Cablegate: Zagreb Weekly Activity Report - September 17, 2008

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SUBJECT: ZAGREB WEEKLY ACTIVITY REPORT - SEPTEMBER 17, 2008

1. (U) HUNGARY IS FIRST NATO MEMBER TO RATIFY CROATIAN AND
ALBANIAN ACCESSION:
The Hungarian Parliament on September 15 voted overwhelmingly
in favor of Croatia's and Albania's Accession Protocol,
making Hungary the first NATO member state to approve this
round of NATO enlargement. having served as Croatia's
"Contact Point" country during the MAP process, Hungary was
keen to be the first country to approve its neighbor's
accession. To celebrate the event, the President of the
Croatian Parliament is hosting a reception for NATO country
ambassadors on September 18. (RHoltzapple)

2. (SBU) CROATIAN PARLIAMENTARIANS ON NATO TOUR:
From September 3 to 10, a multi-party delegation of the
Croatian Parliament (Sabor) traveled to Brussels, Brunssum,
Washington and Norfolk on a USG-sponsored tour to learn more
about NATO. The group included six members of the Sabor's
new Defense Committee. During meetings at ANTO headquarters
and with staff from the US missions to NATO and EU, the
parliamentarians had lengthy discussions about NATO's future
role in Southeast Europe and NATO's relations with Russia and
Georgia. During a visit to the Croatian Mission to NATO, the
delegation was also able to speak by video-link with Croatian
troops deployed in Afghanistan. At the Operations Command in
Brunssum, parliamentarians were pleased to hear very positive
evaluations of Croatia's performance in ISAF. The visit to
the Allied Command for Transformation (ACT) in Norfolk
informed the visitors of the ATC's potential to help members
in defense planning. A highlight of the trip was the chance
the parliamentarians had to attend the September 10 Senate
Foreign Relations Committee hearing on Croatia and Albania's
accession to NATO. In remarks to Croatian media after the
hearing, the Chairman of the Defense Committee noted that
support for accession by Croatia and Albania to NATO was so
strong that Senators' comments and questions focused on the
Georgia crisis instead. (PD'AmicoZTomic)

3. (U) OPPOSITION LEADER PAYS CONTROVERSIAL VISIT TO
BLEIBURG:
A delegation of the Social Democratic Party (SDP), led by
party president Zoran Milanovic, paid a controversial visit
to Bleiburg, Austria, and Tezno, Slovenia, on September 11.
Bleiburg was where fleeing Ustasa (pro-fascist/pro-Nazi)
sympathizers and other civilian refugees were handed over by
British allied forces to Yugoslav Communist Partisans at the
end of WWII. A large, though disputed, number were executed
or died during a forced march back to Yugoslavia, with one of
the largest mass grave sites in Tezno. Milanovic denied
accusations the trip was politically motivated or timed to
appeal to nationalist voters in upcoming local elections. He
said his trip was to show a balanced SDP approach to crimes
committed during WWII regardless of the victim, and to open a
dialogue within Croatia regarding the events that took place
at these sites. Prominent leaders and historians from the
Croatian Jewish community dropped earlier plans to accompany
Milanovic after protests were raised within the community.
(JNCallahan)

4. (U) EU WARNS CROATIA TO PICK UP THE PACE IN ACCESSION
NEGOTIATIONS:
Following meetings with PM Sanader on September 16, European
Commission (EC) President Barroso told the press Croatia will
need to speed up the pace of reforms if it is going to meet
the necessary benchmarks by November in order to stay on
course for completing negotiations in late 2009. Barroso
specifically noted two chapters: Judiciary and Fundamental
Rights, where Croatia must increase its effectiveness in
fighting corruption and conducting war crimes trials, and
Competition Policy, where Croatia must make more progress in
privatizing its shipyards and complying with EU rules on
state subsidies. Sanader said Croatia was aware of the task
ahead wand would do what was needed to complete negotiations
next year. COMMENT: Despite the optimism Sanader continues
to project, this warning from the EC may be a first step in
easing back from the ambitious timeline of completing
negotiations in 2009. (SLLitke)

5. (U) PRESIDENT AND GOVERNMENT TRADE BARBS OVER ECONOMIC
PERFORMANCE:
On September 16, President Mesic used his opening address at
the Zagreb Autumn Trade Fair to blame PM Sanader and his
government for Croatia's high inflation and other economic
problems. He said high inflation is the result of "policy
that spends but does not earn," with a growing bureaucracy
and a failure to increase economic production. In response,
DPM and Minister of Economy Polancec implied Mesic's
understanding of the economic situation was insufficient and

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countered that "inflation in Croatia is completely imported"
and the result primarily of fuel and food prices. Speaking
from Brussels, PM Sanader said Croatia's economic indicators
are good and everyone has welcomed the steps the GOC has
taken to curb inflation. He added, "the speech must have
been written by (Mesic's) advisors, but we will put up with
them for one more year." (NOTE: Mesic's presidential term is
due to end in early 2010.) (SLLitke)

6. (U) INA SAYS MOL SHARE PRICE OFFER OF 2800 HRK IS
"ACCEPTABLE":
Mesic also used his Trade Fair speech to challenge current
efforts to further privatize Croatia's largest oil and gas
company INA, questioning why the government would sell such
strategic assets in turbulent economic times during which
everyone else was grasping to secure energy supplies. PM
Sanader, answering questions in Brussels on the Mesic speech,
said the government was simply implementing a privatization
law passed during the SDP government of Ivica Racun. Dep PM
Polancec also noted that a share swap with MOL, while
reducing the GOC's shares in INA to 25 percent, would also
give the GoC an ownership stake in MOL, and extend current
restrictions on MOL's holdings within INA, meaning such
shares could not be sold on to other buyers for an extended
period. On September 15, INA's board announced that the
offer from Hungary's MOL was of 2800 HRK (approx. $560) per
share was acceptable, citing the current business climate and
INA profit margins. The company's union, however, continues
to claim the offer is inadequate and argues the offered price
should be as high as 5000 HRK, despite a Price Waterhouse
Coopers study that valued INA shares at only 1300 HRK.
(DHWestfall)

7. MINNESOTA NATIONAL GUARD COMMANDER VISITS CROATIA:
Minnesota National Guard's Adjutant General Shellito wrapped
up his visit to Croatia on September 16. TAG Shellito met
with Ambassador Bradtke, Croatia's Chief of the General Staff
(CHOD), and the Chief of the Croatian Army to further
development of the State Partnership between the Croatian
Armed Forces and the Minnesota NG. Briefings and discussions
included plans for a joint Operational Mentoring and Liaison
Team (OMLT) for ISAF intended to deploy to Afghanistan in
2009. One result of the trip is that the Minnesota NG
sending a team in October to go through the Military Decision
Making Procedure with the Croatian military to better sculpt
each sides' respective contributions to the joint OMLT.
(CDavis)

8. (U) TRAINING ON COMBATING TERRORISM:
The US Embassy's Office of Defense Cooperation coordinated an
intense, one-week mobile training team course entitled
"Intelligence in Combating Terrorism" from 8 to 12 September
2008. The purpose of the week-long seminar was to train
Croatian, US. and other allied military and civilian
personnel to analyze terrorist and other sub-national threats
in the contemporary operating environment. The instructors
from the US Intelligence School at Ft. Huachuca, Arizona
helped the students to examine terrorist organization
structures; state support to terrorist groups; terrorist
strategy and tactics; terrorist threat assessment for
military installations and deploying units; and terrorist use
of weapons of mass destruction. The center piece of the
course was the analytical methods for examining terrorist
groups, giving the students the tools they need to comb
through large amounts of information, find the key elements
and assemble the underlying picture so that commanders can
take appropriate action. (CDavis)
Bradtke

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