SLOVENIA: COM AND PM JANSA MEET PRIOR TO

C O N F I D E N T I A L LJUBLJANA 000414

SIPDIS

SIPDIS

DEPT FOR EUR/NCE VTRIM; NSC FOR DWILSON

E.O. 12958: DECL: 06/30/2016
TAGS: PREL ECON MARR ENRG SI
SUBJECT: SLOVENIA: COM AND PM JANSA MEET PRIOR TO
WASHINGTON VISIT


Classified By: COM Thomas B. Robertson for Reasons 1.4 (b) and (d)

1.(C) Summary. COM had lunch with Prime Minister Janez Jansa
June 29 to discuss the Prime Minister's upcoming visit to
Washington July 10-12. Jansa was clearly looking forward to
his trip and eager to connect with policy makers in
Washington. Jansa is focused on Slovenia's upcoming EU
Presidency (first half of 2008) and how he will provide
leadership on some of the pressing issues outside the EU. He
is interested in US views on NATO/EU membership for Ukraine
and other European countries that do not presently figure in
membership timelines for these organizations. He expressed a
pragmatic view of Russia and its approach to Europe,
specifically on energy, and he indicated he would like to
strengthen economic ties between Slovenia and the U.S.,
perhaps focusing on small and medium enterprises, where
Slovenes have been more successful than is commonly
acknowledged. COM and Jansa also discussed the issue of the
8x8 armored fighting vehicles (AFV) and the recent award of a
contract to a Finnish company to supply 136 vehicles to the
Slovene Army. End Summary.


2. (C) PM Jansa started off the meeting saying that he was
looking forward to his meetings in Washington and was
particularly interested in US views on enlargement for both
NATO and the EU. He said that while some countries were in
one organization and not the other, for most European
countries not currently on the path to membership, that was
not really the best signal to be sending. Jansa thought it
was important that the EU countries understand that being
members of one organization was not enough. The EU had to
continue to support these European countries' eventual
membership in the EU.


3. (C) Referring to a speech given by Serbian PM Kostunica
this week in Kosovo, Jansa said he was very disappointed by
Kostunica, whom he had last met in March in Rome. He said
that at that time he told Kostunica he could not outdo the
radicals on their own turf and that he should adopt a more
pragmatic approach to Kosovo. Unfortunately, by expressing
the inviolable connection of Kosovo to Serbia, Jansa said,
Kostunica had gone "one sentence too far."


4. (C) The conversation briefly touched on energy and recent
overtures by Russia in the Slovenian energy market. Jansa
commented that energy was an important issue and one on which
there was no common EU policy, a situation that was very
favorable for Russia. He agreed Russia had recently been
much bolder about pressing its interests in western European
energy markets and attributed this to Russia's "full
pockets."


5. (C) Noting that economic reforms were proceeding and that
he expected to have several more laws adopted by the end of
the year to address tax issues, labor and health law, Jansa
offered and interesting perspective on why privatizations
seemed to be going at a more measured pace. During the years
of communist rule, Slovenes had the strong sense that they
owned the means of production in Slovenia (or Yugoslavia).
Regardless of whether this was, in fact, reality, there was a
genuine perception of ownership among the workers. That
attitude persists today along with a not unreasonable belief
that a private owner, domestic or foreign, would not feel the
obligation to preserve their jobs. This helps drive (or
slow-down) the process of privatization.


6. (C) COM raised the pending investment by casino operator
Harrah's, suggesting that the GOS needed to be much more
forthcoming in its support for the deal if they, in fact,
wanted it to happen. Jansa said that he thought things were
on track. In order for the GOS to lower the tax rate on
gaming proceeds, it needed to make up the lost revenue
elsewhere. He said that if all that Harrah's wanted to do
was put in a casino, Slovenia could do that on its own. The
GOS was much more interested in what else Harrah's could
bring to the table in terms of tourist facilities, including
more beds (up to 3000),which would also generate the levels
of tax revenue needed to offset other losses. The best
chance that the GOS had of selling a project of this
magnitude was to be able to showcase all the benefits beyond
the gaming element of the deal. In fact, those would need to
outweigh the gaming aspects to gain solid support of the
local population.


7. (C) In terms of future economic and commercial
cooperation, Jansa thought that small and medium enterprises

provided the best opportunities. He said there were many
small, innovative Slovenian companies that were practically
unknown in Slovenia, let alone the U.S. One company,
Dewesoft, had developed software that was now being used by
NASA. Jansa thought there were many more such opportunities
for collaboration and investment.


8. (C) One final issue raised by Jansa in response to a
letter sent by COM the previous week was the recent awarding
of a contract to produce 136 8x8 armored fighting vehicles
for the Slovenian Army. Jansa said that given the size of the
military community and the fact that people move easily from
the ministry to the private sector and back, both competitors
had a very good idea of what the other was offering. There
was a strong perception in the GOS that the Slovene company,
Sistema Teknika (ST),was too self-assured, assumed it had
the superior product and would win, and, therefore, did not
have to compete hard for the contract. The offer of the
Finnish company, Patria, however, was $50 million cheaper and
that was very significant. When asked if there was any
chance the tender would be reopened, Jansa said he did not
know, and that he would support the decision of his Minister
of Defense. COM did point out that it was hard to do the
math on the Patria claim that it would create jobs and
involve up to 50 Slovene companies in production if the first
64 vehicles, at least, were to be produced in Finland. It
was also worth noting that there were reports that the Patria
8x8 could not be loaded on to a C-130 cargo plane with out
first removing the wheels, thus making it a difficult vehicle
to transport out of country. Jansa was interested and said
this was new information to him, but he did not make any
commitment to act on it.


9. Comment: On the whole, PM Jansa seemed relaxed and ready
to go to Washington. He is clearly prepared to make the most
of his visit and put Slovenia solidly in the camp of good and
reliable allies to the United States. We hope Jansa will
also take advantage of his trip to strengthen bilateral
commercial and educational ties, which will help fortify an
already strong foundation of cooperation between Slovenia and
the United States. End Comment.
ROBERTSON