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

S E C R E T SECTION 01 OF 02 ZAGREB 000331 
 
SIPDIS 
 
 
CINCUSNAVEUR LONDON UK//N22/N2// 
USCINCEUR VAINHINGEN GE// ECJ2-HSE/ECSD-J2 
 
E.O. 12958: DECL: 02/24/2014 
TAGS: PREL MARR LY HR
SUBJECT: CROATIA KEEPS PUSHING ON LIBYA SHIP REFIT 
 
REF: A. A) SECDEF DTG 121648Z FEB 04 
     ¶B. B) MOON-ENGLISH E-MAIL 2/23/04 
     ¶C. C) ZAGREB 0071 
     ¶D. D) 03 STATE 331261 
     ¶E. E) 01 ZAGREB DAO IIR 6 933 0002 02 
 
CLASSIFIED BY: DCM PATRICK MOON, REASONS 1.5 (B) & (D) 
 
SUMMARY AND COMMENT: 
-------------------- 
 
¶1. (C) AS A FOLLOW ON THE PRESIDENT MESIC RAISING POTENTIAL 
LIBYAN SHIP REFIT CONTRACTS WITH SECRETARY RUMSFELD (REF A), 
PRESIDENTIAL FOREIGN POLICY ADVISOR MASTRUKO PROVIDED US 
ADDITIONAL DETAILS OF THE PROPOSED SCOPE OF THIS $120 MILLION 
PROJECT (REF B).  THE $120 MILLION CONTRACT INCLUDES $7.5 
MILLION FOR REFIT OF THE AL-MUNJED DIVER SUPPORT SHIP AND 15 
OTHER OVERHAUL OR SHIP CONSTRUCTION PROJECTS IN CROATIAN 
SHIPYARDS.  HOWEVER, WORK ON THE OTHER PROJECTS IS CONTINGENT 
ON THE REFIT OF THE AL-MUNJED. 
 
¶2. (C) GIVEN THE IMPORTANCE OF SUCH A LARGE CONTRACT TO 
CROATIAN SHIPYARDS, WE EXPECT THE CROATIANS TO CONTINUE TO 
PRESS US ON THIS PROJECT, ESPECIALLY AS U.S. AND EUROPEAN 
TIES IMPROVE WITH LIBYA.  END SUMMARY AND COMMENT. 
 
DETAILS OF WORK ON LIBYAN SHIPS EMERGES 
--------------------------------------- 
 
    ¶3. (C) DURING SECRETARY RUMSFELD,S VISIT ON FEBRUARY 8, 
PRESIDENT MESIC ASKED THAT THE U.S. DROP ITS OBJECTIONS TO 
CROATIAN SHIPYARD WORK ON LIBYAN VESSELS.  IN RESPONSE TO OUR 
REQUEST FOR ADDITIONAL INFORMATION ON THE REPORTED $120 
MILLION CONTRACT, MESIC,S FOREIGN POLICY ADVISOR, AMBASSADOR 
IVICA MASTRUKO, PROVIDED US ON FEBRUARY 23 A NOTE ON 
POTENTIAL LIBYAN SHIP OVERHAUL AND CONSTRUCTION PROJECTS. 
THE NOTE WAS DRAFTED BY THE MARITIME DIVISION OF THE CROATIAN 
GENERAL CONTRACTING FIRM INGRA (INFORMAL TRANSLATION SENT TO 
DEPARTMENT IN REF B). 
 
¶4.  (SBU) THE INGRA NOTE ADVISED THAT THE $120 MILLION 
CONTRACT INCLUDED: 
 
-- OVERHAUL OF THE AL MUNKHED SALVAGE SHIP -- $7.5 MILLION 
-- OVERHAUL OF THE RO-RO SHIP -- $10.5 MILLION 
-- OVERHAUL OF COAST GUARD SHIPS (8 UNITS) -) $65.5 MILLION 
-- BUILDING SHIPS FOR THE CUSTOMS AND MARITIME POLICE (6 
UNITS) -- $36 MILLION 
 
FURTHER, THE NOTE ADVISED THAT WORK ON THE OTHER PROJECTS WAS 
CONTINGENT ON OVERHAUL OF THE AL-MUNKHED SALVAGE SHIP.  (THE 
AL-MUNKHED SALVAGE SHIP IS THE AL-MUNJED DIVER SUPPORT SHIP 
REFERRED TO IN REFS C AND D.)  THE NOTE FROM INGRA GOES ON TO 
ASSERT: &SHIPBUILDING EXPERTS ARE WELL AWARE THAT THE LIBYAN 
NAVY COOPERATES WITH MOST EUROPEAN COUNTRIES, ESPECIALLY WITH 
ITALY AND FRANCE.  THEY HAVE CONDUCTED ON A REGULAR BASIS 
EXERCISES WITH ITALY, WHICH IS A NATO MEMBER, AND HAVE HAD 
THEIR SHIPS REPAIRED IN ITALIAN SHIPYARDS.8 
 
¶5. (SBU) THE CROATIAN NAVY HAS A SISTER SHIP TO THE AL MUNJED 
    ALSO IN NEED OF OVERHAUL, AND COULD REAP CONSIDERABLE COST 
SAVINGS BY COMPLETING THE LIBYAN REFIT FIRST. 
 
SIMILARITY TO EARLIER CONTRACT WITH LIBYA 
----------------------------------------- 
 
¶6. (S/NF) DETAILS OF THIS $120 MILLION CONTRACT ARE SIMILAR 
IN SCOPE TO A PROPOSED CONTRACT IN 2001 (REF E), ALTHOUGH 
SOME OF THE PROJECTS HAVE CHANGED.  THE PRICE QUOTED FOR THE 
AL-MUNJED OVERHAUL IS THE SAME - $7.5 MILLION.  THE OVERHAUL 
OF EIGHT COAST GUARD SHIPS IN THE NEW CONTRACT IS QUITE 
SIMILAR IN SIZE AND SCOPE TO THE 2001 PROPOSAL OF $63 MILLION 
TO OVERHAUL SEVEN TO NINE LA COMBATTANTE MISSILE BOATS.  THE 
CONSTRUCTION OF FIVE NAVY PATROL BOATS IN 2001 IS NOW 
SUPPLANTED BY CONSTRUCTION OF SIX SHIPS FOR CUSTOMS AND THE 
MARITIME POLICE.  THE OVERHAUL/REPAIR OF A PRESUMABLY 
CIVILIAN ROLL-ON/ROLL-OFF SHIP REPLACES THE CONSTRUCTION OF 
FOUR NEW UNITS PROPOSED IN 2001.  THE OVERALL CONTRACT PRICE 
WAS $138 MILLION IN 2001. 
 
COMMENT 
------- 
 
¶7. (C) IN PREVIOUS CONVERSATIONS, INGRA REPRESENTATIVES AND 
 
ZAGREB 00000331  001.2 OF 002 
 
---- 
 
¶1. (C) AS A FOLLOW ON THE PRESIDENT MESIC RAISING POTENTIAL 
LIBYAN SHIP REFIT CONTRACTS WITH SECRETARY RUMSFELD (REF A), 
PRESIDENTIAL FOREIGN POLICY ADVISOR MASTRUKO PROVIDED US 
ADDITIONAL DETAILS OF THE PROPOSED SCOPE OF THIS $120 MILLION 
PROJECT (REF B).  THE $120 MILLION CONTRACT INCLUDES $7.5 
MILLION FOR REFIT OF THE AL-MUNJED DIVER SUPPORT SHIP AND 15 
OTHER OVERHAUL OR SHIP CONSTRUCTION PROJECTS IN CROATIAN 
SHIPYARDS.  HOWEVER, WORK ON THE OTHER PROJECTS IS CONTINGENT 
ON THE REFIT OF THE AL-MUNJED. 
 
¶2. (C) GIVEN THE IMPORTANCE OF SUCH A LARGE CONTRACT TO 
CROATIAN SHIPYARDS, WE EXPECT THE CROATIANS TO CONTINUE TO 
PRESS US ON THIS PROJECT, ESPECIALLY AS U.S. AND EUROPEAN 
TIES IMPROVE WITH LIBYA.  END SUMMARY AND COMMENT. 
 
DETAILS OF WORK ON LIBYAN SHIPS EMERGES 
    --------------------------------------- 
 
¶3. (C) DURING SECRETARY RUMSFELD,S VISIT ON FEBRUARY 8, 
PRESIDENT MESIC ASKED THAT THE U.S. DROP ITS OBJECTIONS TO 
CROATIAN SHIPYARD WORK ON LIBYAN VESSELS.  IN RESPONSE TO OUR 
REQUEST FOR ADDITIONAL INFORMATION ON THE REPORTED $120 
MILLION CONTRACT, MESIC,S FOREIGN POLICY ADVISOR, AMBASSADOR 
IVICA MASTRUKO, PROVIDED US ON FEBRUARY 23 A NOTE ON 
POTENTIAL LIBYAN SHIP OVERHAUL AND CONSTRUCTION PROJECTS. 
THE NOTE WAS DRAFTED BY THE MARITIME DIVISION OF THE CROATIAN 
GENERAL CONTRACTING FIRM INGRA (INFORMAL TRANSLATION SENT TO 
DEPARTMENT IN REF B). 
 
¶4.  (SBU) THE INGRA NOTE ADVISED THAT THE $120 MILLION 
CONTRACT INCLUDED: 
 
-- OVERHAUL OF THE AL MUNKHED SALVAGE SHIP -- $7.5 MILLION 
-- OVERHAUL OF THE RO-RO SHIP -- $10.5 MILLION 
-- OVERHAUL OF COAST GUARD SHIPS (8 UNITS) -) $65.5 MILLION 
-- BUILDING SHIPS FOR THE CUSTOMS AND MARITIME POLICE (6 
UNITS) -- $36 MILLION 
 
FURTHER, THE NOTE ADVISED THAT WORK ON THE OTHER PROJECTS WAS 
CONTINGENT ON OVERHAUL OF THE AL-MUNKHED SALVAGE SHIP.  (THE 
AL-MUNKHED SALVAGE SHIP IS THE AL-MUNJED DIVER SUPPORT SHIP 
REFERRED TO IN REFS C AND D.)  THE NOTE FROM INGRA GOES ON TO 
ASSERT: &SHIPBUILDING EXPERTS ARE WELL AWARE THAT THE LIBYAN 
NAVY COOPERATES WITH MOST EUROPEAN COUNTRIES, ESPECIALLY WITH 
ITALY AND FRANCE.  THEY HAVE CONDUCTED ON A REGULAR BASIS 
EXERCISES WITH ITALY, WHICH IS A NATO MEMBER, AND HAVE HAD 
THEIR SHIPS REPAIRED IN ITALIAN SHIPYARDS.8 

¶5. (SBU) THE CROATIAN NAVY HAS A SISTER SHIP TO THE AL MUNJED 
ALSO IN NEED OF OVERHAUL, AND COULD REAP CONSIDERABLE COST 
SAVINGS BY COMPLETING THE LIBYAN REFIT FIRST. 
 
SIMILARITY TO EARLIER CONTRACT WITH LIBYA 
----------------------------------------- 
 
¶6. (S/NF) DETAILS OF THIS $120 MILLION CONTRACT ARE SIMILAR 
IN SCOPE TO A PROPOSED CONTRACT IN 2001 (REF E), ALTHOUGH 
SOME OF THE PROJECTS HAVE CHANGED.  THE PRICE QUOTED FOR THE 
AL-MUNJED OVERHAUL IS THE SAME - $7.5 MILLION.  THE OVERHAUL 
OF EIGHT COAST GUARD SHIPS IN THE NEW CONTRACT IS QUITE 
SIMILAR IN SIZE AND SCOPE TO THE 2001 PROPOSAL OF $63 MILLION 
TO OVERHAUL SEVEN TO NINE LA COMBATTANTE MISSILE BOATS.  THE 
CONSTRUCTION OF FIVE NAVY PATROL BOATS IN 2001 IS NOW 
SUPPLANTED BY CONSTRUCTION OF SIX SHIPS FOR CUSTOMS AND THE 
MARITIME POLICE.  THE OVERHAUL/REPAIR OF A PRESUMABLY 
CIVILIAN ROLL-ON/ROLL-OFF SHIP REPLACES THE CONSTRUCTION OF 
FOUR NEW UNITS PROPOSED IN 2001.  THE OVERALL CONTRACT PRICE 
WAS $138 MILLION IN 2001. 
 
COMMENT 
------- 
 
¶7. (C) IN PREVIOUS CONVERSATIONS, INGRA REPRESENTATIVES AND 
 
ZAGREB 00000331  002.1 OF 002 
 
E OVER THESE PROJECTS IF 
CROATIA CONTINUES TO STALL.  PRESIDENT MESIC HAS A LONG-TIME 
FASCINATION WITH LIBYA AND QADHAFI AND AN OPENLY AVOWED 
DESIRE TO WIN BUSINESS FOR CROATIAN FIRMS IN LIBYA.  MESIC'S 
PERSISTENCE IN RAISING THIS CONTRACT, INCLUDING WITH 
SECRETARY RUMSFELD, INDICATES TO US THAT HE WILL CONTINUE TO 
 
SIPDIS 
PURSUE THIS NAVAL REFIT/CONSTRUCTION CONTRACT ON BEHALF OF 
INGRA. 
 
¶8.  (C) WE WILL CONTINUE TO URGE PATIENCE PER REF D 
INSTRUCTIONS, ESPECIALLY AS DETAILS OF THE NEW CONTRACT RAISE 
QUESTIONS ABOUT OTHER ASPECTS OF THE PROPOSED WORK.  HOWEVER, 
WE ARE CERTAIN THAT THE CROATIANS WILL BECOME INCREASINGLY 
ANNOYED AND SUSPICIOUS OF U.S. MOTIVES AS THE U.S. AND OTHER 
EUROPEAN COUNTRIES IMPROVE THEIR TIES WITH LIBYA.  THE 
CROATIANS ARE CONVINCED THAT THE AL-MUNJED IS AN INNOCUOUS 
SALVAGE SHIP TO BE USED FOR OFFSHORE PETROLEUM OPERATIONS AND 
THAT SIGNIFICANT DELAYS WILL RESULT IN THE LIBYANS TAKING THE 
WORK TO ITALIAN SHIPYARDS AT A TIME WHEN CROATIAN SHIPYARDS 
STRUGGLE TO AVOID BANKRUPTCY. 
FRANK 
 
ZAGREB 00000331  002.2 OF 002 
 
E OVER THESE PROJECTS IF 
CROATIA CONTINUES TO STALL.  PRESIDENT MESIC HAS A LONG-TIME 
FASCINATION WITH LIBYA AND QADHAFI AND AN OPENLY AVOWED 
DESIRE TO WIN BUSINESS FOR CROATIAN FIRMS IN LIBYA.  MESIC'S 
PERSISTENCE IN RAISING THIS CONTRACT, INCLUDING WITH 
SECRETARY RUMSFELD, INDICATES TO US THAT HE WILL CONTINUE TO 
 
SIPDIS 
PURSUE THIS NAVAL REFIT/CONSTRUCTION CONTRACT ON BEHALF OF 
INGRA. 
 
¶8.  (C) WE WILL CONTINUE TO URGE PATIENCE PER REF D 
INSTRUCTIONS, ESPECIALLY AS DETAILS OF THE NEW CONTRACT RAISE 
QUESTIONS ABOUT OTHER ASPECTS OF THE PROPOSED WORK.  HOWEVER, 
WE ARE CERTAIN THAT THE CROATIANS WILL BECOME INCREASINGLY 
ANNOYED AND SUSPICIOUS OF U.S. MOTIVES AS THE U.S. AND OTHER 
EUROPEAN COUNTRIES IMPROVE THEIR TIES WITH LIBYA.  THE 
CROATIANS ARE CONVINCED THAT THE AL-MUNJED IS AN INNOCUOUS 
SALVAGE SHIP TO BE USED FOR OFFSHORE PETROLEUM OPERATIONS AND 
THAT SIGNIFICANT DELAYS WILL RESULT IN THE LIBYANS TAKING THE 
WORK TO ITALIAN SHIPYARDS AT A TIME WHEN CROATIAN SHIPYARDS 
STRUGGLE TO AVOID BANKRUPTCY. 
FRANK 
 
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