VZCZCXRO5797
RR RUEHDBU RUEHFL RUEHKW RUEHLA RUEHROV RUEHSR
DE RUEHVB #0158/01 0440915
ZNY CCCCC ZZH
R 130915Z FEB 07
FM AMEMBASSY ZAGREB
TO RUEHC/SECSTATE WASHDC 7290
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE

C O N F I D E N T I A L SECTION 01 OF 02 ZAGREB 000158 
 
SIPDIS 
 
SIPDIS 
 
DEPT FOR PRM:POLSON 
DEPT FOR EUR/SCE:RBALIAN 
BELGRADE FOR OLSON 
 
E.O. 12958: DECL: 02/13/2017 
TAGS: PREF PGOV HR REFUGEES
SUBJECT: CROATIA OFFERS COMPROMISE ON KEY REFUGEE ISSUES 
UNDER "SARAJEVO PROCESS" 
 
REF: A. 2006 ZAGREB 1513 
     ¶B. 2006 ZAGREB 1055 
 
Classified By: Amb R. A. Bradtke for reasons 1.4 (b) and (d) 
 
¶1. (SBU) SUMMARY AND COMMENT: At a February 2 meeting near 
Dubrovnik, Croatian, Serbian, Bosnian and Montenegrin 
officials met with OSCE, UNHCR and EC reps to plan the 
wrap-up of the "Sarajevo Process," a regional approach to 
refugee issues involving targets set by each country (the 
individual "Road Maps") and a mutually agreed matrix of 
cooperative measures.  UNHCR and OSCE reps told poloff that 
having addressed six of its eight Road Map points, the 
Croatian delegation proposed to include the two key remaining 
issues in a Ministerial Declaration to be signed later this 
spring. 
 
¶2. (SBU) As described by new Assistant Minister for Refugee 
Issues Milivoj Mikulic, the GOC would for the first time 
commit to some form of compensation for refugees who formerly 
held "occupancy/tenancy rights" (OTR) in socialized housing, 
but who do not wish to return to Croatia. In addition, the 
GOC would commit to a solution for the convalidation problem, 
by which Croatian Serbs seek recognition, for pension 
purposes, of the time they worked in formerly Serb-occupied 
areas of Croatia.  These are potentially very expensive 
programs, and politically sensitive for the GOC. 
 
¶3.  (SBU) Because the convalidation issue will have to be 
resolved as part of Croatia's EU accession, the international 
community has some assurance that it will be adequately 
addressed.  Compensation for refugees who do not plan to 
return to Croatia has never been offered before; this 
represents a major concession by the GOC, which was praised 
by the UNHCR, OSCE and EC reps.  The Bosnian and Montenegrin 
delegations accepted the GOC's proposal to deal with these 
issues in a separate Ministerial Declaration (i.e. outside of 
Croatia's individual Road Map), but the Serbian delegate 
insisted they should be in both Croatia's road map and the 
joint matrix.  Negotiations for a spring Ministerial in 
Podgorica continue.  UNHCR/Croatia noted that given the 
favorable reaction by other players to Croatia's initiative, 
the new Serbian government may not wish to appear the sole 
obstacle to a regional agreement to close the refugee file. 
END SUMMARY AND COMMENT 
 
Sarajevo Process Moving Slowly to Resolve Refugee Issues 
--------------------------------------------- -- 
¶4. (U) The December 2005 Sarajevo Declaration committed the 
governments of Bosnia and Herzegovina, Croatia and Serbia and 
Montenegro to resolve remaining refugee return issues through 
a regional approach; it was due to wrap up by the end of 
¶2006.  The Declaration called on each country to deal with 
refugee issues according to its own "Road Map" and addressed 
regional problems in a "Joint Matrix."  Slow work on the 
country roadmaps and disagreements about the contents of the 
joint matrix slowed the process; the OTR compensation and 
convalidation issues were major sticking points.  Through its 
individual road map, Croatia has set up processes to address 
home reconstruction and repossession, infrastructure 
development (including electrification and water 
restoration), data exchange, solutions for refugees in 
Croatia, and social rights of refugees and returnees. 
 
Croatia Proposes Compromise In Declaration 
------------------------------------------ 
 
¶5.  (C) At the working level February 2 meeting in Cavtat, 
according to UNHCR/Croatia Senior Protection Officer Wilfried 
Buchhorn, Assistant Minister Mikulic took a constructive 
approach by offering two new compromise positions: he 
proposed addressing compensation for Croatian Serb refugees - 
former OTR holders who decided not to return - in the 
ministerial declaration.  This is the first time Croatia has 
been willing to discuss such compensation, preferring instead 
to address the issue in terms of its humanitarian housing 
program for those who do wish to return.  Mikulic proposed to 
address compensation in the Declaration as a "fair 
compensation mechanism" without details as to the source or 
mechanisms of funding.  The Head of Return and Reintegration 
for OSCE/Croatia, Christian Loda, who also attended the 
meeting, told poloff that this willingness was an important 
gesture and opened the door for future discussions. 
 
¶6. (C) Mikulic's second component would refer to 
convalidation of working years for ethnic Serbs who were 
employed in the former "Krajina" zone.  While the numbers are 
still unclear, there may potentially be 20,000 persons 
 
ZAGREB 00000158  002 OF 002 
 
 
affected.  High-level GOC contacts have consistently warned 
Emboffs that convalidation is a political hot potato, 
particularly in an election year, because many ethnic 
Croatian retirees do not receive adequate pensions. 
Nevertheless, Mikulic left the door open to finding a 
solution to convalidation and recognized a GOC commitment to 
follow through.  In addition - and also unexpected - was 
Mikulic's offer to extend the application deadline for OTR 
holders outside the war-affected areas (Areas of Special 
State Concern or ASSC), which expired in September 2005. 
 
Serbian Delegate Opposed to Compromise 
-------------------------------------- 
 
¶7. (SBU) The OSCE and UNHCR reps noted that GOS Refugee 
Commissioner Dragisa Dabetic (who, they said, was not likely 
to continue in that position once a new government was formed 
in Belgrade) asserted that he expected "millions of dollars 
in cash" as compensation for some 19,000 refugees who lost 
OTR.  Mikulic reportedly asked for an estimate of former OTR 
holders living in Serbia which was based on reliable data. 
Dabetic also rejected the idea of addressing the two issues 
in the Declaration and insisted that they be incorporated in 
Croatia's Road Map and in the joint matrix of tasks to be 
completed. 
 
 
Political Guarantee: Declaration, And EU Accession Process 
--------------------------------------------- ------------- 
 
¶8. (C) UNHCR and the OSCE believe that addressing these 
issues in a separate declaration could offer some political 
guarantees.  In addition, EC delegation Political Advisor 
David Hudson reaffirmed that convalidation remains one of 
Croatia's commitments in its EU accession process, providing 
additional assurance that the GOC will address it.  According 
to Buchhorn, the international community and all regional 
governments want to make progress in the lagging Sarajevo 
process; given the support expressed by Bosnia and 
Montenegro, Serbia risks looking like the lone obstacle to 
progress. 
 
OTR Housing Care Process Continues 
---------------------------------- 
 
¶9. (SBU) Mikulic's appointment in November 2006 gave a new 
impetus to the lethargy surrounding the GOC's "Housing Care" 
program for former OTR holders.  (Ref B) He recently told 
poloff he plans to complete the administrative review and 
inform applicants of their status by March.  The Housing Care 
program foresees construction and purchase of 4,000 flats, 
which according to current plans will take until 2012 to 
complete.  To date, about 50 applicants have been approved 
and moved into apartments, opening the GOC to criticism that 
the program remains largely unimplemented.  Although these 
and other problems such as lack of economic opportunity 
hinder refugee returns, the GOC has demonstrated a commitment 
to resolve the issue, and a pragmatic recognition of the work 
left to be done.  The Ambassador and the international 
community continue to push the GOC to move more quickly in 
implementing the housing care program. 
BRADTKE