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IdentifierCreatedClassificationOrigin
06ZAGREB203 2006-02-16 09:05:00 UNCLASSIFIED Embassy Zagreb
Cable title:  

CROATIA SPINS VICTORY ON BALKAN FREE

Tags:   ECON ETRD ECIN EU HR 
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RR RUEHAG RUEHDA RUEHDF RUEHFL RUEHIK RUEHKW RUEHLA RUEHLN RUEHLZ
RUEHROV RUEHSR RUEHVK RUEHYG
DE RUEHVB #0203/01 0470905
ZNR UUUUU ZZH
R 160905Z FEB 06
FM AMEMBASSY ZAGREB
TO RUEHC/SECSTATE WASHDC 5707
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE
					  UNCLAS SECTION 01 OF 02 ZAGREB 000203 

SIPDIS

SENSITIVE BUT UNCLASSIFIED
SIPDIS

EUR FOR EUR/SCE

E.O. 12958: N/A
TAGS: ECON ETRD ECIN EU HR
SUBJECT: CROATIA SPINS VICTORY ON BALKAN FREE
TRADE PROPOSAL

REF: ZAGREB 135



1. (SBU) Summary and Comment: Croatian PM Ivo
Sanader scored domestic political points over the
past two weeks in the controversy surrounding
proposals for a Western Balkans Free Trade
Agreement. Although the concept of a regional
free trade agreement is one that Croatia has
nominally supported within the framework of the
Stability Pact, a poorly-informed press inflamed
public opinion with suggestions that Croatia
could be coerced into a new Yugoslav federation
and that its EU accession would be slowed.
Sanader, taking full advantage of this deficit of
facts, used the opportunity to push a long-
standing Croatian position that any free trade
agreement in the region be based on an enlarged
Central European Free Trade Agreement (CEFTA).
Although the GOC is still awaiting official
reaction from Brussels, the Croatian public and
press have praised the Prime Minister's "defense"
of Croatia's national interests. End Summary.

Press Defines the Story


--------------------------




2. (SBU) News that the EU reiterated its long-
standing call for a Western Balkans Free Trade
Agreement in late January fell on fertile ground
in the fiercely competitive Croatian market for
sensationalist headlines. Unburdened by the fact
that work on a free trade agreement has been on-
going within the Stability Pact, much less that
these countries represent Croatia's best export
markets, the press seized only on imagined
similarities with the former Yugoslavia.
Headlines proclaimed that the EU had called for
the creation of a new Yugoslavia. Beneath this
was speculation about unspoken political motives,
appeasement of Serbia and even a "Balkan EU."
The chattering class in Zagreb largely concurred
that such a proposal would surely stall Croatia's
advance to the EU.

Government Lets the Pot Boil


--------------------------




3. (SBU) The government did little to set the
record straight. Politicians of various stripes
seized the opportunity for posturing, vowing
never to countenance the creation of a new
Yugoslavia. By and large, there was little
discussion of the merits of a free trade
agreement, of the benefits of a new agreement
versus modification of existing ones, or of
whether or not a new agreement would benefit
Croatia as the strongest economy among the likely
members.

CEFTA as Compromise


--------------------------




4. (SBU) Sanader used this controversy artfully,
vowing that he would never permit the creation of
another Yugoslavia and making his own
"counterproposal." Sanader actually proposed
nothing new, but following a meeting with
Stability Pact Coordinator Busek in Zagreb on
February 2, announced that he had advocated an
enlargement of CEFTA as an alternative to a new
free trade agreement. Enlarging CEFTA has been a
long-standing Croatian position, partially as a
means of pushing back on pressure to create a new
"Western Balkan" structure. The Croatian fear of
being shackled to the other former Yugoslav
republics is deep-seated, as are suspicions that
its EU accession could be stalled. CEFTA, by
this logic is more palatable, mostly by virtue of
the fact that it is not "Balkan" and that most of
its previous members have or are about to find
their place within the EU.

Defender of the National Interest


--------------------------




5. (SBU) The press has remained interested in
this story over the past two weeks and has been
largely complimentary of the government and its
handling of the issue. Several stories have
praised Sanader for pushing back on the EU's
proposal and defending Croatia's national
interest - a particularly strong compliment, as
the government is generally criticized for being

ZAGREB 00000203 002 OF 002


too compliant toward Brussels. In the meantime,
the government has used every opportunity to
reiterate its proposal for CEFTA enlargement, all
the while waiting for a reaction from the EU.
Sanader is expected to raise the issue again
during the February 15 visit of EU Commissioner
Barroso.


FRANK