VZCZCXYZ0012
PP RUEHWEB

DE RUEHVB #0069/01 0311047
ZNY CCCCC ZZH
P 311047Z JAN 08
FM AMEMBASSY ZAGREB
TO RUEHC/SECSTATE WASHDC PRIORITY 8530
INFO RUEHZG/NATO EU COLLECTIVE
RUEHSQ/AMEMBASSY SKOPJE 2605
RUEHTI/AMEMBASSY TIRANA 0830
RUEKJCS/JOINT STAFF WASHDC
RUEKJCS/SECDEF WASHDC
RUEHNO/USMISSION USNATO 3468

C O N F I D E N T I A L ZAGREB 000069 
 
SIPDIS 
 
SIPDIS 
 
DEPARTMENT FOR EUR - P/DAS VOLKER, DAS DICARLO, EUR/RPM, 
EUR/SCE 
USNATO FOR AMB NULAND, UNDERWOOD, BAEZ, GLORIOSO 
NSC FOR BRADLEY 
OSD FOR NATO POLICY - DAS FATA 
JCS FOR SHIELDS 
 
E.O. 12958: DECL: 01/24/2018 
TAGS: PREL PGOV KPAO MOPS MARR NATO HR DEFENSE REFORM
SUBJECT: ASSESSMENT OF CROATIA'S NATO READINESS 
 
REF: A. ZAGREB 24 
     ¶B. USNATO 22 
     ¶C. ZAGREB 22 
     ¶D. ZAGREB 10 
     ¶E. 07 ZAGREB 1092 
 
Classified By: Political Officer Tom Selinger for reasons 1.4(b) and (d 
). 
 
¶1. (U) Following is Post assessment of Croatia's progress on 
key reform issues related to NATO accession and remaining 
challenges facing PM Sanader's new government in advance of a 
possible membership invitation at the Bucharest Summit. 
 
REGIONAL LEADERSHIP: COMMITTED TO STABILITY OF NEIGHBORS 
--------------------------------------------- ----------- 
¶2. (U) After gaining parliamentary approval of his new 
government on January 12, PM Sanader repeated his commitment 
to Croatia's Euro-Atlantic integration and its role in 
supporting its eastern neighbors on this same path (ref A). 
The GoC sees its success in winning a non-permanent seat on 
the UN Security Council (UNSC) and the conclusion of the full 
OSCE mission in Croatia as international recognition of the 
country's contributions to regional stability and its efforts 
to address the legacies of war from the 1990s.  Post expects 
no major changes in the GoC's positive engagement in the 
region under new FM Gordan Jandrokovic, who chaired 
parliament's foreign affairs committee for the past four 
years and served as a member of Croatia's National Committee 
on NATO Membership. 
 
¶3. (U) The GoC has continued active partnership in the 
Adriatic Charter and has publicly called for invitations for 
all of the A-3 in Bucharest.  Croatia served as A-3 chair in 
the last half of 2007, hosting a successful 
Adriatic-3/Baltic-3 meeting for foreign and defense ministers 
in October and organizing an A-3 foreign ministers meeting on 
the margins of the UNGA in September.  In both events, 
Croatia also involved the three new Partnership for Peace 
(PfP) members in the region and is supporting their 
involvement in other NATO activities, including plans to host 
Montenegrin observers in their next ISAF deployment. 
 
¶4. (U) The GoC maintains vigorous and positive bilateral 
relations with every country in the region.  In May 2007, 
Croatia concluded its successful chairmanship of the South 
East European Cooperation Process with the formation of a 
permanent Regional Cooperation Council (RCC), the successor 
to the Stability Pact initiative.  A Croatian diplomat is 
currently serving as the first secretary general of the RCC. 
Government and parliamentary leaders have made regular 
efforts to contribute to stability both in Bosnia and 
Herzegovina and in Kosovo.  Croatia is in the process of 
opening a diplomatic office in Pristina, and maintains broad 
contacts in Kosovo, including GOC-support for efforts by a 
Croatian Serb parliamentarian to encourage Kosovo Serbs to 
engage directly with Kosovar institutions in Pristina. 
 
¶5. (C) With its entry into the UNSC this month, Croatia's 
role on Kosovo becomes even more critical.  The GoC has 
supported the Ahtisaari plan and has regularly (including as 
recently as on January 25 by FM Jadrokovic) assured Post that 
it will follow the lead of the US and EU on the Kosovo issue, 
including recognition of independence.  At the JAN 16 UNSC 
session, Croatia's position was fully supportive of USG 
views.  The GoC is counting on EU unity on this issue, 
knowing full well that it will bear the brunt of any trade 
sanctions or other retaliatory measures Belgrade might take 
in response. 
 
BUILDING PUBLIC SUPPORT: NEW GOVERNMENT BRINGS NEW ENERGY 
--------------------------------------------- ------------ 
 
¶6. (U) During a January 16 meeting with the North Atlantic 
Council (ref B), PM Sanader assured NATO PermReps of his 
government's commitment to continuing education of the 
Croatian public on NATO.  Support for membership has been 
hovering around 50 percent since before the November 
elections, when what had been a very effective government 
outreach campaign temporarily halted pending a new 
 
government.  Sanader expressed confidence in Brussels that 
support will grow as his team spreads the message that the 
Alliance "is not just about security, but about values, 
democracy, and human rights."  The Government convened its 
"State Committee on NATO Membership" on January 25 to 
continue planning on concrete efforts to increase public 
outreach. 
 
¶7. (U) In the coalition agreement between Sanader's Croatian 
Democratic Union (HDZ) and the Peasant Party (HSS) and the 
Social Liberals (HSLS), the PM succeeded in convincing his 
partners to rule out a public referendum on NATO membership 
(refs C and D).  Instead, the new ruling coalition committed 
to continued engagement in international peacekeeping 
operations, further contributions to NATO peace-building 
missions, and sustained public outreach on the advantages of 
alliance membership. 
 
¶8. (U) While Croatian Ambassador to NATO Davor Bozinovic will 
likely again play a prominent role in the GoC's outreach, the 
MFA has also begun to send other speakers to public events, 
broadening the number of voices supporting membership in the 
media.  In addition, former head of MFA's NATO Dept Neven 
Mikec has moved up to be FM Jandrokovic's new chief of 
cabinet, putting NATO expertise at the minister's fingertips 
and keeping the Alliance near the top of the MFA's priority 
list. 
 
REFUGEE RETURNS AND HOUSING: MEETING 2007 BENCHMARKS? 
--------------------------------------------- -------- 
 
¶9. (U) For returning refugees who owned property before they 
fled the war, Croatia has largely addressed home 
reconstruction, repossession and infrastructure development. 
According to the UNHCR and OSCE, with the exception of cases 
pending appeal, the cases of those who owned residences have 
been resolved and only 17 houses subject to repossession 
remain in dispute.  In tens of thousands of other cases, 
property owners have been able to return to their property or 
received alternate housing, reconstruction assistance, or 
compensation. 
 
¶10. (U) A key remaining challenge has been how to accommodate 
those who did not own property but held tenancy rights in 
socialized housing.  In consultation with the international 
community, the GoC set two benchmarks for 2007: 
-- resolve 1,000 of these housing care cases inside Areas of 
Special State Concern (ASSC -- areas most directly affected 
by the war), and 
-- provide 400 apartments to applicants outside ASSC. 
 
¶11. (U) The GoC reports it achieved both 2007 benchmarks. On 
January 15, the GoC said it has resolved 1,007 cases inside 
ASSC, meaning applicants have either moved into alternate 
housing, have accepted building materials in lieu of housing, 
or are awaiting completion or availability of designated 
housing.  Outside ASSC, the GoC said it has purchased 408 
apartments.  According to the government, 307 of these units 
are actually available for occupancy, while the rest are 
still being processed. 
 
¶12. (C) The international community has not yet been able to 
verify these claims.  Previous field checks by the OSCE and 
UNHCR have revealed that the GoC often stretches the 
definition of "resolving" a case to show maximum progress, 
often reporting a case involving a unit that is still in the 
process of being purchased or renovated as resolved. 
However, the GoC is generally moving steadily in a positive 
direction in what will be a long-term political and budgetary 
challenge.  Even after meeting the 2007 benchmarks, the GoC 
faces almost 10,000 more unresolved applications in the years 
to come. 
 
¶13. (U) Within the so-called "Sarajevo Process," the 
Government of Serbia has pushed for Croatia to pay financial 
compensation to former holders of tenancy rights who do not 
actually wish to return to Croatia.  The GoC argues that 
tenancy rights are not private property and that providing 
compensation for tenancy rights to those who do not want to 
return violates the spirit of the process, which is to 
promote return of refugees to their home country.  The GoC 
stressed repeatedly that it promises to provide housing to 
all those who wish to return.  The GoC has also offered to 
support a donors' conference to assemble a package of 
assistance for individuals unwilling to return, but has said 
it could only be one of several donors in such an effort. 
 
¶14. (U) The final unresolved issue within the "Sarajevo 
Process" is recognition (or "convalidation"), for pension and 
benefits purposes, of years worked in the former Serb-held 
territories during the war.  This has been a topic of long 
political discussions between the GoC and Croatian Serb 
politicians, and a commitment to finding a resolution is 
reportedly part of the governing coalition agreement signed 
earlier this month between the Independent Serbian Democratic 
Party (SDSS) and the HDZ.  Convalidation and other refugee 
return issues will continue to be monitored by the EU, as 
resolution of these questions is explicitly included among 
the EU's criteria for Croatia's eventual accession to the 
Union. 
 
REFORMING THE JUDICIARY, COMBATTING CORRUPTION 
--------------------------------------------- - 
 
¶15. (U) Judicial reform remains a key area of concern, with a 
persistent public perception of the judiciary as one of the 
country's main sources of corruption.  However, Post has 
noted progress.  The case backlog has actually been reduced 
30 percent in the past two years, and improvements in court 
administration, including computerization and court 
rationalization, are expected to speed up progress.  The MoJ 
continues to improve training of judges and supervision of 
judicial administration.  Serious weaknesses in such areas as 
witness support still persist and have the potential to 
jeopardize cases such as the war crimes prosecution of 
Generals Ademi and Norac transferred from The Hague Tribunal. 
 But politically it is notable that such high profile war 
crimes cases against ethnic Croatians are proceeding without 
significant public protest or resistance. 
 
¶16. (U) Croatia's steady implementation of its National 
Strategy to Combat Organized Crime and Corruption is yielding 
results.  The GoC has established police and prosecutor task 
forces to combat organized crime and has begun freezing 
assets in narcotics cases.  The GoC's Office for the 
Suppression of Corruption and Organized Crime (USKOK) 
conducted three high-profile stings in the past six months 
leading to 36 arrests of government officials and private 
citizens for corruption within the Croatian Privatization 
Fund (Operation "Maestro"), the Zagreb land registry office 
(Operation "Gruntovec," ref E), and the Dubrovnik permitting 
office (Operation "Five Stars"). 
 
¶17. (C) USKOK Director Dinko Cvitan has claimed that these 
stings are only the beginning of the GoC's ongoing campaign 
to tackle corruption, and several other operations will go 
public early this year.  The investigations are also becoming 
increasingly sophisticated, moving from informants into 
electronic surveillance.  According to Cvitan, he has the 
full support of PM Sanader and the rest of Croatia's 
political leadership in this fight, stressing that all of his 
requests to the GoC for operational funds -- including money 
for informants to use to pay bribes -- have been honored with 
no questions asked.  While USKOK has still not netted the 
biggest fish, their recent success is a positive development 
that should embolden them to continue to move up the 
corruption food chain. 
 
DEFENSE SPENDING: BALANCING DEFENSE AND DEPLOYABILITY 
--------------------------------------------- -------- 
 
¶18. (U) The GoC remains on track to raise defense spending to 
2 percent of GDP by 2010 as set out in the MoD's Long Term 
Development Plan (LTDP).  Defense spending in 2007 was 
approximately 1.63 percent of GDP (1.96 percent when pension 
payments are included and fire fighting is excluded, per 
NATO's formula).  Projected figures (without pensions, with 
fire fighting) for 2008 and 2009 are 1.77 percent and 1.82 
respectively. 
¶19. (U) Reduction of personnel costs is a long-term priority 
in the LTDP.  In 2007, personnel costs were approximately 67 
percent of the defense budget -- down from 79 percent in 
¶2003.  Military planning guidelines for the coming year call 
for salary upgrades, improvements to living and working 
conditions, and increased compensation for deployed troops, 
so the MoD must stick to its force reduction targets in order 
to continue decreasing personnel costs. 
 
¶20. (U) About 7 percent of the defense budget was available 
for equipment purchases and modernization in 2007.  Under the 
LTDP, this figure will improve to 32 percent by 2010, with 
USD 610 million envisaged for equipment for the land forces, 
USD 474 million for the air force, and USD 185 million for 
maritime forces.  Having completed the tender in 2007 to 
procure armored personnel carriers for the land forces, the 
largest procurement priorities remain advanced fighter 
aircraft and coastal patrol ships.  Croatian leaders are 
committed to this plan, which they believe balances national 
defense needs and force deployability. 
 
HANDLING CLASSIFIED: APPROACHING NATO STANDARDS 
--------------------------------------------- -- 
 
¶21. (U) The GoC took several steps forward last year in 
applying NATO security standards and regulations, in 
particular in the field of security legislation, and we do 
not expect this to be an issue of concern for accession.  The 
Data Secrecy Act and the Information Security Act were 
adopted in July 2007.  Early this year, we expect the newly 
formed parliament to adopt the Security Clearance Act, which 
will harmonize Croatian and NATO requirements.  In the 
meantime, vetting and clearance procedures are in line with 
NATO standards on the basis of a governmental decree on 
security vetting, according to NATO International Staff 
experts.  Information security-related structures are mostly 
established, although they still need some time to become 
fully operational. 
 
¶22. (U) NATO's January 2008 progress report on Croatia noted 
that the GoC's National Security Authority has established a 
properly staffed registry system in compliance with NATO 
standards and that information flow is well regulated.  The 
GoC has also established and funded an INFOSEC authority 
(Zavod za Sigurnost Informacijskih Sustava).  Current 
physical security requirements are in most cases in line with 
NATO's requirements, and the Central Registry has been 
upgraded to enable operation at the COMSIC TOP SECRET level. 
The GoC must now focus on developing and approving national 
INFOSEC directives and establishing a Security Accreditation 
Authority to enable implementation of a communications system 
capable of processing NATO information. 
BRADTKE