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Cablegate: Zagreb Weekly Activity Report- September 25, 2009

VZCZCXRO9038
PP RUEHAG RUEHAST RUEHDA RUEHDBU RUEHDF RUEHFL RUEHIK RUEHKW RUEHLA
RUEHLN RUEHLZ RUEHNP RUEHPOD RUEHROV RUEHSK RUEHSL RUEHSR RUEHVK
RUEHYG
DE RUEHVB #0575 2611213
ZNR UUUUU ZZH
P 181213Z SEP 09
FM AMEMBASSY ZAGREB
TO RUEHC/SECSTATE WASHDC PRIORITY 9539
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE PRIORITY
RHEHNSC/NSC WASHDC PRIORITY
RUEKJCS/SECDEF WASHDC PRIORITY

UNCLAS ZAGREB 000575

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: PREL PGOV ELAB NATO HR
SUBJECT: ZAGREB WEEKLY ACTIVITY REPORT- SEPTEMBER 25, 2009

1. (SBU) WORLD BANK PRESENTS REPORT ON CROATIA'S PREPARATIONS
FOR EU:
The annual World Bank study on Croatia reports the most
serious problem hindering economic growth is an underemployed
population. Croatia,s employment rate of 57% of the working
age population in 2008 is lower than both the EU average and
the regional average for Central Europe. The report
mentioned several reasons, including generous pubic subsidies
for a variety of categories that effectively reduce
incentives for paid employment. The report concluded that an
increase in the employment rate closer to EU levels would
increase per capita income by 15% by 2025. According to
media, the presentation of the report was poorly attended.
Comment: Despite the strong recommendations from the report,
the current Kosor-led government will have difficulty
enacting any fundamental labor reforms in the short term.
Unwinding the current net of social programs and payments
will require both political will, planning and time. End
Comment (TBULLOCK)
2. (U) INSOLVENCY RATES UP SHARPLY:
Croatia's Financial Collection Agency (FINA) announced
September 14 that "past due notices are skyrocketing." Local
media speculate that this trend will continue unless the GoC
takes action. FINA reported that the level of arrears for
the month of July 2009 was 41.6% higher than in July 2008 and
attributed the majority of the increase to Croatian retail
and processing industries. The Ministry of Finance has not
released any figure on how much the State sector contributed
to payment delinquency, but many Croatian economists believe
that public companies are to blame for the rise of
non-payment because of their lack of timely payment (normally
within 60 days) for goods and services. (TBULLOCK)
3. (SBU) EXERCISE JACKAL STONE 2009 UNDERWAY IN CROATIA
The multination military special forces training exercise
"Jackal Stone" began on September 9, 2009 and will run
through September 29, 2009. The training operation involves
nearly 1,500 troops from the United States, Croatia, Romania,
Poland, Lithuania, Ukraine, Hungary, Macedonia, Sweden, and
Albania. This year's exercises include a large number of
operations at sea to take advantage of Croatia's unique
coastal environment, but the multi-week training event also
includes land and air training opportunities as well.
(DMEGES)
FOLEY

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