US embassy cable - 03ZAGREB950

CROATIA WILL NOT ACCEPT TRANSFER OF NBY FUNDS

Identifier: 03ZAGREB950
Wikileaks: View 03ZAGREB950 at Wikileaks.org
Origin: Embassy Zagreb
Created: 2003-04-29 15:18:00
Classification: CONFIDENTIAL
Tags: PREL ECON EFIN SI BK MK SR HK
Redacted: This cable was not redacted by Wikileaks.
This record is a partial extract of the original cable. The full text of the original cable is not available.


 
C O N F I D E N T I A L ZAGREB 000950 
 
SIPDIS 
 
 
FOR EUR/SCE NYSTROM 
 
E.O. 12958: DECL: 04/29/2013 
TAGS: PREL, ECON, EFIN, SI, BK, MK, SR, HK 
SUBJECT: CROATIA WILL NOT ACCEPT TRANSFER OF NBY FUNDS 

REF: STATE 99664 (NOTAL) 
 
CLASSIFIED BY: POLECON COUNSELOR NICHOLAS HILL, FOR REASONS 1.5 (B AND 
D) 
 
1.  (C) ON APRIL 29, WE MET WITH MIROSLAV KOVACIC, HEAD OF 
THE AMERICAS DEPARTMENT AT THE MFA, AT HIS REQUEST.  KOVACIC 
SAID THE MINISTRY HAD HEARD FROM THE CROATIAN NATIONAL BANK 
(CNB) THAT IT HAD BEEN REQUESTED TO ACCEPT A TRANSFER OF 
$54.6 MILLION AS CROATIA'S PART OF UNFROZEN NBY ASSETS IN THE 
U.S.  KOVACIC REFERRED BACK TO OUR DEMARCHES OVER THE LAST 
SEVERAL MONTHS, WHICH HAD DESCRIBED A PROCESS IN WHICH, IF 
THE USG DID NOT RECEIVE HOLD HARMLESS ASSURANCES FROM ALL 
PARTIES, THE USG WOULD PROCEED WITH A GENERAL UNBLOCKING. 
KOVACIC ASKED FOR CONFIRMATION THAT THE TELEX FROM THE 
FEDERAL RESERVE BANK IN NEW YORK DID INDEED INDICATE THAT THE 
USG HAD DECIDED TO DISBURSE THE MONEY TO EACH SUCCESSOR STATE. 
 
2.  (C) USING REFTEL POINTS, WE CONFIRMED THAT THE USG HAD 
DECIDED THAT TRANSFERRING THE FUNDS DIRECTLY TO EACH 
GOVERNMENT WOULD BE THE MOST EFFECTIVE AND EFFICIENT WAY TO 
GET THE ASSETS TO THE SUCCESSOR COUNTRIES.  WE STRESSED THAT 
WE WOULD BE CONCERNED IF CROATIA TOOK ANY LEGAL STEPS THAT 
WOULD INTERFERE WITH THIS EFFORT TO RESOLVE ISSUES LEFT OVER 
FROM THE MILOSEVIC ERA.  FINALLY, WE BELIEVED THAT THE ISSUE 
OF NBY ASSETS FROZEN IN THE US UNDER MILOSEVIC-ERA SANCTIONS 
AND THE AGREEMENT ON SUCCESSION ISSUES (ASI) SHOULD BE 
HANDLED SEPARATELY. 
 
3.  (C) KOVACIC COUNTERED THAT GOC LAWYERS SAID THE TWO 
    ISSUES WERE LINKED.  THE GOC COULD NOT ACCEPT THE MONEY, 
BECAUSE THAT WOULD MEAN ACCEPTING THE KEY OF THE ASI, WHICH 
HAD NOT BEEN RATIFIED BY PARLIAMENT.  HE EXPRESSED HIS 
STRONG, PERSONAL DISAPPOINTMENT THAT THIS OUTCOME WAS NOT IN 
LINE WITH WHAT THE USG HAD TOLD THE CROATIAN GOVERNMENT. 
KOVACIC SAID CROATIA HAD BEEN VERY HOPEFUL WHEN THE USG 
OFFERED ASSISTANCE TO HELP OBTAIN AN EXPLANATION OF WHAT HAD 
HAPPENED TO THE NBY DEPOSITS -- AN OFFER THAT SEEMED TO 
DISAPPEAR SUDDENLY AFTER AN OFAC VISIT TO ZAGREB AND BELGRADE 
IN DECEMBER. 
 
4.  (C) WE EXPLAINED THAT THE OFFER WAS RESCINDED AFTER 
OFFICIAL VISITORS TO CROATIA, DISMAYED BY THE HARD LINE TAKEN 
BY CROATIAN INTERLOCUTORS, CAME TO THE CONCLUSION THAT 
CROATIA WAS NOT LOOKING FOR AN EXPLANATION THAT WOULD SMOOTH 
THE WAY TO RATIFICATION OF THE ASI, BUT RATHER FURTHER 
REASONS TO BE INTRANSIGENT AND TO DEMAND COMPENSATION.  WE 
REITERATED THAT IT WOULD BE UNWISE FOR CROATIA TO TRY TO 
BRING A COURT CASE AGAINST THE USG OVER THIS ISSUE.  KOVACIC 
SAID IT WAS TOO EARLY TO SAY, BUT IT MIGHT IN THE END BE 
NECESSARY. 
MOON 
 
NNNN 

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