SCENESETTER FOR DEPUTY SECRETARY LEW'S VISIT TO ZAGREB

UNCLAS SECTION 01 OF 03 ZAGREB 000092 SIPDIS SENSITIVE FOR DEPUTY SECRETARY LEW FROM AMBASSADOR FOLEY E.O. 12958: N/A TAGS: PREL OTRA PGOV HR SUBJECT: SCENESETTER FOR DEPUTY SECRETARY LEW'S VISIT TO ZAGREB ZAGREB 00000092 001.2 OF 003 BACKGROUND -------------- ¶1. (SBU) Your visit to Zagreb on February 18 for the inauguration of Croatia's third president, Ivo Josipovic, will send a clear signal of support for the new president and the US-Croatia relationship overall. Josipovic is a well-respected legal scholar and self-professed "europhile" who was nominated by the opposition Social Democrat party (but will officially resign from the party prior to his taking office). Just as significantly, Josipovic is expected to work well with the HDZ-led Government of Croatia, so your visit will not be seen as any sort of partisan gesture, but as support for Croatia as a whole. Particularly important will be Josipovic's cooperation with Prime Minister Jadranka Kosor on addressing corruption and working towards EU membership. ¶2. (SBU) The U.S.-Croatian relationship is as good and strong as it has ever been, reflecting the remarkable transformation that has been underway in Croatia over the last decade. Having achieved NATO membership in April 2009, and nearing the final lap of its EU accession process, Croatia has nearly completed the tasks of putting the 1990s war and all of its negative legacies behind it, and of effecting its political metamorphosis into a stable and fully democratic member of the Euro-Atlantic community. The only major concern is Croatia's underperforming economy, which is weighed down by high taxes, heavy regulation and corruption, and an unattractive business and investment environment. BILATERAL ASSISTANCE -------------- ¶3. (SBU) Since 1990, the USG has provided more than $350M in assistance to Croatia, although with its graduation from SEED Act assistance in 2006 and the termination of the USAID mission in 2008, our assistance funds have fallen significantly. Croatia continues to receive bilateral military assistance through the IMET, NADR and Foreign Military Financing (FMF) programs, and these funds have given Croatia significant help in sustaining its NATO deployments to ISAF and KFOR. This is the final year of the budget for rule of law assistance through the ICITAP program, which has had a major impact in the fight against corruption and organized crime. Post may shortly propose several one-time projects to INL to further enhance police and prosecutor capabilities in this critical area. Finally, the USG provides approximately $2M per year for humanitarian demining. MISSION MANAGEMENT -------------- ¶4. (SBU) Embassy Zagreb takes an active role in the EUR Bureau's management initiatives: CMI and eServices, FSN empowerment, regionalization, warehouse reduction, and environmentally friendly "green" administration. This medium-sized Embassy, located in a new NEC (2003) well outside of Zagreb proper, has 54 USDH and about 150 local staff from 6 USG agencies. The recent closure of the USAID mission and other right-sizing measures have resulted in excess space and increased ICASS costs for the remaining agencies. Post has creatively mitigated costs with ICASS staff reductions, warehouse consolidation and reutilization of space. In addition, some ICASS costs are now shared with Embassy Podgorica, a regional partner for whom Embassy Zagreb provides most financial and human resources support. The embassy's distance from the city center does detract from the mission's diplomatic effectiveness. U.S. OBJECTIVES WITH CROATIA -------------- ¶5. (SBU) Croatia's main goal in the next two years is to complete its accession to the European Union. We strongly support EU membership because it reinforces all of our bilateral goals with Croatia, and sends a strong signal to the rest of the region that reforms will bring positive change. Prime Minister Kosor has taken courageous decisions to overcome obstacles to Croatia's EU accession, notably by concluding an Arbitration Agreement with Slovenia on the maritime border dispute, and invigorating efforts to cooperate with the ICTY (which has been recognized now by all EU members except the Netherlands, which continues to block the opening of a key Chapter in EU accession negotiations). Kosor has also led a high profile campaign against corruption, another key EU benchmark. ¶6. (SBU) Our own goals with Croatia center on three key objectives: bolstering Croatia as a global partner, promoting regional stability, and supporting the completion of badly-needed domestic political and economic reforms particularly in the area of anticorruption. Since the president's role is largely limited to foreign affairs and military issues, Josipovic should prove a key ally with our first two goals. His campaign, however, focused on anticorruption efforts and we expect him also to be an important partner with Prime Minister Kosor in Croatia's anticorruption ZAGREB 00000092 002.2 OF 003 initiatives. ¶7. (SBU) As a global partner, Croatia has approximately 300 troops deployed to Afghanistan as part of ISAF. The GoC has been particularly responsive to our encouragements to focus their deployment as much as possible on supporting our policy of training Afghan forces to assume increasing responsibility for security in their own country. In 2009, the Croatian Air Force also deployed to a multilateral PKO for the first time, contributing two helicopters and 20 crew to KFOR who remain based at US Camp Bondsteel in Kosovo. Supporting these deployments is a key focus of our assistance programs (IMET, FMF, 1206, GPOI) with Croatia. On our broader global agenda, Croatia has proven a reliable ally, and just concluded a term as a non-permanent UNSC member in which it was consistently supportive of U.S. positions, with a particular emphasis on maintaining international attention to counter-terrorism efforts. ¶8. (SBU) Within the region of Southeast Europe, Croatia's success has promoted stability in two ways. First, through the power of example. Croatia's NATO membership, and its progress toward the EU, has communicated as clearly as anything could to its neighbors that if they make the necessary reforms, they can aspire to a better future. Second, the process of integrating into Euro-Atlantic institutions has been a solid incentive to Croatia to improve its policies toward its neighbors. The bad old days of Croatian interference in Bosnia-Herzegovina are long gone. Throughout the recent Butmir talks, Zagreb endeavored to support the process and urged BiH Croat leaders to assume more constructive stances on the issues under discussion. In its other relations as well, Croatia has had to address difficult issues ranging from the border dispute with Slovenia, to assisting the return of ethnic Serbs who fled during the war, to taking a principled position in support of Kosovo's independence despite the strains that would create with Belgrade. None of these decisions have been simple, and none of the issues can yet be considered completely resolved, but the movement is in a positive direction. You could encourage Josipovic to pursue his stated goal of seeking improved relations with Serbia, which will require pragmatic resolution of several outstanding bilateral issues. ¶9. (SBU) Domestically, the Croatian president does not control any policy levers. But Josipovic's background as a constitutional scholar gives him weight in calling for legal reforms and other anticorruption measures. Prior to his election, Josipovic was a key ally for the US and EU in pushing reform of the judiciary and in calling for Croatia to deal forthrightly with the issue of war crimes, both in domestic courts and in cooperation with the ICTY. During his campaign, Josipovic stressed the need to tackle corruption and revive the economy. He also campaigned on a pledge to utilize foreign policy to build trade relations in the region, which he viewed as crucial to Croatia's economic development. Overall, Croatia needs to create a much more business-friendly environment, one that will be attractive to foreign investors and Croatian entrepreneurs alike. (Last year the World Bank ranked Croatia 107 out of 180 countries in this regard.) THEMES FOR YOUR VISIT -------------- ¶10. (SBU) Croatian officials view the U.S. very favorably. We have been a reliable supporter for the country; clear about our interests, but realistic in our demands, and trustworthy in delivering on our commitments. The Croatians know that we are one of their strongest, but also most candid, supporters, and therefore they listen to our advice carefully. Josipovic has an excellent relationship with the Embassy and is an alumnus of our International Visitor program. ¶11. (SBU) Your visit, which will include a morning meeting with the Foreign Minister, and a meeting with President Josipovic following the inauguration ceremony and celebratory luncheon, will provide excellent opportunities to advance the objectives outlined above. ¶12. (SBU) With both the FM and President Josipovic, foreign policy themes include: - Congratulate Croatia on the impressive transition that has taken place over the past ten to fifteen years in Croatia. - Note our support for Croatia's EU membership. - Thank Croatia for its support to the ISAF mission. - Note our support for any moves to improve relations with Serbia, including full completion of the efforts Croatia has undertaken to facilitate the return of ethnic Serb refugees. - Thank Croatia for its constructive policies toward Bosnia-Herzegovina and Kosovo. ZAGREB 00000092 003.2 OF 003 - Praise Croatia's progress on ICTY cooperation and on finding a resolution to the Slovenia border issue, and stress the need to continue such cooperation. In addition, with Josipovic you could add: - Congratulate President Josipovic on his election and note how the smooth conduct of the election has again confirmed Croatia's democratic credentials. - Stress the importance of tackling corruption, which is vital to EU accession and to the consolidation of the rule of law in Croatia. ¶13. (U) I look forward to welcoming you to Zagreb next week. FOLEY