US embassy cable - 05LJUBLJANA190

C O N F I D E N T I A L  LJUBLJANA 000190 
 
SIPDIS 
 
 
E.O. 12958: DECL: 03/23/2015 
TAGS: PREL, PGOV, ETRD, SI 
SUBJECT: SCENESETTER FOR DEPUTY SECRETARY ZOELLICK'S VISIT 
TO LJUBLJANA 
 
 
Classified By: COM Thomas B. Robertson for Reasons 1.4 (b) and (d) 
 
1. (SBU)  SUMMARY.  Your visit comes as Slovene Prime 
Minister Janez Jansa completes his first 100 days in office, 
and the gentlemen's agreement to temper public criticism of 
the new government terminates.  Jansa continues to enjoy 
strong personal popularity, upwards of 66% in recent polls, 
despite taking up several controversial issues, such as tax 
reform, privatization, and labor reform, early on. Jansa and 
his foreign minister, Dimitrij Rupel, have also set a more 
positive tone on relations with the U.S. than has been heard 
in Ljubljana in several years. 
 
2.  (C) Slovenia's foreign affairs agenda in 2005 is 
dominated by its role as Chairman in Office (CiO) of the 
OSCE.  This is a job Slovenia willingly took on, and it is an 
area where firm encouragement from the U.S. should help it 
find the right path through difficult times.  One of Jansa's 
top domestic priorities is to "get the government out of the 
economy," and to attract more foreign direct investment. 
Success in this endeavor will require some finesse as the 
government, through various holdings, has a controlling 
interest in more than half of the economy.  END SUMMARY. 
 
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DRAWING CLOSER TO THE US 
------------------------ 
 
3. (C)  Your first visit to Ljubljana as Deputy Secretary is 
a chance to acknowledge Slovenia's growing appreciation of 
its obligations as a member of NATO and ally of the United 
States.  You should encourage both Jansa and Rupel to stay 
the course.  Public opinion is a mine-field where Iraq is 
concerned, but Jansa has done a credible job thus far laying 
the groundwork for possible, eventual Slovene participation 
in a NATO operation inside Iraq. 
 
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OSCE - SPECIAL INTEREST IN KOSOVO 
--------------------------------- 
 
4.  (C)  This visit is another opportunity to re-inforce our 
message on the way forward in the OSCE.  Rupel has said that 
as CiO, he wants to "revitalize, reform and rebalance" the 
OSCE.  In practice, Rupel has demonstrated a preference to 
mediate the problems within the OSCE rather than provide the 
strong leadership needed to work out of them.  Among specific 
goals for its Chairmanship, the GOS has made resolving the 
regional problem of Kosovo in 2005 a top priority.  The GOS 
understands that Kosovo's status will be resolved within the 
framework of the Contact Group and the UN.  For the GOS, 
however, getting it right on Kosovo is so important it will 
not be put off this campaign in the context of the OSCE.  In 
its view, ensuring peace and stability in Kosovo is key to 
ensuring a prosperous future for the region, and, thus, for 
Slovenia. To that end, Rupel will use his bully pulpit as CiO 
to press the international community to deal with standards 
and status in parallel and in earnest.  Slovenia has strong 
economic interests in Kosovo as well, with nearly 30 million 
Euro in exports in the first half of 2004. Rupel has already 
visited Kosovo twice since becoming foreign minister in 
November, and he is likely to have made his third visit by 
the time of your meeting. 
 
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FDI - NEED ACTION BEHIND THE RHETORIC 
------------------------------------- 
 
5.  (C)  While Slovene business has been very aggressive in 
entering regional markets, Slovenia has not been as welcoming 
to foreign investment.  Many Slovenes tend to see FDI as the 
potential sell-off of the national patrimony.  Foreign 
investors are viewed as unlikely to have the best interests 
of Slovenia or its workers in mind.  The government must do a 
much better job of explaining the need for it to divest 
itself from the economy in order to ensure a bright economic 
 
 
future for Slovenia.  PM Jansa has stated publicly he wants 
to attract more FDI, and this has been echoed by members of 
his government, but they have not yet elaborated a strategy 
or plan to take this idea beyond rhetoric. 
 
6.  (C) Despite the government's weak performance, there has, 
in fact, been one new major investment since Jansa took 
office.  Denver-based United Global Telecom purchased 
Slovenia's number one cable provider, Telemach, for 
approximately $95 million in March 2005.  At the same time, 
the largest U.S. investor to-date, Western Wireless 
International (WWI), is preparing to exit the market in 
failure. Unfortunately, the Government of Slovenia does not 
appreciate the damage to its own reputation this failure 
represents. Our latest discussions with the GOS on the WWI 
situation are not encouraging.  Barring a solution between 
WWI and Slovene wireless telecom provider, Mobitel, the GOS 
believes the WWI case is weak and seems prepared to go to 
court and defend itself. 
 
------------------------------ 
THE ECONOMY - NO PAIN, NO GAIN 
------------------------------ 
 
7.  (C) Slovenia is, in a sense, a victim of its own success. 
 Well ahead of its neighbors in economic development at the 
time of independence, Slovenia has not had to make difficult 
or dramatic changes to its system to sustain a comfortable 
standard of living for its citizens.  It has experienced 
steady economic growth of 3-4% over the last several years. 
Continuing this growth and controlling inflation are critical 
as Slovenia prepares for its top economic priority - adopting 
the Euro by 2007. 
 
8.  (C)   With all that Slovenia has going for it: a talented 
workforce, good infrastructure, a secure environment and a 
stable government, we are watching business opportunities 
pass right over Ljubljana and make Bratislava the first stop 
in the region. Part of this is poor marketing: Slovenia, a 
tiny country which did not exist 15 years ago, has failed to 
aggressively place itself on the world map (as Slovakia has 
done so successfully.)   Beyond that, however, complaints of 
current investors as well as Slovene business owners are 
increasing.  There is growing frustration with high labor 
costs and an inflexible work force, a glacially slow legal 
system and a general lack of transparency in the bureaucracy. 
 Rather than positioning itself as an open and friendly 
destination for investments, Slovenia is viewed as an insular 
and difficult environment in which to do business.  For 
Slovenia to realize its goal of being the leading edge of 
stability in prosperity in south eastern Europe, it must 
recognize and believe in the need to attract vibrant new 
investment.  To do this, it must undertake to reform its 
labor system and minimize the bureaucracy of establishing 
businesses.  It must also get out there and sell itself to 
potential investors. 
ROBERTSON 
 
 
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 2005LJUBLJ00190 - Classification: CONFIDENTIAL 


 
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