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07ZAGREB717 2007-07-27 14:45:00 UNCLASSIFIED Embassy Zagreb
Cable title:  

CODEL BEAN Visits Croatia

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1. Summary: CODEL Bean visited Zagreb on 22-23 July and met with
Croatian business, government, and parliamentary leaders.
Discussion at most meetings focused on Croatia's leadership and
stabilizing role in the region, Kosovo, future membership in NATO
and the EU, its international contributions to peace-keeping, and
the improving Croatian economic and investment climate. End

Parliament Considers Croatia's Role Outside Its Borders

2. The CODEL met with parliamentary representatives from several
major political parties and committees. Representatives included
Gordan Jandrokovic (HDZ), Chair of the Foreign Affairs Committee,
Nikola Ivanis (PGS), Deputy Committee Chair, Tonino Picula (SDP) and
Marin Jurjevic (SDP), committee members, and Milorad Pupovac (SDSS),
Chair of the Committee on Inter-Parliamentary Cooperation.

3. Regional Relations: When asked about Croatia serving as a role
model in the region, Jandrokovic pointed out that although some war
wounds still need to heal, Croatia has relatively quickly crossed
the path from war-time intolerance to a tolerant democratic society.
A good deal of war-related issues have already been resolved, he
observed, and Croatia is prepared to contribute to the resolution of
outstanding regional issues including the status of Kosovo and a new
constitution in BiH. Pupovac noted that Croatia continues to
cooperate with its neighbors and will share its progress with them.
It's time for the region to turn to the present, discard prior
policies that resulted in war crimes, ethnic cleansing and political
isolation, and proceed with war crimes prosecution and regional
cooperation, he stated. Ivanis told the CODEL that Croatia-Serbia
relations and their lasting "harmonization" are the most important
regional issue. Although the radicals won a plurality in Serbia,
maintaining good relations are important, he remarked.

4. Kosovo: Jandrokovic admitted that Kosovo remains the most
difficult regional question. International consensus is important,
he reaffirmed, noting that Croatia will follow the lead of the
international community. Picula, former Minister of Foreign
Affairs, told the CODEL that the entire region is concerned with
security, cooperation and solidarity and that once the status of
Kosovo is resolved, all ethnic communities will be agreed on future
political goals for the region. Pupovac, who is serving as an OSCE
envoy to Kosovo, stated his hope that Kosovo be organized as a
multiethnic society, with equal opportunities for Albanians, Serbs
and others. He noted that his work with Kosovo Serbs is difficult
and risky, but that he has the support of President Mesic, PM
Sanader, and U.S. representatives in Zagreb. Pupovac cautioned
against unilateral recognition, stating that there are not
sufficient mechanisms to respond to an unstable situation. Both
Croatia and Serbia, he believes, represent stability in the region.
We should "build" rather than "proclaim" status, at which point the
transition will be easier to manage. Finally, referring to Serbs'
heritage and tradition there, Pupovac said that it is important to
give Serbia the feeling that if it loses Kosovo, Kosovo won't be
lost for the Serbs.

5. International Involvement: Looking ahead to parliamentary
elections, Jandrokovic assured the delegation that whichever party
wins the tight race, the main foreign policy goals would not change.
Like other participant countries, Croatia is struggling with public
support of its troops in Afghanistan. Nevertheless, the Government
is aware it needs to take part in global processes and help bring
stability to the world's hot spots. Referring to UN peacekeepers
who oversaw the peaceful reintegration of Croatia in the 90s, he
reaffirmed, "If we want to be an equal partner, we need to give, not
only receive."

Foreign Minister Reaffirms Policy Priorities

6. In a prior meeting, Minister of Foreign Affairs and European
Integration Kolinda Grabar-Kitarovic presented Croatia's three major
foreign policy priorities - accession to the European Union and
NATO, cooperation in the region, and Croatia's position in the
international community and organizations.

7. The minister briefed the delegation about the pace and current
state of EU membership negotiations and the development of relations
with NATO. She discussed Croatia's active participation in UN
bodies and peacekeeping missions, as well as the presence of
Croatian forces in Afghanistan. Speaking about regional issues,
Grabar-Kitarovic noted that Croatia wanted to be helpful in finding
a sustainable solution in Kosovo. Settlement of the issue should
ensure the stability of the entire region, she said. The minister
informed the delegation about the recent establishment of the
Regional Cooperation Council and the future role of the South East
European Cooperation Process. Referring to border disputes with
Slovenia, she said that any outstanding issues should be settled
bilaterally and by fully respecting international law.

Business, Economy Performing Well

8. In a breakfast session with CODEL, State Secretary and Assistant
Minister of Finance, Ante Zigman, 3M Country Manager Tomislav Slat
and FedEx Regional Manager/AMCHAM Croatia president Josip Krznaric
briefed the CODEL on the state of the economy and business
conditions. All local representatives agreed that the economy was
performing well, and that the GOC had initiated some positive
programs - specifically Hitro, the one-stop shop for business
formation. Zigman asserted that the permitting process for
greenfield investment has been reduced to less than two years, and
in response to CODEL's question, reaffirmed that Americans (and
other foreign investors) can buy property in Croatia. Chamber
President Krznaric noted that although Croatia is not one of the top
U.S. export markets (currently ranked 116th), U.S. companies are
present and active in the market. There is little manufacturing
investment from the U.S., as Croatia missed the initial wave of U.S.
investment in Central Europe in the 90s due to the war, but there
has been a recent increase in activity. Slat commented that
Croatia's improved infrastructure should help the country to serve
as a regional distribution hub. The group agreed that NATO
membership and EU accession are independent validations of Croatia's
progress to date.

9. CODEL did not have the opportunity to clear this cable.