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04ZAGREB363 2004-03-03 10:09:00 CONFIDENTIAL Embassy Zagreb
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					  C O N F I D E N T I A L  ZAGREB 000363 


E.O. 12958: DECL: 03/02/2014

Classified By: Ambassador Ralph Frank, reasons 1.5 (b) & (d)


1. (C) Ambassador Frank discussed a range of issues February
24 with former Prime Minister, SDP President and now
opposition leader Ivica Racan, and thanked him for his
efforts as Prime Minister to prepare Croatia for future NATO
membership. Racan welcomed the thanks but cautioned that his
now-opposition SDP party would not support sending Croatian
troops to Iraq or ratification of an Article 98 agreement in
the current political climate. Racan's opposition means that
PM Sanader faces an almost insurmountable challenge to
assemble the two-thirds majority vote in the Sabor among the
other, smaller opposition parties, many of which have already
rejected publicly any support for troops to Iraq or an
Article 98 agreement.

2. (C) Racan blamed intra-coalition conflict as the major
cause for the defeat of his center-left coalition, noting
that while the SDP only lost five seats, the other coalition
partners were devastated in the polls. However, he admitted
some responsibility for his defeat by failing to spend more
time building up his own party's organization.

3. (C) On February 26, the Ambassador also met Racan's SDP
colleague, former Defense Minister Zeljka Antunovic. An
effective reformer in office, Antunovic warned that steep
cuts in the defense budget proposed by the ruling HDZ would
endanger defense reforms and render it difficult for Croatia
to fulfill its MAP obligations. END SUMMARY.

Afghanistan Yes, Iraq No


4. (C) On February 24, Ambassador Frank met with SDP
President and former Prime Minister Ivica Racan for the first
time since Racan's party lost tQ November 23 parliamentary
elections. The Ambassador thanked Racan for his efforts to
prepare Croatia to become a member of NATO, noting that the
visit of Secretary of Defense Rumsfeld to Croatia on February
8 was primarily intended to welcome Croatia's progress toward
NATO and was not meant to send any signals about the change
in government.

5. (C) Racan thanked the Ambassador, noting that when in
power, he had done everything possible to bring Croatia
closer to NATO and the EU. Racan agreed that U.S.-Croatia
relations were deeper than how they were frequently depicted
in the media which have been suggesting that close ties
depend solely on the issues of troops to Iraq and an Article
98 agreement. Racan said he wants what is best for Croatia
and would not be partisan if the ruling HDZ were able to
build on his good work to further Croatia's Euro-Atlantic

6. (C) The Ambassador said he hoped that Racan could be
equally non-partisan on the issue of sending troops to Iraq,
which was in Croatia's interest and would demonstrate the
GoC's willingness to share the burdens of being part of the
global coalition against terrorism. Racan responded that
sending Croatian troops to Afghanistan to participate in ISAF
had been his initiative. He had been able to secure broad
political support because of the clearer political context
and general public support. Racan said he would support an
expansion of Croatia's efforts in Afghanistan, as it would
not provoke any strong negative public reaction.

7. (C) On Iraq, Racan said the situation was much more
complex and public reaction would be much more negative. He
said that the SDP was in a delicate political position, and
that any support for sending troops to Iraq would hurt the
SDP and benefit the ruling HDZ. Because the ruling HDZ was
linked closely in the public mind to the U.S., the HDZ could
plausibly cite U.S. pressure as the motivating factor for its
support for sending troops to Iraq. If the SDP were to
support such a move, it would be seen as abandoning its
principles. Racan added that, when he was in government, he
wanted to do much more on Iraq, but pressure from the public
and from President Mesic forced him to retreat. Therefore,
any future steps in Iraq would have to be very cautious,
initially non-military in nature, and not all at once.

No Article 98 Agreement


8. (C) On an Article 98 agreement, Racan noted that he had
tried to find a solution to reconcile the U.S. and Croatian
positions. While he supported without compromise Croatia's
cooperation with the ICTY, public opinion still linked an
Article 98 agreement with ICTY cooperation. Racan said he
believed that HDZ party members for the most part were in
favor of signing an Article 98 agreement with the U.S. only

because they believed it would be part of a deal that could
get Croatia off the hook from cooperating with the ICTY. The
Ambassador made clear that there would be no such deal for an
Article 98 agreement. Racan said that while an Article 98
agreement would be very difficult politically, he hoped that
negotiations would continue to produce a formula to meet both
sides' needs.

Defeat Not Racan's Fault


9. (C) In response to Ambassador Frank's question about how
he would rebuild his party following the November 23
elections, Racan said that the elections had clarified the
political landscape in Croatia. There was now a strong
right-wing party in the HDZ, which he hoped would prove to be
as moderately right-wing as PM Sanader claimed. Racan
credited Sanader with initiating reform of the HDZ, but said
the work was not finished. Racan believes that Sanader will
be tied up with the business of governing and will not be
able to complete reform of the HDZ he was in power.

10. (C) More importantly, the elections had shattered the
illusion that there was political space for a democratic
center between the moderate right and the moderate left. The
challenge was for the SDP to become the strong moderate left
party. The SDP could agree on strategic issues with the HDZ
like NATO and EU membership, but still sharply differentiate
itself on issues of taxation, abortion, human rights, and
social welfare.

11. (C) Racan said that he would be focusing his efforts on
rebuilding his party now that he had the time. While in
government, he had to focus his attention on maintaining the
coalition and admitted that he had made a strategic error in
neglecting party-building work while Prime Minister.
However, Racan would not accept the notion that his party had
lost the elections. He noted that the SDP had only lost five
seats, while being the only party to campaign on the basis of
the work of the governing coalition. The other coalition
parties had effectively run against the coalition and been
devastated in the polls.

12. (C) Racan claimed that the election defeat was the result
of rising public expectations that the very success of his
government's policies had engendered. He blamed
intra-coalition squabbling for souring the public's appetite
for continued coalition government and accused the media of
being more interested in scandal-mongering than in reporting
on the coalition's successes. Racan also accused
conservative elements of the Catholic Church, upset at the
coalition's liberal social policies, of playing a worse role
than in the previous election.

Defense Reform Stalled


13. (C) The Ambassador followed up the Racan meeting with a
separate meeting on February 26 with former defense minister
(and current SDP Vice President and MP) Zeljka Antunovic to
thank her for her work in moving the Croatian military to
prepare for possible NATO membership. Antunovic thanked the
Ambassador for U.S. support for her efforts. She said that
now it was time for a strong public relations campaign to
explain why it was in Croatia's interest to join NATO. Such
a campaign should also be open and direct about what were the
obligations NATO membership would entail.

14. (C) Antunovic said she was deeply concerned that the
Defense budget proposed by the ruling HDZ would prove to be a
costly mistake. The cuts proposed were too deep to allow
further work on reforming the military to meet its NATO
obligations. Croatia had promised NATO it would spend 2.2
percent of GDP on the military, but the new budget was less
than last year. Worse, Antunovic feared that the new budget
indicated that the HDZ leadership did not understand that
further defense reform is not just for NATO but also in
Croatia's own best defense interests.

15. (C) Antunovic said she was also concerned about the new
defense minister's ability to assert leadership over a balky
bureaucracy and general staff. She said she understood that
leadership change always slows progress on reforms. She
feared that while staff work on reforms that she set in
motion would continue, implementation could be blocked by a
reluctant bureaucracy. She feared that the Defense Minister
Roncevic would not be able to reach the same modus vivendi
she had with the defense leadership, that she would accept
all comments and criticism but expected the military to carry
out her decisions.

16. (C) Antunovic said that President Mesic was very engaged
on military reform issues and that she had a productive
working relationship with him. She said that she had agreed

with Mesic to keep any disagreements out of the public eye
and work together to resolve them. Her problems had come
more from the President's staff than from the President

Not Ready for Coast Guard Decision


17. (C) In response to our question, Antunovic said she had
not made taking a decision on a Coast Guard a priority as
Mininster. She said the issue was in need of further
internal discussion, as all the relevant ministries have
different ideas on the issue. That said, she had set in
motion a long-term planning process at the Ministry of
Defense, but cautioned that few people in Croatia think
seriously about the need for inter-ministerial cooperation on
this or any issue.



18. (C) The hesitancy that Racan expressed to the Ambassador
to take on public opinion or President Mesic on difficult
issues sounded to us like deja vu all over again. Racan's
failure to assert leadership on Iraq and Article 98 was an
important reason movement on those issues stalled under his
tenure as prime minister. With his SDP's 34 seats in the
Sabor, Racan could have made it easier for the HDZ to gain
the two-thirds majority of 101 (of 152) deputies needed to
approve sending troops to Iraq or an Article 98 agreement.

19. (C) It will be virtually impossible for PM Sanader to
find the necessary votes without the SDP. He would have to
cobble together support from the smaller parties on the left
and right extremes, most of which have previously come out
against such moves. Sanader has proved that in bringing his
party to power he knows how to cut a political deal.
However, we are not sanguine that even Sanader could make
either troops to Iraq or an Article 98 agreement happen when
a large portion of his own party base is already set against
it. Adding to that President Mesic's strong opposition to
both initiatives, we conclude that faced with these
considerable obstacles there is little likelihood that the
Sanader government will be able to move forward on either
issue in the near term.