Cablegate: Zagreb Weekly Report - October 31, 2009

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SUBJECT: ZAGREB WEEKLY REPORT - OCTOBER 31, 2009

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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:

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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

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