CROATIA OFFERS COMPROMISE ON KEY REFUGEE ISSUES

C O N F I D E N T I A L SECTION 01 OF 02 ZAGREB 000158

SIPDIS

SIPDIS

DEPT FOR PRM:POLSON
DEPT FOR EUR/SCE:RBALIAN
BELGRADE FOR OLSON

E.O. 12958: DECL: 02/13/2017
TAGS: PREF PGOV HR REFUGEES
SUBJECT: CROATIA OFFERS COMPROMISE ON KEY REFUGEE ISSUES
UNDER "SARAJEVO PROCESS"

REF: A. 2006 ZAGREB 1513

B. 2006 ZAGREB 1055

Classified By: Amb R. A. Bradtke for reasons 1.4 (b) and (d)


1. (SBU) SUMMARY AND COMMENT: At a February 2 meeting near
Dubrovnik, Croatian, Serbian, Bosnian and Montenegrin
officials met with OSCE, UNHCR and EC reps to plan the
wrap-up of the "Sarajevo Process," a regional approach to
refugee issues involving targets set by each country (the
individual "Road Maps") and a mutually agreed matrix of
cooperative measures. UNHCR and OSCE reps told poloff that
having addressed six of its eight Road Map points, the
Croatian delegation proposed to include the two key remaining
issues in a Ministerial Declaration to be signed later this
spring.


2. (SBU) As described by new Assistant Minister for Refugee
Issues Milivoj Mikulic, the GOC would for the first time
commit to some form of compensation for refugees who formerly
held "occupancy/tenancy rights" (OTR) in socialized housing,
but who do not wish to return to Croatia. In addition, the
GOC would commit to a solution for the convalidation problem,
by which Croatian Serbs seek recognition, for pension
purposes, of the time they worked in formerly Serb-occupied
areas of Croatia. These are potentially very expensive
programs, and politically sensitive for the GOC.


3. (SBU) Because the convalidation issue will have to be
resolved as part of Croatia's EU accession, the international
community has some assurance that it will be adequately
addressed. Compensation for refugees who do not plan to
return to Croatia has never been offered before; this
represents a major concession by the GOC, which was praised
by the UNHCR, OSCE and EC reps. The Bosnian and Montenegrin
delegations accepted the GOC's proposal to deal with these
issues in a separate Ministerial Declaration (i.e. outside of
Croatia's individual Road Map),but the Serbian delegate
insisted they should be in both Croatia's road map and the
joint matrix. Negotiations for a spring Ministerial in
Podgorica continue. UNHCR/Croatia noted that given the
favorable reaction by other players to Croatia's initiative,
the new Serbian government may not wish to appear the sole
obstacle to a regional agreement to close the refugee file.
END SUMMARY AND COMMENT

Sarajevo Process Moving Slowly to Resolve Refugee Issues
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4. (U) The December 2005 Sarajevo Declaration committed the
governments of Bosnia and Herzegovina, Croatia and Serbia and
Montenegro to resolve remaining refugee return issues through
a regional approach; it was due to wrap up by the end of

2006. The Declaration called on each country to deal with
refugee issues according to its own "Road Map" and addressed
regional problems in a "Joint Matrix." Slow work on the
country roadmaps and disagreements about the contents of the
joint matrix slowed the process; the OTR compensation and
convalidation issues were major sticking points. Through its
individual road map, Croatia has set up processes to address
home reconstruction and repossession, infrastructure
development (including electrification and water
restoration),data exchange, solutions for refugees in
Croatia, and social rights of refugees and returnees.

Croatia Proposes Compromise In Declaration
--------------


5. (C) At the working level February 2 meeting in Cavtat,
according to UNHCR/Croatia Senior Protection Officer Wilfried
Buchhorn, Assistant Minister Mikulic took a constructive
approach by offering two new compromise positions: he
proposed addressing compensation for Croatian Serb refugees -
former OTR holders who decided not to return - in the
ministerial declaration. This is the first time Croatia has
been willing to discuss such compensation, preferring instead
to address the issue in terms of its humanitarian housing
program for those who do wish to return. Mikulic proposed to
address compensation in the Declaration as a "fair
compensation mechanism" without details as to the source or
mechanisms of funding. The Head of Return and Reintegration
for OSCE/Croatia, Christian Loda, who also attended the
meeting, told poloff that this willingness was an important
gesture and opened the door for future discussions.


6. (C) Mikulic's second component would refer to
convalidation of working years for ethnic Serbs who were
employed in the former "Krajina" zone. While the numbers are
still unclear, there may potentially be 20,000 persons

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affected. High-level GOC contacts have consistently warned
Emboffs that convalidation is a political hot potato,
particularly in an election year, because many ethnic
Croatian retirees do not receive adequate pensions.
Nevertheless, Mikulic left the door open to finding a
solution to convalidation and recognized a GOC commitment to
follow through. In addition - and also unexpected - was
Mikulic's offer to extend the application deadline for OTR
holders outside the war-affected areas (Areas of Special
State Concern or ASSC),which expired in September 2005.

Serbian Delegate Opposed to Compromise
--------------


7. (SBU) The OSCE and UNHCR reps noted that GOS Refugee
Commissioner Dragisa Dabetic (who, they said, was not likely
to continue in that position once a new government was formed
in Belgrade) asserted that he expected "millions of dollars
in cash" as compensation for some 19,000 refugees who lost
OTR. Mikulic reportedly asked for an estimate of former OTR
holders living in Serbia which was based on reliable data.
Dabetic also rejected the idea of addressing the two issues
in the Declaration and insisted that they be incorporated in
Croatia's Road Map and in the joint matrix of tasks to be
completed.


Political Guarantee: Declaration, And EU Accession Process
-------------- --------------


8. (C) UNHCR and the OSCE believe that addressing these
issues in a separate declaration could offer some political
guarantees. In addition, EC delegation Political Advisor
David Hudson reaffirmed that convalidation remains one of
Croatia's commitments in its EU accession process, providing
additional assurance that the GOC will address it. According
to Buchhorn, the international community and all regional
governments want to make progress in the lagging Sarajevo
process; given the support expressed by Bosnia and
Montenegro, Serbia risks looking like the lone obstacle to
progress.

OTR Housing Care Process Continues
--------------


9. (SBU) Mikulic's appointment in November 2006 gave a new
impetus to the lethargy surrounding the GOC's "Housing Care"
program for former OTR holders. (Ref B) He recently told
poloff he plans to complete the administrative review and
inform applicants of their status by March. The Housing Care
program foresees construction and purchase of 4,000 flats,
which according to current plans will take until 2012 to
complete. To date, about 50 applicants have been approved
and moved into apartments, opening the GOC to criticism that
the program remains largely unimplemented. Although these
and other problems such as lack of economic opportunity
hinder refugee returns, the GOC has demonstrated a commitment
to resolve the issue, and a pragmatic recognition of the work
left to be done. The Ambassador and the international
community continue to push the GOC to move more quickly in
implementing the housing care program.
BRADTKE