GOC TO WATCH POTENTIAL LIBYA CONTRACTS CLOSELY

C O N F I D E N T I A L ZAGREB 002186

SIPDIS


DEPARTMENT FOR NEA/PDAS (LAROCCO); EUR/SCE (NARDI/KABUMOTO);
EUR/RPM (WASER); NP/RA (JSMITH); EUR/PRA (CORDOVA); IO/PHO
(CARLSON); AND INR/SPM (ZARZECKI)

E.O. 12958: DECL: 10/09/2013
TAGS: PARM MNUC KNNP LY HR
SUBJECT: GOC TO WATCH POTENTIAL LIBYA CONTRACTS CLOSELY

REF: STATE 282619

CLASSIFIED BY: POLOFF JUSTIN FRIEDMAN, REASONS 1.5 (B) & (D)


1. (C) SUMMARY: DCM DELIVERED REFTEL POINTS PRESIDENTIAL
FOREIGN AFFAIRS AVISOR IVICA MASTRUKO ON OCTOBER 6 AND TO MFA
ASSTANT MINISTER FOR NON-EUROPEAN AFFAIRS DRAZEN MARGETA ON
OCTOBER 7. THE GOC INTERLOCUTORS SAID THAT WHILE CROATIA HAD
A SIGNIFICANT INTEREST IN SECURING PURELY CIVILIAN WORK IN
LIBYA, THE GOC SHARED OUR CONCERNS AND WOULD IMPLEMENT A
STRICT POLICY TO ENSURE THAT ANY CONTRACTS WOULD NOT BE TO
THE BENEFIT THE LIBYAN MILITARY. END SUMMARY.


2. (C) DCM DELIVERED REFTEL POINTS PRESIDENTIAL FOREIGN
AFFAIRS AVISOR IVICA MASTRUKO ON OCTOBER 6 AND TO MFA ASSTANT
MINISTER FOR NON-EUROPEAN AFFAIRS DRAZEN MARGETA ON OCTOBER

7. NOTING CROATIA'S LONG HISTORY OF BUSINESS RELATIONS WITH
LIBYA, DCM STRESSED THAT U.S. SANCTIONS WERE STILL IN PLACE,
AND CAUTIONED THAT POSSIBLE INVESTMENT BY THE CROATIAN ENERGY
FIRM INA IN LIBYA COULD RAISE ILSA CONCERNS. DCM WARNED THAT
LIBYA HAD TRIED IN THE PAST TO SECURE OVERHAUL SERVICES FOR
MILITARY SHIPS BY ATTEMPTING TO HIDE THEIR MILITARY NATURE,
AND URGED THE GOC TO BE VIGILANT IN ITS MONITORING OF
APPROACHES BY LIBYA TO CROATIAN SHIPYARDS.


3. (C) REFERRING TO PRESIDENT MESIC,S VISIT TO LIBYA IN
AUGUST, PRESIDENTIAL ADVISOR MASTRUKO INSISTED THAT CROATIA
WAS INTERESTED ONLY IN CONSTRUCTION OF ROADS, RAILROADS, A
DIABETES CENTER AND A WATER PIPELINE IN LIBYA. HE ASSERTED
THAT ITALY AND MONTENEGRO HAD SECURED MAJOR CONTRACTS TO
OVERHAUL LIBYAN SHIPS, IMPLYING THAT SOME MAY BE MILITARY.
MASTRUKO SAID THAT CROATIA WOULD LIKE TO SECURE OVERHAUL
CONTRACTS, ESPECIALLY FOR SHIPS, ENGINES, BUT INSISTED THAT
NO MILITARY VESSELS WOULD BE INVOLVED. HE CITED A SMALL
SHIPYARD NEAR ZADAR AS A POSSIBLE CONTRACTOR. MASTRUKO ALSO
NOTED THAT THE CROATIAN STATE PETROLEUM COMPANY INA WAS
INTERESTED IN INVESTING IN OIL REFINERY WORK IN LIBYA.


4. (C) ASSISTANT MINSTER MARGETA NOTED THAT PRESIDENT MESIC
HAD BROUGHT ALONG A HUGE DELEGATION ON HIS TRIP TO LIBYA.
RESPONDING TO THE DCM'S CAUTION ON POSSIBLE ILSA IMPLICATIONS
OF ANY INA INVESTMENT IN LIBYA, MARGETA SAID THE DOUBTED THAT
ANY INA INVESTMENT WOULD REACH THE $20 MILLION THRESHOLD OF
ILSA. HE BELIEVED INA WAS MOST INTERESTED IN SECURING
CONTRACTS FOR ITS CROSCO FIELD SERVICES SUBSIDIARY, NOTING
THAT CROSCO USUALLY WORKED AS A SUBCONTRACTOR TO OTHER MAJOR
OIL SERVICES FIRMS.


5. (C) ON SHIPBUILDING, MARGETA SAID THAT LIBYA HAD TRIED TO
SEND SOME SHIPS TO CROATIA FOR OVERHAULS CLAIMING THEY WERE
CIVILIAN. HOWEVER, THE GOC HAD LEARNED THAT THE SHIPS WERE
ACTUALLY IN THE REGISTER OF THE LIBYAN NAVY AND HAD REFUSED
TO ALLOW ANY WORK TO BE DONE. DCM URGED THAT THE GOC BE
VIGILANT FOR SIMILAR ATTEMPTS TO BYPASS GOC CONTROLS,
PARTICULARLY INVOLVING MARINE ENGINE OVERHAULS.


6. (C) MARGETA STATED THAT THE GOC SHARED U.S. CONCERNS ON
POSSIBLE WMD DEVELOPMENT IN LIBYA. MARGETA NOTED THAT SOME
CROATIAN FIRMS HAD MAINTAINED OFFICES IN LIBYA FOR THE LAST
DECADE, AND MANY FIRMS REGARD LIBYA AS PART OF CROATIA'S
TRADITIONAL MARKET. HE SAID THAT THE GOC WOULD IMPLEMENT A
STRICT POLICY TO ENSURE THAT ANY WORK BY CROATIAN FIRMS IS
PURELY CIVILIAN IN NATURE.
FRANK



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