CROATIA SEES BRIGHTER PROSPECTS FOR RESOLVING

UNCLAS ZAGREB 000734

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: PREL HR SI
SUBJECT: CROATIA SEES BRIGHTER PROSPECTS FOR RESOLVING
BORDER DISPUTE WITH SLOVENIA


1. (U) SUMMARY: Zagreb is cautiously optimistic that Croatia
can reach an agreement with Slovenia by the end of the year
to take their unresolved border issues to arbitration, most
likely at the International Court of Justice (ICJ) in The
Hague. The Croatia-Slovenia border commission has largely
finished drawing up the legal documents that would be the
basis for the arbitration. All that remains is for both
capitals to green light the case for arbitration. Zagreb
would like to resolve the bilateral dispute sooner rather
than later and sees the early indications out of Ljubjana's
likely new government as encouraging. However, Slovenia's
insistence on the legal concept of "ex aequo et bono"
(according to the right and good) could still keep the matter
from being taken to arbitration in the near-term. END SUMMARY

What Is At Stake
--------------


2. (U) The main issue concerns the maritime boundary, which
was never established between the two former Yugoslav
republics, and Slovenia's claims to waters in Piran Bay.
There are also several contested points along the land
border, including along the Dragonja River in the Istria
region, and in a few other mountainous areas between Sveti
Martin and Hotiza, near the summit of Mt. Sneznik, and on a
mountain ridge running from Sekulici, Croatia towards the
village of Bregana. None of the disputed points are of major
economic or strategic significance.

Bled Agreement Sets the Stage for the End Game
--------------


3. (U) In August 2007 at Lake Bled in Slovenia, Croatian
Premier Ivo Sanader and former Slovenian Premier Janez Jansa
agreed to take both land and border issues to arbitration at
the International Court of Justice (ICJ) in The Hague for
resolution. The ICJ was considered a neutral compromise
after Croatia rejected Slovenia's request to arbitrate the
issue in front of the Badinter Commission and Slovenia
rejected Croatia's request to arbitrate in front of the
International Tribunal for the Law of the Sea in Hamburg.
Jansa, however, failed to gain full support across the
political spectrum in Slovenia for the ICJ as the venue for
the arbitration. The Bled Agreement also stipulated that
other bilateral sore-points -- i.e., nuclear waste disposal
at Krsko and deposits in the Ljubljanska Banka -- would be
handled separately via bilateral agreements or other court
proceedings.

Border Commission Wraps-Up
--------------


4. (U) The two governments set up a bilateral border
commission to clarify the legal terms and the scope of the
arbitration, which has met three times in the past year, most
recently in early October, and has finished its work.
Throughout these meetings, Croatia has been insistent that
the matter be taken to the ICJ. The Slovenian position has
been that the venue for arbitration could be either the ICJ,
the Permanent Court of Arbitration in the Hague, or some
other ad hoc international body of mediation.

Capitals Mull Final Options
--------------


5. (SBU) These relatively minor border disputes have assumed
greater significance in the context of Croatia's EU accession
negotiations. The Croatian media reported extensively on
parting comments from out-going Slovene FM Dimitri Rupel,
indicating that Slovenia would block EU negotiations on any
chapter that included Croatian maps or references to the
border. There is presently cautious optimism in Croatia
regarding the border dispute and a belief that Pahor and his
foreign policy team will have a less antagonistic stance
toward Croatia. Croatian officials at both the Foreign
Ministry and the President's Office have noted to EmbOffs
their relief that, for the first time in nearly a decade,
bilateral disputes between Croatia and Slovenia were not a
campaign issue in the latest parliamentary campaigns in
either Croatia or Slovenia. The Croatian MFA is optimistic
that the new government in Ljubljana, mostly likely headed by
Borut Pahor, will support a final decision to take the
dispute to the ICJ. Sanader has emphasized that Zagreb is
ready to see the matter arbitrated, and Pahor, for his part,
has indicated that he would continue with the previous
government's policies vis-a-vis Croatia, and suggested that a
final decision could be made by Christmas.


6. (U) Pahor has, however, insisted that the concept of "ex

aequo et bono" be one of the criteria weighed by the
arbitrary body in its judgment. (NOTE: Ex aequo et bono
(according to the right and good) is a legal term of art and
refers to the power of the arbitrator to dispense with
consideration of the law and consider solely what the
arbitrators consider to be fair and equitable. END NOTE.)
ICJ governing statutes allow for the court to decide cases ex
aequo et bono, but only where the parties agree to this
principle in advance. Up to the end of 2007, the ICJ has
never decided such a case solely on this principle, but some
legal scholars have argued that the concept is well suited
toward disputes between parties in "a complex and long-term
relationship." Croatia has rejected this legal concept as a
factor for consideration in the arbitration.


7. (SB) COMMENT: While Sanader and Jansa had a constructive
relationship, much of Croatia's renewed optimism on this
issue appears to come from seeing the back of FM Rupel.
Given Pahor's comments on "ex aequo et bono", however,
Croatia's effort to get this issue to the ICJ still has some
ways to go. END COMMENT.
Bradtke