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UNCLAS        ZAGREB 00472

SIPDIS
R 151057Z MAY 07

FM AMEMBASSY ZAGREB
TO RUEHC/SECSTATE WASHDC 7684
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE

UNCLAS SECTION 01 OF 03 ZAGREB 000472 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: PREL PREF OSCE HR
SUBJECT: REFUGEE RETURN: KEY TO OSCE MISSION CLOSURE 
 
REF: ZAGREB 00399 
 
¶1. (SBU) Summary and Comment:  Facing intensifying pressure 
from the international community to make additional tangible 
progress on refugee issues, the GOC has established and 
clarified program benchmarks for this year.  With OSCE 
mission closure high on the GOC's priority list, the GOC has 
put itself on the hook to prove its commitment in the next 
several months.  The benchmarks are ambitious but realistic, 
and the prospect of OSCE closure will be the best motivation 
for the GOC to achieve them.  Ambassador Bradtke attended 
OSCE's April 24 meeting with GOC Ministers of Foreign 
Affairs, Justice, and Sea, Tourism, Transport and Development 
(responsible for refugee issues).  The meeting reconfirmed 
benchmarks for the GOC that were laid out by Ambassador 
Bradtke and others earlier at our regular meeting with the 
GOC on refugee issues.  Those targets - particularly on the 
GOC housing program for former "occupancy and tenancy rights" 
holders (OTR) - will form the basis for evaluating whether 
the OSCE mission has completed its mandate in Croatia. 
(reftel) 
 
¶2.  (SBU) OSCE Head of Mission Jorge Fuentes agrees that this 
year is the key moment both for the international community 
to press hard on these issues and for the GOC to demonstrate 
it can achieve technically what it has promised politically. 
There is clear political will, demonstrated again most 
recently by Prime Minister Sanader to Under Secretary Burns 
on May 11 (see septel).  As usual on refugee issues, the 
challenges will be in implementation and program momentum. 
The housing targets collectively established for 2007 
represent a small percentage of total housing applications 
and are limited to a few other issues discussed below. 
However,  if achieved, they will demonstrate a clear forward 
momentum on the programs and the will of the GOC both to 
close the OSCE mission and to make progress on the refugee 
portfolio.  In addition, the international community 
(including the Embassy and EC delegation) will remain 
vigilant in monitoring further progress in the years to come. 
 End Summary and Comment. 
 
International Community Sets the Bar for 2007 
 
¶3. (SBU) At our April meeting on refugee issues with Minister 
for Sea, Tourism, Transport and Development Bozidar Kalmeta, 
the international community once again laid out clear targets 
the GOC needs to achieve this year.  Ambassador Bradtke 
delivered strong and specific targets to Kalmeta, noting that 
they were necessary in order for us to support OSCE closure. 
OSCE, UNHCR, and the EC support the following targets: 
-- 1. Four hundred apartments outside the Areas of Special 
State Concern (ASSC) allocated - about 10 per cent of program 
applications; 
-- 2. One thousand apartments inside the ASSC allocated - 
about 30 per cent of remaining program applications; 
-- 3. Convalidation (pension credit for time worked under 
rebel Serb administration) solution finalized; 
-- 4. Residents in Vukovar in OTR apartments possess leases 
and appropriate paperwork. 
 
¶4. (SBU) Minister Kalmeta agreed that these targets were 
realistic and achievable by the end of 2007.  At the meeting, 
the international community also raised several other 
outstanding issues, which are in various stages of being 
resolved.  For example, the GOC recently resolved the most 
blatant case of unsolicited investment by an occupant of a 
returnee's property when it offered a contract to the 
occupant and the owner which took over the court-ordered debt 
of the owner.  The case had attracted international 
attention, and the GOC still needs to institutionalize this 
process so that last minute interventions are not necessary. 
As Fuentes reminded Kalmeta on implementation, "This is the 
best business investment Croatia can make; and the reality is 
that we are a barometer, and if we are still here, it sends a 
signal that there are still problems in Croatia." 
 
Housing Program - Benchmarks and Barriers 
 
¶5. (SBU)  BENCHMARKS: At the GOC's regular "plenary meeting" 
on April 24 with the OSCE, it presented its implementation 
plan for the OTR program, which were earlier agreed to by 
Kalmeta.  In several recent meetings EC Head of Delegation 
Vincent Degert reaffirmed the EC,s desire for program 
implementation - he told us he will be looking at the land 
purchase, tender, and construction processes this year in 
order to assess progress and GOC will.  In addition, after 
pressure from the international community, the GOC agreed to 
step up its construction process, completing the construction 
and allocation of all apartments outside the ASSC by the end 
of 2009, rather than 2011 as previously reported.  According 
to the GOC, the program will cost an estimated $533 million. 
 
¶6. (SBU) While clarifying these program targets on 4 May with 
Assistant Minister Milivoj Mikulic, the nuances became clear 
on how the GOC defines "allocation".  For example, the 
Embassy has suggested that meeting the target would involve 
apartments handed over to and inhabited by beneficiaries. 
The GOC has a more flexible definition of allocation, 
defining it as an apartment that is somewhere in the process 
of permitting, completion, and allocation.  In addition, 
Mikulic predicted some delays in meeting targets due to 
technical problems, such as obstacles of local 
administration, land permitting, and zoning requirements, 
which all prevent speedier progress for constructing new 
apartments.  However, he remained optimistic and reaffirmed 
the political will and financial commitment of the GOC to get 
the job done. 
 
¶7. (SBU) STATUS: To date, outside the ASSC the GOC has 
purchased 114 apartments and has allocated 41 (e.g. 
beneficiaries are living in the apartments).  The GOC spent 
$8.6 million on those apartments, and Mikulic told us he 
plans to purchase another 210 this year.  He is in the 
process of reviewing all 4,425 requests and expects to 
complete that review by June; however about 1500 reviews have 
been delayed as the GOC has requested additional information 
but cannot locate those individuals.  Kalmeta told us that 
tenders were announced for construction of apartments in 
Karlovac (80) and Osijek (58) and anticipated construction 
would begin later in the year.  The EC delegation's refugee 
advisor Alfons Peeters was skeptical that construction would 
actually take place before the end of 2008, based on the 
labyrinth of local and state requirements for construction 
and the generally sluggish pace of approval for construction 
in Croatia. 
 
¶8. (SBU) Inside the ASSC, about 800 out of 8000 total 
applications have been resolved (e.g. beneficiaries living in 
apartments).  In addition, there are more than 3000 
beneficiaries who have received positive approval and are 
awaiting housing.  (Note: these beneficiaries refer to both 
ethnic Croats and ethnic Serbs who have returned.  The ethnic 
breakdown is unknown.  Some in the international community 
have criticized the process for favoring primarily ethnic 
Croats, although Mikulic tells us that he will institute a 
procedure that processes applications by date received, 
rather than by ethnicity.  End Note.)  A critical impediment 
to program implementation remains the convoluted land 
ownership and registry problems remaining from the Yugoslav 
era.  Without clear land title, the GOC construction and 
allocation process will stagnate. 
 
¶9. (SBU) ISSUES:  Meeting with Mikulic on May 4, Poloff and 
PRM's Belgrade-based regional refugee coordinator heard again 
that the GOC is willing to consider opening its deadline for 
the housing program outside the ASSC.  Mikulic said he is 
ready to compromise with his Serbian counterparts, but will 
not discuss compensation for those who do not wish to return. 
  He emphasized that the GOC priority is to find a 
humanitarian solution for those who do wish to return.  The 
international community in Zagreb is realistic in its 
expectations from the GOC.  Politically and financially, 
compensation for those who will not return is not possible 
from the GOC, according to Christian Loda, head of Return and 
Reintegration unit at the OSCE Mission.  Another outstanding 
issue remains the lack of an appeal commission for the OTR 
program outside the ASSC, which the GOC should have 
established at its onset.  A functioning appeals commission 
is an important component of the program, UNHCR Head of 
Mission Wilfried Buchhorn reaffirmed to us, as application 
rejections remain a concern. 
 
Uncertain Future for the Sarajevo process 
 
¶10.  (SBU) OSCE HOM Fuentes told PolOff recently that he 
believes the Sarajevo Process is largely finished, or at 
least progressing toward a satisfactory political conclusion. 
 Outstanding issues in the Sarajevo Process include residency 
and citizenship issues, unsolicited investment in refugee 
properties, the state prosecutor's war crimes indictees list, 
and convalidation of working years for those in the former 
Krajina region.  In an early April meeting with PM Sanader, 
Fuentes received assurances again that the convalidation 
issue would be resolved soon.  This resolution would most 
likely be re-opening the 1999 application deadline to apply 
for recognition of related documents.  Ambassador Bradtke 
advocated for speedy resolution at our meeting with Kalmeta. 
As to the other outstanding issues, Fuentes noted that the 
GOC is working on them to various degrees.  Fuentes and other 
members of the international community in Zagreb agree that 
completing the Sarajevo Process (through a 
yet-to-be-scheduled ministerial meeting) will not mean an end 
to international attention to these issues.  The issue of 
compensation for OTR holders who do not wish to return is a 
bilateral topic between GOC and Bosnia and Serbia, Fuentes 
stated, noting that it was still controversial within OSCE. 
BRADTKE