Cablegate: Zagreb Weekly Report - November 13, 2009

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INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE PRIORITY
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UNCLAS ZAGREB 000667

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E.O. 12958: N/A
TAGS: EAIR EFIN PREL PGOV HR
SUBJECT: ZAGREB WEEKLY REPORT - NOVEMBER 13, 2009

1. (SBU) KOSOR APPOINTS NEW ECON MINISTER; EXPANDS DEPUTY PM
POSITIONS:
Croatian PM Kosor announced the appointment of Croatian
Employer Association (HUP) Executive Director Duro Popijac as
new Minister of Economy November on 13. PM Kosor also
announced that Health Minister Darko Milinovic and Finance
Minister Ivan Suker would be promoted to Deputy Prime
Ministers in addition to their current positions, giving the
20-member government a total of five Deputy PMs. (COMMENT:
Popijac's appointment as Minister of Economy is a clear
indication that Kosor wants a non-partisan, business
perspective to inform Croatia's economic policy. The
elevation of Milinovic and Suker, both loyalists of the
ruling HDZ party, appears to be a gesture by Kosor to the HDZ
to reassure the party that it still forms the backbone of the
government. END COMMENT) (TBULLOCK)

2. (U) GOVERNMENT SENDS BORDER DISPUTE ARBITRATION AGREEMENT
TO PARLIAMENT:
Prime Minister Jadranka Kosor on Thursday November 12 sent to
the Parliament a bill for the ratification of the Arbitration
Agreement on the Croatian-Slovenian border dispute. Local
media report that parliament will take up the bill next week.
(More details septel) (DMEGES)

3. (U) FAA VISIT FINDS POSITIVE PROGRESS ON CIVIL AVIATION
REFORM:
The FAA's regional representative visited Croatia November
5-6 for an informal visit to discuss Croatia's reform of its
civil aviation oversight. He found that significant progress
had been made in establishing a functioning and independent
Civil Air Agency (CAA) -- the key area identified by the
FAA's negative inspection findings in 2008. Two problems
that are yet to be addressed fully are recruiting a complete
staff of qualified pilots as inspectors, and creating a
stable cash flow from airport fees and ticket surcharges to
run the Civil Air Agency. The CAA informed the FAA rep that
they planned to officially request a new FAA International
Aviation Safety Assessment (IASA) for spring 2010 and will be
preparing the invitation letter for the assessment team
within the coming weeks. (DWESTFALL)

4. (U) FINANCE MINISTERY REPORTS GOOD NEWS ON BOND ISSUE:
Croatian State Secretary for Finance Zdvrako Maric gave
econoffs a very upbeat report on Croatia's recent sale of
$1.5 billion of GoC bonds in the United States. According to
Maric, U.S investors responded positively to Slovenia's
decision to unblock Croatia's EU accession negotiations as
well as to the lack of Croatian bank closures during the
economic crisis. making the Croatian bonds more attractive.
Maric said the revenue from the bond sale will cover the GoC
budget for fiscal year 2009 but that the Finance Ministry
believes that another bond issuance will be necessary to
cover proposed expenditures for the 2010 budget. (TBULLOCK)
FOLEY

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