US embassy cable - 04ZAGREB279

UNCLAS  ZAGREB 000279 
 
SIPDIS 
 
 
E.O. 12958: N/A 
TAGS: PREL, PGOV, PHUM, ECON, HR, Refugee 
SUBJECT:  AMBASSADOR MEETS MARITIME,           TOURISM,TRANSPORT AND DEVELOPMENT MINISTER 
 
Summary 
------- 
 
1.  Bozidar Kalmeta, Croatia's Minister of Maritime, 
Tourism, Transport and Development, said in his February 9 
introductory meeting with the Ambassador that 
reconstruction of returning Serbs' homes and road building 
would be his two top priorities.  The government would 
consider giving Bechtel a contract to participate in 
building a highway from Split to Dubrovnik.  It also 
intends to continue modernization of the Croatian railroads 
and liberalize the telecommunications market.  In tourism, 
the GOC would seek to raise the quality of service by 
privatizing hotels to brand-name investors.  A joint 
project with the World Bank has been started to treat 
wastewater in coastal cities.  Kalmeta would like to see 
creation of an American-style Coast Guard.  Despite these 
numerous challenges, Kalmeta's business-mindedness inspires 
optimism.  End summary. 
 
Reconstruction 
-------------- 
 
2.  Croatia's new Minister for Maritime Affairs, Tourism, 
Transport and Development, Bozidar Kalmeta, said at his 
February 9 introductory meeting with the Ambassador that 
reconstruction of the remaining 5,000 houses for which 
reconstruction applications were outstanding -- 80 percent 
of which was ethnic-Serb owned property -- was his 
ministry's top priority.  He estimated that this effort 
would cost about 1.3 billion kuna (approx. 215 million 
dollars) and would be completed by the spring of 2005. 
Kalmeta praised his team working on reconstruction, led by 
his State Secretary for development, Zdravko Livakovic, and 
including an ethnic Serb assistant minister, Milan Janjic 
of the Serb Democratic Forum (SDF).  Revitalizing the 
economy in the war-affected areas will be part of the 
reconstruction effort.  Kalmeta said the government was 
preparing a new law on Areas of Special State Interest, 
which would include additional economic incentives for 
these areas. 
 
Transportation Infrastructure 
----------------------------- 
 
3.  Kalmeta identified construction of infrastructure as 
the second highest priority of his ministry.  The 
government will continue the same pace of road building as 
the previous one.  Referring to a meeting he had had the 
same day with Bechtel representatives, the Prime Minister 
and the Foreign Minister, Kalmeta said the government would 
consider Bechtel as the contractor for the new highway from 
Split to Dubrovnik.  An important condition would be heavy 
involvement of Croatian companies in the project.  Bechtel 
representatives, who allegedly voiced readiness to include 
Croatians in up to 70 percent of the job, would send back a 
concrete proposal in a matter of days.  In addition to this 
Adriatic-Ionic corridor, the GOC was also interested in the 
5C corridor running from the Hungarian to the Bosnian 
border, as well as convincing the Slovenes to build their 
own portions of the highways connecting Croatia with Italy 
and Austria, respectively.  Kalmeta asked for USG help with 
the Slovene government about this issue. 
 
4.  The government intends to continue with the 2003-2007 
Railroad Modernization Plan as enacted by the previous 
government.  To achieve this, the government would have to 
spend 15 billion kuna ($2.5 billion), part of which would 
be collected through a gasoline tax. 
 
Telecommunications 
------------------ 
 
5.  Despite resistance from the existing telecom firms to 
allowing more networks of fixed and mobile telephony, 
Kalmeta supported the liberalization of the 
telecommunications sector.  Competition would eventually 
bring down the prices of telephone services, which were 
among the highest in Europe, Kalmeta said.  Also, new 
concessionaires would create from 1 to 1.5 thousand jobs, 
and contribute at least 170 million kuna to the state 
budget. 
 
Tourism 
------- 
 
6.  As for tourism, Kalmeta supported quick privatization 
of the remaining 30 hotel companies, which owned a much 
greater number of hotels.  He favored foreign brand-name 
investors that would significantly raise the quality of 
accommodations.  Kalmeta singled out Istria as a region 
 
 
whose approach to tourism was serious, systematic and which 
recognized that tourism was a long-term investment.  As far 
as the rest of Croatia was concerned, tourism was handled 
in an "amateurish" way.  Kalmeta mentioned that the 
government engaged with the World Bank in a $240 million 
project to manage wastewater in the coastal cities.  Zadar 
and Opatija were the first towns to start the project. 
 
Coast Guard 
----------- 
 
7.  Kalmeta liked the idea of a Coast Guard as it exists in 
the U.S.  His ministry was drafting legislation to 
establish such a Coast Guard and welcomed U.S assistance 
and experience in this matter. 
 
Comment 
------- 
 
8.  Kalmeta's gigantic ministry came as a result of merging 
three ministries into one.  While highly talented -- 
Kalmeta was described during the election campaign as 
Croatia's most "successful mayor" -- the Zadar native is 
still trying to determine where his huge portfolio ends. 
His public works and reconstruction predecessor, Radimir 
Cacic, a bullish and determined businessman, left some big 
shoes to fill.  To a large extent, the government's 
performance will be measured by Kalmeta's achievements, 
both domestically (tourism and road building) and 
internationally (return and reconstruction).  Despite this 
pressure, Kalmeta strikes us as a capable manager, rather 
than a politician, who is on top of his portfolio and whose 
eye is set on results. 
 
FRANK 
 
 
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