AMBASSADOR MEETS MARITIME, TOURISM,TRANSPORT AND DEVELOPMENT MINISTER

UNCLAS ZAGREB 000279

SIPDIS


E.O. 12958: N/A
TAGS: PREL PGOV PHUM ECON HR
SUBJECT: AMBASSADOR MEETS MARITIME, TOURISM,TRANSPORT AND DEVELOPMENT MINISTER

Summary
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1. Bozidar Kalmeta, Croatia's Minister of Maritime,
Tourism, Transport and Development, said in his February 9
introductory meeting with the Ambassador that
reconstruction of returning Serbs' homes and road building
would be his two top priorities. The government would
consider giving Bechtel a contract to participate in
building a highway from Split to Dubrovnik. It also
intends to continue modernization of the Croatian railroads
and liberalize the telecommunications market. In tourism,
the GOC would seek to raise the quality of service by
privatizing hotels to brand-name investors. A joint
project with the World Bank has been started to treat
wastewater in coastal cities. Kalmeta would like to see
creation of an American-style Coast Guard. Despite these
numerous challenges, Kalmeta's business-mindedness inspires
optimism. End summary.

Reconstruction
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2. Croatia's new Minister for Maritime Affairs, Tourism,
Transport and Development, Bozidar Kalmeta, said at his
February 9 introductory meeting with the Ambassador that
reconstruction of the remaining 5,000 houses for which
reconstruction applications were outstanding -- 80 percent
of which was ethnic-Serb owned property -- was his
ministry's top priority. He estimated that this effort
would cost about 1.3 billion kuna (approx. 215 million
dollars) and would be completed by the spring of 2005.
Kalmeta praised his team working on reconstruction, led by
his State Secretary for development, Zdravko Livakovic, and
including an ethnic Serb assistant minister, Milan Janjic
of the Serb Democratic Forum (SDF). Revitalizing the
economy in the war-affected areas will be part of the
reconstruction effort. Kalmeta said the government was
preparing a new law on Areas of Special State Interest,
which would include additional economic incentives for
these areas.

Transportation Infrastructure
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3. Kalmeta identified construction of infrastructure as
the second highest priority of his ministry. The
government will continue the same pace of road building as
the previous one. Referring to a meeting he had had the
same day with Bechtel representatives, the Prime Minister
and the Foreign Minister, Kalmeta said the government would
consider Bechtel as the contractor for the new highway from
Split to Dubrovnik. An important condition would be heavy
involvement of Croatian companies in the project. Bechtel
representatives, who allegedly voiced readiness to include
Croatians in up to 70 percent of the job, would send back a
concrete proposal in a matter of days. In addition to this
Adriatic-Ionic corridor, the GOC was also interested in the
5C corridor running from the Hungarian to the Bosnian
border, as well as convincing the Slovenes to build their
own portions of the highways connecting Croatia with Italy
and Austria, respectively. Kalmeta asked for USG help with
the Slovene government about this issue.


4. The government intends to continue with the 2003-2007
Railroad Modernization Plan as enacted by the previous
government. To achieve this, the government would have to
spend 15 billion kuna ($2.5 billion),part of which would
be collected through a gasoline tax.

Telecommunications
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5. Despite resistance from the existing telecom firms to
allowing more networks of fixed and mobile telephony,
Kalmeta supported the liberalization of the
telecommunications sector. Competition would eventually
bring down the prices of telephone services, which were
among the highest in Europe, Kalmeta said. Also, new
concessionaires would create from 1 to 1.5 thousand jobs,
and contribute at least 170 million kuna to the state
budget.

Tourism
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6. As for tourism, Kalmeta supported quick privatization
of the remaining 30 hotel companies, which owned a much
greater number of hotels. He favored foreign brand-name
investors that would significantly raise the quality of
accommodations. Kalmeta singled out Istria as a region


whose approach to tourism was serious, systematic and which
recognized that tourism was a long-term investment. As far
as the rest of Croatia was concerned, tourism was handled
in an "amateurish" way. Kalmeta mentioned that the
government engaged with the World Bank in a $240 million
project to manage wastewater in the coastal cities. Zadar
and Opatija were the first towns to start the project.

Coast Guard
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7. Kalmeta liked the idea of a Coast Guard as it exists in
the U.S. His ministry was drafting legislation to
establish such a Coast Guard and welcomed U.S assistance
and experience in this matter.

Comment
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8. Kalmeta's gigantic ministry came as a result of merging
three ministries into one. While highly talented --
Kalmeta was described during the election campaign as
Croatia's most "successful mayor" -- the Zadar native is
still trying to determine where his huge portfolio ends.
His public works and reconstruction predecessor, Radimir
Cacic, a bullish and determined businessman, left some big
shoes to fill. To a large extent, the government's
performance will be measured by Kalmeta's achievements,
both domestically (tourism and road building) and
internationally (return and reconstruction). Despite this
pressure, Kalmeta strikes us as a capable manager, rather
than a politician, who is on top of his portfolio and whose
eye is set on results.

FRANK


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