ZAGREB WEEKLY REPORT - OCTOBER 31, 2009

UNCLAS SECTION 01 OF 02 ZAGREB 000645 SIPDIS E.O. 12958: N/A TAGS: PREL PGOV PREF HR SUBJECT: ZAGREB WEEKLY REPORT - OCTOBER 31, 2009 ZAGREB 00000645 001.2 OF 002 ¶1. (U) GOVERNMENT SETS DATE FOR PRESIDENTIAL ELECTIONS: The Government announced on October 30 that it has set the date for Croatia's upcoming Presidential election. The first round will be held on December 27, 2009. A second round, if necessary which is likely) will be held on January 10, 2010. (RHoltzapple) ¶2. (U) PODRAVKA SCANDAL SINKS DIRECTORS AND SNARES ECON MINISTER: Six people, including former and current executives of top Croatian food group Podravka, were arrested October 21 on suspicion of illegal share purchasing, according to Croatian media. The suspects are believed to have planned to purchase Podravka shares through the Fima Grupa, a Croatian brokerage, and through Split-based food processor SMS. In the wake of the scandal, on October 30, Deputy PM and Minister of the Economy Damir Polancec -- a former executive at Podravka -- resigned. Local media speculate that he will be implicated in the alleged malfeasance. The Zagreb Stock Exchange did not suspend trading of Podravka shares following the news of the arrests last week but placed the company on a monitoring list and reported a 1.5 percent decline in stock price after the news of the arrests. Podravka is 26.5 percent owned by the Croatian government, and Prime Minister Jadranka Kosor recently appointed opposition SDP MP Ljubo Jurcic as chairman of Podravka,s supervisory board following the news of suspected fraud. (TBullock) ¶3. (U) DEPUTY PM ADLESIC APOLOGIZES FOR HOOLIGAN INCIDENT IN VARAZDIN: The Croatian press reported that Deputy Prime Minister Djurdja Adlesic in Belgrade on Oct. 19, apologized for racist chants against the Serbian side made by the crowd in Varazdin during a youth tournament football game on October 13. PM Kosor and other leading politicians in Croatia also condemned the incident shortly after it occurred. Adlesic noted that the government was working on ideas to better prevent violence and other forms of racial intolerance at sporting events. Deputy PM Slobodan Uzelac raised the issue in a courtesy call meeting with Ambassador Foley on October 26 as evidence that Serbs still face challenges reintegrating into society in Croatia. However, he praised PM Kosor for her quick condemnation of the incident and said the high-level government response was very positive. (PD'Amico) ¶4. (U) MFA SEEKS TO BOOST CROATIAN INVESTMENT IN IRAQ: The Ministry of Foreign Affairs, led by the chief of the Croatian Mission in Iraq, Jerko Vukas, announced plans in late October to organize a meeting for Croatian construction companies interested in working in Iraq, though no date was specified. Vukas reported that Croatian companies were missing an opportunity and should take advantage of old contacts established when Croatia was part of Yugoslavia. The meeting will inform companies about the political and security situation, legal regulations, the banking system, licensing, etc. The MFA also plans to organize an economic forum next spring and will invite approximately 100 Iraqi companies to participate. (NCallahan) ¶5. (U) GERMAN FIRM PULLS OUT OF CROATIAN LNG PROJECT: RWE, Europe's fifth largest utility, announced on October 20 that it would withdraw from the Adria LNG consortium's project to build a facility for liquefied natural gas (LNG) conversion on the Croatian island of Krk. RWE said it withdrew from the consortium in order to pursue LNG exploration in Northern Europe, and planned to offer its 17 percent share of Adria LNG to the other shareholders. The consortium expects to obtain the necessary permits from Croatian authorities during the first quarter of 2010, the Adria LNG consortium said in a 20 October press statement, and claimed RWE's withdrawal will not endanger the project. According to Croatian media, three Croatian utility companies (INA, INA.ZA, and HEP) and gas pipeline operator Plinacro are expected to join the $1.2 billion project soon. Should these firms take over RWE,s shares, Croatian firms would have approximately a 25 percent stake in the Adria LNG consortium. (DMatijas) ¶6. (U) FINMIN SEARCHING FOR BOND BUYERS IN US AND EUROPE: Finance Minister Ivan Suker this week led a Croatian delegation seeking buyers for approximately $750 million in GoC bonds, according to the Ministry of Finance. Suker presented the GoC bonds to investors in London, Luxembourg, Boston, New York, and San Francisco, and hoped to attract buyers with an interest rate of 6 percent. Local media reported on October 30 that Suker had found strong demand for Croatian bonds. He was reported to have placed nearly $1.5 billion worth of Croatian bonds in America, but he did so at an interest rate of 6.75%. (septel) (TBullock) ¶7. (U) AMB. FOLEY VISITS KNIN, MEETS MAYOR AND SERB RETURNEES: ZAGREB 00000645 002.2 OF 002 Ambassador Foley attended a ceremony at the Knin Hospital on 29 October recognizing the several hundred thousand dollar renovation project completed earlier in the year by US Airmen. During the ceremony, the Ambassador announced that US European Command would donate an additional $50,000 for the purchase of two new incubators for the pediatric wing of the hospital. The Ambassador also met with Mayor of Knin Josipa Rimac for a discussion that focused on improving inter-ethnic relations and ongoing efforts to bolster the area's economy. Finally, Ambassador Foley met with Serb returnees who are having their damaged home rebuilt under Croatia's housing care program for returnees. The Serb returnees' story attests to the efforts of the GoC to implement its housing program, but also highlighted the significant gap between the GoC's "approval" of a returnee's application for housing assistance and the actual completion of construction. The house will likely not be finished before the winter, and thus will not be ready for the family to move in until the spring of 2010. (DMeges) ¶8. (U) TED TALKS AT AMERICAN CORNER DRAWS LARGE AUDIENCE: The monthly U.S. embassy "TED Talk" attracted an audience of 70 young and innovative Croatians to the American Corner in Zagreb on October 27. Croatian psychologist and author Dr. Mirjana Krizmanic and moderator Ms Nevena Crljenko from the Academy for Political Development discussed Alain de Botton's notions of success, failure, snobbery and meritocracy. De Botton's questioning of whether success and failure are always earned spurred a lively discussion among young professionals in the audience about Croatian society, government accountability and true happiness. TED (Technology, Entertainment, Design) is an annual conference in the United States that defines its mission as "ideas worth spreading". These lectures ("TED Talks") are available on-line at www.ted.com. This exciting and dynamic new tool in our outreach program engages Croatians from different fields, helps connect them to other embassy programs, and establishes a positive connection with the United States. It also spreads the ideas from the TED videos we select, in this case spreading the idea that a government's success should be measured by merit. (MCrnjakovic/BPost) ¶9. (U) LIBRARY OUTREACH IN SLAVONIA: The APAO and IRC Director traveled to eastern Slavonia, visiting three public libraries in Drenovci, Zupanja, and Vinkovci, small cities with which we have had little previous contact. In each library, we presented a collection of children's books from the Sabre Foundation, International Information Program (IIP) products, and books donated by the Embassy community through the CLO office. Children's books in English are prized in small communities. At each location we received a tour and discussed Embassy programs and ways to collaborate. While in Drenovci, the APAO also met with the Deputy Mayor. This program is part of an ongoing library outreach program in which the public affairs office has visited 30 libraries, mainly in economically challenged areas of the country. The visits have extended the reach of the embassy into smaller communities, generating speaker requests and embassy visits. (KWetzel) ¶10. (U) PRESENTATION ON PRESIDENT OBAMA IN NORTHERN CROATIA: The APAO spoke about President Obama to 50 high school students at the public library in Koprivnica, a city of 30,000 located near the Hungarian border, in late October. Students from both the comprehensive and vocational high school attended. Using a power point presentation and a film clip from the President's historic speech at the 2004 Democratic National Convention, the APAO emphasized elements of the President's extraordinary life story, discussing democracy, race and the American dream. The APAO also presented the Director of the Library with a projector which could be used for future lectures. Local television and newspapers covered the presentation. The speech engaged high school students in a discussion of U.S. society, drawing upon the President's broad popularity among young people and strengthened the Mission's presence in northern Croatia. (KWetzel) FOLEY