US embassy cable - 03ZAGREB2144

C O N F I D E N T I A L  ZAGREB 002144 
 
SIPDIS 
 
 
E.O. 12958: DECL: 10/06/2013 
TAGS: PREL, PREF, PGOV, ECON, HR, BK, Refugee 
SUBJECT: GOC RECEIVES POOR GRADES ON RETURNS-RELATED ISSUES 
 
REF: A. (A) ZAGREB 1474 
 
     B. (B) ZAGREB 1084 
     C. (C) STATE 96439 
 
Classified By: Darren Taylor, Political Officer, for reasons 1.5 (b) an 
d (d). 
 
 SUMMARY 
------- 
 
1. (C) Since its declarations this spring and June 12 
initiative aimed at providing subsidized housing to refugees 
who enjoyed "tenancy rights" under the old Yugoslav system, 
the GOC has made little progress on key return-related 
issues.  The number of refugees returning to Croatia lags 
behind those in recent years.  Representatives from key IC 
organizations, including UNHCR, OSCE, and the European 
Commission, agree that the government,s performance on a 
number of issues, including repossession of property, 
evictions, and rental compensation, remains poor.  We will 
need to work with others in the IC to keep the pressure on 
the government to produce results.  There is some debate, 
however, over how hard to press -- particularly right now. 
This is a politically sensitive time for the Croatian 
government, with elections expected in November.  End 
Summary. 
 
GOC Makes Promises On Return Issues( 
------------------------------------ 
 
2. (C) Earlier this spring and prior to its submission of its 
application for EU membership, the GOC made a series of 
promises to resolve key issues related to refugee returns. 
More specifically, the GOC pledged to resolve by year-end the 
almost 7,000 cases involving property repossession to pay 
rental compensation to owners -- primarily Serbs -- who were 
not able to occupy their homes, to evict mostly Croat double 
and illegal occupants (those who were illegally occupying 
homes at the same time they owned property in one of the 
former Yugoslav republics, or who simply were not entitled to 
housing care from the state), and to increase significantly 
the pace of reconstruction of property for Serb owners.  The 
GOC vowed that, by taking these actions, most of the issues 
affecting returns would be resolved by the end of this year. 
The government expected that about two years would be needed 
to complete the property reconstruction process. 
 
3. (C) In June, after considerable pressure from the 
international community and growing complaints about the lack 
of GOC progress on returns, the government promised to take a 
comprehensive approach to refugee returns by adopting 
legislation providing housing assistance to refugees who 
wanted to return to Croatia (REF A).  This policy covered 
those mostly Serb owners who were former occupancy/tenancy 
rights holders under the old Yugoslav system.  The program 
was to offer the holders the option of renting or buying a 
home at subsidized prices.  From the GOC perspective, 
adopting such legislation was the final piece of the puzzle 
that would resolve the refugee issue altogether.  GOC leaders 
vowed to provide the IC with a detailed implementation plan 
for the housing program within 30 days after its 
announcement.  "Housing is no longer an obstacle for refugees 
seeking to return to Croatia,8 Prime Minister Racan said 
after he invited all Serb refugees to return to Croatia. 
However, no such plan has been offered to date. 
 
(While the IC sets Benchmarks 
---------------------------- 
 
4. (C) Meanwhile, the international community -- including 
OSCE and EC -- has sought to keep the pressure on the GOC. 
In its March report, the European Commission set specific 
benchmarks that the GOC must meet, some by the end of the 
year, others by March 2004 (REF B).  The report stipulated 
that the GOC must show concrete progress on repossession, 
reconstruction, and compensation for lost occupancy/tenancy 
rights.  It also called on the GOC to resolve the issue of 
repossession by the end of the year.  That said, while 
remaining firm that Croatia must honor its commitments, 
Jacques Wunenburger, head of Zagreb's EC mission, conceded to 
the Ambassador on September 30 that he doubted the GOC's 
record on refugee returns would hold up Croatia's bid for EU 
membership -- in this respect, the government's cooperation 
with the war crimes tribunal loomed much larger. 
 
5. (C) The OSCE noted in its July Status Report on Croatia 
that much progress was still needed on repossession, 
evictions and housing reconstruction.  It noted that the pace 
of returns had slowed down.  The report also highlighted 
interviews with Serb refugees who cited housing problems as 
well as legal, administrative, and psychological barriers as 
key obstacles to their return and reintegration into Croatian 
society.  OSCE officials noted that the Croatian government 
would likely receive a more critical report during its 
evaluation in the fall if it did not make significant 
 
progress on the key issues of concern raised by the OCSE. 
 
 
6. (C) In the July joint monthly report produced by UNHCR and 
the OSCE, UNHCR noted that the GOC has not created a 
favorable environment, particularly in the war-affected 
regions, for the return of refugees.  Many refugees continue 
to face "discriminatory practices" in terms of medical, 
social, and humanitarian assistance from the government 
leaving them in extremely vulnerable situations.  UNHCR 
called on the government to implement legislation immediately 
aimed at improving the overall conditions of refugees who 
have already returned and for those seeking to return. 
 
That was Then, This is Now 
-------------------------- 
 
7. (C) EC, OSCE and UNHCR officials have told us that the GOC 
has not made as much progress as expected on repossession, 
reconstruction, compensation, and implementing the new 
housing program.  They also note that meetings with GOC 
officials in recent weeks have not gone well.  The GOC 
appeared to be backtracking on its commitments and taking a 
more hostile attitude when sensitive issues related to the 
government,s performance were discussed. 
 
8. (C) The EC mission,s point person on returns, Alfons 
Peters, told us that while the government has made 
significant progress on reconstruction, it has not made much 
progress on the repossession of property, rental 
compensation, and implementing the new housing program.  The 
government would not meet its self-imposed year-end deadline 
for solving all of the property repossession cases (some 
2,000 cases would be left unresolved).  Peters believed that 
a major reason for the government,s problems was a lack of 
communication among the relevant ministries and a lack of 
expertise.  He told us that the EC mission would probably 
give the GOC the benefit of the doubt and accept a longer 
implementation period as long as the GOC could present an 
acceptable program of action to resolve the outstanding 
issues. 
 
9. (C) The Head of the Return and Reintegration unit at the 
OSCE mission, Axel Jaenicke, told us that the GOC,s 
performance over the past three months was dismal.  Almost 
5,000 repossession cases were unresolved, some 15,000 
applications for reconstruction assistance remain without a 
formal decision, and the government,s rental compensation 
plan has been a "miserable failure."  Only a few hundred 
owners, out of an initial group of 4,000 claimants, have 
received some form of payment and those were not for the 
proper amounts.  The program lacks transparency, and its 
guidelines make it difficult to determine who is eligible to 
receive compensation and for what amount.  Even more 
discouraging are reports that GOC officials in different 
jurisdictions are encouraging Serb owners not to apply for 
compensation.  Jaenicke said that the OSCE was in the process 
of determining what message the mission would send about the 
GOC,s performance in two upcoming reports, including the 
Mission,s official status report due in November. 
 
10. (C) UNHCR Head Bajulaiye told us that he was very 
disappointed with the GOC's recent progress.  He described a 
recent meeting that he and his EC and OSCE counterparts had 
with Reconstruction Minister Cacic in which Cacic himself 
gave a somber assessment of the GOC,s performance on 
return-related issues.  Cacic stated that the government 
would not meet its self-imposed deadlines and those set by 
the IC, particularly in resolving all of the property 
repossession cases.  Cacic further admitted that little 
progress had been made in implementing the new housing 
program announced on June 12, and that the GOC has failed to 
provide the IC with a detailed implementation plan as 
promised by July. 
 
11. (C) Bajulaiye left the meeting feeling that not much had 
been accomplished except more GOC promises, which will not be 
fulfilled.  He cited an incident last month in which ODPR 
Head Pejkovic threatened to raise complaints at UNHCR 
headquarters against his UNHCR counterparts from BiH and 
Serbia and Montenegro when they voiced concerns about the 
GOC,s commitment to the returns process.  He also cited the 
hostile responses of senior GOC officials to the most recent 
Human Right Watch Report, which was highly critical of the 
GOC,s performance on refugee and minority issues, as another 
counterproductive action by the GOC.  Bajulaiye vowed not to 
sugar coat any UNHCR reports on the GOC's progress in coming 
months. 
 
GOC Appealing for More Time 
--------------------------- 
 
12. (C) When we met with Pejkovic last week to get the GOC,s 
perspective, we found him in a much more somber mood than 
usual.  His office has been under increased pressure from the 
 
government as refugee-related questions were among the most 
important ones the GOC has to respond to as the GOC prepared 
answers to the EU questionnaire.  In recent weeks, his staff 
has had to focus solely on preparing a response to the EU 
questions, which had forced him to place other 
returns-related issues on the back burner.  He argued that 
repossession, evictions, and compensations were extremely 
complex issues and required a functioning judiciary system, 
which Croatia did not have at the moment.  He pleaded for 
more time.  There are some 19,000 claims for reconstruction 
and 4,600 repossession cases that must be resolved. 
 
13. (C) Pejkovic predicted that it would be more difficult to 
resolve property repossession in regions such as Knin, 
Benkovac, and Obrovac because of a substantial extremist 
presence.  Taking drastic actions would increase ethnic 
hostilities and lead to open conflicts between the local 
populations and returning refugees.  Pejkovic noted that the 
information campaign designed to inform refugee populations 
in BiH and Serbia and Montenegro about the GOC,s housing 
program will start at the end of the month.  The GOC had 
already included funding for the construction of 1,500 
apartments in next year,s budget.  He predicted that a total 
of about 5,000 apartments would be needed as he expected a 
similar number of applicants would qualify and want to 
participate in the program. 
 
While Returns Continue to Spiral Downward 
----------------------------------------- 
 
14. (C) The most recent UNHCR and GOC figures show that 
refugee returns continue to decline.  In the first seven 
months of this, some 5,860 refugees have returned to Croatia 
from BiH and Serbia and Montenegro.  This is compared to a 
total of 9,640 returns in 2002 and 10,572 returns in 2001 
based on ODPR figures.  UNHCR figures indicate that as of the 
end of July there were 6,400 returns to Croatia this year 
compared to a total of 11,000 returns all of last year.  With 
the returns season ending in August, UNHCR does not expect a 
spike in returns over the remaining three months of the year 
as the winter months approach.  UNHCR estimates that there 
may be up to 1,000 more returns by year-end but not more. 
 
 
Comment 
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15. (C) The Racan government has demonstrated again it is 
content to make declarations expressing its commitment to the 
returns process without following through on implementation 
-- a dichotomy that the government makes no effort to hide. 
Senior GOC officials have not publicly raised the housing 
program initiative since it was first announced in June, and 
there have been few if any evictions.  Despite specific 
deadlines, many GOC officials overseeing refugee returns took 
the entire month of August off for holidays and spent 
September working on the EU questionnaire instead of on 
return issues.  Pejkovic said that substantial progress will 
probably not be made until next year after a new government 
is formed. 
 
16.  (C) On refugee-related issues, Croatian government 
officials may be sensing fatigue on the part of their 
international critics.  We are taking steps to combat this 
perception and to keep the GOC focused.  While the upcoming 
parliamentary elections will make it difficult to engage 
senior leaders on the refugee problem, we intend to propose 
that returns be raised at the upcoming review of Croatia's 
NATO Annual National Program in Brussels.  Until a new 
Croatian government is seated, we will focus on building 
consensus for a consistent international community stance on 
refugee return issues.  We will also seek opportunities to 
engage at the local level to remind officials of our 
continued interest and expectation of results.  Once a new 
government is seated, engaging key officials early and often 
will be part of our effort. 
FRANK 
 
 
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