CROATIAN VIEWS ON RUSSIAN INVOLVEMENT IN

C O N F I D E N T I A L SECTION 01 OF 02 ZAGREB 000729 SIPDIS NOFORN PLEASE PASS TO EUR/SCE AND EUR/RUS E.O. 12958: DECL: 12/07/2019 TAGS: PGOV PREL ENRG HR RS SUBJECT: CROATIAN VIEWS ON RUSSIAN INVOLVEMENT IN SOUTHEASTERN EUROPE REF: A. BELGRADE 1258 ¶B. 07 ZAGREB 669 ¶C. ZAGREB 670 Classified By: Peter D'Amico, Pol Officer, for reasons 1.4 (b) & (d). ¶1. (C/NF) Summary: The GoC has traditionally been leery of Russia's involvement in the region, particularly due to Russian support for Serbia during the 1990s war, as well as concerns that the GoR could slow efforts to bring South Eastern Europe into the Euro-Atlantic community. Since taking office in July 2009, however, PM Kosor has had a more pragmatic attitude toward engagement with Moscow than her predecessor. This increased engagement, which also includes a December 13-14 visit to Moscow by President Mesic and an expected trip by Kosor in early 2010, is driven in large part by Croatia's energy requirements and its lack of viable alternatives to dealing with Moscow. However, the GoC continues to be wary and would prefer to maintain decent but distant relations with Russia, as well as minimize the GoR's influence in the region. End Summary. Relations Between Russia and Croatia Traditionally Distant ¶2. (C/NF) Since Croatia's independence, the GoC has been leery of Russia's involvement in the region. Zagreb views Moscow as a close historic ally of Belgrade, including during the 1990s conflict. More recently, Croatia has also been wary of Russia's role in Bosnia, especially Moscow's support for Republika Srpska (RS) PM Milorad Dodik. Croatia is also concerned that Russia could try to slow the progress of neighboring states toward Euro-Atlantic integration. In a recent conversation with Poloff, MFA Director General for the Neighboring Countries and South Eastern Europe Davor Vidis noted how Russian President Medvedev sent mixed messages about Serbia's Euro-Atlantic future during his visit to Belgrade on October 20, which Dodik also attended in part (ref A). Despite these concerns, Croatia lacks the harsh Cold War experience of some NATO neighbors who had Soviet troops invade and occupy their countries. Thus, while the GoC worries about Russian involvement in the region, its geographic distance and historical detachment during the Yugoslav period lessens Zagreb's fears about dealing with Moscow. Croatia Likely To Engage More with Moscow ¶3. (C/NF) Initial signs are that Prime Minister Kosor, in office since July 2009, has adopted a more pragmatic approach toward engagement with Moscow than her predecessor. Ivo Sanader worked to keep Russian involvement in Croatia to a minimum, particularly in key strategic sectors such as energy (ref B). Some within the GoC also cited Montenegro's experience as a cautionary tale, with Russian individuals and businesses controlling a significant percentage of property along the coast. As a result, Russian investment in Croatia to date has been very limited, with the most visible investment Lukoil's purchase of a small chain of gas stations in 2007. In fact, Sanader's aloofness led then-Russian President Putin to complain about Russian difficulties in doing business in Croatia. Kosor, however, has signaled a more flexible stance towards dealing with Russia and is planning to travel to Moscow in the next few months. President Mesic has already gone ahead with his planned December 13-14 visit to Russia. ¶4. (C/NF) Energy requirements are driving this shift in attitude. The GoC finds it has few alternatives in securing gas supplies from anywhere but Russia, which currently supplies almost half of Croatia's gas. Davor Stier, the PM's Foreign Policy Advisor, told post that if the EU had a strong, unified, and viable policy on Russia, particularly regarding energy, Croatia would gladly follow it. Instead, he noted, EU countries seemed eager to cut whatever bilateral deals they could with the Russians, especially when it came to securing supplies of Russian gas. Due to the absence of options for natural gas supply, Stier argued that Zagreb could either cut a deal with Moscow directly or wait and have Budapest make a less favorable arrangement with the GoR for Croatia, via the Hungarian firm MOL's majority share in Croatia's largest energy company, INA. Mesic's visit this week was largely ceremonial, since he has no authority to set energy or commercial policy. Kosor's eventual visit, however, will almost certainly include serious discussion of future Russian gas supplies and possible Croatian participation in South Stream. Croatian officials all tell us that Zagreb will be cautious in making any energy deals with Moscow. Croatia will resist pressure to forswear any potential options for diversification of its energy supply ZAGREB 00000729 002 OF 002 such as the planned LNG terminal on the Adriatic island of Krk. However, serious negotiations are only at the initial stages. ¶5. (C/NF) Croatia's growing pragmatism toward Russia on energy issues has no visible impact on Croatia's policy within NATO or other areas. The GoC has been willing to take actions that could irritate the GoR, such as inviting the Georgian military to participate in training exercises in Croatia, and participating in PfP exercises in Georgia following the conflict there. Nevertheless, Croatia's position on Russia within NATO or in other fora such as the OSCE is typically less antagonistic towards the GoR than some of the new member states from Central and Eastern Europe. Comment ¶6. (C/NF) The GoC's overall concerns about Russia's role in Southeast Europe and Moscow's inclination to favor Serbia have not abated. Zagreb will, however, seek to increase its cooperation with Moscow on select issues, particularly energy, given the lack of viable alternatives. With the GoC's EU allies unable to form a unified position on Russia, the Croatians fear being left behind as other countries cut their own bilateral deals with Moscow. Croatia would prefer to have the GoR's ability to influence events in the region kept to a minimum, but not at the cost of going without heat in the winter. FOLEY