VZCZCXYZ0004
RR RUEHWEB

DE RUEHLJ #0072/01 0461153
ZNR UUUUU ZZH (CCY AD5D8067 MSI4149) 431
R 151153Z FEB 08 ZDS
FM AMEMBASSY LJUBLJANA
TO RUEHC/SECSTATE WASHDC 6455
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE
RHMCSUU/DEPT OF ENERGY WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEAIIA/CIA WASHDC

UNCLAS LJUBLJANA 000072 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
C O R R E C T E D   C O P Y   (ADDED SENSITIVE) 
 
EUR/NCE FOR TYEAGER, USDOC/ITA FOR CRUSNAK 
 
E.O. 12958: N/A 
TAGS: ECON ENRG BEXP PGOV PREL SENV SI
SUBJECT: CHARGE DISCUSSES ENERGY, KOSOVO WITH SLOVENIAN 
BUSINESS LEADER 
 
 
Summary 
-------- 
 
¶1. (SBU) On 12 February, Charg met with Igor Bavcar, the CEO 
of Istrabenz--one of Slovenia,s largest conglomerates, which 
has holdings of 65 companies in the energy, tourism, 
investment, food, and IT sectors--to discuss issues ranging 
from Instrabenz,s latest business ventures to the upcoming 
Slovenian parliamentary elections.  Bavcar briefed Charg on 
the various alternative energy projects that Istrabenz is 
currently engaged in or has planned, including a possible 
solar power plant in the port of Koper.  Bavcar expressed 
concern that the escalating situation in Kosovo was likely to 
harm Slovenia,s business interests in the region.  He 
concluded that Slovenia was too invested in the region to 
serve as an objective leader on the issue. Bavcar then 
discussed the state of foreign direct investment (FDI) in 
Slovenia, which he somewhat surprisingly characterized as 
being strong despite several impediments.  Speculating on the 
upcoming parliamentary elections scheduled for the coming 
fall, he predicted that the next government is likely to be a 
mixed coalition of center-left and center-right parties.  End 
Summary. 
 
Istrabenz Seeking Stake in Slovenian Energy Company Petrol 
--------------------------------------------- ------- 
 
¶2. (SBU) Charg inquired about persistent rumors that 
Instrabenz intends to purchase a sizable stake in Slovenia,s 
government-owned energy firm Petrol.  Bavcar confirmed that 
Istrabenz is negotiating the acquisition of a 25 percent 
stake of Petrol, but the firm has encountered difficulties 
with antitrust legislation.  He added that the public in 
Slovenia is wary of such a deal and fears that Istrabenz may 
be growing too strong for the small Slovenian economy. 
Regarding the potential joint venture between the Russian 
energy firm Lukoil and Petrol, Bavcar expressed concern that 
the venture would only serve to increase Russia,s already 
strong influence in the Central European energy sector. He 
confessed, however, that he did not have the power to derail 
the deal, so the next best thing would be to secure a seat 
around the negotiating table.  Bavcar told Charg that he 
personally did not see the value that Lukoil added to the 
venture.  (Note. Chairman of the Petrol Supervisory Boards 
Viktor Baraga told Charg last week that the Petrol-Lukoil 
venture was dead, but Bavcar gave no indication in his 
discussion of the matter that this was the case.  End note.) 
 
Istrabenz Looking to Expand its Alternative Energy Operations 
--------------------------------------------- -------- 
 
¶3.  (SBU) Istrabenz is very active in the natural gas 
industry and is seeking to increase its participation in 
alternative energy projects.  Bavcar noted that Istrabenz is 
currently involved in several alternative energy projects, 
including two new biomass investments in Bosnia, and is 
considering building a small solar power plant in the port of 
Koper.  He is curious to see the results of a project to 
build a liquid natural gas terminal on the Croatian island of 
Krk, although he says he is not optimistic about its success. 
 Bavcar expressed similar skepticism about the feasibility of 
wind energy, noting that the winds in Koper are too strong 
for a wind energy plant. 
 
Kosovo CDI Could Harm Slovenian Business Interests in Serbia 
--------------------------------------------- --------- 
 
¶4. (SBU) On the subject of Kosovo, Bavcar said he is happy 
that Tadic won the Serbian presidential election but that he 
is very worried that Slovenia recognizing Kosovo,s 
independence would have serious repercussions for Slovenian 
business interests in the region.  Bavcar noted that Slovenia 
has significant investments in Serbia--mainly in the food 
processing industry--and hinted that Belgrade would retaliate 
against Slovenia through economic measures if Slovenia 
recognized an independent Kosovo.  Bavcar posited that it 
would be better for France or Germany to make the first move 
because Slovenia--with over one billion dollars invested in 
Serbia and longstanding ties to both the Kosovo Albanians and 
the Serbians--is too connected to the region.  He indicated 
that he thought Slovenia was being pushed to solve the Kosovo 
issue and questioned why this was the case. 
 
Foreign Investment in Slovenia Hampered by Government 
Interference 
--------------------------------------------- ----------- 
 
¶5. (SBU) Bavcar told Charg that he thought Slovenia had 
strong FDI inflows, but he identified two primary impediments 
to investment.  One impediment is a prevailing protectionist 
sentiment among the public that has its roots in centuries of 
foreign occupation.  The Slovenes appear concerned that 
outside forces--particularly the Austrians--are becoming too 
strong in Slovenia.  The second major impediment is that 
Slovenian politicians still want to maintain power in the 
private sector through the control of state-owned funds.  He 
explained that business leaders in Slovenia have increasingly 
moved to consolidate ownership of companies to protect 
against government interference. 
 
Bavcar Predicts Next Government will be Mixed Coalition 
--------------------------------------------- ------ 
 
¶6. (SBU) When asked about the upcoming parliamentary 
elections and his political ambitions, Bavcar, who previously 
ran for Prime Minister, said he had no intention of 
reentering politics.  He speculated that it would be 
impossible for the ruling Slovenian Democratic Party (SDS) to 
build a totally right-of-center coalition following the 
parliamentary elections this fall.  He concluded that none of 
the parties are likely to be in a controlling position 
following the elections and that some type of unwieldy 
coalition would result. 
 
Bio Note 
-------- 
 
¶7. (SBU) Igor Bavcar is a well-known figure in Slovenia who 
played a prominent role in the country's independence 
movement.  Bavcar began his career as a journalist, having 
served as chief editor of the newspaper Tribuna in the early 
1980s.  In 1988, he established a group known as the Human 
Rights Committee that initiated demonstrations in support of 
the four Slovene journalist--including the current Prime 
Minister Janez Jansa--who had been arrested by Yugoslav 
officials for criticizing the Yugoslav army.  The 
demonstrations are widely seen as having served as a catalyst 
for Slovenia's drive for independence.  Bavcar parlayed his 
notoriety from the independence movement into a successful 
political career.  He served as Interior Minister (1990-1993) 
and as Minister without Portfolio for European Affairs from 
(1997-2000), distinguishing himself in the partisan Slovenian 
political community as an excellent coordinator.  Bavscar 
transition from politics to the business world in 2002, when 
he took over as Chief Executive Officer of the Istrabenz 
Holding Company--one of the leading business groups in 
Slovenia.  Bevcar is close to Prime Minister Janez Jansa but 
that relationship has grown strained over the years as Bavcar 
has sought to fully immerse himself in the business 
community.  Bavcar says that he has no intention of 
reentering the political realm. 
 
COLEMAN