VZCZCXRO1442
PP RUEHIK
DE RUEHVB #0092/01 0421246
ZNR UUUUU ZZH
P 111246Z FEB 10
FM AMEMBASSY ZAGREB
TO RUEHC/SECSTATE WASHDC PRIORITY 9896
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE

UNCLAS SECTION 01 OF 03 ZAGREB 000092 
 
SIPDIS 
SENSITIVE 
 
FOR DEPUTY SECRETARY LEW FROM AMBASSADOR FOLEY 
 
E.O. 12958: N/A 
TAGS: PREL OTRA PGOV HR
SUBJECT: SCENESETTER FOR DEPUTY SECRETARY LEW'S VISIT TO ZAGREB 
 
ZAGREB 00000092  001.2 OF 003 
 
 
BACKGROUND 
---------- 
 
¶1. (SBU) Your visit to Zagreb on February 18 for the inauguration of 
Croatia's third president, Ivo Josipovic, will send a clear signal 
of support for the new president and the US-Croatia relationship 
overall.  Josipovic is a well-respected legal scholar and 
self-professed "europhile" who was nominated by the opposition 
Social Democrat party (but will officially resign from the party 
prior to his taking office).  Just as significantly, Josipovic is 
expected to work well with the HDZ-led Government of Croatia, so 
your visit will not be seen as any sort of partisan gesture, but as 
support for Croatia as a whole.  Particularly important will be 
Josipovic's cooperation with Prime Minister Jadranka Kosor on 
addressing corruption and working towards EU membership. 
 
¶2. (SBU) 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. 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.  The only major 
concern is Croatia's underperforming economy, which is weighed down 
by high taxes, heavy regulation and corruption, and an unattractive 
business and investment environment. 
 
BILATERAL ASSISTANCE 
-------------------- 
 
¶3. (SBU) Since 1990, the USG has provided more than $350M in 
assistance to Croatia, although with its graduation from SEED Act 
assistance in 2006 and the termination of the USAID mission in 2008, 
our assistance funds have fallen significantly.  Croatia continues 
to receive bilateral military assistance through the IMET, NADR and 
Foreign Military Financing (FMF) programs, and these funds have 
given Croatia significant help in sustaining its NATO deployments to 
ISAF and KFOR.  This is the final year of the budget for rule of law 
assistance through the ICITAP program, which has had a major impact 
in the fight against corruption and organized crime.  Post may 
shortly propose several one-time projects to INL to further enhance 
police and prosecutor capabilities in this critical area.  Finally, 
the USG provides approximately $2M per year for humanitarian 
demining. 
 
MISSION MANAGEMENT 
------------------ 
 
¶4. (SBU) Embassy Zagreb takes an active role in the EUR Bureau's 
management initiatives:  CMI and eServices, FSN empowerment, 
regionalization, warehouse reduction, and environmentally friendly 
"green" administration.  This medium-sized Embassy, located in a new 
NEC (2003) well outside of Zagreb proper, has 54 USDH and about 150 
local staff from 6 USG agencies. The recent closure of the USAID 
mission and other right-sizing measures have resulted in excess 
space and increased ICASS costs for the remaining agencies.  Post 
has creatively mitigated costs with ICASS staff reductions, 
warehouse consolidation and reutilization of space.  In addition, 
some ICASS costs are now shared with Embassy Podgorica, a regional 
partner for whom Embassy Zagreb provides most financial and human 
resources support.  The embassy's distance from the city center does 
detract from the mission's diplomatic effectiveness. 
 
U.S. OBJECTIVES WITH CROATIA 
---------------------------- 
 
¶5. (SBU) Croatia's main goal in the next two years is to complete 
its accession to the European Union.  We strongly support EU 
membership because it reinforces all of our bilateral goals with 
Croatia, and sends a strong signal to the rest of the region that 
reforms will bring positive change.  Prime Minister Kosor has taken 
courageous decisions to overcome obstacles to Croatia's EU 
accession, notably by concluding an Arbitration Agreement with 
Slovenia on the maritime border dispute, and invigorating efforts to 
cooperate with the ICTY (which has been recognized now by all EU 
members except the Netherlands, which continues to block the opening 
of a key Chapter in EU accession negotiations).  Kosor has also led 
a high profile campaign against corruption, another key EU 
benchmark. 
 
¶6. (SBU) Our own 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 particularly in the area of 
anticorruption.  Since the president's role is largely limited to 
foreign affairs and military issues, Josipovic should prove a key 
ally with our first two goals.  His campaign, however, focused on 
anticorruption efforts and we expect him also to be an important 
partner with Prime Minister Kosor in Croatia's anticorruption 
 
ZAGREB 00000092  002.2 OF 003 
 
 
initiatives. 
 
¶7. (SBU) As a global partner, 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.  In 2009, the Croatian Air Force also deployed to 
a multilateral PKO for the first time, contributing two helicopters 
and 20 crew to KFOR who 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.  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. 
 
¶8. (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 in support of 
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.  You could encourage Josipovic to pursue 
his stated goal of seeking improved relations with Serbia, which 
will require pragmatic resolution of several outstanding bilateral 
issues. 
 
¶9. (SBU) Domestically, the Croatian president does not control any 
policy levers.  But Josipovic's background as a constitutional 
scholar gives him weight in calling for legal reforms and other 
anticorruption measures.  Prior to his election, Josipovic was a key 
ally for the US and EU in pushing reform of the judiciary and in 
calling for Croatia to deal forthrightly with the issue of war 
crimes, both in domestic courts and in cooperation with the ICTY. 
During his campaign, Josipovic stressed the need to tackle 
corruption and revive the economy.  He also campaigned on a pledge 
to utilize foreign policy to build trade relations in the region, 
which he viewed as crucial to Croatia's economic development. 
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.) 
 
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.  Josipovic has an excellent 
relationship with the Embassy and is an alumnus of our International 
Visitor program. 
 
¶11. (SBU) Your visit, which will include a morning meeting with the 
Foreign Minister, and a meeting with President Josipovic following 
the inauguration ceremony and celebratory luncheon, will provide 
excellent opportunities to advance the objectives outlined above. 
 
¶12. (SBU) With both the FM and President Josipovic, foreign policy 
themes include: 
 
-  Congratulate Croatia on the impressive transition that has taken 
place over the past ten to fifteen years in Croatia. 
 
-  Note our support for Croatia's EU membership. 
 
-  Thank Croatia for its support to the ISAF mission. 
 
-  Note our support for any moves to improve relations with Serbia, 
including full completion of the efforts Croatia has undertaken to 
facilitate the return of ethnic Serb refugees. 
 
-  Thank Croatia for its constructive policies toward 
Bosnia-Herzegovina and Kosovo. 
 
ZAGREB 00000092  003.2 OF 003 
 
 
 
-  Praise Croatia's progress on ICTY cooperation and on finding a 
resolution to the Slovenia border issue, and stress the need to 
continue such cooperation. 
 
In addition, with Josipovic you could add: 
 
-  Congratulate President Josipovic on his election and note how the 
smooth conduct of the election has again confirmed Croatia's 
democratic credentials. 
 
-  Stress the importance of tackling corruption, which is vital to 
EU accession and to the consolidation of the rule of law in Croatia. 
 
 
¶13. (U) I look forward to welcoming you to Zagreb next week. 
 
FOLEY