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OO RUEHIK
DE RUEHVB #0084/01 0361352
ZNR UUUUU ZZH
O 051352Z FEB 10
FM AMEMBASSY ZAGREB
TO RUEHC/SECSTATE WASHDC IMMEDIATE 9883
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE IMMEDIATE

UNCLAS SECTION 01 OF 03 ZAGREB 000084 
 
SIPDIS 
SENSITIVE 
 
FOR SENATORS VOINOVICH AND SHAHEEN FROM AMBASSADOR JAMES 
FOLEY 
 
E.O. 12958: N/A 
TAGS: PREL OTRA PGOV HR
SUBJECT: SCENESETTER FOR CODEL VOINOVICH 
 
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BACKGROUND 
----------- 
 
¶1. (SBU) Your visit to Zagreb on February 15 comes in the 
final week of President Stipe Mesic's second and final term 
in office, and just three days before the inauguration of Ivo 
Josipovic, an opposition Social Democrat and legal scholar, 
who will become Croatia's third president since independence. 
 Just as significantly, your visit will provide an 
opportunity to engage with the relatively new HDZ government 
of Prime Minister Jadranka Kosor, who assumed office only in 
July 2009, upon the entirely unexpected (and still somewhat 
inexplicable) resignation of Ivo Sanader, who had been Prime 
Minister since 2003.  Kosor has surprised many with her 
forthright stand against corruption and willingness to make 
tough decisions on both foreign and domestic issues, and 
notably defeated an effort by Sanader to stage a political 
comeback in early January. 
 
¶2. (SBU) Despite these political transitions, the 
U.S.-Croatian relationship is as good and strong as it has 
ever been, reflecting the remarkable transformation that has 
been underway in Croatia over the last decade or more. 
Having achieved NATO membership in April 2009, and nearing 
the final lap of its EU accession process, Croatia has nearly 
completed the tasks of putting the 1990s war and all of its 
negative legacies behind it, and of effecting its political 
metamorphosis into a stable and fully democratic member of 
the Euro-Atlantic community.  While work still remains in 
both politics and economics to cement these changes, our 
assessment is that Croatia is irreversibly on a positive path. 
 
U.S. OBJECTIVES WITH CROATIA 
----------------------- 
 
¶3. (SBU) Our goals with Croatia center on three key 
objectives:  bolstering Croatia as a global partner, 
promoting regional stability, and supporting the completion 
of badly-needed domestic political and economic reforms. 
 
¶4. (SBU) Croatia has approximately 300 troops deployed to 
Afghanistan as part of ISAF.  The GoC has been particularly 
responsive to our encouragements to focus their deployment as 
much as possible on supporting our policy of training Afghan 
forces to assume increasing responsibility for security in 
their own country.  The Croatian military at present has 
three Operational Mentoring and Liaison Teams (OMLTs) on the 
ground, including one combined OMLT with the Minnesota 
National Guard.  During 2010, the Croatians intend to add two 
Police OMLTs to that total.  In 2009, the Croatian Air Force 
also deployed to a multilateral PKO for the first time, 
contributing two helicopters and 20 crew to KFOR which remain 
based at US Camp Bondsteel in Kosovo.  Supporting these 
deployments is a key focus of our assistance programs (IMET, 
FMF, 1206, GPOI) with Croatia.  Among our mid-term goals is 
to support Croatia's nascent niche capability in helicopters, 
capitalizing on their recent acquisition of several MI-171sh 
helicopters from Russia as payment on old Soviet debts.  On 
our broader global agenda, Croatia has proven a reliable 
ally, and just concluded a term as a non-permanent UNSC 
member in which it was consistently supportive of U.S. 
positions, with a particular emphasis on maintaining 
international attention to counter-terrorism efforts. 
 
¶5. (SBU) Within the region of Southeast Europe, Croatia's 
success has promoted stability in two ways.  First, through 
the power of example.  Croatia's NATO membership, and its 
progress toward the EU has communicated as clearly as 
anything could to its neighbors that if they make the 
necessary reforms, they can aspire to a better future. 
Second, the process of integrating into Euro-Atlantic 
institutions has been a solid incentive to Croatia to improve 
its policies toward its neighbors.  The bad old days of 
Croatian interference in Bosnia-Herzegovina are long gone. 
Throughout the recent Butmir talks Zagreb endeavored to 
support the process and urged BiH Croat leaders to assume 
more constructive stances on the issues under discussion.  In 
its other relations as well, Croatia has had to address 
difficult issues ranging from the border dispute with 
Slovenia, to assisting the return of ethnic Serbs who fled 
during the war, to taking a principled position on Kosovo's 
independence despite the strains that would create with 
Belgrade.  None of these decisions have been simple, and none 
of the issues can yet be considered completely resolved, but 
the movement is in a positive direction. 
 
¶6. (SBU) Implementing critical domestic reforms has also been 
a complicated challenge.  The Croatian economy is much less 
productive than it could be given the human capital 
 
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available, and despite several years of solid growth early in 
the last decade it remains too weighed down by inefficient 
taxes and regulation.  The financial crisis has helped to 
highlight the need for economic reform if Croatia hopes to 
reverse the estimated 6% decline in GDP in 2009, but it has 
also made some desperately needed reforms such as shrinking 
the bloated government payroll more difficult.  Overall, 
Croatia needs to create a much more business-friendly 
environment, one that will be attractive to foreign investors 
and Croatian entrepreneurs alike.  (Last year the World Bank 
ranked Croatia 107 out of 180 countries in this regard.) 
 
¶7. (SBU) On the rule of law and fighting corruption, the 
Croatians have spent a great deal of effort, and US and EU 
assistance, into reforming the judiciary and developing more 
effective legislation and law enforcement institutions. 
Significantly, since Prime Minister Kosor assumed office 
seven months ago, the government has been able to capitalize 
on these institutional reforms in its invigorated and more 
courageous efforts to weed out and prosecute corruption. 
Corruption investigations have already ensnared two former 
ministers, and reportedly could even reach higher in the 
period ahead.  Croatian officials need to sustain these 
efforts, prosecute them thoroughly, and produce results that 
justify recent assertions that no one in Croatia is any 
longer "untouchable." 
 
CRITICAL FACTORS FOR SUCCESS:  EU'S CREDIBILITY AND KOSOR'S 
SPINE 
----------------------------------- 
 
¶8. (SBU) Two factors will be central to the sustainability of 
the positive developments noted above.  First, the EU needs 
to deliver on the promise that if Croatia makes the tough 
reforms, then the EU is ready to welcome it.  The goalposts 
should stay where they are.  There has been a temptation for 
some to see EU accession as the last chance for leverage over 
Croatia on a variety of issues, and to squeeze as hard as 
they can.  One example, but not the only one, has been the 
dispute with Slovenia.  The U.S. has been very careful not to 
take any position on the relative merits of either country's 
maritime and border claims.  But we have been clear in our 
disagreement with Slovenia's decision to link this dispute to 
the EU negotiations.  (Resolution now hinges on Slovenia's 
ratification of the arbitration agreement reached by the two 
sides, which was ratified by the Croatian parliament in 
November.)  The U.S. position is that bilateral disputes 
should not be injected into the agendas of NATO or the EU. 
This principle will be just as important when it comes time 
for Croatia's eastern neighbors to negotiate their accession. 
 
¶9. (SBU) The second key factor will be whether the Kosor 
government has the courage to take some risks and continue 
making tough decisions.  On foreign policy, she has a 
reasonable record over the past months, willing to make the 
hard calls needed on issues such as the ad hoc arbitration 
deal with Slovenia, sending tough messages to the Croats in 
Bosnia, or supporting the US position on Kosovo at the 
International Court of Justice.  Domestically, as well, she 
is off to a good start by dealing more forthrightly with such 
issues as the pervasiveness of corruption or the weakness of 
Croatia's earlier cooperation on war crimes.  It is only on 
economic issues where one can see signs of a lack of 
direction, or perhaps even a lack of nerve.  We intend to 
increasingly focus our efforts on encouraging the Croatians 
to make these tough but necessary decisions as well. 
 
THEMES FOR YOUR VISIT 
--------------------- 
 
¶10. (SBU) Croatian officials view the U.S. very favorably. 
We have been a reliable supporter for the country; clear 
about our interests, but realistic in our demands, and 
trustworthy in delivering on our commitments.  The Croatians 
know that we are one of their strongest, but also most 
candid, supporters, and therefore they listen to our advice 
carefully. 
 
¶11. (SBU) Your visit, which will include a planned quick 
survey of Croatian helicopter forces, meetings with PM Kosor 
and President Mesic, a combined lunch with the FM and DefMin, 
and a concluding dinner at the Residence with President-elect 
Josipovic, will provide excellent opportunities to advance 
all of the objectives outlined above.  We are providing 
specific talking points for each event on your planned 
schedule, but with all of these officials, you can stress the 
same themes: 
 
-  Congratulate Croatia on the impressive transition that has 
 
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taken place over the past ten to fifteen years in Croatia. 
The smooth conduct of the recent presidential elections has 
once again confirmed Croatia's democratic credentials. 
 
-  Welcome Croatia as a new NATO Ally, and express 
appreciation for Croatia's willingness to contribute to 
important missions from KFOR to ISAF, as well as our hope 
that they will be able to strengthen those contributions in 
the year ahead. 
 
-  Note our understanding that relations with some neighbors, 
particularly where there are issues remaining from the 
collapse of Yugoslavia, are difficult and sensitive.  Urge 
them to continue constructive efforts to resolve all 
outstanding issues, in particular with Serbia, which could 
form the basis of an improved relationship as Croatia 
prepares to enter the EU.  Probe Croatian views on future 
evolution of the situation in Bosnia-Herzegovina. 
 
-  Praise the recent improvements in the government's efforts 
to fight corruption, and to cooperate with the ICTY.  Stress 
that both efforts are vital to EU accession and to the 
consolidation of the rule of law in Croatia.  Urge a similar 
commitment to economic reforms and improvement in the 
business and investment climates. 
 
¶12. (U) I look forward to welcoming you to Zagreb on February 
¶15. 
FOLEY