US embassy cable - 05LJUBLJANA449

C O N F I D E N T I A L  LJUBLJANA 000449 
 
SIPDIS 
 
 
DEPT FOR EUR/NCE, EB/CBA, EUR/ERA, INL 
 
E.O. 12958: DECL: 06/29/2015 
TAGS: PREL, PGOV, ECON, SI 
SUBJECT: SLOVENIA: COM LUNCH WITH PM JANSA - THE REST OF 
THE STORY 
 
REF: A. LJUBLJANA 438(NOTAL) 
 
     B. LJUBLJANA 439 (NOTAL) 
 
Classified By: COM Thomas B. Robertson for Reasons 1.4 (b) and (d) 
 
1. (C) Summary.  COM met with Prime Minister Janez Jansa June 
28.  In addition to Slovenia's support for the NATO training 
mission in Iraq (Ref A), they discussed a range of bilateral 
issues including denationalization, which is moving more 
slowly than hoped, but the current log jam should be broken 
with some new legislation; privatization, also seemingly 
going slower than expected, but Jansa made clear his 
government is continuing to move forward; foreign direct 
investment (FDI) which Jansa thought might improve with new 
tax legislation to be introduced this Fall; corruption and 
Jansa's plans to become more aggressive on the prosecution of 
white-collar crime; the European Union and how to keep hope 
alive for the potential Balkan members; commercial issues; 
and Jansa's interest in an official visit to Washington.  End 
Summary. 
 
--------------------------- 
MOVING ITEMS OFF THE AGENDA 
--------------------------- 
 
2. (C) Pleased to finally be moving this issue off the 
bilateral agenda, COM let Jansa know of his appreciation for 
all the help MFA State Secretary Bozo Cerar and the Finance 
Ministry lent to the Portal Monitor project and getting the 
bilateral agreement signed and implementation underway. Jansa 
acknowledged there were those in the MFA who had thought 
Slovenia had to go to Brussels to seek permission, which he 
said was the wrong thing to do if you thought you might get a 
negative answer. Jansa stressed this was as much in 
Slovenia's national interest as it was in any other 
country's.  (Comment: We have learned that the EC apparently 
- and finally -  recognized the limits of its influence and 
capitulated by giving its blessing after the fact. This was 
an excellent exercise for Slovenia in how to manage Brussels 
when national security interests are at stake.  We may 
expect, if Jansa and his team exercise leadership, to see 
more of this firm promotion of Slovenia's own interests in 
Brussels. End Comment) 
 
3. (C) COM also thanked Jansa for his support for improving 
Embassy perimeter security.  He emphasized (again) the key 
role of MFA State Secretary Cerar and Minister of Interior 
Dragan Mate in finally bringing this to closure.  Jansa  said 
it had taken too long a time, and that they had had serious 
problems with the City of Ljubljana in this regard, 
commenting that the city government was weak, with lots of 
disputes, and people focused on upcoming elections. 
 
------------------- 
STILL ON THE AGENDA 
------------------- 
 
4. (U) DENATIONALIZATION:  Jansa acknowledged the 
denationalization process was moving too slowly, quoting that 
only 65% of the US cases had been solved while over 90% of 
others were done.  He said that the newly established 
interagency group on denationalization had made changes that 
should improve the situation (Ref B).  Jansa indicated, 
however, that the real problem was with the State Defender, 
who was always circumventing the process and impeding cases 
from reaching resolution.  Jansa noted that GOS had proposed 
new legislation to change the functioning of the State 
Defender so that he could no longer be an obstacle, and said 
he believed this legislation might even be passed in the 
remaining summer session. 
 
----------- 
THE ECONOMY 
----------- 
 
5. (C) PRIVATIZATION:  Jansa repeated that his government was 
determined to cut back on the current 50% state ownership of 
the economy, which he agreed was totally unacceptable.  He 
said he met resistance, however, from his coalition partner 
the Slovene People's Party (SLS) to speeding up 
privatization.  He noted that supervisory board members 
currently being replaced in state-run companies were those 
whose terms had come to an end, and those selected to replace 
them were competed, that is to say, appointments were not 
based on political interests.  As an example, he mentioned 
major insurer Triglav, saying that they had replaced a 
politician, a member of parliament, with a businessman who 
had been selected because he was best qualified, and whom 
 
 
Jansa didn't even know. 
 
6. (C) Jansa commented that there was no denying that 
politics had traditionally played a big part in business.  As 
an example, he said during the Mala Gora (WWII commemoration) 
event in April, Petrol chairman Lotric had approached him and 
asked what he should do about a number of his staff.  Jansa 
said he told him that it was his company and he should make 
his own decisions about the staff.  But, Jansa stressed, this 
was clearly how it had always been done in the past. 
 
7. (C) Interestingly, Jansa said that two years ago, the 
LDS-led GOS had developed a list of companies to be 
privatized but that it had taken no steps to create 
implementing legislation or regulations, something this 
government was now in the process of doing. 
 
8. (SBU) FDI:  COM repeated his interest in seeing more US 
FDI in Slovenia, noting Sava Goodyear as a good model.  COM 
also noted that a US insurance company recently had been in 
town to explore entering the market, and that while 
regulators and other interlocutors had been polite and 
helpful, there seemed to be no particular interest in seeing 
a US company enter the market.  Jansa noted that both Triglav 
and Zavarovalnica Maribor (Slovene insurance companies) were 
state owned companies, and state regulators had no interest 
in outside competition.  He added that while the market was 
pretty well covered, the State would be selling minority 
interest in both companies over time. 
 
9, (SBU) FDI AND TAX LEGISLATION: Jansa said he believed that 
foreign investors would be most responsive to changes in the 
tax laws, and that his government is serious about 
introducing new tax legislation this fall.  It would have to 
be budget neutral, and the first stage would probably be a 
reduction of the number of different tax brackets.  While he 
did not think the flat tax was where Slovenia would go, he 
said the Government was still talking to other governments 
which have implemented the flat tax.  If it appeared that 
flat-tax was the right solution, the GOS might still do it. 
He also emphasized the strong opposition of the unions and 
other groups that meant that the flat tax would probably, 
ultimately not survive politically. 
 
10. (C) VEGA:  On Western Wireless/Vega, Jansa said that the 
dispute was now in the courts and would have to work its way 
through. He said this was, as he had told COM before, not 
what they had wanted to do. He stressed opposition from the 
SLS (again) to moving on this.  He said his team had thought 
they might be able to split the difference between the 
Mobitel and Vega bids, but to do that they would have to wait 
until current Mobitel board members departed and were 
replaced, and that if this were done in connection with a 
"new deal" for VEGA, the GOS would suffer politically.  COM 
asked if the competition board came out with a ruling that 
Mobitel had in fact been guilty of monopolistic price fixing, 
whether that would provide an opening for the GOS to solve 
the issue.  Jansa said it would not. 
 
----------------------------------- 
CORRUPTION AND HOW BEST TO FIGHT IT 
----------------------------------- 
 
11. (U) Corruption and the GOS intention to go after more 
white-collar crime has been in the news lately.  A new 
Supreme State Prosecutor, Barbara Brezigar (also a 2002 
Presidential candidate) has recently been appointed with a 
mandate to fight corruption.  Jansa remarked that Slovenia is 
a small country, and everyone knows everyone else, especially 
among the elites.  He said there is serious corruption in 
Slovenia, but no prosecutor has ever brought a corruption 
case to trial.  Jansa believed that his pick for prosecutor 
was the right person for the job. 
 
12.  (C) Slovenia also has a Commission for the Prevention of 
Corruption which is headed by Drago Kos, an appointee of the 
previous government and long-time nemesis of Jansa's.  Kos 
has recently been very vocal about fears that the Commission 
might be shut down or unfunded - and he has taken his case to 
the press.  He has also appealed to the Embassy to weigh in 
with the government.  Jansa raised the issue of the 
corruption Commission first with COM, saying he thought COM 
would raise it otherwise.  He made clear that he had real 
problems with the Commission and its chairman Kos, especially 
with his request for serious increases in budget allocations, 
which were simply not possible.  Jansa asked rhetorically why 
Kos needed extra bodies for the Commission, when in fact the 
Government felt that all asset disclosures should be made 
 
 
public, and people could see them on the Internet.  Jansa 
complained that Kos was not pursuing the potentially big 
cases, neither in his own government, since he was trying to 
get funding from this government, nor in the past government. 
 Instead, Jansa claimed, Kos was focusing on small town 
mayors and other small fry.  At one point Jansa suggested the 
Commission might be folded into  the Parliament commission on 
corruption (something we know Kos fears). 
 
13. (C)  COM explained the USG relationship with the 
Commission through the Office of Government Ethics and 
emphasized that we had played an important role in providing 
the Commission with models for asset reporting and other 
practices.  COM additionally noted that the OECD and EU 
groups concerned with corruption had been impressed by 
Slovenia's leadership in this area.  COM stressed the 
important role of prevention that asset reporting and other 
activities promoted by the Commission provided, and warned 
that whatever steps the GOS might take, it should not "throw 
the baby out with the bath water."  As if to illustrate just 
how deeply rooted the animosity between Jansa and Kos is, 
Jansa asked if COM knew Kos's history.  (Kos had been 
intimately involved in the affair that forced Jansa to resign 
as Defense Minister several years ago.  All charges were 
eventually dropped and Jansa exonerated a year later, but the 
damage was done.)  Jansa added that Kos had been a strong 
opponent of NATO, and he handed COM a stack of articles 
written by Kos opposing NATO and Slovenia's membership, and 
making less than flattering comments about the United States. 
 
14. (SBU) Comment:  COM was left feeling that Jansa would be 
looking to Barbara Brezigar for guidance on a general 
approach to fighting corruption.  COM also told Jansa he 
would look for opportunities to provide prosecutors with 
anti-corruption training.  Jansa was grateful, saying 
prosecutors really had no experience or training in this 
field. End Comment. 
 
------------------------------- 
THE EU - WHERE SLOVENIA FITS IN 
------------------------------- 
 
15. (C) In responding to a question concerning the split 
between concepts of Europe (France vs UK), Jansa said he felt 
that there was a natural coalition between Great Britain and 
the Scandinavian countries, suggesting that Slovenia found 
its spot in that group.  He mentioned discussions he had had 
with the Hungarian Foreign Minister that day on ideas central 
European countries may push within the EU, such as a shorter, 
three year budget.  COM asked whether they had discussed this 
with the British and Jansa they had had discussions with 
Blair's deputy for EU matters.  Jansa said there would be a 
Visegrad plus 2 (Slovenia and Austria) meeting of Prime 
Ministers at the end of next week (week of July 4) where they 
would try to gain support for this approach.  Jansa mentioned 
that it was critical for the EU budget to be settled in order 
for the GOS to meet its own budget targets. He suggested 
Luxembourg PM Juncker's penultimate plan was one that 
appeared to match the GOS approach and needs.  Jansa 
expressed concern with inflation, and hence EURO 
introduction, due to high oil prices.  He said Slovenia would 
likely have to build a new nuclear reactor.  (Note: Twenty 
percent of Slovene energy needs are currently met with 
nuclear power. Any new reactor, Jansa indicated, would likely 
be attached to current one in Krsko. End Note.) 
 
--------------------------------------------- - 
RECONCILIATION AND JANSA/DRNOVSEK RELATIONSHIP 
--------------------------------------------- - 
 
16. (C) When COM asked about Jansa's relationship with 
President Drnovsek, Jansa said they had a "correct" 
relationship, and that they met every week.  COM complimented 
Jansa on his speech at Mala Gora (WWII commemoration) in 
April, and Drnovsek's at Teharje Memorial Park, June 11, 
saying both seemed a serious attempt to work for 
reconciliation amongst Slovenians.  Jansa said that this was 
something that needed to be done, that there never had been 
any true reconciliation, and that it would take a long time. 
COM noted that Stanovnik, president of the League of 
Combatants (and former President of Slovenia 1988-90) and 
former President Kucan had expressed reservations about his 
speech;  Jansa responded that a week later Stanovnik had 
apologized when he saw how positive the general public 
reaction had been to the speech. 
 
------------------- 
VISIT TO WASHINGTON 
 
 
------------------- 
 
17. (C) COM raised the Iraq issue (REF A) in the context of 
preparing for an eventual Jansa visit to Washington.  He said 
it was very hard scheduling such a trip to which Jansa 
responded with a modest chuckle saying he understood fully, 
knowing how difficult it must be to find time in the 
President's schedule, especially for a small country like 
Slovenia.  COM noted that we were looking at dates towards 
the end of the year, and if a visit were to occur, we would 
want to look for opportunities for him to speak while in 
Washington, and perhaps to take a trip outside of Washington 
to Cleveland or another Slovene-American stronghold.  Jansa 
said he regretted he had never been to Cleveland and made 
clear he would like to do that.   Jansa also commented that 
he was considering a trip to Washington in mid-July for the 
International Democratic Union meeting July 17-18.  He said 
that if he went, it would be as SDS party leader and not as 
Prime Minister.  He said he understood President Bush would 
address the group. 
 
------- 
COMMENT 
------- 
 
18. (C) As in previous meetings, Jansa was very relaxed and 
confident in his quiet way.  Again, he had clearly studied 
his brief.  On Kos, he was not defensive, but clearly felt 
that the anti-corruption fight had to be fought differently. 
He clearly doesn't think Kos is the right guy for the job, 
and this is certainly tied up in the history between the two. 
 While the Prime Minister was not big on the corruption 
Commission, he was clearly taken with the need to go after 
real corruption, and Brezigar seems to be his ace to pursue 
that. 
ROBERTSON 
 
 
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 2005LJUBLJ00449 - Classification: CONFIDENTIAL 


 
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