ZAGREB WEEKLY ACTIVITY REPORT - SEPTEMBER 17, 2008

UNCLAS SECTION 01 OF 02 ZAGREB 000661 SENSITIVE SIPDIS FOR EUR/SCE, EUR/PPD, EUR/RPM AND EUR/ERA OSD FOR POPOVICH E.O. 12958: N/A TAGS: PREL PGOV HR SUBJECT: ZAGREB WEEKLY ACTIVITY REPORT - SEPTEMBER 17, 2008 ¶1. (U) HUNGARY IS FIRST NATO MEMBER TO RATIFY CROATIAN AND ALBANIAN ACCESSION: The Hungarian Parliament on September 15 voted overwhelmingly in favor of Croatia's and Albania's Accession Protocol, making Hungary the first NATO member state to approve this round of NATO enlargement. having served as Croatia's "Contact Point" country during the MAP process, Hungary was keen to be the first country to approve its neighbor's accession. To celebrate the event, the President of the Croatian Parliament is hosting a reception for NATO country ambassadors on September 18. (RHoltzapple) ¶2. (SBU) CROATIAN PARLIAMENTARIANS ON NATO TOUR: From September 3 to 10, a multi-party delegation of the Croatian Parliament (Sabor) traveled to Brussels, Brunssum, Washington and Norfolk on a USG-sponsored tour to learn more about NATO. The group included six members of the Sabor's new Defense Committee. During meetings at ANTO headquarters and with staff from the US missions to NATO and EU, the parliamentarians had lengthy discussions about NATO's future role in Southeast Europe and NATO's relations with Russia and Georgia. During a visit to the Croatian Mission to NATO, the delegation was also able to speak by video-link with Croatian troops deployed in Afghanistan. At the Operations Command in Brunssum, parliamentarians were pleased to hear very positive evaluations of Croatia's performance in ISAF. The visit to the Allied Command for Transformation (ACT) in Norfolk informed the visitors of the ATC's potential to help members in defense planning. A highlight of the trip was the chance the parliamentarians had to attend the September 10 Senate Foreign Relations Committee hearing on Croatia and Albania's accession to NATO. In remarks to Croatian media after the hearing, the Chairman of the Defense Committee noted that support for accession by Croatia and Albania to NATO was so strong that Senators' comments and questions focused on the Georgia crisis instead. (PD'AmicoZTomic) ¶3. (U) OPPOSITION LEADER PAYS CONTROVERSIAL VISIT TO BLEIBURG: A delegation of the Social Democratic Party (SDP),led by party president Zoran Milanovic, paid a controversial visit to Bleiburg, Austria, and Tezno, Slovenia, on September 11. Bleiburg was where fleeing Ustasa (pro-fascist/pro-Nazi) sympathizers and other civilian refugees were handed over by British allied forces to Yugoslav Communist Partisans at the end of WWII. A large, though disputed, number were executed or died during a forced march back to Yugoslavia, with one of the largest mass grave sites in Tezno. Milanovic denied accusations the trip was politically motivated or timed to appeal to nationalist voters in upcoming local elections. He said his trip was to show a balanced SDP approach to crimes committed during WWII regardless of the victim, and to open a dialogue within Croatia regarding the events that took place at these sites. Prominent leaders and historians from the Croatian Jewish community dropped earlier plans to accompany Milanovic after protests were raised within the community. (JNCallahan) ¶4. (U) EU WARNS CROATIA TO PICK UP THE PACE IN ACCESSION NEGOTIATIONS: Following meetings with PM Sanader on September 16, European Commission (EC) President Barroso told the press Croatia will need to speed up the pace of reforms if it is going to meet the necessary benchmarks by November in order to stay on course for completing negotiations in late 2009. Barroso specifically noted two chapters: Judiciary and Fundamental Rights, where Croatia must increase its effectiveness in fighting corruption and conducting war crimes trials, and Competition Policy, where Croatia must make more progress in privatizing its shipyards and complying with EU rules on state subsidies. Sanader said Croatia was aware of the task ahead wand would do what was needed to complete negotiations next year. COMMENT: Despite the optimism Sanader continues to project, this warning from the EC may be a first step in easing back from the ambitious timeline of completing negotiations in 2009. (SLLitke) ¶5. (U) PRESIDENT AND GOVERNMENT TRADE BARBS OVER ECONOMIC PERFORMANCE: On September 16, President Mesic used his opening address at the Zagreb Autumn Trade Fair to blame PM Sanader and his government for Croatia's high inflation and other economic problems. He said high inflation is the result of "policy that spends but does not earn," with a growing bureaucracy and a failure to increase economic production. In response, DPM and Minister of Economy Polancec implied Mesic's understanding of the economic situation was insufficient and ZAGREB 00000661 002 OF 002 countered that "inflation in Croatia is completely imported" and the result primarily of fuel and food prices. Speaking from Brussels, PM Sanader said Croatia's economic indicators are good and everyone has welcomed the steps the GOC has taken to curb inflation. He added, "the speech must have been written by (Mesic's) advisors, but we will put up with them for one more year." (NOTE: Mesic's presidential term is due to end in early 2010.) (SLLitke) ¶6. (U) INA SAYS MOL SHARE PRICE OFFER OF 2800 HRK IS "ACCEPTABLE": Mesic also used his Trade Fair speech to challenge current efforts to further privatize Croatia's largest oil and gas company INA, questioning why the government would sell such strategic assets in turbulent economic times during which everyone else was grasping to secure energy supplies. PM Sanader, answering questions in Brussels on the Mesic speech, said the government was simply implementing a privatization law passed during the SDP government of Ivica Racun. Dep PM Polancec also noted that a share swap with MOL, while reducing the GOC's shares in INA to 25 percent, would also give the GoC an ownership stake in MOL, and extend current restrictions on MOL's holdings within INA, meaning such shares could not be sold on to other buyers for an extended period. On September 15, INA's board announced that the offer from Hungary's MOL was of 2800 HRK (approx. $560) per share was acceptable, citing the current business climate and INA profit margins. The company's union, however, continues to claim the offer is inadequate and argues the offered price should be as high as 5000 HRK, despite a Price Waterhouse Coopers study that valued INA shares at only 1300 HRK. (DHWestfall) ¶7. MINNESOTA NATIONAL GUARD COMMANDER VISITS CROATIA: Minnesota National Guard's Adjutant General Shellito wrapped up his visit to Croatia on September 16. TAG Shellito met with Ambassador Bradtke, Croatia's Chief of the General Staff (CHOD),and the Chief of the Croatian Army to further development of the State Partnership between the Croatian Armed Forces and the Minnesota NG. Briefings and discussions included plans for a joint Operational Mentoring and Liaison Team (OMLT) for ISAF intended to deploy to Afghanistan in ¶2009. One result of the trip is that the Minnesota NG sending a team in October to go through the Military Decision Making Procedure with the Croatian military to better sculpt each sides' respective contributions to the joint OMLT. (CDavis) ¶8. (U) TRAINING ON COMBATING TERRORISM: The US Embassy's Office of Defense Cooperation coordinated an intense, one-week mobile training team course entitled "Intelligence in Combating Terrorism" from 8 to 12 September ¶2008. The purpose of the week-long seminar was to train Croatian, US. and other allied military and civilian personnel to analyze terrorist and other sub-national threats in the contemporary operating environment. The instructors from the US Intelligence School at Ft. Huachuca, Arizona helped the students to examine terrorist organization structures; state support to terrorist groups; terrorist strategy and tactics; terrorist threat assessment for military installations and deploying units; and terrorist use of weapons of mass destruction. The center piece of the course was the analytical methods for examining terrorist groups, giving the students the tools they need to comb through large amounts of information, find the key elements and assemble the underlying picture so that commanders can take appropriate action. (CDavis) Bradtke