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  ZAGREB 000554 
 
SIPDIS 
 
 
DEPT FOR EUR/SCE 
 
E.O. 12958: DECL: 04/01/2014 
TAGS: PHUM PREF PGOV PREL HR
SUBJECT: SERBS PLAYING POLITICAL HARDBALL ON RETURN ISSUES 
 
Classified By: POLOFF Mitch Benedict for reasons 1.5 (b) and (d) 
 
Summary 
------- 
 
¶1. (C) Disappointed with GOC implementation of promises to 
address refugee return issues, Serb politicians threatened on 
March 23 to withdraw their informal support for PM Sanader's 
government.  Sanader responded immediately and met with 
Milorad Pupovac, one of three MPs representing the Serb 
minority in Croatia's parliament and agreed to concrete 
benchmarks on property repossession, reconstruction 
assistance and minority representation in local government 
bodies.  Sanader and Pupovac agreed on a bureaucratic 
mechanism intended to bypass a long-standing obstruction to 
returns.  Pupovac genuinely believes Sanader is trying to do 
the right thing.  He told us on March 26 that he supports 
"with no reserves and no conditions" the PM's efforts to 
reform both the GOC and the HDZ.  Sanader's efforts to 
deliver quick results on this issue may run aground on the 
rocks of Croatia's still foundering judicial system, which 
would be responsible for ordering evictions of ethnic Croat 
"squatters" in homes belonging to Serb refugees.  Pupovac set 
optimistic benchmarks by which he will measure GOC 
implementation of commitments.  End Summary. 
 
Serbs Dissatisfied 
------------------ 
 
¶2. (C) On March 23, Milorad Pupovac, president of the Serb 
National Council and one of three members of Croatia's 
parliament designated to represent the Serb minority, 
announced to the press that he was dissatisfied with the 
government's implementation of its pledges to move forward on 
refugee issues.  Pupovac threatened that the three Serb MP's 
were prepared to withdraw their support for PM Sanader in the 
absence of concrete results.  Although traveling in Europe, 
PM Sanader contacted Pupovac right away and set up an urgent 
meeting with Serb leaders.  While Sanader leads a minority 
government and needs the support of the three Serb votes in 
parliament, the greatest value he gains by his party's 
informal coalition with the Serbs is credibility; they 
demonstrate to the EU and other skeptics that Sanader's HDZ 
is no longer the ethnocentric party of former President 
Tudjman. 
 
Commission Established 
---------------------- 
 
¶3. (C) After meeting with the SDSS on March 25, Sanader 
announced that the GOC had formed a commission to resolve 
return and property issues and that it would be headed by 
former MP and hard-line HDZ member Gordana Turic.  Sanader 
proposed the commission in part because he was unwilling to 
remove Lovre Pejkovic, the Assistant Minister who has been in 
charge of the property repossession issue for six years.  The 
SDSS alleges that Pejkovic is not only tainted by allegations 
of corruption and is viewed by many as an obstacle to return 
and the resolution of property issues, but he worked actively 
to oppose the appointment of Stanko Janic (an ethnic Serb) as 
Assistant Minister for reconstruction. 
 
¶4. (C) The latest addition to the commission, which was 
recently reported to consist of 14 members, is Vladimir 
Stengel, the hard-line and long-serving HDZ mayor of Vukovar. 
 The appointment of Stengel, even more than Turic, provides 
ample pause for concern.  Stengel, an ardent Croat 
nationalist, has presided over a virtual stalemate in 
Vukovar, a city that has begun to reconstruct, albeit slowly, 
but remains tensely divided along ethnic lines.  However, 
Sanader believes his government should be judged by its 
results rather than rhetoric, and his strategy may be that 
only hard-liners, motivated by the desire to stay in power 
and promise of leading Croatia toward its Euro-Atlantic 
aspirations, can force compliance on refugee return issues 
among the lower level bureaucrats and local and regional 
officials. 
 
Property Repossession 
--------------------- 
 
¶5. (C) The Government's agreement with the SDSS called for 
the elimination of "legal and other obstacles to the 
repossession of property owned by institutions of the Serb 
national community."  Repossession of private property by 
individuals was not specifically addressed, but has become a 
central benchmark now being used by the SDSS to measure 
cooperation with the Government.  A key area for concern is 
properties that are occupied illegally, either because the 
temporary occupant never had official approval or is in 
 
possession of alternative accommodation.  These so-called 
"illegal/double occupants" now currently number about 500. 
Approximately 3,200 legally occupied houses (under the 
war-time law on temporary occupancy) are to be returned by 
year's end. 
 
¶6. (C) Pupovac, who cited a figure of 430 illegally occupied 
properties, told us that the SDSS is demanding that all 
illegal/double occupants vacate properties by the end of 
June.  They expect 150 properties to be returned to their 
rightful owners in April, 150 in May, and the balance in 
June.  Pupovac said it was unconscionable that situations 
exist whereby an ethnic Croat from Bosnia is occupying a 
Serb's house in Croatia yet the Croat has gotten 
reconstruction assistance in Bosnia to rebuild his house 
there, which he is now renting and using the income to 
purchase a place on the coast of Croatia.  The SDSS is 
pushing the Sanader Government to establish a coordination 
mechanism with Serbia Montenegro and Bosnia Herzegovina so 
that such situations can be detected and avoided. 
 
¶7. (C) The OSCE Mission has told us they view the SDSS 
timetable as unobtainable and unrealistic.  Some 99 percent 
of cases of illegal/double occupancy are before the courts 
awaiting action, meaning there could be no change in the 
status quo until the completion of such action; in addition, 
a court order would be required to evict an illegal/double 
occupant -- which is doubtful given the still growing backlog 
of over 1.4 million cases clogging the judicial system.  The 
inability of the judicial system to resolve these emotionally 
charged yet simple cases is highlighted by the fact that 
resolution of cases (and approximately 200 have been resolved 
since January 1) occurs extra-judicially by agreement between 
the occupier and the owner.  Ratko Gajica, an SDSS MP, 
admitted to us that illegal/double occupants are going to 
vacate only if pressured to do so by the government. 
 
Reconstruction Assistance 
------------------------- 
 
¶8. (C) The agreement between the SDSS and the Government 
speaks extensively to the issue of reconstruction assistance. 
 The GOC agreed to the administrative resolution of all 
requests on hand by the end of April.  In addition, the 
agreement commits the GOC to extend the current deadline of 
June 2004 for submission of requests for reconstruction 
assistance.   According to the OSCE there are currently 
10,500 applications for reconstruction assistance on file 
with the GOC, and of those they expect approximately 7,500 
positive decisions.  The remaining 3,000 applications are 
incomplete, and could be closed immediately, according to the 
GOC. 
 
¶9. (C) Pupovac, who is not known for his exactness of 
numbers, spoke of 7,000 applications that were incomplete. 
Regardless of the number, the issue for Pupovac is to find 
out why the applications are incomplete so that appropriate 
efforts can be made to complete the applications.  He 
recognizes that the applicants themselves are at least partly 
to blame for the high number of incomplete applications; 
information gleaned from the OSCE would in fact lay most of 
the blame on the applicants.  For example, last year as a 
follow up, the GOC sent 2,000 letters to applicants seeking 
clarifications and additional information; only a few hundred 
applicants responded.   According to the OSCE, the GOC is in 
possession of 17,000 unprocessed applications, which is 
compounding the problem.  On March 26, the GOC extended the 
deadline for submitted reconstruction assistance requests to 
September 30. 
 
CLNM Implementation 
------------------- 
 
¶10. (C) A significant part of the agreement between Sanader 
and the SDSS related to implementation of the Constitutional 
Law on National Minorities (CLNM).  Sanader committed to 
bringing local and regional self-government units into 
compliance with the provisions of the CLNM by March 18.  He 
also committed by March 18 to provide the funds and establish 
the conditions for the election and work of Serb national 
minority councils at the local, municipal, and county levels. 
 Elections for minority councils took place in February; 
funding and other issues remain unresolved. 
 
¶11. (C) Full implementation of the CLNM would bring two 
significant benefits for minorities: political participation 
at the local and regional level and jobs.  Political 
participation of the Serbian minority and jobs being what 
they are -- either in short supply or a particularly touchy 
subject seven years after an ethnically based war -- these 
 
provisions of the law have not been implemented since the law 
was passed in December 2002.  Nonetheless, the law requires 
that county, municipal, and town councils include ethnic 
minorities proportionally.  Pupovac and the SDSS are 
demanding steps be taken to implement this commitment, which 
will in many cases open the doors for the first time to 
political participation for minorities at the local and 
regional level. 
 
¶12. (C) Remarkably the Racan Government appears to have never 
even attempted to implement the CLNM at the local and 
regional level.  The GOC is now drafting regulations for 
implementation and accompanying guidelines for municipalities 
and counties.  Pupovac told us the SDSS is not demanding 
everything at once, but it would be content for now if the 
GOC would meet with the county prefects and begin a process 
of developing regulations for implementation of the CLNM. 
Actual implementation could then take place over a six-month 
period. 
 
Comment 
------- 
 
¶13. (C) We asked Pupovac directly how he is going to measure 
success.  He cited figures on the return of property and 
talked about implementation of the CLNM, but what really 
animated him was talk about personalities.  He said that the 
people who for years obstructed the return of refugees "have 
to be dealt with" -- and he is correct.  There is no doubt 
that individual obstruction by government officials has 
significantly held back the resolution of refugee return and 
reintegration issues. 
 
¶14. (C) There is a new urgency to settling issues resulting 
from the 1991-1995 war.  Many feel that only the HDZ -- the 
party in power during and after the war -- would have the 
authority to deal with the hard-liners who have been 
obstructing progress on refugee return and reintegration 
issues.  However, Sanader has to maintain a delicate 
balancing act.  He must keep his right-wing nationalist base 
placated while at the same time sufficiently fulfilling his 
agreement with the SDSS to retain their support in 
parliament. 
 
¶15. (C) Like the OSCE, we do not expect the GOC to be able to 
resolve all the issues in the agreement with the SDSS by the 
deadlines established.  Where the SDSS draws the line remains 
to be seen; for now Pupovac genuinely believes Sanader is 
trying to do the right thing.  He told us on March 26 that he 
supports "with no reserves and no conditions" the PM's 
efforts to reform both the GOC and the HDZ. 
FRANK 
 
 
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