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Cablegate: Zagreb Daily Report - January 22, 2010

VZCZCXRO5201
PP RUEHIK
DE RUEHVB #0048 0221148
ZNR UUUUU ZZH
P 221148Z JAN 10
FM AMEMBASSY ZAGREB
TO RUEHC/SECSTATE WASHDC PRIORITY 9841
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE PRIORITY

UNCLAS ZAGREB 000048

SIPDIS
SENSITIVE

E.O. 12958: N/A
TAGS: PGOV PREL HR ECON
SUBJECT: Zagreb Daily Report - January 22, 2010

1. (U) Prosecutors Open Formal Corruption Investigation of Former
Deputy Prime Minister:
Media reported on January 21 that the Office for Suppression of
Corruption and Organized Crime (USKOK) has opened a formal
investigation of Damir Polancec, the former Deputy Prime Minister
and Minister of Economy who resigned amid corruption scandals
related to Croatian food manufacturer Podravka in October 2009.
Additional details will be reported septel.

2. (U) PM and Opposition Initiate Greater Dialogue on Economic
Measures and Constitutional Reforms:
Prime Minister Jadranka Kosor said on January 21 that she was
satisfied with her talks this week with parliamentary party leaders,
as well as with her first formal bilateral meeting with Social
Democratic Party president Zoran Milanovic since becoming Prime
Minister. Kosor acknowledged that the ruling coalition and the
opposition had failed to reach agreement on a complete set of
proposed constitutional changes, but stressed the meeting was "very
good" and that another one would be held in a fortnight. Milanovic
told the press the focus of his meeting with Kosor had been the
difficult economic situation that Croatia faces "and the level of
[the SDP's] cooperation will depend on the government's readiness to
really focus on the settlement of fundamental issues." The SDP is
concerned that even in the short-term the government cannot maintain
the current level of public spending. Milanovic welcomed the recent
package of anti-recession measures announced by the government and
the central bank as a positive step, but said they were insufficient
alone, and more needed to be done. Milanovic also said that the SDP
supported the government in the fight against corruption.

3. (U) Minor Coalition Partner Staying in the Government For Now:
Darinko Kosor, president of the Croatian Social Liberal Party
(HSLS), which holds two parliamentary seats in the governing
coalition, said on January 21 that his party "remains a firm partner
in the ruling coalition." Quoted in the media days earlier as
suggesting the HSLS might leave the government unless significant
budget cuts were made, Kosor (a distant relative of PM Kosor) told
the press after a meeting of the HSLS party's presidency that the
party "has no conditions on its coalition partners other than those
set out in the coalition agreement." He proposed that leaders of
the Croatian Democratic Union (HDZ) and the HSLS meet further to
discuss the most important reforms that needed to be carried out in
the country, including shipbuilding, downsizing of state
administration, and reorganization of local government.

4. (U) Josipovic Responds to Mesic's Comments on BiH; Also Calls
U.S. Great Friend Of Croatia:
In a January 21 interview with Voice of America, when asked about
President Mesic's earlier comments on the possibility of a military
response if the RS tried to secede from Bosnia-Herzegovina (BiH),
President-Elect Josipovic said: "As far as I am concerned, there can
be no military solutions. Things must always be resolved through
talks, through agreement between the parties concerned." In the
same interview, he characterized the United States as a "great
friend" of Croatia, both during the war in 1990s and today. Details
on the Ambassador's January 21 meeting with Josipovic reported
septel.

5. (U) Consular Section hosts GOC Visa Waiver Delegation:
On January 20, Embassy Zagreb's consular section hosted seven
members of a GOC delegation preparing to attend technical meetings
with DHS and Consular Affairs in Washington at the end of the month.
The delegation, comprised of heads of department from the Ministry
of Foreign Affairs, Ministry of Interior, and other security
services, had a productive meeting with the DCM, Cons chief, and
visa staff, and were walked through the visa process from start to
finish. The goal of the visit was to assist the GOC delegation in
preparing for their upcoming meetings by providing a clear picture
of the existing non-immigrant visa program, tempering expectations
for a quick resolution of Croatia's visa waiver status, as well as
to answer any other questions they had concerning visas or the Visa
Waiver Program. The delegation is scheduled to be in Washington
January 25-28.

FOLEY

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