ZAGREB WEEKLY ACTIVITY REPORT - APRIL 16, 2008

UNCLAS ZAGREB 000317 SIPDIS SIPDIS FOR EUR/SCE, EUR/PPD, EUR/RPM AND EUR/ERA OSD FOR WINTERNITZ E.O. 12958: N/A TAGS: PREL PGOV HR SUBJECT: ZAGREB WEEKLY ACTIVITY REPORT - APRIL 16, 2008 ¶1. (U) CROATIA FORMALLY ACCEPTS NATO MEMBERSHIP NEGOTIATIONS: Croatian Foreign Minister Gordan Jandrokovic on April 14 forwarded a letter to NATO Secretary-General Jaap de Hoop Scheffer informing him that Croatia has accepted the invitation to launch negotiations on NATO membership. Jandrokovic's letter said NATO membership was one of the fundamental priorities of Croatia's foreign policy and that he was confident the accession negotiations would affirm Croatia's readiness and ability to assume the political and military responsibility based on the North Atlantic Treaty. (RHoltzapple) ¶2. (U) INFLATION LIVES UP TO EXPECTATIONS IN FIRST QUARTER: As forecast, Croatia has started 2008 with inflation about double the 2007 average annual rate of 2.9%. Compared to the same months of 2007, prices this year were 6.2% higher in January, 5.8% higher in February and 5.7% higher in March. Rises in food and fuel prices continue to drive the overall rise. Food prices in March were 10.2% higher than in March 2007, with fruits seeing the steepest rise at 28.7%. Liquid fuel prices were 34.0% higher than in March 2007. (SLitke) ¶3. (U) ZAGREB'S BEAR MARKET: Croatia,s stock index fell 5.7 percent on April 14, bringing its six month decline to 40%. Monday's sell-off was prompted in part by the Government's decision to allow Croatian veterans to sell shares in the state-held Veterans' Fund, as well as an alleged sell recommendation for Croatia's main oil and gas company INA by INGBank analysts. The Veterans' Fund was created from Government-held shares in Croatian Telecom and INA several years ago. Together, these two companies account for a large percentage of trading volume on the Zagreb exchange, so the sale of Fund shares and any impact of the INGBank analysis was reflected quickly in the overall index. The total turnover in Veterans' Fund shares was apparently less than some analysts had expected, and the market appeared to stabilize somewhat on April 15, clawing back around 2.5%. Although sowing fear among some investors, the recent losses have yet to erase the 60 percent gain the Zagreb index posted in 2007. (NBerliner) ¶4. (U) ZAGREB HOSTS DVC ON EVERGLADES NATIONAL PARK AT AMERICAN CORNERS: U.S. Embassy Zagreb recently sponsored a digital video conference (DVC) featuring Mr. Larry Perez, a U.S. National Park Service Ranger in charge of Science Communications Outreach at Everglades National Park. Mr. Perez spoke to secondary school students at the American Corners in Zagreb, the capital, and in Zadar, a city on Croatia's Dalmatian coast. The audience also included representatives from the Croatian State Institute for the Protection of Nature, the Croatian Environmental Protection Agency, Medvednice Nature Park (two park rangers),and the Croatian Ministry of Tourism. Using humor and audience participation to connect with the group, Mr. Perez's presentation provided an engaging overview of the U.S. National Park System and an in-depth discussion of the ecology and wildlife of the Everglades. The research Mr. Perez conducted on Croatia and its national park system helped establish rapport with the students and Croatian park rangers taking part in the event. (KWetzel) Bradtke