Cablegate: Meeting with Croatian Minister of Economy

VZCZCXYZ0000
PP RUEHWEB

DE RUEHVB #1233 2841311
ZNR UUUUU ZZH
P 111311Z OCT 06
FM AMEMBASSY ZAGREB
TO RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY
RHEBAAA/DEPT OF ENERGY WASHDC PRIORITY
INFO RUEHC/SECSTATE WASHDC 6774

UNCLAS ZAGREB 001233

SIPDIS

SIPDIS

SENSITIVE

FOR SECRETARY GUTIERREZ AND SECRETARY BODMAN,
FROM AMBASSADOR BRADTKE

STATE FOR EUR/SCE

E.O. 12958: N/A
TAGS: EFIN ECON PREL PGOV HR EUN
SUBJECT: MEETING WITH CROATIAN MINISTER OF ECONOMY

(U) Sensitive but unclassified; please handle
accordingly.

1. (SBU) Croatian Prime Minister Ivo Sanader will
travel to Washington to meet with President Bush on
October 17. Sanader's meeting with the President comes
at an important time for Croatia as it seeks to bind
itself firmly to Euro-Atlantic institutions. Securing
continued economic growth is a crucial part of this
strategy and is essential to our own policy goals of
enhancing regional economic cooperation and permanent
stability in Southeast Europe.

2. (SBU) With these goals in mind, I hope you will find
time to meet with Sanader's Minister of Economy, Branko
Vukelic, who will accompany the PM to Washington.
Vukelic's ministry is responsible for trade, economic
development, and energy and is a key part of Sanader's
strategy of making Croatia an attractive destination
for investment and a regional engine of economic growth
and reform. I believe it is important for the United
States to help Croatia succeed, both as a return on the
millions of dollars of assistance we have given over
the years and a way of backstopping our larger goal of
regional stability.

3. (SBU) Vukelic will come to Washington boosted by
Croatia's sound economic performance. Last year's
economic growth topped 4 percent on the back of growing
investment and falling deficits. This week US Barr
Labs succeeded in acquiring a majority share in
Croatia's Pliva pharmaceuticals, marking the single
largest foreign investment in Croatia's history as an
independent country. I believe this investment of 2.5
billion dollars sends an important signal of confidence
to American investors and can be leveraged to create
other opportunities for US companies.

4. (SBU) I expect that Vukelic will also tout a number
of other recent developments, including major planned
investments in Croatia's energy sector, which is unique
in the region for its degree of independence from
Russian supply. He will also highlight economic reform
measures that have streamlined procedures for
investment.

5. (SBU) At Commerce we could encourage Vukelic to
resolve Croatia's problem of granting marketing
approval to generic copies of pharmaceuticals for which
US firms hold patents; successful resolution of this
issue would help get Croatia off the Special 301 watch
list. We could also push for resolution of a taxation
problem with which Coca Cola is currently struggling.

6. (SBU) Regarding DOE issues, Croatia is investing in
its energy sector, which holds potential opportunities
for US companies. Croatia is planning to build several
new electric power generation plants, an LNG facility,
gas pipelines and upgrade its oil refineries. Croatia
is also looking at investment in oil pipelines,
particularly the Pan European Oil Pipeline (PEOP).
Eager to secure its energy supply, Croatia could be a
partner in efforts to diversify European energy
supplies with a view to reducing reliance on Russian
sources.

7. (SBU) The Croatians are very appreciative of the
support they have received from the US over the last 15
years, including their use of GSP to encourage exports.
I believe that your meeting with Vukelic would be the
chance to take our economic relationship to its next
stage, one based on trade and investment that is in our
mutual interest.
BRADTKE

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