US embassy cable - 03ZAGREB1474

C O N F I D E N T I A L  ZAGREB 001474 
 
SIPDIS 
 
 
E.O. 12958: DECL: 06/27/2013 
TAGS: PREL, PREF, PGOV, ECON, HR, BK, Refugee 
SUBJECT: GOC APPROVES HOUSING MEASURES AIMED AT 
FACILITATING REFUGEE RETURNS 
 
REF: A. (A) STATE 96439 
 
     B. (B) ZAGREB 1084 
 
Classified By: Darren Taylor, Political Officer, For Reasons: 1.5 (B) a 
nd (D). 
SUMMARY 
------- 
 
1. (C) In what is being viewed as an abrupt change of policy, 
the Croatian Government on June 12 finally approved measures 
aimed at providing subsidized housing to refugees who enjoyed 
"tenancy rights" under the old Yugoslav system.  In another 
development, Prime Minister Racan, for the first time, 
publicly called for all refugees to return to Croatia.  The 
GOC,s pursuit of EU membership -- and the EU,s linkage of 
progress on return-related issues as a condition for 
membership -- is the driving force behind recent GOC actions. 
 The proof will be in the implementation.  Senior GOC 
officials, unfortunately, are already declaring the mission 
accomplished -- characteristically confusing statements of 
intention with implementation.  End Summary. 
 
What A Difference A Day Makes 
----------------------------- 
 
2. (C) After three years of ignoring, rebuffing and attacking 
IC insistence that it address the issue of lost 
occupancy/tenancy rights (OTR) affecting the ability of tens 
of thousands of refugees to return to Croatia, the SDP-led 
coalition Racan government on June 12 dramatically reversed 
its previous policy and announced a new initiative to provide 
housing assistance to refugees who had enjoyed OTR and who 
want to return.  The government previously insisted that OTR 
had been abolished as a legal instrument in Croatia and 
therefore that no effort would be made to offer any special 
assistance (never mind compensation) to the tens of thousands 
of refugees -- by one estimate, up to 100,000 ethnic Serbs -- 
who lost OTR when Croatia's law was changed after they had 
fled Croatia, often under duress, in the mid-nineties. 
 
3. (C) Following Cabinet approval of the new initiative, 
Prime Minister Racan took center stage and publicly welcomed 
refugees to return to Croatia during a nationwide television 
broadcast.  (Racan had rejected making such a public appeal 
ever since entering office in early 2000, citing domestic 
political considerations.)  In this first-ever public, 
personal invitation, Racan told the TV audience that, by 
adopting the housing program, the GOC had removed a key 
political obstacle to EU membership.  "Housing is no longer 
an obstacle for refugees seeking to return to Croatia,8 he 
said. 
 
GOC Highlights Housing Policy 
----------------------------- 
 
4. (C) In their public announcements and in a presentation to 
the Zagreb diplomatic corps, GOC officials described the new 
initiative as an effort to facilitate the return of refugees, 
not restore OTR to all individuals and families who lost 
them.  Under the new housing plan, which the GOC promised to 
begin implementing within 30 days, there will be two options 
for potential returnees. 
 
--  Subsidized rent of state-owned apartments.  Under this 
program, returnees would be eligible to receive subsidized 
rent (less than one dollar per square meter) for apartments 
that will be bought by the State or built through the 
state-subsidized housing program. 
 
--  Direct purchase of property.  Refugees who are 
financially able to pay the down payment (usually 10-30 
percent of the actual cost of a home or apartment) will 
receive low interest rate loans under the program. 
 
5. (C) GOC officials stressed that only former OTR holders 
who seek to return to Croatia and who do not own homes in 
Croatia or any of the former Yugoslav republics will be 
eligible to participate in the program.  The program will 
include cities both inside and outside of the war-affected 
areas (so-called "Areas of Special State Concern").  The GOC 
said it plans to spend USD 70 million toward the effort next 
year and complete the reconstruction program by 2006. 
Roughly half of this amount will come from the state budget. 
Both Deputy PM Linic and Deputy FM Simonovic assured the 
Ambassador that funds have been reserved for this program. 
The GOC plans to apply for loans from the Council of Europe 
Bank to cover the remaining balance. 
 
EU Membership Driving Force Behind GOC Action 
--------------------------------------------- 
 
6. (C) The EU,s decision to link Croatia,s progress on 
refugee returns to its eventual membership in the EU is 
 
 
driving the GOC effort.  In its March report, the EC 
Commission specifically set a benchmark for the GOC:  to 
develop and implement an acceptable plan to restore OTR for 
those who lost such rights after fleeing during the war.  The 
Commission gave the GOC until the end of the year to show 
measurable progress on this and two other key impediments to 
return: property restitution and processing applications for 
reconstruction assistance.  The clear message was that the 
GOC must act to enable and facilitate minority returns or 
face a negative avis next spring on its EU membership 
application.  The linkage is the only powerful lever 
available to the IC to force the GOC to take what it 
considers unpopular and costly steps to facilitate mostly 
Serb returns.  Early signs are that the GOC is bending under 
this EU pressure, which the USG has both spurred and 
endorsed. 
 
No Time to Celebrate 
-------------------- 
 
7. (C) The GOC has a history of making promises and not 
following through.  The Ambassador has underscored that we 
will be looking at implementation as the true test of the 
government's commitment -- a message he conveyed again to the 
Prime Minister on June 26.  Whether or not the GOC fully 
implements the program just announced will send a clear 
signal about its readiness to "clear the hurdle" on refugee 
returns.  While the GOC appears to have gotten the message 
from the EU that resolving refugee returns will weigh heavily 
on Croatia,s bid for membership, the same holds true for 
NATO membership -- a point which the Croatians need to be 
reminded of at every opportunity (Ref). 
 
8. (C) Finally, despite the rather celebratory spirit 
displayed by many GOC officials over the recent initiative, 
another cloud hangs over Croatia: the case a former tenancy 
right holder brought to the European Court of Human Rights in 
Strasbourg.  Scores of other similar cases loom too.  The GOC 
could be on the hook to compensate -- at enormous cost -- all 
former tenancy rights holders, not just those who return to 
Croatia to live.  Indeed, the proposed GOC program is not a 
final resolution to the issue of OTR.  The EU holds that 
rulings by the Strasbourg court must be respected -- a 
central obligation of any country which aspires to EU 
membership.  The OSCE is also following these cases closely. 
 
ROSSIN 
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