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Cablegate: Croatia: Scenesetter for Codel Tanner

UNCLAS ZAGREB 00095

SIPDIS
P 081547Z FEB 08

FM AMEMBASSY ZAGREB
TO RUEHC/SECSTATE WASHDC PRIORITY 8564
INFO RUEHBS/AMEMBASSY BRUSSELS 1014
RUEHFR/AMEMBASSY PARIS 0107
RUEHSQ/AMEMBASSY SKOPJE 2609
RUEHTI/AMEMBASSY TIRANA 0834
RUEHNO/USMISSION USNATO 3474

UNCLAS SECTION 01 OF 02 ZAGREB 000095

SIPDIS

E.O. 12958: N/A
TAGS: OREP AMGT ASEC AFIN AORC PREL PGOV NATO HR
SUBJECT: CROATIA: SCENESETTER FOR CODEL TANNER

1. You are coming to Croatia just six weeks after the formation of
Prime Minister Ivo Sanader's second government, as he and other
leaders look ahead to NATO's Bucharest Summit. After encouraging
feedback from NATO allies during the January review of Croatia's
progress under the Membership Action Plan, the PM is confidently
anticipating a membership invitation in April. Accession to NATO
represents a tremendous step forward for this young nation as it
takes its place among the democratic, free-market countries of
Europe with a level of freedom, security, and prosperity that were
unimaginable fifteen years ago. Just beginning a two-year term on
the United Nations Security Council and hoping to conclude accession
negotiations with the European Union in 2009, the Croatian
Government sees itself as a leader in southeastern Europe, ready to
promote regional stability and to help integrate its neighbors into
the Euro-Atlantic community.

GLOBAL CONTRIBUTOR TO STABILITY AND SECURITY
--------------------------------------------

2. Just a decade ago, Croatia was a consumer of international
security resources, with U.N. forces ensuring the peaceful
reintegration of the eastern Slavonian region after the
disintegration of the former Yugoslavia. Today, Croatia is an
exporter of stability, both in the region and globally:
- as a strong, active partner in the Adriatic Charter with Albania
and Macedonia, promoting democratic and defense reforms on the road
to NATO integration;
- as a provider of soldiers and police to 11 UN peacekeeping
missions from Kosovo to East Timor;
- as a solid contributor to NATO operations, with a 200-troop ISAF
contingent in Afghanistan (set to grow to 300 by the end of 2008),
and liaison officers involved in Operation Active Endeavor, NATO's
counterterrorism mission in the Mediterranean;
- as a host of NATO exercises, including NATO amphibious landing and
civilian disaster response exercises in 2007 that were the largest
ever held in a non-member state.

3. Croatia's constructive engagement within the region continues to
be one of its greatest contributions to stability. During its
chairmanship of the South East European Cooperation Process in the
first half of 2007,
Croatia led the formation of a permanent Regional Cooperation
Council based in Sarajevo. We have also had an increasingly
productive dialogue with Croatian leaders on southeastern Europe's
"unfinished business" in Bosnia and Herzegovina and Kosovo.
Relations with Serbia remain sensitive, but President Stjepan Mesic
and Prime Minister Sanader both have good relations with their
counterparts in Belgrade and firmly support Serbia's future in
Europe and NATO.

PROMOTING PUBLIC SUPPORT FOR NATO MEMBERSHIP
--------------------------------------------

4. Local public support for NATO accession has been a key concern
among allies during Croatia's candidacy, but poll numbers show
steady growth in favor of membership and the Sanader government is
re-doubling its efforts to educate the public prior to Bucharest.
Thanks to previous government outreach and U.S. Embassy-support NGO
programs, all recent surveys show support ranging from 51 to 54
percent, with opposition fluctuating around 30 percent.

5. Over the past year, the government has succeeded in countering
several misconceptions about Alliance membership (i.e. the myth that
NATO wants to build naval bases on the Croatian coast or force
Croatia to send troops wherever the U.S. directs). In fact, the
government plans nationwide outreach activities during the coming
weeks to solidify support to help ensure an invitation in April.
The Embassy has provided support to a number of key NGOs which are
also engaged in educating the Croatian public about what it means to
be a member of NATO. This effort has contributed to our goal of
ensuring that Croatia will become an active and capable member of
the Alliance.

COMMITMENT TO DEMOCRATIC VALUES
-------------------------------

6. Croatia's democratic reforms have been another focus of its NATO
accession process. In all key areas, including judicial reform,
fighting crime and corruption, and the return of refugees, the
Government has achieved concrete progress which paved the way for
the closure of the OSCE mission at the end of 2007.

7. While the judiciary remains an area for further reforms and the
public still perceives it as one of the country's main sources of
corruption, we have nevertheless witnessed steady progress. Court
backlogs have shrunk 30 percent in the past two years, and
improvements in court administration are expected to speed up the
process. The Ministry of Justice is actively improving the training
of judges and supervision of judicial administration, and Croatian
courts are trying war crimes cases involving defendants of all
ethnicities in a fair manner, including high-profile cases
transferred from The Hague Tribunal.

8. Croatia's steady implementation of its National Strategy to
Combat Organized Crime and Corruption is yielding results. The
government has established police and prosecutor task forces to
combat organized crime and has begun freezing assets in narcotics
cases. The Office for the Suppression of Corruption and Organized
Crime conducted three high-profile stings in the past six months,
leading to 36 arrests of government officials and private citizens
for corruption related to privatization, land registry, and the
issuance of building permits.

9. On refugee returns, Croatia has welcomed back more than 125,000
refugees of Serb ethnicity, and the Government has largely completed
its programs of home repossession and reconstruction, infrastructure
development. It has also begun housing programs for former tenants
of socialized apartments. However, assisting this category of
returnees and addressing issues related to pensions of those who
worked in former Serb-held territories during the war will remain a
long political and budgetary challenge.

DEFENSE MODERNIZATION: BECOMING A CAPABLE ALLY
--------------------------------------------- -

10. The Croatian military has nearly completed its restructuring in
line with NATO standards, and is now focused on modernization and
deployability as outlined in the Ministry of Defense's Long Term
Development Plan (LTDP) for the Croatian Armed Forces. Defense
spending is set to rise to two percent of GDP by 2010, and
reductions in personnel costs are beginning to make room in the
budget for major equipment modernization. The military completed a
tender for armored personnel carriers in 2007 and plans to pursue
purchase of advanced fighter aircraft and coastal patrol vessels in
the coming years.

STEADY GROWTH, BRIGHT FUTURE
----------------------------

11. Croatia's economy has enjoyed steady growth since 2000, led by
strong tourism receipts (tourism makes up 20% of GDP), a buoyant
construction industry and growing mortgage and consumer lending.
Although Croatia has grown at a slower rate than other economies in
Central and Eastern Europe, early 2007 figures showed the economy
growing at a brisk 6.9 percent. Although Croatia's per capita GDP
of $9,000 is high by regional standards and is reflected in a
relatively high standard of living, fast growth rates will be
essential to closing the gap between Croatia and its wealthier
western European neighbors.

12. EU accession talks, opened in 2005, brought new confidence in
Croatia's economic future, particularly as the Government was forced
to implement long-overdue reforms. While more remains to be done to
improve transparency, fight corruption, and reduce the overly-large
state role in the economy, Croatia is emerging as an attractive
place for foreign investment with its growing economy, low
inflation, stable exchange rate, and developed infrastructure.

BRADTKE

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