MAINTAINING BILATERAL MOMENTUM AFTER PM'S WHITE

C O N F I D E N T I A L ZAGREB 001334 SIPDIS SIPDIS FOR EUR/SCE E.O. 12958: DECL: 11/02/2016 TAGS: PREL PGOV EAIR ETRD PHUM KJUS HR SUBJECT: MAINTAINING BILATERAL MOMENTUM AFTER PM'S WHITE HOUSE VISIT Classified By: Ambassador Robert A. Bradtke for reasons 1.4(b) and (d). ¶1. (C) SUMMARY: As discussed at PM Sanader's October 18 lunch with the Vice-President, the Ambassador and FM Kolinda Grabar-Kitarovic began a series of regular reviews of outstanding bilateral issues October 27. State Secretary Hidajet Biscevic and DCM also attended. Embassy provides this overview as an initial list of issues key to further improving bilateral relations and on which progress can potentially be made. We will follow up with individual requests for action and guidance as appropriate. END SUMMARY Croatian Role in Kosovo Status process ¶2. (C) Ambassador thanked Grabar-Kitarovic and Biscevic for their interest in seeing Special Envoy for Kosovo Frank Wisner on October 30 (see septel). He noted the importance of our countries remaining in close touch to ensure a favorable outcome of the Kosovo status process. Supplemental SOFA Talks ¶3. (C) Biscevic noted that we had made a little progress on the SOFA talks, but that the judicial aspect (detainees) was still a problem. The Ambassador noted that both sides should work to bridge differences on this issue so we could sign by the end of the year. (NOTE: Further progress was made during a DVC round of talks on October 25, leaving only two difficult issues for further discussion: the custody/detainee issue, and the issue of payment of landing fees.) Open Skies ¶4. (C) Grabar-Kitarovic said that the Ministries of Transport and Economy were very interested in the Open Skies agreement. However, the MFA was concerned about the reaction of the European Union if Croatia, as a candidate country, negotiated such an agreement bilaterally. She asked about the EU Commission's lawsuit against Germany and other member states that had concluded Open Skies agreements with the US, and what the current status of that case was. Ambassador assured Grabar-Kitarovic that we had numerous such agreements with EU member states. He promised additional guidance on addressing the EU issue in the next few days, pending receipt of instructions expected from Washington. Shipboarding Agreement ¶5. (U) Biscevic said that the U.S.-Croatian shipboarding agreement was on the parliament's agenda for ratification in the near future. Extradition Treaty ¶6. (U) The Ambassador noted that we were gauging Washington interest on updating the current extradition treaty, which dates from 1901. Grabar-Kitarovic said she would discuss the issue with Minister of Justice Lovrin. Police cooperation Agreement ¶7. (U) The Ambassador noted Minister of Interior Kirin's interest in concluding a bilateral Police Cooperation Agreement, and undertook to raise the issue with Washington. Double Taxation Agreement ¶8. (U) The Ambassador raised a double taxation agreement as another issue we will explore with Washington agencies. Security Cooperation Agreement ¶9. (C) The Ambassador updated the FM on our conversations with the President's office on a draft Security Cooperation Agreement. He said the draft is still under review in Washington, but we are encouraged by President Mesic's willingness to consider such an arrangement. Grabar-Kitarovic said she was pleased we were discussing this with the President. She reminded the Ambassador of demarches the GOC had received from EU countries cautioning Croatia against signing such a deal with the US. She agreed that we should continue discussions on this issue. Property Restitution ¶10. (SBU) The Ambassador brought up the problem of restitution for U.S. citizens whose property had been confiscated during or after WWII, and our impression that this issue had not made much progress recently. He noted that this issue would certainly come up when the U.S. Senate considers Croatia's accession to NATO, so it was better to deal with it now to get it off the table. Grabar-Kitarovic said that Croatia was determined to deal with the issue, but that it was politically very difficult, especially in a pre-election context. The last time property restitution had come up publicly, the opposition and President Mesic had successfully persuaded the public that the government wanted to give property back to Austrian Nazis, which was untrue. Due to the Austria connection, this issue had to be handled with political sensitivity. She promised to discuss it further with the Ministry of Justice. She suggested that a U.S. NGO might be helpful in persuading the opposition that this issue needed to be addressed. The Ambassador suggested that the Special Envoy for Anti-Semitism, who is currently planning a trip to Zagreb, might be able to discuss this issue further with the GOC. (NOTE: Special Envoy Gregg Rickman will visit Zagreb November 17-18.) Tax issues ¶11. (U) The Ambassador brought up several tax issues being faced by U.S. companies operating in Croatia, noting that he would be addressing these with Finance Minister Suker. IPR ¶12. (SBU) The Ambassador stressed the importance of getting Croatia off the Special 301 (Intellectual Property Rights) Watch List by dealing with its pharmaceutical patents issue. He stressed that the USG was not asking Croatia to do anything on this issue that would be inconsistent with its obligations to the EU - in fact, if Croatia fully implements EU standards on patents, our problem will be taken care of too. American Studies ¶13. (U) The Foreign Minister said that she was in discussions with the University of Zagreb about enhancing its American Studies curriculum. The Ambassador said we would like to be helpful in this area. BRADTKE