ASSESSMENT OF CROATIA'S NATO READINESS

C O N F I D E N T I A L ZAGREB 000069

SIPDIS

SIPDIS

DEPARTMENT FOR EUR - P/DAS VOLKER, DAS DICARLO, EUR/RPM,
EUR/SCE
USNATO FOR AMB NULAND, UNDERWOOD, BAEZ, GLORIOSO
NSC FOR BRADLEY
OSD FOR NATO POLICY - DAS FATA
JCS FOR SHIELDS

E.O. 12958: DECL: 01/24/2018
TAGS: PREL PGOV KPAO MOPS MARR NATO HR DEFENSE REFORM
SUBJECT: ASSESSMENT OF CROATIA'S NATO READINESS

REF: A. ZAGREB 24

B. USNATO 22

C. ZAGREB 22

D. ZAGREB 10

E. 07 ZAGREB 1092

Classified By: Political Officer Tom Selinger for reasons 1.4(b) and (d
).


1. (U) Following is Post assessment of Croatia's progress on
key reform issues related to NATO accession and remaining
challenges facing PM Sanader's new government in advance of a
possible membership invitation at the Bucharest Summit.

REGIONAL LEADERSHIP: COMMITTED TO STABILITY OF NEIGHBORS
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2. (U) After gaining parliamentary approval of his new
government on January 12, PM Sanader repeated his commitment
to Croatia's Euro-Atlantic integration and its role in
supporting its eastern neighbors on this same path (ref A).
The GoC sees its success in winning a non-permanent seat on
the UN Security Council (UNSC) and the conclusion of the full
OSCE mission in Croatia as international recognition of the
country's contributions to regional stability and its efforts
to address the legacies of war from the 1990s. Post expects
no major changes in the GoC's positive engagement in the
region under new FM Gordan Jandrokovic, who chaired
parliament's foreign affairs committee for the past four
years and served as a member of Croatia's National Committee
on NATO Membership.


3. (U) The GoC has continued active partnership in the
Adriatic Charter and has publicly called for invitations for
all of the A-3 in Bucharest. Croatia served as A-3 chair in
the last half of 2007, hosting a successful
Adriatic-3/Baltic-3 meeting for foreign and defense ministers
in October and organizing an A-3 foreign ministers meeting on
the margins of the UNGA in September. In both events,
Croatia also involved the three new Partnership for Peace
(PfP) members in the region and is supporting their
involvement in other NATO activities, including plans to host
Montenegrin observers in their next ISAF deployment.


4. (U) The GoC maintains vigorous and positive bilateral
relations with every country in the region. In May 2007,
Croatia concluded its successful chairmanship of the South
East European Cooperation Process with the formation of a
permanent Regional Cooperation Council (RCC),the successor
to the Stability Pact initiative. A Croatian diplomat is
currently serving as the first secretary general of the RCC.
Government and parliamentary leaders have made regular
efforts to contribute to stability both in Bosnia and
Herzegovina and in Kosovo. Croatia is in the process of
opening a diplomatic office in Pristina, and maintains broad
contacts in Kosovo, including GOC-support for efforts by a
Croatian Serb parliamentarian to encourage Kosovo Serbs to
engage directly with Kosovar institutions in Pristina.


5. (C) With its entry into the UNSC this month, Croatia's
role on Kosovo becomes even more critical. The GoC has
supported the Ahtisaari plan and has regularly (including as
recently as on January 25 by FM Jadrokovic) assured Post that
it will follow the lead of the US and EU on the Kosovo issue,
including recognition of independence. At the JAN 16 UNSC
session, Croatia's position was fully supportive of USG
views. The GoC is counting on EU unity on this issue,
knowing full well that it will bear the brunt of any trade
sanctions or other retaliatory measures Belgrade might take
in response.

BUILDING PUBLIC SUPPORT: NEW GOVERNMENT BRINGS NEW ENERGY
-------------- --------------


6. (U) During a January 16 meeting with the North Atlantic
Council (ref B),PM Sanader assured NATO PermReps of his
government's commitment to continuing education of the
Croatian public on NATO. Support for membership has been
hovering around 50 percent since before the November
elections, when what had been a very effective government
outreach campaign temporarily halted pending a new

government. Sanader expressed confidence in Brussels that
support will grow as his team spreads the message that the
Alliance "is not just about security, but about values,
democracy, and human rights." The Government convened its
"State Committee on NATO Membership" on January 25 to
continue planning on concrete efforts to increase public
outreach.


7. (U) In the coalition agreement between Sanader's Croatian
Democratic Union (HDZ) and the Peasant Party (HSS) and the
Social Liberals (HSLS),the PM succeeded in convincing his
partners to rule out a public referendum on NATO membership
(refs C and D). Instead, the new ruling coalition committed
to continued engagement in international peacekeeping
operations, further contributions to NATO peace-building
missions, and sustained public outreach on the advantages of
alliance membership.


8. (U) While Croatian Ambassador to NATO Davor Bozinovic will
likely again play a prominent role in the GoC's outreach, the
MFA has also begun to send other speakers to public events,
broadening the number of voices supporting membership in the
media. In addition, former head of MFA's NATO Dept Neven
Mikec has moved up to be FM Jandrokovic's new chief of
cabinet, putting NATO expertise at the minister's fingertips
and keeping the Alliance near the top of the MFA's priority
list.

REFUGEE RETURNS AND HOUSING: MEETING 2007 BENCHMARKS?
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9. (U) For returning refugees who owned property before they
fled the war, Croatia has largely addressed home
reconstruction, repossession and infrastructure development.
According to the UNHCR and OSCE, with the exception of cases
pending appeal, the cases of those who owned residences have
been resolved and only 17 houses subject to repossession
remain in dispute. In tens of thousands of other cases,
property owners have been able to return to their property or
received alternate housing, reconstruction assistance, or
compensation.


10. (U) A key remaining challenge has been how to accommodate
those who did not own property but held tenancy rights in
socialized housing. In consultation with the international
community, the GoC set two benchmarks for 2007:
-- resolve 1,000 of these housing care cases inside Areas of
Special State Concern (ASSC -- areas most directly affected
by the war),and
-- provide 400 apartments to applicants outside ASSC.


11. (U) The GoC reports it achieved both 2007 benchmarks. On
January 15, the GoC said it has resolved 1,007 cases inside
ASSC, meaning applicants have either moved into alternate
housing, have accepted building materials in lieu of housing,
or are awaiting completion or availability of designated
housing. Outside ASSC, the GoC said it has purchased 408
apartments. According to the government, 307 of these units
are actually available for occupancy, while the rest are
still being processed.


12. (C) The international community has not yet been able to
verify these claims. Previous field checks by the OSCE and
UNHCR have revealed that the GoC often stretches the
definition of "resolving" a case to show maximum progress,
often reporting a case involving a unit that is still in the
process of being purchased or renovated as resolved.
However, the GoC is generally moving steadily in a positive
direction in what will be a long-term political and budgetary
challenge. Even after meeting the 2007 benchmarks, the GoC
faces almost 10,000 more unresolved applications in the years
to come.


13. (U) Within the so-called "Sarajevo Process," the
Government of Serbia has pushed for Croatia to pay financial
compensation to former holders of tenancy rights who do not
actually wish to return to Croatia. The GoC argues that
tenancy rights are not private property and that providing
compensation for tenancy rights to those who do not want to
return violates the spirit of the process, which is to
promote return of refugees to their home country. The GoC
stressed repeatedly that it promises to provide housing to
all those who wish to return. The GoC has also offered to
support a donors' conference to assemble a package of
assistance for individuals unwilling to return, but has said
it could only be one of several donors in such an effort.


14. (U) The final unresolved issue within the "Sarajevo
Process" is recognition (or "convalidation"),for pension and
benefits purposes, of years worked in the former Serb-held
territories during the war. This has been a topic of long
political discussions between the GoC and Croatian Serb
politicians, and a commitment to finding a resolution is
reportedly part of the governing coalition agreement signed
earlier this month between the Independent Serbian Democratic
Party (SDSS) and the HDZ. Convalidation and other refugee
return issues will continue to be monitored by the EU, as
resolution of these questions is explicitly included among
the EU's criteria for Croatia's eventual accession to the
Union.

REFORMING THE JUDICIARY, COMBATTING CORRUPTION
-------------- -


15. (U) Judicial reform remains a key area of concern, with a
persistent public perception of the judiciary as one of the
country's main sources of corruption. However, Post has
noted progress. The case backlog has actually been reduced
30 percent in the past two years, and improvements in court
administration, including computerization and court
rationalization, are expected to speed up progress. The MoJ
continues to improve training of judges and supervision of
judicial administration. Serious weaknesses in such areas as
witness support still persist and have the potential to
jeopardize cases such as the war crimes prosecution of
Generals Ademi and Norac transferred from The Hague Tribunal.
But politically it is notable that such high profile war
crimes cases against ethnic Croatians are proceeding without
significant public protest or resistance.


16. (U) Croatia's steady implementation of its National
Strategy to Combat Organized Crime and Corruption is yielding
results. The GoC has established police and prosecutor task
forces to combat organized crime and has begun freezing
assets in narcotics cases. The GoC's Office for the
Suppression of Corruption and Organized Crime (USKOK)
conducted three high-profile stings in the past six months
leading to 36 arrests of government officials and private
citizens for corruption within the Croatian Privatization
Fund (Operation "Maestro"),the Zagreb land registry office
(Operation "Gruntovec," ref E),and the Dubrovnik permitting
office (Operation "Five Stars").


17. (C) USKOK Director Dinko Cvitan has claimed that these
stings are only the beginning of the GoC's ongoing campaign
to tackle corruption, and several other operations will go
public early this year. The investigations are also becoming
increasingly sophisticated, moving from informants into
electronic surveillance. According to Cvitan, he has the
full support of PM Sanader and the rest of Croatia's
political leadership in this fight, stressing that all of his
requests to the GoC for operational funds -- including money
for informants to use to pay bribes -- have been honored with
no questions asked. While USKOK has still not netted the
biggest fish, their recent success is a positive development
that should embolden them to continue to move up the
corruption food chain.

DEFENSE SPENDING: BALANCING DEFENSE AND DEPLOYABILITY
-------------- --------------


18. (U) The GoC remains on track to raise defense spending to
2 percent of GDP by 2010 as set out in the MoD's Long Term
Development Plan (LTDP). Defense spending in 2007 was
approximately 1.63 percent of GDP (1.96 percent when pension
payments are included and fire fighting is excluded, per
NATO's formula). Projected figures (without pensions, with
fire fighting) for 2008 and 2009 are 1.77 percent and 1.82
respectively.

19. (U) Reduction of personnel costs is a long-term priority
in the LTDP. In 2007, personnel costs were approximately 67
percent of the defense budget -- down from 79 percent in

2003. Military planning guidelines for the coming year call
for salary upgrades, improvements to living and working
conditions, and increased compensation for deployed troops,
so the MoD must stick to its force reduction targets in order
to continue decreasing personnel costs.


20. (U) About 7 percent of the defense budget was available
for equipment purchases and modernization in 2007. Under the
LTDP, this figure will improve to 32 percent by 2010, with
USD 610 million envisaged for equipment for the land forces,
USD 474 million for the air force, and USD 185 million for
maritime forces. Having completed the tender in 2007 to
procure armored personnel carriers for the land forces, the
largest procurement priorities remain advanced fighter
aircraft and coastal patrol ships. Croatian leaders are
committed to this plan, which they believe balances national
defense needs and force deployability.

HANDLING CLASSIFIED: APPROACHING NATO STANDARDS
-------------- --


21. (U) The GoC took several steps forward last year in
applying NATO security standards and regulations, in
particular in the field of security legislation, and we do
not expect this to be an issue of concern for accession. The
Data Secrecy Act and the Information Security Act were
adopted in July 2007. Early this year, we expect the newly
formed parliament to adopt the Security Clearance Act, which
will harmonize Croatian and NATO requirements. In the
meantime, vetting and clearance procedures are in line with
NATO standards on the basis of a governmental decree on
security vetting, according to NATO International Staff
experts. Information security-related structures are mostly
established, although they still need some time to become
fully operational.


22. (U) NATO's January 2008 progress report on Croatia noted
that the GoC's National Security Authority has established a
properly staffed registry system in compliance with NATO
standards and that information flow is well regulated. The
GoC has also established and funded an INFOSEC authority
(Zavod za Sigurnost Informacijskih Sustava). Current
physical security requirements are in most cases in line with
NATO's requirements, and the Central Registry has been
upgraded to enable operation at the COMSIC TOP SECRET level.
The GoC must now focus on developing and approving national
INFOSEC directives and establishing a Security Accreditation
Authority to enable implementation of a communications system
capable of processing NATO information.
BRADTKE