Croatia's Refugee Programs Proceeding, Slowly

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SUBJECT: Croatia's Refugee Programs Proceeding, Slowly

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1. (SBU) Summary and Comment. Continuing their monthly
meetings on refugee return issues, the Ambassador and other
principals from the international community (OSCE, UNHCR and
EU) met with Minister for Trade, Transport and Development
Bozidar Kalmeta February 6 to review progress. Perhaps the
greatest progress is the forum itself: the monthly meetings
hosted by Kalmeta allow for concrete discussions on return-
related programs. The International Community (IC) is eager
to see the GOC fulfill its commitment to additional tangible
results this year, particularly in the complex program to
allocate apartments to individuals who previously had
received subsidized housing. GOC progress in other areas is
significant: the GOC has essentially completed the process
of returning about 19,000 homes; reconstruction is
proceeding steadily with 9,500 houses rebuilt in 2005;
electrical grids and other infrastructure projects are
undergoing significant investment; and the GOC has initiated
procedures to deal with some outstanding administrative
barriers.


2. (SBU) At the meeting the Minister indicated that 2006
presents a key opportunity for the GOC to move forward on
its housing program, re-electrification, and other returnee
programs, and was optimistic it would complete its
commitments on time. In light of EU accession talks and
impending closure of the OSCE mission, all sides are eager
to demonstrate progress in return programs this year. The
EC is growing impatient with the pace of reforms and
emphasized the need to present progress to Brussels in
upcoming accession discussions; while Heads of Mission from
OSCE and UNHCR see improvements and say they need to
convince their home offices that the GOC is earnest in
helping returnees. Trying to be proactive on return
programs, the Minister has the political backing of PM
Sanader but faces bureaucratic resistance within the GOC;
Kalmeta is committed to results and his efforts have been
bolstered by the October 2005 appointment of Damir Spancic
(former Mayor of Pakrac, with whom Post has a strong
relationship) to the returnee portfolio. Due in part to
internal disagreements within the OSCE, EC, and UNHCR,
progress on the Sarajevo Declaration (through which the
governments of Croatia, Serbia and Bosnia agreed to
cooperate with the IC and each other on setting concrete
benchmarks for refugee returns) appears stalled. Post will
continue its engagement with the IC and GOC to encourage
even greater concrete results.


3. (SBU) In addition to policy-level involvement by the
Ambassador, and regular and intensive consultation on these
issues among Embassy, IC and GOC staff at the working
levels, nearly all USG programs in Croatia assist the GOC in
creating a welcoming environment for returnees. These
include programs to improve economic opportunity in returnee
areas, selection of humanitarian demining sites, supporting
domestic prosecution of war crimes through training and
equipment, bilateral military exercises which include a
civic action component, and so on. End Summary and Comment.

Progress, Slowly but Surely


4. (SBU) The GOC has made tangible progress in several key
areas. The process of repossession of ethnic Serb homes is
essentially completed: the GOC has facilitated the return of
19,000 homes and only about 50 cases remain. Home
reconstruction is progressing steadily: about 9,000 homes
were reconstructed in 2005 alone, and about 4,900 claims
remain pending. The state-owned electricity company (HEP)
reports that it invested 34 million kuna ($5.6 million) last
year to reconnect about 50 returnee villages and envisions
nearly doubling that expenditure in 2006 to connect 3400
users. In addition, the GOC recently intervened in an
egregious case of an unsolicited investment of a refugee's
home by a temporary user. The Minister has drafted a
standardized procedure for resolution of the 24 other such
cases that he plans to submit for approval shortly.


5. (SBU) Perhaps more importantly, the forum for discussing
these issues has been institutionalized: the IC meets
monthly with the Minister to discuss both successes and
problem areas. In contrast to prior administrations, the
meetings are constructive, collegial and open. Kalmeta and

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Spancic (Kalmeta's new deputy minister, who replaced
Assistant Minister Lovre Pejkovic as the point-person on
refugee returns) are proactive and results-oriented and
working in good faith to make progress. Both admitted that
they face obstruction from other parts of the bureaucracy
but that they want to achieve success. And progress has
been recognized: in a recent interview in Serbia, Croatian
ethnic Serb MP Milorad Pupovac praised the GOC for its
refugee return programs in recent years, citing resolution
of home reconstruction and repossession, and recent movement
on tenancy rights.

The Way Towards Reconciliation


6. (SBU) Reconciliation is a long-term goal. Towards that
goal, the international community is focused on encouraging
tangible results for returnees. Most problematic is housing
for former tenancy rights holders, a program initiated
several years ago. The GOC needs to review about 7,900
claims and is just now allocating the first apartments.
With urging from the OSCE, the GOC provided apartments to
forty-two vulnerable cases in late 2005. Two weeks ago the
GOC began the procedure for providing apartments to another
27 tenancy rights holders. In its meeting with the
Minister, the IC emphasized that that the pace of allocation
will need to increase dramatically in 2006 in order to
consider the portfolio closed anytime soon.


7. (SBU) The Minister assured the IC that the process of
adjudicating applications and procuring housing has begun in
earnest and was confident that the GOC will be able to
fulfill its commitments for this year. At next month's
meeting with the IC, he will provide a concrete timeline for
constructing and allocating apartments. Kalmeta noted that
the GOC has immediately available 52 million kuna ($8.6
million) for purchasing apartments, which includes unused
prior-year funding. For 2006, the GOC plans to spend over 2
billion kuna ($333 million) for reconstruction and refugee
issues including re-electrification and infrastructure
development.
FRANK