SERBS PLAYING POLITICAL HARDBALL ON RETURN ISSUES

C O N F I D E N T I A L ZAGREB 000554

SIPDIS


DEPT FOR EUR/SCE

E.O. 12958: DECL: 04/01/2014
TAGS: PHUM PREF PGOV PREL HR
SUBJECT: SERBS PLAYING POLITICAL HARDBALL ON RETURN ISSUES

Classified By: POLOFF Mitch Benedict for reasons 1.5 (b) and (d)

Summary
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1. (C) Disappointed with GOC implementation of promises to
address refugee return issues, Serb politicians threatened on
March 23 to withdraw their informal support for PM Sanader's
government. Sanader responded immediately and met with
Milorad Pupovac, one of three MPs representing the Serb
minority in Croatia's parliament and agreed to concrete
benchmarks on property repossession, reconstruction
assistance and minority representation in local government
bodies. Sanader and Pupovac agreed on a bureaucratic
mechanism intended to bypass a long-standing obstruction to
returns. Pupovac genuinely believes Sanader is trying to do
the right thing. He told us on March 26 that he supports
"with no reserves and no conditions" the PM's efforts to
reform both the GOC and the HDZ. Sanader's efforts to
deliver quick results on this issue may run aground on the
rocks of Croatia's still foundering judicial system, which
would be responsible for ordering evictions of ethnic Croat
"squatters" in homes belonging to Serb refugees. Pupovac set
optimistic benchmarks by which he will measure GOC
implementation of commitments. End Summary.

Serbs Dissatisfied
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2. (C) On March 23, Milorad Pupovac, president of the Serb
National Council and one of three members of Croatia's
parliament designated to represent the Serb minority,
announced to the press that he was dissatisfied with the
government's implementation of its pledges to move forward on
refugee issues. Pupovac threatened that the three Serb MP's
were prepared to withdraw their support for PM Sanader in the
absence of concrete results. Although traveling in Europe,
PM Sanader contacted Pupovac right away and set up an urgent
meeting with Serb leaders. While Sanader leads a minority
government and needs the support of the three Serb votes in
parliament, the greatest value he gains by his party's
informal coalition with the Serbs is credibility; they
demonstrate to the EU and other skeptics that Sanader's HDZ
is no longer the ethnocentric party of former President
Tudjman.

Commission Established
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3. (C) After meeting with the SDSS on March 25, Sanader
announced that the GOC had formed a commission to resolve
return and property issues and that it would be headed by
former MP and hard-line HDZ member Gordana Turic. Sanader
proposed the commission in part because he was unwilling to
remove Lovre Pejkovic, the Assistant Minister who has been in
charge of the property repossession issue for six years. The
SDSS alleges that Pejkovic is not only tainted by allegations
of corruption and is viewed by many as an obstacle to return
and the resolution of property issues, but he worked actively
to oppose the appointment of Stanko Janic (an ethnic Serb) as
Assistant Minister for reconstruction.


4. (C) The latest addition to the commission, which was
recently reported to consist of 14 members, is Vladimir
Stengel, the hard-line and long-serving HDZ mayor of Vukovar.
The appointment of Stengel, even more than Turic, provides
ample pause for concern. Stengel, an ardent Croat
nationalist, has presided over a virtual stalemate in
Vukovar, a city that has begun to reconstruct, albeit slowly,
but remains tensely divided along ethnic lines. However,
Sanader believes his government should be judged by its
results rather than rhetoric, and his strategy may be that
only hard-liners, motivated by the desire to stay in power
and promise of leading Croatia toward its Euro-Atlantic
aspirations, can force compliance on refugee return issues
among the lower level bureaucrats and local and regional
officials.

Property Repossession
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5. (C) The Government's agreement with the SDSS called for
the elimination of "legal and other obstacles to the
repossession of property owned by institutions of the Serb
national community." Repossession of private property by
individuals was not specifically addressed, but has become a
central benchmark now being used by the SDSS to measure
cooperation with the Government. A key area for concern is
properties that are occupied illegally, either because the
temporary occupant never had official approval or is in

possession of alternative accommodation. These so-called
"illegal/double occupants" now currently number about 500.
Approximately 3,200 legally occupied houses (under the
war-time law on temporary occupancy) are to be returned by
year's end.


6. (C) Pupovac, who cited a figure of 430 illegally occupied
properties, told us that the SDSS is demanding that all
illegal/double occupants vacate properties by the end of
June. They expect 150 properties to be returned to their
rightful owners in April, 150 in May, and the balance in
June. Pupovac said it was unconscionable that situations
exist whereby an ethnic Croat from Bosnia is occupying a
Serb's house in Croatia yet the Croat has gotten
reconstruction assistance in Bosnia to rebuild his house
there, which he is now renting and using the income to
purchase a place on the coast of Croatia. The SDSS is
pushing the Sanader Government to establish a coordination
mechanism with Serbia Montenegro and Bosnia Herzegovina so
that such situations can be detected and avoided.


7. (C) The OSCE Mission has told us they view the SDSS
timetable as unobtainable and unrealistic. Some 99 percent
of cases of illegal/double occupancy are before the courts
awaiting action, meaning there could be no change in the
status quo until the completion of such action; in addition,
a court order would be required to evict an illegal/double
occupant -- which is doubtful given the still growing backlog
of over 1.4 million cases clogging the judicial system. The
inability of the judicial system to resolve these emotionally
charged yet simple cases is highlighted by the fact that
resolution of cases (and approximately 200 have been resolved
since January 1) occurs extra-judicially by agreement between
the occupier and the owner. Ratko Gajica, an SDSS MP,
admitted to us that illegal/double occupants are going to
vacate only if pressured to do so by the government.

Reconstruction Assistance
--------------


8. (C) The agreement between the SDSS and the Government
speaks extensively to the issue of reconstruction assistance.
The GOC agreed to the administrative resolution of all
requests on hand by the end of April. In addition, the
agreement commits the GOC to extend the current deadline of
June 2004 for submission of requests for reconstruction
assistance. According to the OSCE there are currently
10,500 applications for reconstruction assistance on file
with the GOC, and of those they expect approximately 7,500
positive decisions. The remaining 3,000 applications are
incomplete, and could be closed immediately, according to the
GOC.


9. (C) Pupovac, who is not known for his exactness of
numbers, spoke of 7,000 applications that were incomplete.
Regardless of the number, the issue for Pupovac is to find
out why the applications are incomplete so that appropriate
efforts can be made to complete the applications. He
recognizes that the applicants themselves are at least partly
to blame for the high number of incomplete applications;
information gleaned from the OSCE would in fact lay most of
the blame on the applicants. For example, last year as a
follow up, the GOC sent 2,000 letters to applicants seeking
clarifications and additional information; only a few hundred
applicants responded. According to the OSCE, the GOC is in
possession of 17,000 unprocessed applications, which is
compounding the problem. On March 26, the GOC extended the
deadline for submitted reconstruction assistance requests to
September 30.

CLNM Implementation
--------------


10. (C) A significant part of the agreement between Sanader
and the SDSS related to implementation of the Constitutional
Law on National Minorities (CLNM). Sanader committed to
bringing local and regional self-government units into
compliance with the provisions of the CLNM by March 18. He
also committed by March 18 to provide the funds and establish
the conditions for the election and work of Serb national
minority councils at the local, municipal, and county levels.
Elections for minority councils took place in February;
funding and other issues remain unresolved.


11. (C) Full implementation of the CLNM would bring two
significant benefits for minorities: political participation
at the local and regional level and jobs. Political
participation of the Serbian minority and jobs being what
they are -- either in short supply or a particularly touchy
subject seven years after an ethnically based war -- these

provisions of the law have not been implemented since the law
was passed in December 2002. Nonetheless, the law requires
that county, municipal, and town councils include ethnic
minorities proportionally. Pupovac and the SDSS are
demanding steps be taken to implement this commitment, which
will in many cases open the doors for the first time to
political participation for minorities at the local and
regional level.


12. (C) Remarkably the Racan Government appears to have never
even attempted to implement the CLNM at the local and
regional level. The GOC is now drafting regulations for
implementation and accompanying guidelines for municipalities
and counties. Pupovac told us the SDSS is not demanding
everything at once, but it would be content for now if the
GOC would meet with the county prefects and begin a process
of developing regulations for implementation of the CLNM.
Actual implementation could then take place over a six-month
period.

Comment
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13. (C) We asked Pupovac directly how he is going to measure
success. He cited figures on the return of property and
talked about implementation of the CLNM, but what really
animated him was talk about personalities. He said that the
people who for years obstructed the return of refugees "have
to be dealt with" -- and he is correct. There is no doubt
that individual obstruction by government officials has
significantly held back the resolution of refugee return and
reintegration issues.


14. (C) There is a new urgency to settling issues resulting
from the 1991-1995 war. Many feel that only the HDZ -- the
party in power during and after the war -- would have the
authority to deal with the hard-liners who have been
obstructing progress on refugee return and reintegration
issues. However, Sanader has to maintain a delicate
balancing act. He must keep his right-wing nationalist base
placated while at the same time sufficiently fulfilling his
agreement with the SDSS to retain their support in
parliament.


15. (C) Like the OSCE, we do not expect the GOC to be able to
resolve all the issues in the agreement with the SDSS by the
deadlines established. Where the SDSS draws the line remains
to be seen; for now Pupovac genuinely believes Sanader is
trying to do the right thing. He told us on March 26 that he
supports "with no reserves and no conditions" the PM's
efforts to reform both the GOC and the HDZ.
FRANK


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