This record is a partial extract of the original cable. The full text of the original cable is not available.

C O N F I D E N T I A L SECTION 01 OF 02 ZAGREB 001238 
 
SIPDIS 
 
STATE FOR EUR (BOGUE) AND PM (LINO) 
DEFENSE FOR OSD/DASD-EURASIA (RICARDEL), OSD-P (SHELTON) 
AND DSCA-ERASA 
                       CONFIDENTIAL 
 
PAGE 02        ZAGREB  01238  01 OF 02  301414Z 
USEUCOM FOR J4 
 
E.O. 12958: DECL: 05/03/2013 
TAGS: MARR PREL KTIA ABUD MASS PREL KTIA ABUD MASS HR HRMARR KICC NATO
SUBJECT: CROATIA: SUSPENSION OF MILITARY ASSISTANCE WOULD 
SLOW PROGRESS TOWARD NATO, LIMIT BORDER SECURITY 
 
REF: A. STATE 139892 
     ¶B. STATE 139186 (NOTAL) 
 
CLASSIFIED BY: POLOFF A.F.GODFREY FOR REASONS 1.5 (B,D) 
 
SUMMARY 
------- 
 
¶1.  (C) CROATIA IS HEAVILY RELIANT ON FMF AND IMET FUNDING TO 
ACHIEVE ITS GOALS OF MODERNIZATION AND INTEROPERABILITY WITH 
NATO.  AS CROATIA STRUGGLES TO DOWNSIZE AND RESTRUCTURE ITS 
MILITARY, NEARLY 70 PERCENT OF ITS DEFENSE BUDGET IS CONSUMED 
BY PERSONNEL COSTS.  THE LOSS OF U.S. MILITARY ASSISTANCE 
PROGRAMS WILL CERTAINLY SLOW CROATIA'S PROGRESS TOWARD 
ELIGIBILITY FOR NATO MEMBERSHIP AND THEREBY AFFECT OUR 
EFFORTS TO PROMOTE REGIONAL STABILITY IN SOUTH CENTRAL EUROPE 
BY MOVING THE REGION'S COUNTRIES INTO EURO-ATLANTIC 
INSTITUTIONS AND USING THE LEVERAGE OF THE NATO ACCESSION 
PROCESS TO SPEED REFORMS. 
 
¶2.  (C) CROATIA VALUES THE HIGH LEVEL OF BILATERAL DEFENSE 
COOPERATION AND WOULD REGRET THE IMPACT AN ASSISTANCE CUTOFF 
WOULD HAVE ON THAT RELATIONSHIP, PERHAPS EVEN MORE THAN THE 
IMPACT OF THE LOSS OF ASSISTANCE ITSELF.  POST IS WORKING TO 
                       CONFIDENTIAL 
 
PAGE 03        ZAGREB  01238  01 OF 02  301414Z 
MITIGATE THE IMMEDIATE IMPACT OF SEVERING MILITARY 
ASSISTANCE.  AT RISK IS USD 5.5 MILLION IN UNOBLIGATED FMF 
FUNDS FROM FY 2003.  WHILE WE HAVE NOT YET TAKEN STEPS WHICH 
WOULD WEAKEN OUR EFFORTS WITH THE GOC TO NEGOTIATE AN ARTICLE 
98 AGREEMENT, IT IS LIKELY THAT MOST OF THE FY03 FMF FUNDS 
COULD BE OBLIGATED BEFORE THE JULY 1 DEADLINE.  END SUMMARY. 
 
CROATIA RELIES ON FMF FOR MODERNIZATION, INTEROPERABILITY 
--------------------------------------------- ------------ 
 
¶3.  (C) BECAUSE THE GOC IS STILL STRUGGLING WITH DOWNSIZING 
AND RESTRUCTURING ITS MILITARY, PERSONNEL COSTS ARE A 
DISPROPORTIONATELY HIGH PORTION OF THE ANNUAL MOD BUDGET.  IN 
ITS MAY 2003 REPORT TO NATO'S NORTH ATLANTIC COUNCIL IN ITS 
FIRST MEMBERSHIP ACTION PLAN REVIEW, CROATIA REPORTED THAT 
MILITARY PROCUREMENT MAKES UP ONLY ABOUT 18 PERCENT OF ITS 
TOTAL BUDGET.  SUBTRACT FROM THIS AN EXPENSIVE 
UPGRADE/OVERHAUL TO ITS AGING FLEET OF MIG AIRCRAFT AND THE 
PAYMENTS TO SERVICE AN EX-IM BANK LOAN USED FOR THE PURCHASE 
OF COASTAL AND AIR SURVEILLANCE RADARS, AND THE $5.5 MILLION 
FMF BUDGET IS THE EQUIVALENT OF NEARLY 30 PERCENT OF 
CROATIA'S OWN NATIONAL DEFENSE MODERNIZATION BUDGET.  ALL OF 
THE EQUIPMENT IN THE CURRENT FMF PROCUREMENT PIPELINE IS 
INTENDED TO SUPPORT CROATIA'S GOALS OF INTEROPERABILITY WITH 
NATO. 
 
FMF COMMUNICATIONS EQUIPMENT SUPPORTS BORDER SECURITY 
--------------------------------------------- -------- 
 
¶4.  (C) CROATIA'S TOP PRIORITIES FOR FMF, AS DEVELOPED BY MOD 
PLANNERS IN CLOSE COOPERATION WITH EMBASSY ZAGREB'S ODC, HAVE 
                       CONFIDENTIAL 
 
PAGE 04        ZAGREB  01238  01 OF 02  301414Z 
BEEN TO PROCURE VHF AND OTHER WIDE-BAND RADIOS, IFF EQUIPMENT 
FOR CAF HELICOPTERS, MILES EQUIPMENT AND NIGHT VISION GOGGLES 
FOR THE GROUND FORCES.  THESE PURCHASES WILL HELP ACHIEVE 
FORCE INTEROPERABILITY WITH NATO.  RADIO EQUIPMENT ALSO PLAYS 
A ROLE IN ENSURING CROATIA IS CAPABLE OF CONTROLLING ITS LONG 
MARITIME BORDER; WITHOUT THIS COMMUNICATIONS CAPABILITY, 
CROATIA'S NEWLY INSTALLED RADAR SYSTEMS WOULD NOT BE FULLY 
INTEGRATED. 
 
THE NUMBERS: WHAT IS AT STAKE 
----------------------------- 
 
¶5.  (C) ALL OF THE FY 2000 AND 2001 FMF FUNDS HAVE BEEN 
OBLIGATED, ALTHOUGH EQUIPMENT HAS NOT YET BEEN DELIVERED.  OF 
THE USD 5 MILLION ALLOCATED FOR FY 2002, USD 377,867 REMAINS 
TO BE OBLIGATED (WORK ON THIS CASE HAS BEEN ONGOING; A CHANGE 
IN PRICE FOR NIGHT VISION GOGGLES HAS PREVENTED COMPLETION; 
IT IS NOT LIKELY TO BE COMPLETE BEFORE THE JULY 1 CUTOFF). 
NONE OF THE USD 5.5 MILLION FOR FY 2003 HAS BEEN OBLIGATED, 
AND UNLESS PROMPT ACTION IS TAKEN, THIS FUNDING IS AT RISK OF 
BEING SUSPENDED.  USD 700,000 WAS ALLOCATED FOR FY 2003 IMET 
PROGRAMS WITH CROATIA.  OF THIS AMOUNT, USD 599,179 WILL BE 
OBLIGATED BY JUNE 30, LEAVING USD 100,821 AT RISK OF BEING 
SUSPENDED AND REALLOCATED. 
 
                       CONFIDENTIAL 
 
                           CONFIDENTIAL     PTQ5507 
 
PAGE 01        ZAGREB  01238  02 OF 02  301414Z 
ACTION EUR-00 
 
INFO  LOG-00   MFA-00   NP-00    AF-00    AID-00   ACQ-00   CIAE-00 
      INL-00   PERC-00  SRPP-00  DS-00    EB-00    FBIE-00  FO-01 
      VC-00    TEDE-00  INR-00   IO-00    JUSE-00  LAB-01   L-00 
      VCE-00   AC-01    NSAE-00  NSCE-00  OIC-02   OMB-01   PA-00 
      PM-00    PRS-00   ACE-00   P-00     SCT-00   SP-00    IRM-00 
      SSO-00   SS-00    TRSE-00  T-00     USIE-00  DTC-00   PMB-00 
      DSCC-00  LBA-00   PRM-00   DRL-01   G-00     NFAT-00  SAS-00 
      SWCI-00    /007W 
                  ------------------6D1C37  301414Z /38 
O 301354Z MAY 03 
FM AMEMBASSY ZAGREB 
TO SECSTATE WASHDC IMMEDIATE 0369 
SECDEF WASHDC IMMEDIATE 
INFO HQ USEUCOM VAIHINGEN GE//ECJ4-ID// IMMEDIATE 
AMEMBASSY BELGRADE PRIORITY 
AMEMBASSY LJUBLJANA PRIORITY 
AMEMBASSY SARAJEVO PRIORITY 
AMEMBASSY SKOPJE PRIORITY 
AMEMBASSY TIRANA PRIORITY 
USEU BRUSSELS PRIORITY 
USMISSION USNATO PRIORITY 
 
C O N F I D E N T I A L SECTION 02 OF 02 ZAGREB 001238 
 
SIPDIS 
 
STATE FOR EUR (BOGUE) AND PM (LINO) 
DEFENSE FOR OSD/DASD-EURASIA (RICARDEL), OSD-P (SHELTON) 
AND DSCA-ERASA 
                       CONFIDENTIAL 
 
PAGE 02        ZAGREB  01238  02 OF 02  301414Z 
USEUCOM FOR J4 
 
E.O. 12958: DECL: 05/03/2013 
TAGS: MARR PREL KTIA ABUD MASS PREL KTIA ABUD MASS HR HRMARR KICC NATO
SUBJECT: CROATIA: SUSPENSION OF MILITARY ASSISTANCE WOULD 
SLOW PROGRESS TOWARD NATO, LIMIT BORDER SECURITY 
 
CROATIA VALUES BILATERAL DEFENSE RELATIONSHIP 
--------------------------------------------- 
 
¶6.  (C) FOREIGN MINISTER PICULA TOLD THE AMBASSADOR ON MAY 29 
THAT CROATIA WILL REGRET THE POTENTIAL DAMAGE DONE TO THE 
BILATERAL MILITARY AND OVERALL U.S. - CROATIA RELATIONSHIP 
EVEN MORE THAN THE LOSS OF THE FUNDING.  PICULA SAID CROATIA 
HIGHLY VALUES THE POSITIVE RELATIONS THE MOD HAS DEVELOPED 
WITH DOD AS ONE OF THE "MOST POSITIVE" ASPECTS OF THE BROADER 
BILATERAL RELATIONSHIP.  IN AN EARLIER MEETING WITH THE 
AMBASSADOR, CROATIA'S AMBASSADOR TO THE U.S. IVAN GRDESIC 
PRAISED THE OUTSTANDING CUMULATIVE EFFECT THE IMET PROGRAMS 
ARE HAVING ON THE PROFESSIONALISM OF THE CAF'S OFFICER CORPS. 
 THESE OFFICERS RETURN TO CROATIA WITH A VISION OF A MODERN 
MILITARY, ORIENTED TOWARD NATO AND READY TO ENGAGE WITH THE 
U.S. TO ACHIEVE OUR SHARED GOALS IN THE REGION. 
 
NEXT STEPS 
---------- 
 
¶7.  (C) WE CONTINUE TO PRESS HARD FOR THE GOC TO ENGAGE MORE 
SERIOUSLY TO NEGOTIATE AN ARTICLE 98 AGREEMENT, BUT WE HAVE 
NO SERIOUS EXPECTATION THAT THE GOC WILL AGREE.  WE WILL 
ENGAGE WITH MOD PROCUREMENT SPECIALISTS TO COMMIT THE BULK OF 
                       CONFIDENTIAL 
 
PAGE 03        ZAGREB  01238  02 OF 02  301414Z 
THE FY 2003 FMF FUNDS AT RISK.  SINCE THERE IS NO TIME TO 
BUILD A NEW FMF CASE BEFORE THE JULY 1 CUTOFF, THE ONLY WAY 
TO OBLIGATE THESE FUNDS IS TO AMEND AN EXISTING CASE.  FOR 
CROATIA, THIS MAKES GOOD SENSE, SINCE THE EXISTING CASE FOR 
PURCHASE OF VHF RADIOS HAS BEEN IDENTIFIED BY THE MOD AS A 
TOP PRIORITY FOR FUTURE FMF FUNDING. 
 
¶8.  (C) WE HAVE BEEN RELUCTANT TO PRESENT THIS APPROACH TO 
THE MOD IN ORDER TO RETAIN AS MUCH LEVERAGE AS POSSIBLE TO 
ENCOURAGE THE GOC TO NEGOTIATE AN ARTICLE 98 AGREEMENT.  WE 
EXPECT AN INTER-AGENCY TEAM LED BY PM'S AMBASSADOR MARISA 
LINO TO DISCUSS THIS ISSUE IN ZAGREB ON JUNE 12.  POST'S 
OFFICE OF DEFENSE COOPERATION WAS INFORMED ON MAY 30 BY 
DEFENSE SECURITY COOPERATION AGENCY (DSCA) EXPERTS THAT IT 
WOULD BE NECESSARY TO BEGIN THE PROCESS OF COMMITTING 
UNOBLIGATED FMF FUNDING BY JUNE 4 IN ORDER TO BE SURE TO BE 
ABLE TO MEET THE JULY 1 DEADLINE.  WE WILL ENGAGE WITH THE 
MOD IN AN EFFORT TO COMMIT THE FY 2003 FUNDS IN TIME. 
ROSSIN 
 
                       CONFIDENTIAL 
 
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