the European
Commission, agree that the government,s performance on a
number of issues, including repossession of property,
evictions, and rental compensation, remains poor. We will
need to work with others in the IC to keep the pressure on
the government to produce results. There is some debate,
however, over how hard to press -- particularly right now.
This is a politically sensitive time for the Croatian
government, with elections expected in November. End
Summary.

GOC Makes Promises On Return Issues(
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2. (C) Earlier this spring and prior to its submission of its
application for EU membership, the GOC made a series of
promises to resolve key issues related to refugee returns.
More specifically, the GOC pledged to resolve by year-end the
almost 7,000 cases involving property repossession to pay
rental compensation to owners -- primarily Serbs -- who were
not able to occupy their homes, to evict mostly Croat double
and illegal occupants (those who were illegally occupying
homes at the same time they owned property in one of the
former Yugoslav republics, or who simply were not entitled to
housing care from the state),and to increase significantly
the pace of reconstruction of property for Serb owners. The
GOC vowed that, by taking these actions, most of the issues
affecting returns would be resolved by the end of this year.
The government expected that about two years would be needed
to complete the property reconstruction process.


3. (C) In June, after considerable pressure from the
international community and growing complaints about the lack
of GOC progress on returns, the government promised to take a
comprehensive approach to refugee returns by adopting
legislation providing housing assistance to refugees who
wanted to return to Croatia (REF A). This policy covered
those mostly Serb owners who were former occupancy/tenancy
rights holders under the old Yugoslav system. The program
was to offer the holders the option of renting or buying a
home at subsidized prices. From the GOC perspective,
adopting such legislation was the final piece of the puzzle
that would resolve the refugee issue altogether. GOC leaders
vowed to provide the IC with a detailed implementation plan
for the housing program within 30 days after its
announcement. "Housing is no longer an obstacle for refugees
seeking to return to Croatia,8 Prime Minister Racan said
after he invited all Serb refugees to return to Croatia.
However, no such plan has been offered to date.

(While the IC sets Benchmarks
--------------


4. (C) Meanwhile, the international community -- including
OSCE and EC -- has sought to keep the pressure on the GOC.
In its March report, the European Commission set specific
benchmarks that the GOC must meet, some by the end of the
year, others by March 2004 (REF B). The report stipulated
that the GOC must show concrete progress on repossession,
reconstruction, and compensation for lost occupancy/tenancy
rights. It also called on the GOC to resolve the issue of
repossession by the end of the year. That said, while
remaining firm that Croatia must honor its commitments,
Jacques Wunenburger, head of Zagreb's EC mission, conceded to
the Ambassador on September 30 that he doubted the GOC's
record on refugee returns would hold up Croatia's bid for EU
membership -- in this respect, the government's cooperation
with the war crimes tribunal loomed much larger.


5. (C) The OSCE noted in its July Status Report on Croatia
that much progress was still needed on repossession,
evictions and housing reconstruction. It noted that the pace
of returns had slowed down. The report also highlighted
interviews with Serb refugees who cited housing problems as
well as legal, administrative, and psychological barriers as
key obstacles to their return and reintegration into Croatian
society. OSCE officials noted that the Croatian government
would likely receive a more critical report during its
evaluation in the fall if it did not make significant

progress on the key issues of concern raised by the OCSE.



6. (C) In the July joint monthly report produced by UNHCR and
the OSCE, UNHCR noted that the GOC has not created a
favorable environment, particularly in the war-affected
regions, for the return of refugees. Many refugees continue
to face "discriminatory practices" in terms of medical,
social, and humanitarian assistance from the government
leaving them in extremely vulnerable situations. UNHCR
called on the government to implement legislation immediately
aimed at improving the overall conditions of refugees who
have already returned and for those seeking to return.

That was Then, This is Now
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7. (C) EC, OSCE and UNHCR officials have told us that the GOC
has not made as much progress as expected on repossession,
reconstruction, compensation, and implementing the new
housing program. They also note that meetings with GOC
officials in recent weeks have not gone well. The GOC
appeared to be backtracking on its commitments and taking a
more hostile attitude when sensitive issues related to the
government,s performance were discussed.


8. (C) The EC mission,s point person on returns, Alfons
Peters, told us that while the government has made
significant progress on reconstruction, it has not made much
progress on the repossession of property, rental
compensation, and implementing the new housing program. The
government would not meet its self-imposed year-end deadline
for solving all of the property repossession cases (some
2,000 cases would be left unresolved). Peters believed that
a major reason for the government,s problems was a lack of
communication among the relevant ministries and a lack of
expertise. He told us that the EC mission would probably
give the GOC the benefit of the doubt and accept a longer
implementation period as long as the GOC could present an
acceptable program of action to resolve the outstanding
issues.


9. (C) The Head of the Return and Reintegration unit at the
OSCE mission, Axel Jaenicke, told us that the GOC,s
performance over the past three months was dismal. Almost
5,000 repossession cases were unresolved, some 15,000
applications for reconstruction assistance remain without a
formal decision, and the government,s rental compensation
plan has been a "miserable failure." Only a few hundred
owners, out of an initial group of 4,000 claimants, have
received some form of payment and those were not for the
proper amounts. The program lacks transparency, and its
guidelines make it difficult to determine who is eligible to
receive compensation and for what amount. Even more
discouraging are reports that GOC officials in different
jurisdictions are encouraging Serb owners not to apply for
compensation. Jaenicke said that the OSCE was in the process
of determining what message the mission would send about the
GOC,s performance in two upcoming reports, including the
Mission,s official status report due in November.


10. (C) UNHCR Head Bajulaiye told us that he was very
disappointed with the GOC's recent progress. He described a
recent meeting that he and his EC and OSCE counterparts had
with Reconstruction Minister Cacic in which Cacic himself
gave a somber assessment of the GOC,s performance on
return-related issues. Cacic stated that the government
would not meet its self-imposed deadlines and those set by
the IC, particularly in resolving all of the property
repossession cases. Cacic further admitted that little
progress had been made in implementing the new housing
program announced on June 12, and that the GOC has failed to
provide the IC with a detailed implementation plan as
promised by July.


11. (C) Bajulaiye left the meeting feeling that not much had
been accomplished except more GOC promises, which will not be
fulfilled. He cited an incident last month in which ODPR
Head Pejkovic threatened to raise complaints at UNHCR
headquarters against his UNHCR counterparts from BiH and
Serbia and Montenegro when they voiced concerns about the
GOC,s commitment to the returns process. He also cited the
hostile responses of senior GOC officials to the most recent
Human Right Watch Report, which was highly critical of the
GOC,s performance on refugee and minority issues, as another
counterproductive action by the GOC. Bajulaiye vowed not to
sugar coat any UNHCR reports on the GOC's progress in coming
months.

GOC Appealing for More Time
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12. (C) When we met with Pejkovic last week to get the GOC,s
perspective, we found him in a much more somber mood than
usual. His office has been under increased pressure from the

government as refugee-related questions were among the most
important ones the GOC has to respond to as the GOC prepared
answers to the EU questionnaire. In recent weeks, his staff
has had to focus solely on preparing a response to the EU
questions, which had forced him to place other
returns-related issues on the back burner. He argued that
repossession, evictions, and compensations were extremely
complex issues and required a functioning judiciary system,
which Croatia did not have at the moment. He pleaded for
more time. There are some 19,000 claims for reconstruction
and 4,600 repossession cases that must be resolved.


13. (C) Pejkovic predicted that it would be more difficult to
resolve property repossession in regions such as Knin,
Benkovac, and Obrovac because of a substantial extremist
presence. Taking drastic actions would increase ethnic
hostilities and lead to open conflicts between the local
populations and returning refugees. Pejkovic noted that the
information campaign designed to inform refugee populations
in BiH and Serbia and Montenegro about the GOC,s housing
program will start at the end of the month. The GOC had
already included funding for the construction of 1,500
apartments in next year,s budget. He predicted that a total
of about 5,000 apartments would be needed as he expected a
similar number of applicants would qualify and want to
participate in the program.

While Returns Continue to Spiral Downward
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14. (C) The most recent UNHCR and GOC figures show that
refugee returns continue to decline. In the first seven
months of this, some 5,860 refugees have returned to Croatia
from BiH and Serbia and Montenegro. This is compared to a
total of 9,640 returns in 2002 and 10,572 returns in 2001
based on ODPR figures. UNHCR figures indicate that as of the
end of July there were 6,400 returns to Croatia this year
compared to a total of 11,000 returns all of last year. With
the returns season ending in August, UNHCR does not expect a
spike in returns over the remaining three months of the year
as the winter months approach. UNHCR estimates that there
may be up to 1,000 more returns by year-end but not more.


Comment
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15. (C) The Racan government has demonstrated again it is
content to make declarations expressing its commitment to the
returns process without following through on implementation
-- a dichotomy that the government makes no effort to hide.
Senior GOC officials have not publicly raised the housing
program initiative since it was first announced in June, and
there have been few if any evictions. Despite specific
deadlines, many GOC officials overseeing refugee returns took
the entire month of August off for holidays and spent
September working on the EU questionnaire instead of on
return issues. Pejkovic said that substantial progress will
probably not be made until next year after a new government
is formed.


16. (C) On refugee-related issues, Croatian government
officials may be sensing fatigue on the part of their
international critics. We are taking steps to combat this
perception and to keep the GOC focused. While the upcoming
parliamentary elections will make it difficult to engage
senior leaders on the refugee problem, we intend to propose
that returns be raised at the upcoming review of Croatia's
NATO Annual National Program in Brussels. Until a new
Croatian government is seated, we will focus on building
consensus for a consistent international community stance on
refugee return issues. We will also seek opportunities to
engage at the local level to remind officials of our
continued interest and expectation of results. Once a new
government is seated, engaging key officials early and often
will be part of our effort.
FRANK


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