VZCZCXRO2122
RR RUEHAST
DE RUEHVB #1055/01 2490857
ZNR UUUUU ZZH
R 060857Z SEP 06
FM AMEMBASSY ZAGREB
TO RUEHC/SECSTATE WASHDC 6595
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE
RUEHNO/USMISSION USNATO 3440

UNCLAS SECTION 01 OF 02 ZAGREB 001055 
 
SIPDIS 
 
DEPT FOR PRM: ROLSON 
DEPT FOR EUR/SCE: RBALIAN 
BELGRADE FOR SCHEEVER 
SARAJEVO FOR RMEYERS 
USNATO FOR DJONES 
 
SIPDIS 
SENSITIVE 
 
E.O. 12958: N/A 
TAGS: PREF PGOV HR HUMAN RIGHTS
SUBJECT: GOC SKETCHES OUT RETURNEE HOUSING PROGRAM 
 
ZAGREB 00001055  001.2 OF 002 
 
 
Sensitive but unclassified, please handle accordingly. 
 
¶1. (U) SUMMARY AND COMMENT.  On 25 August the GOC 
approved a housing program for ethnic Serbs that 
provides for the construction of apartments for former 
tenancy rights holders (socialized housing) in non-war 
affected areas (outside the Areas of Special State 
Concern, or ASSC).  The $500 million plan foresees the 
construction of 3600 apartments in major cities around 
Croatia by the end of 2011 and purchase of another 400. 
Residents will not be able to sell, sub-let, or inherit 
the rental apartments, which will be returned to the 
State upon the tenant's death. 
 
¶2. (SBU) The issue of tenancy rights has been a thorny 
one for the GOC for years and is now the largest 
unresolved housing category for ethnic Serb returnees, 
most of whom had fled their state-owned apartments 
during the war and not returned in time to participate 
in state-sponsored purchasing programs.  Government 
adoption of the program has raised even more dust in 
the past few days and created confusion about its 
elements, which are left vague.  The announcement drew 
the ire both of conservative war veterans groups, who 
protested that the GOC was giving apartments to those 
who "fought against Croatia," and of ethnic Serb 
groups, who complained about the no-purchase, no- 
inheritance model.  Working damage control, PM Sanader 
stated that the program is humanitarian.  Post and 
international organizations do not yet have formal 
confirmation that the purchase option, to which the GOC 
committed in earlier discussions, is off the table. 
Despite the poor program rollout and subsequent public 
reactions, the program is a slow step forward.  Targets 
are modest, as most housing would not be available for 
three to five more years.  And as always, 
implementation will be the challenge.  Nevertheless, 
with this decision, the GOC has re-committed itself to 
providing a humanitarian solution for returnees.  END 
SUMMARY AND COMMENT. 
 
PROGRAM SKETCHED OUT FOR LEASED APARTMENTS 
 
¶3. (SBU) The GOC Conclusion addresses the 4,425 
applications for apartments outside the ASSC.   GOC 
Spokesman Ratko Macek told the press that the plan 
refers to applicants who applied only for leasing (as 
opposed to purchase) of state-owned apartments. 
(Note: As there are only around 2,200 of those "lease- 
only" applicants, it is not clear who would occupy the 
other 2,225 apartments.)  Apartments are planned in 
Karlovac, Osijek, Petrinja, Pula, Rijeka, Sisak, Split, 
Zadar and Zagreb.  (Another 4,600 refugees have applied 
for a similar program in the ASSC.)   Under this 
program, former tenants of socialized housing will pay 
lower-than market rent but will not be entitled to 
sell, rent or inherit those apartments.  They will be 
returned to the GOC upon the death of the tenant. 
Costs of construction will be paid off over 25 years 
and are estimated at $20 million annually.  This year, 
the GOC has set aside about $6 million, which was 
unused in past years for the program and rolled over to 
¶2006.  The apartments will be built through a public- 
private partnership model that has yet to be detailed. 
Targets for apartment allocation are modest; most 
program implementation would take place four or five 
years from now.  For example, by 2007 the GOC plans to 
build 180 apartments, and 930 in 2008.  In total, the 
GOC plans to purchase 400 apartments by late 2007 and 
construct 3,600. 
 
LEASE AND PURCHASE? 
 
¶4. (SBU) Following a 2003 Government decision, the 
housing program outside the ASSC has two components: 
purchase and lease.  In their public comments, PM 
Sanader and Minister for Construction and Environment 
Martina Matulovic-Dropulic referred only to the lease 
option, emphasizing that former tenancy-rights-holding 
refugees who will lease the apartments will not be able 
to later purchase them.  (Note: In 1996, Croatian 
citizens were granted this opportunity as the country 
privatized state-owned apartments, but the option was 
not available to any one not physically present in 
Croatia.)  Left unmentioned was the purchase option, 
 
ZAGREB 00001055  002.2 OF 002 
 
 
presumably as it was more likely to raise the ire of 
conservative domestic political groups.  When rolling 
out the program, Minister Dropulic, a conservative HDZ 
member, assured the public that the apartments would be 
returned "to Croatians" for social welfare housing upon 
the death of the tenants.  (Comment: The subtext is 
that elderly returnees will not live long.) 
 
¶5. (SBU) The European Community announced that it was 
"surprised" that residents would not be allowed to 
eventually purchase the apartments, but refrained from 
further comments.  The OSCE Mission told us they were 
pleased that the GOC made some specific commitments for 
apartment purchase and construction, as the 
international community has been pressing for years for 
program implementation.  In addition, the OSCE's Office 
for Refugees and Reintegration expressed hope for 
assurances that renters would eventually be able to 
purchase the apartments, and that they could be 
inherited by members of the original household (in 
1991) who do not own other property currently. OSCE 
will look for clarification that the separate, purchase 
option remains for the 2,200 other applicants as was 
previously agreed to.  In regular meetings with 
Minister Bozidar Kalmeta, responsible for refugee 
issues, Post and the international community have 
pressed for specifics about programs and clear targets 
for their implementation.  Post will continue to 
request detailed information about the GOC housing 
program and to advocate for prompt implementation. 
 
REACTIONS ALL AROUND 
 
¶6. (SBU) Several groups reacted strongly to the brief 
presentation by Minister Dropulic.  Veterans groups 
harshly criticized the GOC program.  Housing should be 
provided to veterans, "not for those who fled," stated 
one coordinating body of war veterans associations. 
The Croatian Generals' Assembly has asked the GOC for a 
list of ethnic Serb housing applicants to ensure that 
no war-time aggressors are given State housing.  The 
Serb Democratic Forum, Croatia's largest NGO, 
vehemently opposes the decision, as it does not allow 
residents to purchase the apartments.  In addition, its 
president, Veljko Djakula said that the deadline is too 
flimsy.  It is unacceptable if the housing is not 
transferable to family members, he told the press, 
referring to the general belief that many elderly 
applicants will die in the coming years.  Ethnic Serb 
MP Milorad Pupovac and GOC coalition partner criticized 
the project both for policy and process reasons, 
complaining that his party was not consulted, and 
objecting to the no-purchase aspect; he did publicly 
indicate however that he has no plans to withdraw from 
the governing coalition.  In addition, local municipal 
authorities, who learned of the program through the 
press, expressed public frustration with the GOC's lack 
of consultation.  The mayor of Rijeka, for example, 
announced that there is no State-owned land available 
for such construction. 
Bradtke