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C O N F I D E N T I A L  ZAGREB 001296 
 
SIPDIS 
 
 
E.O. 12958: DECL: 06/06/2013 
TAGS: PREL PGOV ECON PREF KAWC HR EVN NATO
SUBJECT: CROATIA'S DETERIORATING RELATIONSHIP WITH THE U.S. 
 
REF: 02 ZAGREB 146 
 
Classified By: AMBASSADOR LAWRENCE G. ROSSIN.  REASONS 1.5 
(B) AND (D) 
 
Summary 
------- 
 
¶1. (C) So far, 2003 has not been a good year for our 
bilateral relationship with Croatia.  On issue after issue, 
whether Iraq, intellectual property rights, unblocking of 
assets of the Former Yugoslavia, or now our proposed Article 
98 agreement, the GOC not only has failed to deliver, but has 
antagonized us in the process.  The GOC's shortcomings -- 
lack of leadership, political infighting, bad PR, apathy and 
arrogance -- are well known and have hampered Croatian reform 
and progress on a host of issues.  We are not alone in this 
problem.  Our European colleagues share our frustration with 
the GOC's handling of refugee returns, cooperation with ICTY 
and (lacking) judicial reform.  The difference is that Prime 
Minister Racan eventually responds to European concerns, but 
not ours. 
 
¶2. (C) We have begun to press senior GOC officials about the 
deteriorating relationship.  Most recently, the Ambassador 
urged FM Picula to work to get our bilateral relationship 
back on track.  He told Picula that a good place to start 
would be concluding an Article 98 agreement.  Picula and the 
others left us in a disappointing, if familiar, place that 
boils down to: the GOC values the relationship but is 
unwilling to take any particular risks for it.  They trot out 
by-now shopworn arguments that it is in our interest to cut 
Croatia maximum slack because of the GOC's "unique 
stabilizing role" in the region.  We have discounted this 
line and stressed that if the GOC puts the U.S. in second 
place, we will reciprocate, and that will have consequences, 
notably in U.S. support for Croatia's NATO aspirations. 
While we see some signs that the GOC realizes it has a 
problem, we see less indication it will change its recent 
behavior.  Racan has made EU accession the leitmotif of his 
election campaign; even after that fear of ruffling EU 
feathers will be a powerful disincentive to take risks for 
us, and in any case Racan's domestic timidity and natural 
risk aversion bode poorly for this relationship.   End 
Summary. 
 
What a difference a year makes 
------------------------------ 
 
¶3. (C) In our mid-term evaluation of the GOC's performance in 
January 2002 (reftel), we warned that the GOC's poor 
management, the lack of leadership at the top, 
intra-coalition and intra-party fractiousness and underlying 
lack of sympathy for international community concerns would 
slow progress on the core issues of refugee returns, 
compliance with ICTY obligations and economic reforms. 
Nonetheless, we had registered important bilateral successes: 
 the GOC canceled dual-use sales to Iran and Libya, was 
active to a degree in the Global War On Terrorism and had 
helped several ways -- humanitarian assistance, arms for the 
ANA and sending Military Police for ISAF -- in Afghanistan. 
 
¶4. (C) In contrast, 2003 has seen a downturn in our bilateral 
relationship.  Variously due to an emergent EU tilt, timidity 
over domestic "threats to stability" or sheer neglect of the 
relationship, the GOC has mishandled or stiffed us on a range 
of issues, including but not limited to: 
 
-- IRAQ: Seeking to score domestic political points and curry 
favor with Germany and France, the GOC rebuffed our quiet 
overtures to join the coalition and then publicly exulted in 
its "decisive" no. 
 
-- IPR:  The GOC failed to move the 1998 Croatian-U.S. MOU on 
intellectual property to its parliament for ratification, 
despite repeated high-level interventions and warnings that 
inaction would result in Special 301 watch listing -- as it 
did this spring. 
 
-- SFRY ASSETS UNBLOCKING:  Croatia tried, very obnoxiously, 
to obstruct our unblocking of funds frozen in the U.S. under 
Milosevic-era sanctions.  It is the only country not to have 
ratified the Agreement on Succession Issues for countries of 
the SFRY. 
 
-- GWOT SHORTFALLS:  Despite constant reminders, including by 
the G8, since 9/11 the GOC has signed or ratified none of its 
outstanding terrorism conventions.  It also failed to provide 
information we sought on the movement of Iraqis through 
Croatia. 
 
-- PUBLIC INSULT:  In April Deputy PM Granic, PM Racan's 
right-hand man and the GOC point man on many issues of 
special IC interest, publicly insulted the Ambassador and 
other IC actors most engaged on war crimes matters in words 
widely assessed here as "going too far."  Racan, while saying 
 
he disagreed, affirmed Granic's right to say what he wanted 
publicly and took no corrective measures. 
 
¶5. (C) We are not the only ones to feel the effects of 
Croatian foreign policy incompetence.  Granic did not only 
attack the U.S. Ambassador in April for insisting on full 
cooperation with ICTY:  the British Ambassador, the Dutch 
government and the last Spanish Ambassador were also 
broadsided, and their governments were equally irritated.  At 
PM Racan's (admittedly insincere) invitation in autumn 2002, 
all leading IC representatives here requested a meeting on 
refugee return issues.  Irritating everyone, Racan then 
ignored the letter, never set up a meeting, conveyed that he 
never would, and indicated he would not discuss returns 
issues anymore with local Ambassadors.  More generally, 
European ambassadors tell us that the GOC communicates as 
poorly with them as it does with us, with Ambassadorial 
access to PM Racan virtually non-existent. 
 
¶6. (C) There is, however, one major difference.  The GOC may 
not be very responsive to any outside advice or pressure, but 
eventually it does bend to EU pressure.  The most notable 
instance was in early April when Racan overrode a court order 
and had ICTY's indictment of General Bobetko delivered -- on 
a deadline day set by Chief Prosecutor del Ponte, and after 
the British specifically threatened not to ratify Croatia's 
Stabilization and Association Agreement if the deadline were 
missed.  Racan, Picula and other top Croatian officials make 
trip after trip to EU capitals to manage their EU relations 
and aspirations.  As some within the MFA have remarked, they 
make no comparable effort with the USG.  For example, 
internal recommendations that a high Croatian official visit 
Washington to discuss the Article 98 issue have not been 
implemented. 
 
Can this be turned around? 
-------------------------- 
 
¶7. (C) In a series of discussions over the past few weeks 
with senior GOC officials including Croatian Ambassador to 
the U.S. Grdesic, Deputy Foreign Minister Simonovic and 
Presidential Foreign Policy Advisor Jakic and a frank 
one-on-one with Picula on May 29, the Ambassador and DCM have 
pressed the GOC to act to reverse this downward trend.  They 
stressed that the problem ran deeper that just the GOC's 
failure to deliver on issues of concern to the United States, 
though that was serious.  The GOC was failing to tend to the 
relationship.  Many problem areas had been due to sheer GOC 
neglect and apparent indifference.  Even quiet diplomacy is 
impossible, they noted, since nearly every one of our 
diplomatic overtures is leaked, or as often briefed, to the 
press.  These next-day stories too often include claims by 
GOC officials of U.S. "pressure."  They feed press 
controversy that needlessly limits the GOC's scope to find 
common ground with us. 
 
¶8. (C) The Ambassador and DCM warned that it is increasingly 
apparent to us that the GOC has taken a strategic decision to 
put its relationship with the EU, its domestic sensitivities 
or indeed any competing factor we could identify ahead of the 
United States, and even on occasion to pit us against them. 
Such an approach would have, indeed already had had serious 
consequences in Washington.  The Ambassador told Picula that 
it was time for Zagreb to demonstrate its interest in and 
commitment to our relationship by coming down our way on some 
tough issue important to the U.S. Article 98 negotiations 
were a good place to start, but this was not about Article 98 
alone. 
 
You are right, but... 
--------------------- 
 
¶9. (C) Picula was at pains to stress the importance the GOC 
attaches to its relations with the United States, but 
acknowledged that over the past year the GOC had attended 
more to its EU interests.  The drift in GOC-U.S. ties, he 
explained, was more a matter of circumstance than intent -- 
the GOC is committed to maintaining excellent relations with 
both the EU and the United States.  He rationalized that 
momentum in the U.S.-Croatia bilateral relationship stalled 
when the GOC was criticized at home for "failing" to win an 
invitation to join NATO at the Prague Ministerial in November 
¶2002.  After that, the GOC decided to intensify its EU 
membership drive.  This and the demands of managing its 
oft-stormy relationship with ICTY have been the GOC's foreign 
policy emphases this year, but no slight was intended. 
 
¶10. (C) The GOC, Picula acknowledged, needs to be more active 
and positive in managing its relationship with the United 
States.  That said, Picula reiterated what we have heard 
before: the GOC values U.S. relations but cannot conclude an 
Article 98 agreement now.  Stepped-up EU pressure on Croatia 
-- including a very blunt letter from Patten and Papandreou 
sent in late May -- and domestic linkage between the ICC and 
ICTY make an agreement politically impossible for the GOC. 
 
His argument was the same as he, Racan and others have used 
for some time to solicit U.S. understanding of the "delicate" 
Croatian position.   It is a fill-in-the-blank exercise. 
Signing an Article 98 Agreement (or joining the Iraq 
coalition, or fulfilling ICTY obligations in the Bobetko 
case) would damage this reformist GOC's political prospects; 
that would create disorder in Croatia; that would throw 
Croatia's process of democratization off course; that would 
bring back the rightwing HDZ, end Croatia's contributions to 
regional security and thereby damage U.S. interests. 
Therefore, it is in the U.S. interest, at least as much as 
Croatia's, that Croatia obtain a National Interest Waiver 
from ASPA, that we not press for ICTY cooperation, that we 
"understand" its vocal rejection of the Iraq Coalition, or 
(fill in the blank). 
 
¶11. (C) We have cautioned our interlocutors that the GOC will 
not find much "understanding" in Washington for these 
arguments.   From our vantage point, it seemed that the GOC 
was over-dramatizing the difficulty in negotiating an Article 
98 agreement, whether from an EU or domestic opinion 
perspective, and it was doing nothing to try to guide public 
perceptions, work with us and demonstrate good intentions. 
There had been too many such evolutions.  Croatia could not 
presume that its relations with the U.S. would stay good if 
it did nothing to sustain them.  If, as appeared to be the 
case, Croatia was relegating the U.S. to the second echelon 
in its foreign relations, it could be sure that Washington 
would do the same.  This would have consequences.  As one 
example: a year ago, the USG had championed Croatia's entry 
into NATO's Membership Action Plan.  The GOC knew that other 
Allies had been skeptical but we had prevailed, as we can in 
NATO when we use chips.  Who could imagine that Washington 
would get out front pushing Croatia's NATO aspirations again? 
 Indeed, that Zagreb would fail to husband its U.S. relations 
knowing that its support at NATO HQ is thin raised questions 
about how seriously the GOC even took its NATO bid. 
 
Comment: Prospects Not Good 
--------------------------- 
 
¶12. (C) The GOC's disappointing handling of our request for 
an Article 98 Agreement has followed familiar patterns. 
There is careless incompetence: the GOC ignores issues until 
the 11th hour, shuns quiet diplomacy, then boxes itself in by 
needless media spin so that it reaching agreement is much 
more difficult for it, even if it wanted to try.  There is 
political cowardice:  instead of focusing on how to frame and 
sell hard issues to Croatian voters, the GOC preemptively 
capitulates.  There is arrogance:  the GOC really believes 
that it is indispensable to stability in the region, even 
though rapid changes in Serbia and Montenegro, slow but 
incomplete reform within the opposition HDZ and other 
developments render this claim increasingly overblown.  That 
arrogance leads the GOC to take for granted the substantial 
financial and political assistance we have provided since the 
Racan government came to power in 2000: roughly $175 million 
in SEED and military assistance and strong backing for its 
NATO and EU membership drives. 
 
¶13. (C) We will keep pressing the GOC to understand that 
U.S. attention and support is not Croatia's birthright, and 
that there must be more mutual benefit in the relationship. 
We've seen some small signs that the message is registering 
-- media commentary is beginning to watch this seriously, 
there is some unease in marginal elements of the governing 
coalition and a few second-echelon ministers have expressed 
personal concern and interest in working for improvements. 
We have not seen such concern or interest at the level where 
it counts, however, and we are not sanguine that PM Racan, in 
whose hands this responsibility rests, will do anything to 
turn this trend around anytime soon.  Apart from being at the 
root of some of the GOC weaknesses that have undermined the 
relationship, Racan has decided that his only foreign policy 
priority in this election year, at least, is the EU.  He has 
been ready, even eager to  "choose for Europe, against the 
U.S." to further that goal, even gratuitously when nobody is 
requiring it. 
 
¶14. (C) We, of course, must continue to seek ways to impose 
costs as well as offer benefits keyed to the GOC's handling 
of our bilateral relationship.  Realistically, however, we 
assess that we will not be able to bank on Croatian support 
on any risky issue, not only in this election year but (at 
least as long as Racan is in office) for as long as the EU is 
keeping its shaky membership application under scrutiny and 
ICTY is pursuing Croatia indictments. 
ROSSIN 
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