COM'S JUNE 14 LUNCH WITH PRIME MINISTER JANSA

C O N F I D E N T I A L SECTION 01 OF 04 LJUBLJANA 000418

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EUR/NCE AHENDERSON AND MNORDBERG, USDOC/ITA CRUSNAK

E.O. 12958: DECL: 06/23/2017
TAGS: PREL EUN PINS EINV MOPS ECON PHUM ETRD PGOV
SI
SUBJECT: COM'S JUNE 14 LUNCH WITH PRIME MINISTER JANSA

Classified By: CDA MCOLEMAN FOR REASONS 1.4(b) AND 1.4(d)


1. (C) Summary: At a lunch hosted by Prime Minister Janez
Jansa for COM June 14, the Ambassador urged Slovenia to exert
strong leadership during its upcoming EU Presidency
(January-June, 2008). Jansa discussed themes for the
Presidency, warned about the potentially explosive situation
in Kosovo, and stated that his Government would be willing to
extend the deployment of two Slovenian military trainers in
Iraq as long as any new billets are similar to the jobs
currently held by Slovenes at NTM-I. On domestic issues,
Jansa pointed to progress on economic reforms, decried the
red tape that is delaying completion of property
denationalization, and opined that further outreach to local
authorities in western Slovenia would facilitate final
agreement on the pending $1 billion Harrah's
entertainment/casino investment project. On human rights
issues, Jansa said the Government is pushing for a
constitutional law to resolve the issue of the "erased," and
he denied that the Government exerts any pressure on media
freedom. End summary.


2. (C) On June 14, Prime Minister Janez Jansa invited COM
to lunch to discuss a range of multilateral, bilateral and
domestic topics. Also attending were the PM's Foreign Policy
Advisor, Gasper Dovzan, and DCM. The Ambassador informed
Jansa that he plans to depart post at the end of August. He
also described his effort to raise money for the
International Fund for Demining (ITF) by soliciting donations
as he walks across Slovenia on the E-6 hiking trail. He
invited Jansa to join him in completing one of the last
segments of the route. The PM said he would like to do it.


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EU Presidency: COM Urges Strong Slovenian Leadership
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3. (C) The Ambassador remarked that one of his final
speeches will be on the topic of Slovenia's EU Presidency.
He said the eyes of the world will be on the first of the new
EU expansion countries to hold the Presidency and that strong
Slovenian leadership will be vital. COM urged the Government
of Slovenia (GOS) not to define a successful Presidency as
"surviving without making mistakes." On key issues such as
EU expansion, intercultural dialogue and energy security --
the challenges Slovenia has identified as its priorities --
the GOS must strive to make real progress. COM noted that as
a new member of the Human Rights Council, Slovenia should use
its Presidency to speak up on behalf of those suffering from
human rights abuses. He raised the example of Cuba, noting
that the common EU position will be revisited during
Slovenia's Presidency in June 2008. As a person who was
jailed in the fight for Slovenia's freedom, he remarked,
Jansa should be a vocal advocate for advancing human rights.


4. (C) The PM concurred and turned the discussion to the
management of specific EU issues. He thought that the
Portuguese would exercise good leadership, focusing on Africa
and the Lisbon strategy. He predicted that it would fall to
Slovenia, in close cooperation with France, to deal with the
difficult EU constitutional issue. He warned that the EU
needs to find a resolution before 2009, when EU Parliamentary
elections will be held and political pressures will likely
block further progress. Jansa suggested that in comparison
with Portugal, Slovenia has some advantages going into its
Presidency. Slovenia is almost at the same level of
development as Portugal, but enjoys a 7 percent rate of
growth this year as opposed to Portugal's 1 percent.

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Kosovo: GOS Concerned that EU Members Don't Understand Facts
on the Ground
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5. (C) Jansa expressed strong concern about what will
happen in Kosovo in the fall if Russia blocks the UN Security
Council resolution. He said that conditions on the ground
are explosive -- Pristina is filled with unemployed youth and
there is no authority there that can control the situation.
The PM remarked that his other European "colleagues" don't
fully comprehend these facts and he claimed that Slovenia is
working to increase understanding, especially among central
and eastern European countries. COM asserted that this

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effort is critical and that if Russia vetoes, there is a
possibility that the U.S. will recognize Kosovo as an
independent state, and it will be vital that the EU is with
us. Jansa agreed that "Plan B" is only workable if both
sides are united. The PM shrugged off any concern about an
implicit Serbian threat to break off relations with Slovenia
if it recognizes Kosovo. He said that he would like to visit
Slovenian troops in Kosovo in conjunction with an official
visit to Serbia, but right now nothing is certain.

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Military Cooperation: COM Urges Slovenia to Keep Trainers in
Iraq
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6. (C) The Ambassador raised the issue of the two Slovenian
military trainers currently deployed in Iraq. Noting that
their tours of duty are over in August, he urged the GOS to
maintain its commitment to fill those two billets by sending
a rotation of two new trainers and to find other suitable
billets to fill so that Slovenia maintains its presence with
the Coalition in Iraq. COM argued that though Slovenia's
numbers are small, the symbolism of their being part of the
effort to stabilize Iraq is very important. Jansa responded
that if Slovenian soldiers could be assigned to similar
missions, then they could stay in Iraq without the need for a
new GOS approval. He noted, however, that the arrangements
have to be completed soon. The Ambassador said we would
raise this again at NATO. (Note: Four Slovenian police
trainers were deployed to NTM-I in February 2006. In
February 2007, SHAPE revised its troop needs at NTM-I and cut
25 billets, including two held by Slovenes. The two Slovenes
currently at NTM-I arrived in February 2007 and will depart,
after a six-month rotation, in August. End Note.)


7. (C) COM also discussed the recent visit of a U.S.
military delegation to Ljubljana to advance U.S.-Slovene
science and technology cooperation. He reported that the
visiting team had had met with Slovene military officers,
private research and development companies, and had a
productive visit to Slovenia's premier scientific
organization -- the Jozef Stefan Institute. Now, he said,
the next key step is to conclude a bilateral Master
Information Exchange Agreement. Jansa listened intently and
replied that he would look into this. COM stated that he
would like to have an agreement by September. The PM
mentioned that researchers at Jozef Stefan have apparently
developed a device that can detect explosives in liquid, a
discovery that could be of great practical use at airports.
(Note: The U.S. military delegation was in fact briefed on
such a detection device during their meetings.)


8. (C) COM asked Jansa about a recent comment by Defense
Minister Erjavec that because of unexpectedly strong economic
growth, GOS military expenditures would not rise to 2 percent
of GDP until 2015. This represents a six-year delay from the
target date of 2009 that Erjavec mentioned to former
Secretary of Defense Rumsfeld at the Portoroz NATO

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Ministerial in September 2006. The PM professed not to know
about the comment, and indicated that the Government has
neither discussed the issue, nor does this represent the GOS
position.

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Bilateral Issues: COM Presses for Progress on Harrah's
Project and Property Denationalization Cases
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9. (C) Turning to bilateral issues, COM brought up the
Harrah's entertainment center investment project -- worth
nearly $1 billion -- and thanked the PM for meeting with
Harrah's CFO Chuck Atwood on June 5. He stressed that a lot
of work still needs to be done to bring this deal to
fruition, particularly public outreach and engagement with
local officials and residents in the region of western
Slovenia where the hotel and casino will be constructed. COM
reported that local officials were worried about stress on
local infrastructure and environment, labor force issues and
possible loss of revenues due to the proposed lower taxes on
the gaming sector. The GOS and Harrah's must work hard, he
said, to convince locals of the many benefits of the project.
Jansa agreed that intensive engagement is necessary.


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10. (C) On property denationalization, COM acknowledged
that a lot of progress has been made (78 percent of all
American cases have been cleared),but he noted that about
100 cases involving Americans still have not been resolved.
He underscored that those American claimants have been
waiting for years and many of them are getting old. He
raised the particularly egregious case of an American whose
claim to land in Slovenia containing valuable sources of
spring water has been shuttled back and forth between the
courts and the Ministry of Interior for 14 years.


11. (C) Jansa responded that denationalization is "not the
bright side of our country." He stated that when the
denationalization law was passed in 1991, the goal was to
complete the whole process in one year. Since then, he
complained, the denationalization law has been amended ten
times, and each time made more complicated, and it is very
hard for the Government to do anything. At one point the
Government tried to change the constitution to get more
flexibility in handling cases, but it was not successful. He
noted that in a few cases, procedures have been going on for
15 years over no more than two acres of land. Now the
Government is pushing a law to streamline court reviews of
denationalization cases so that they can't keep bouncing from
lower to higher courts and back. The delays, he declared,
are costly. Jansa maintained that Slovenia is now paying
compensation for judicial delays in prior years.

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Domestic Issues: PM Pleased with Economic Reforms; COM
Advocates Progress on Lingering Human Rights Issues
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12. (C) Jansa expressed satisfaction that Slovenia's
economic growth is robust and that unemployment is
decreasing. He highlighted the example of the southern
region of Slovenia where two years ago there was considerable
unemployment and now companies are hiring Slovaks because of
a shortage of local labor. He commented that the huge
Slovenian pharmaceutical company Krka had seen its share
value increase sevenfold since it posted its shares on the
Slovenian stock market a few years ago. He also asserted
that the GOS has steadily reduced the red tape that burdens
businesses.


13. (C) Jansa then spoke of the challenges ahead:
providing more flexibility in labor laws so that companies
can get rid of bad workers; passing legislation to enable
employees to work more overtime hours; and negotiating with
labor unions to get agreement on longer validity visas for
foreign workers. The PM noted that companies have dealt with
some of these rigidities by offering workers only short-term
contracts, but this hurts young employees by making it harder
for them to get social security, loans and other benefits.
Jansa was hopeful that the new law on overtime would be in
place by December, though he acknowledged that in Slovenia it
is always possible for opponents of controversial legislation
to get enough signatures to force a national referendum on
the issue.


14. (C) COM asked about progress on pension reform,
asserting that down the road Slovenia would be dedicating a
huge amount of its GDP to supporting retirees. Jansa
explained that the GOS had introduced pension reform in 2000,
and that this legislation increases the retirement age
gradually until 2012. He doubted that there will be a
serious budgetary impact until 2030 and that projections
beyond that are artificial, because Slovenia's growth rate is
not known. One underlying demographic problem, he noted, is
that like in Sweden, women are having children late in their
thirties.


15. (C) COM also raised the lingering human rights issue of
the "erased," asking when Slovenia would regularize the
status and compensation for people taken off residency rolls
in February 1992. The Prime Minister responded that his
Government is working to get a majority in the Parliament,
negotiating now with the new splinter faction "Za Res," to
pass a constitutional law so that these cases can be dealt
with on a case by case basis. He hopes the legislation can
be ready for Parliamentary deliberation this summer or fall.
He recounted how this issue had been mismanaged in the past
by the courts and complicated by public referenda, such that
there is now no alternative to changing the constitution.

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Jansa insisted that basically all of the "erased" now have
legal status. The question is how to compensate them for
lost benefits due to the number of years they were not
registered as legal residents. The PM claimed that the GOS
is ready to compensate anyone who can prove that he or she
was actually resident in Slovenia during the years when they
were stricken from the register. He said firmly that 95
percent of Slovenians oppose compensation for those who did
not remain resident in Slovenia. (Note: International and
local human rights groups estimate that there are 4,000 to
6,000 "erased" persons who have not yet obtained citizenship
or permanent residence permits and many thousands more who
have citizenship or residency but are still hoping to regain
access to the social benefits they lost in the period between
their "erasure" and when they regained legal status. Jansa's
government first proposed a constitutional law on this issue
in January 2006. See Ljubljana 00126 for a full background
on the issue. End Note.)


16. (C) There was a brief discussion of the allegation that
the GOS exerts undue pressure on the media through its
ownership of blocks of shares in companies that in turn own
media outlets. COM asked when the Government was going to
completely divest its shares in the media so that such
accusations can no longer be made. Jansa strongly denied any
government influence on the media and said newspapers and
other commercial news outlets are completely privately owned.


17. (C) At the end of the lunch, COM asked the PM for his
thoughts on the Slovenian Presidential elections this fall.
Jansa replied that it is unlikely that President Drnovsek
will run again, though a last moment change of mind is always
possible. He opined that it would be strange for the leader
of the Social Democrats (SD),Borut Pahor, to run since SD
reportedly opposes such a run. Jansa confirmed that his
party, the Slovene Democratic Party (SDS),supports Lojze
Petterle, who is a former Prime Minister (1990-92) and
currently a representative of the European People's Party in
the European Parliament.


18. (C) Comment: Prime Minister Jansa was confident and at
ease during the lunch, and said he was looking forward to
seeing COM again before he departs Slovenia. End Comment.
COLEMAN