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UNCLAS        ZAGREB 01513

SIPDIS
R 271234Z DEC 06

FM AMEMBASSY ZAGREB
TO RUEHC/SECSTATE WASHDC 7083
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE

UNCLAS ZAGREB 001513 
 
SIPDIS 
 
DEPT FOR PRM ROLSON 
DEPT FOR EUR/SCE RBALIAN 
BELGRADE FOR OLSON 
 
SENSITIVE 
 
E.O. 12958: N/A 
TAGS: PREF PGOV HR
SUBJECT: GOC SOLVES RETURNEE HOUSING DISPUTES 
 
Sensitive But Unclassified.  Please Handle Accordingly. 
 
¶1. (SBU) Summary and Comment.  A December 7 Government meeting 
approved a resolution "process" for temporary occupants of refugee 
homes who made unsolicited investments to the properties and are 
seeking compensation from the refugee owners.  Along with the OSCE, 
UNHCR, and EU, Post has pressed the GOC for a workable resolution 
for over a year in its monthly meetings on refugee issues; the OSCE 
helped draft the decision, which includes an out-of-court settlement 
process.  This is a positive indication of the GOC's desire to make 
progress on the refugee portfolio.  The achievement follows the 
GOC's appointment of new Assistant Minister for Refugee and Returnee 
Issues Milivoj Mikulic, who so far is activist and collaborative 
both within the GOC and with the international community (IC). 
Mikulic, an engineer by background, has been charged with turning 
the lethargic returnee housing plan into concrete reality.  One 
month into the job, his leadership has already changed the tenor of 
the GOC-IC relationship and shown results.   End Summary and 
Comment. 
 
¶2. (U) The resolution commits the GOC to compensate temporary users 
for investments they made to refugee homes while they occupied those 
properties.  While there are presently a small number of applicable 
cases (currently 24 in the court system), the problem drew the 
attention and ire of the international community because of several 
egregious cases.  In one such case, the GOC allowed a temporary 
(Croatian) occupant to take over a home belonging to an ethnic Serb 
in Korenica in 1996; the temporary occupant turned it into a 
successful pizzeria and operated it until 2005.  After an eight-year 
judicial process, the refugee won the right to repossess his home. 
However, the temporary occupant sued the owner for the 30,000 euros 
she invested in the property, and the court ordered the payment. 
Since the owner could not pay the amount, the house was scheduled 
for auction.  As of December, the auction has been postponed due to 
political and international pressure.  At least two such auctions 
were scheduled in other cases.  In some of the 24 cases, investments 
were made to convert homes into businesses, in others they were made 
in order to make the home habitable after war devastation.  In all 
cases, however, the investments were made without the owners' 
consent. 
 
¶3. (U) According to the plan, the GOC will sign an out-of-court 
settlement with the user and the owner for expenses incurred in 
order to make the home habitable (Note: not for all investments to 
the property).  By signing the settlement the user renounces any 
further claims for reimbursement.  If a user refuses the settlement, 
the GOC will take over the claims process, releasing the owner from 
further involvement.  The case would proceed through the courts, and 
the State Prosecutor would request GOC compensation as determined 
through a final court verdict.  While not specifically addressed in 
the GOC decision, we expect that the GOC will actively approach the 
remaining claimants and offer a financial settlement even before a 
final court decision.  The GOC may incur significant costs, although 
the full extent is undetermined. 
 
¶4. (SBU) In its monthly meetings at both the working and ministerial 
level, Post, OSCE, UNHCR and the EU have pressed for a resolution to 
the problem for over a year. Together in late 2005, the four members 
of the IC put forward a proposal which was tabled within the 
Ministry of Sea, Trade, Transport and Development and thwarted by 
state prosecutors who believed that owners would unduly benefit. 
Recently, however, aggressive lobbying by the IC reaped results with 
its approval earlier this month.  The approval coincided - we 
believe not coincidentally - with the appointment of Mikulic, who 
pushed hard to ensure that the Council signed off on the decision. 
Tapped by PM Sanader, Mikulic told us he has been tasked with 
achieving results on the refugee portfolio, most specifically on the 
housing program for former tenancy rights holders.  A civil engineer 
by profession, he previously worked for U.S. firm Bechtel and 
appears to be practical and goal-oriented.  In our December working 
group meeting, he told us that the GOC will increase the pace of 
apartment allocation in 2007 (to be reported septel). 
 
BRADTKE