FM VISIT BOOSTS RUSSIA-CROATIA RELATIONS

UNCLAS ZAGREB 002153

SIPDIS


SENSITIVE

DEPT FOR EUR/SCE - KABUMOTO, BENEDICT

E.O. 12958: N/A
TAGS: PREL PGOV RS HR
SUBJECT: FM VISIT BOOSTS RUSSIA-CROATIA RELATIONS


1. (SBU) SUMMARY AND COMMENT: In an effort to shore up
Moscow's influence in this Brussels-leaning capital, Russian
FM Sergei Lavrov met with President Stjepan Mesic, PM Ivo
Sanader, Speaker of Parliament Vladimir Seks, and FM Miomir
Zuzul on his December 10 visit to Zagreb. Significant
developments included agreement on the settlement of
Soviet-era debt to Yugoslavia, discussions of promoting
Russian investment in Croatia's energy and tourism sectors,
groundwork for future anti-terror and anti-drug trafficking
agreements, and interest in selling hardware to the Croatian
military during its modernization to NATO standards. The two
FMs agreed on a plan of consultation, but an expected visit
by Russian President Vladimir Putin has not yet been
scheduled. The GOC got what it wanted in Soviet debt
repayment; the rest of the visit was primarily a scouting
trip for Russian investment opportunities. END SUMMARY AND
COMMENT.

PLANES, TURBINES, AND PIPELINES
--------------

2. (SBU) Lavrov's visit represented a potential warming of
bilateral relations and, the GoC hopes, increased Russian
interest in economic opportunities in Croatia, according to
Vesna Klaic, MFA's director of bilateral relations with
Eurasian countries. The last Russian FM to visit Croatia was
Jevgeny Primakov in 1998, when Croatia's situation, both
politically and economically, was far different. Lavrov
expressed complete Russian support for Croatia's EU
candidacy.


3. (SBU) Agreement on in-kind payments in the form of
fire-fighting aircraft, power plant turbines, and gas
pipelines to settle the full value of the $185.7 million due
Croatia from Soviet-era debt represented a particular
achievement for the GoC. According to Klaic, standard
Russian practice in other countries of the former Yugoslavia
has been to negotiate a 25 percent reduction.

RUSSIA INTERESTED IN INVESTING IN TOURISM, MILITARY SALES
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4. (U) Lavrov was particularly interested in advancing
economic relations, and the GoC intends to pursue his offer
to initiate a joint campaign to promote Russian investment in
Croatia, particularly in the energy and tourism sectors.
Discussions focused on the Druzba-Adria pipeline, a
controversial project to carry oil from Russia to the port of
Omisalj on the northern Croatian island of Krk. Moscow is
extremely interested in this project, according to Lavrov,
but respects Croatia's ongoing environmental review process
and consideration of potential damage to Croatian tourism.
Research is now complete for an environmental impact report,
but the GoC is still assessing the information and has not
yet released any findings.


5. (U) Just days after Lavrov's departure, the ruling
Croatian Democratic Union (HDZ) presidential candidate
Jadranka Kosor declared her opposition to Druzba-Adria
(putting her slightly beyond the GoC's official neutrality)
and environmental protestors organized rallies in Zagreb and
several coastal cities against the project. President Mesic,
on the other hand, remains open to the project and has called
for an informed public debate, noting that oil tankers are
already entering the Adriatic bound for Italian and Slovenian
ports and no one is protesting against them.


6. (SBU) Lavrov also came to Zagreb looking for a piece of
the military modernization pie. "Military and technical
cooperation" discussions centered on Russian-made hardware
that could serve the Croatian military's needs in upgrading
to NATO standards.

ANTI-TERROR, COUNTER-DRUG AGREEMENTS ON HORIZON
-------------- --

7. (SBU) Lavrov and Zuzul began the groundwork for future
bilateral agreements on preventing terrorism and drug
trafficking and responding to civil disasters. MFA consular
experts will go to Moscow in January to pursue to pursue
accelerated visa procedures. According to Klaic, Russian
police checks are slowing down visas for Croatian business
travelers.


8. (U) The FMs also discussed proposals for intercity
cooperation, including a planned sister city relationship
between Kaliningrad and Rijeka. According to Lavrov, the GoR
will establish Russian cultural center in Croatia and a Forum
for Slavic Culture that will link all Slavic peoples.
FRANK


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