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07ZAGREB1062 2007-12-06 08:54:00 CONFIDENTIAL Embassy Zagreb
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1. (U) Ambassador and PolChief had lunch on December 5 with
FM Kolinda Grabar-Kitarovic and State Secretary Hido
Biscevic, subsequent to their return from the OSCE
Ministerial in Madrid, and to follow up on FM Kitarovic's
bilateral meeting there with U/S Burns.

2. (C) Kitarovic and Biscevic said that after the meeting
with U/S Burns, they had a difficult meeting with Serbian FM
Vuk Jeremic. Jeremic had indicated that Serbia would respond
to a unilateral declaration of independence by Kosovo with
any measure short of military means, including cut-offs of
electricity and water. Kitarovic said she also feared Serbia
would cut diplomatic relations with any country that
recognized Kosovo. Biscevic noted, however, that Jeremic did
not mention Bosnia-Herzegovina when discussing Belgrade's
response to UDI. He thought Belgrade and the RS were playing
a longer game, and that their longer-term interest of
knitting the RS as tightly as possible to Serbia would not be
served by provoking a crisis now.

3. (C) Kitarovic and Biscevic also reported that they had
difficult meetings related to the future of the OSCE Mission
in Croatia, and were disappointed no decision to close the
mission had come out of Madrid. Jeremic told them Serbia
would show no flexibility, and claimed to know nothing about
what the Croatians describe as the refusal of Serbia's
Minister for Refugees to work with Croatia on resolution of
outstanding issues under the Sarajevo Process for refugee
issues. Swedish FM Bildt and Belgian FM De Gucht were also
described as strongly opposed to Mission closure, although
Kitarovic said the Belgian FM appeared more interested in the
fate of a Belgian banking deal in Split than in any issues
directly related to the OSCE mandate. Biscevic said he had
spoken with a German national OSCE official Zalbert (phon.)
on a possible compromise where the OSCE would remain with a
"presence or office" of some seven to ten staff with a
mandate to continue war crimes monitoring, but that refugee
returns would be covered by a Croatian commitment to report
annually on progress toward resolving all outstanding cases.