Croatia—United States Bilateral Relations Overview of Issues   Prepared by the Embassy of the Republic of Croatia to the United States of America for delegates of the Croatian American Association "Days on the Hill"  March 22-24, 1998 Message from the Ambassador          I am particularly pleased to address delegates of the 1998 annual Croatian American Association "Days on the Hill."  Croatian Americans have played a vital role in building America and they have contributed an enormous amount in forging bridges between Croatia and the United States.  "Days on the Hill" is one the best examples that helps to carry the Croatian message further.          I take this opportunity to thank members and the leadership of the Croatian American Association and all those Croatian Americans who have consistently and repeatedly come to Washington over the years to present their views and positions. Croatian Americans have made an enormous contribution to building bridges between the U.S. and Croatia. Through their concerted efforts, Croatian Americans continue to strengthen and reinforce these bridges.  The time has come to fully explore the scope for furthering and intensifying the range and extent of contacts between Croatia and the United States over these bridges.          As U.S. Congressman Peter J. Visclosky—who is one of four U.S. Congressmen of Croatian heritage—said recently; "Croatian Americans have played an integral role in the development and continued success of the United States of America.  Beginning in early part of this century, thousands of Croatian people emigrated to the United States to seek a better and more prosperous life.... I have seen first hand how faith, family, humility, determination, courage, concern, and appreciation of our shared heritage can build good character.  Croatian immigrants did not have it easy in America.  They had to fight to overcome language and cultural differences—but overcome they did.  They made the steel that made the cars, machines, and engines that today has made America a beacon of hope to the rest of the world."          Today, Croatian-Americans are receiving the recognition that they deserve.  We continue to pay tribute to their achievements and their ability to impress positively on other Americans how beautiful Croatia is as a country and how friendly Croatians are as a people.  I am proud to announce that the Croatian American Friendship Association is in the process of being formed, made up of many distinguished American friends of Croatia.          Croatia and the United States have come a long way since establishing diplomatic relations.  This publication focuses in a cogent and lucid way on the current situation in Croatia and our bilateral relations.  The trajectory of political, economic, defense, cultural and educational contacts increases every year.  This past January we had a very successful Ministerial delegation headed by Defense Minister Gojko Susak, who met with his counterpart Secretary of Defense William J. Cohen, and with Deputy Secretary of State Strobe Talbott.  We are currently in the process of preparing a working visit for Foreign Minister Dr. Mate Granic that will further our dialogue on broadening and deepening our bilateral relations.  Furthermore, we are preparing a high level official delegation from the Croatian State Parliament to meet with members of the U.S. Congress later this year.          As many of you know, last year we officially opened our Consulate General in Los Angeles.  This year, the Government announced that it will open another Consulate General in the United States, this time in Chicago.          Finally, we hope to end the year on a high note, with a visit by Croatian President Dr. Franjo Tudjman.  H.E. Dr. Miomir Zuzul  Croatian Ambassador to the United States CROATIA—UNITED STATES BILATERAL RELATIONS OVERVIEW OF ISSUES 1.  Introduction  Bilateral relations between Croatia and the United States have undergone various stages since the establishment of diplomatic relations in 1992. Although sharing common interests, values and objectives, we sometimes differ in the ways of achieving the goals that come along the way.  Focusing on the promotion of its essential and long-term national interests, Croatia faces occasional pressures from those whose approaches and interests vary. Despite some misunderstandings, Croatia and the United States are trying to develop friendly relations and cooperate in matters of mutual interest. Croatia desires to be a stabilizing factor in the region, aware of its advantages and ready to use them according to international standards. On the other hand, the United States, as the only remaining superpower and the most active participant  in international affairs, has a decisive role in creating a new trans-atlantic security architecture, having at its disposal the ways and means of achieving them.  Croatia and the United States share a common interest in extending the structure of understanding and partnership in all fields.   Since the establishment of diplomatic relations, in addition to Croatia's inclusion in Euro-Atlantic institutions, there has been a consensus in two specific areas: the peaceful reintegration of Croatian territory and finding a solution to the crisis in Bosnia and Herzegovina along the lines of the implementation of the Washington and Dayton Accords. The peaceful reintegration of the Danubian Region (Eastern Slavonia) was the most successful United Nations' mission in the history of the organization.  As a result,  Croatia has reinforced its international standing, prepared to further work on national reconciliation, reconstruction and economic development of the region. Bosnia and Herzegovina remains one of the hot spots in the world, with Croatia having a constitutional obligation to protect Croats and their historical place in that country, as well as contributing to the stabilization of its neighbor in cooperation with other members of the international community.  The new quality in mutual relations between Croatia and the United States should focus on increasing in economic exchanges, primarily the expanding U.S. direct investment in Croatia and support for the integration of Croatia in Euro-Atlantic institutions, namely the European Union and NATO. We hope that the on-going negotiations with some U.S. companies will be fruitful, giving impetus to stronger economic ties. We are cognizant that economic exchange follows successful political cooperation.  Open lines of political dialogue and the pattern of close cooperation between our two countries demonstrate that a basis for better economic relations exist. Emphasizing Croatia's achievements and commitment to fulfill its obligations sets the stage for the next stage of our relations. 2. Eastern Slavonia—Return of   Refugees  The peaceful reintegration of the Croatian Danubian Region, which was the result of successful cooperation between Croatia, the United Nations, the international community and U.S. leadership proved Croatia's reliability and commitment to its international obligations. Croatia's commitment to the process and full stabilization of the region has brought Croatia further affirmation as an indispensable factor in the region, increasing its credibility and reliability. Since assuming executive authority over the region on January 16, Croatia has continued its reintegration activities primarily within the program established by the National Committee for reconciliation. As a result, over 31,000 ethnic Serbs have returned; 12,000 from the region and 19,000 from the Federal Republic of Yugoslavia and Bosnia and Herzegovina. During the executive authority held by the United Nations, about 40,000 Serbs left the region over a period of two years.   It is noteworthy that in this short period of time more Serbs have returned than Croat refugees or displaced persons have been able to since the beginning of the war.  Croatia is the only party in the region to register notable returns of persons formerly affiliated with the occupying/rebel forces. The problem remains, however, that displaced Croats cannot return to their homes, either because they are heavily damaged or destroyed, or are presently occupied by people originally coming either from FRY or Bosnia and Herzegovina. In that regard, Croatia is fully aware of the need to settle the situation in the region and bring all refugees and displaced persons back to their original homes.  The Croatian government is committed to the reconciliation process and the implementation of all measures that will allow displaced persons to return and create conditions for a secure living environment for Croats, Serbs and other nationalities. The outstanding problem remains how to create a positive movement toward reconciliation,  as 3 Serbs indicted for war crimes against civilians and wounded soldiers from the Vukovar hospital have yet to be brought before the tribunal in The Hague.  The key element required for reintegration and reconciliation is economic revitalization. As Croatia cannot address this issue alone, international assistance is necessary.  So far, this assistance has been relatively small and Croatia alone financed the costs.  Furthermore, Croatia is preparing a list of projects that will be presented to international donors, and plans to hold an international donor conference for reconstruction and development in May.  Croatia appreciates the support of the United States in generating as much economic aid and assistance as possible.  This is an important factor in Croatia's ability to fulfill its obligations toward the international community and fully realize its commitments. 3. Croatia and Implementation of Dayton Accords  Croatia has many objections to the international community's insouciance toward Croats in Bosnia and Herzegovina. One objection is that nobody has been indicted yet of crimes against Croats in Central Bosnia, although The Hague tribunal has ample documentation to start proceedings. On the other hand, Croats have been the most cooperative party. Out of 23 indictees presently in The Hague, 15 are Bosnian Croats, 11 who voluntarily surrendered (with 3 Croats already cleared of charges brought against them).  Croats are the most endangered group in Bosnia and Herzegovina; from 828,000 Croats that lived there before the war, only 370,000 remain. The problem is particularly acute in Central Bosnia, witnessing terrorist attacks and continuous obstruction of the Dayton peace accord by the Bosniacs. Only 3% of Croats who lived in Sarajevo remain there today.   In relative terms, more Bosnian Croats than any other constitutive nation in Bosnia and Herzegovina do not live in their original homes.     In addition, the situation in Posavina does not enable Bosnian Croats to return to their original homes.  This remains one of the crucial but unfulfilled aspects of the Dayton Accords.  Unfortunately, unless Bosnian Croat refugees and displaced persons are able to return to their homes, there is little prospect that the Dayton Accords can be fully implemented.  However,  there is no sign of progress being made to allow their return.  Croatia, as a witness signatory of Dayton peace accords, has an obligation to protect Bosnian Croats. It is for that reason that Croatia proposed the agreement on special relations with the Federation, aimed at guarantying the position of Croats as a constitutive nation, equal in its rights and obligations with the two other constitutive nations.  Securing economic and cultural ties between Bosnian Croats and Croatia is aimed at preserving the existence of the Croatian nation within Bosnia and Herzegovina, not at dividing it. Croatia respects the sovereignty and territorial integrity of Bosnia and Herzegovina, and is working with the international community in ensuring the economic, social, and political development of Bosnia and Herzegovina.  Croatia is strongly committed to the Dayton peace accords, believing that only full and strict implementation of agreed accords can enable the existence of Bosnia and Herzegovina as a viable state. Our position is that Bosnia and Herzegovina can survive only as a highly decentralized country of three constitutional nations. Any other option discussed and proposed in various forums—the unitary, radical or fundamentalist state—would endanger Bosnia and Herzegovina as a country. In that light, Croatia undertook certain measures, demonstrating its active interest to bring about a secure political, economic and social situation in the region. 4. Croatia and Transatlantic Integration Processes  Croatia's strategic goal is to be integrated into Euro-Atlantic political, economic and security structures. Membership in the European Union, Partnership for Peace program and North Atlantic Treaty Organization (NATO) are the ultimate goals. Croatia wants to be judged by its own results and capabilities. Any connection to other countries in the region and their future democratization and development unjustifiably punishes Croatia, tying it with countries with a different cultural and historic heritage. It is therefore of the utmost importance to present Croatia as a country on its own, that came out of the difficult situation and almost single-handedly became one of the most successful economies among the countries in transition.  A push for speedier inclusion of Croatia into Western integration is a process that warrants particular emphasis and efforts.  Membership in the Partnership for Peace program for Croatia by the end of this year is a realistic possibility.  NATO and European Union membership are the strategic objectives of Croatia.  Croatia, however, rejects regional approaches that try to push Croatia either back into some form of "Yugoslav" association or Balkan framework.  Croatia's future lies in transatlantic institutions, namely NATO and the European Union, and a close partnership with the United States. 5. Internal Democratization Policy  Croatia is building a democratic society with an open, Western-style economy. However, it is often forgotten that Croatia had to defend itself from aggression, build up structures of an independent country and confront the challenges of transition from a communist society to a democracy and free-market based economy. All this took place at the same time, so transition in Croatia differs from that of other Central and East European countries. 5.1. Multiparty Democracy  The Republic of Croatia has a semi-presidential political system with a two chamber parliament (Hrvatski drzavni  sabor—Croatian State Parliament).  Since the first multiparty elections in Croatia in April-May of 1990, Croatian citizens have voted in two presidential elections and four general elections for the House of Representatives and the House of Counties.  In Croatia there are more than seventy political parties, fourteen of which are represented in the Croatian State Parliament. According to the elections held in October 29, 1995 for the House of Representatives, the HDZ (Croatian Democratic Union) received 75 seats (45,2% ); HSS (Croatian Peasant Party) in coalition with four smaller parties gained 16 seats (18,3%); HSLS (Croatian Social-Liberal Party) 12 seats (11,6%); SDP (Social-Democratic Party) 9 seats (8,9%); HSP (Croatian Party of Right) 3 seats (5,0%); IDS (Istrian Democratic Party) 3 seats; SNS (Serbian Peoples' Party) 1 seat; HCSP (Croatian Pure Party of Right) 1 seat, and six seats are designated to representatives of the national minorities, three of them for the Serb representatives. 5.2 Media  In Croatia, 1421 different newspapers, magazines and other periodicals are published yearly. The most significant are the following: 12 dailies (Vecernji list—205.000 copies;  Slobodna Dalmacija—110.000 copies; Vjesnik—40.000 copies; Novi list —30.000 copies; and others); 17 weeklies (Globus—150.000 copies; Nacional—50.000 copies; Feral Tribune—50.000 copies; Imperijal—30.000 copies, Hrvatski obzor—20.000 copies; Tjednik—20.000 copies). In addition to national television (HTV) there are 10 local, private TV stations.  Croatian Radio, with its four programs, broadcasts news and entertainment along with 115 other local private radio stations throughout Croatia.  The media in Croatia faces many of the challenges that countries in Central and Eastern Europe have confronted since the collapse of communism.  In Croatia there are a number of institutions, such as the Croatian Journalists' Association, which support the introduction of Western standards in the media.  This is demonstrated in the Associations' Forum 21, which is concerned with establishing independent electronic media on the national level.  Unfortunately, there are critics that complain about the level of media freedoms in Croatia.   The paradox which appears in our case is that quite often the most ardent critics of freedom of the press appear regularly in the media to express their views.  In addition, in some areas of the Croatian media, there is a tendency to dispel any sense of responsible journalism and engage in "bad taste" journalism, such as incitement to violence or  caricatures of public figures in pornographic contexts.    One egregious example is the case in which an article in the Feral Tribune advocated the assassination of the President,  a case which in the United States would bring serious criminal ramifications.    Today, journalists are able to express their views freely.  Although cases of libel and slander have come before the courts, unlike the previous system, no journalist has been sentenced to jail, an impression that has been created by a number of false reports. 5.3  Minority Rights  National minorities make up 21.9% of the Croatian population. The largest minority of approximately 8% is the Serb minority, followed by Italian, Czech, Slovak, Hungarian, Ukrainian, German, Jewish and other minorities.  The Republic of Croatia ratified the Optional Protocol to the International Covenant on Civil and Political Rights and the Protocol of the Council of Europe on the protection of national minorities. The Law on the Election of Members of Parliament provides for the right of members of minorities to elect their representatives according to their number. National minorities are also protected by bilateral agreements, for example with Italy and Hungary. A similar agreement is under discussion with F.R. Yugoslavia. Concerning the education of national minorities in Croatia, kindergartens, primary and secondary schools conducted in the languages of the minority have been established. For example the Italian minority has 24 kindergartens, 17 primary and 4 secondary schools;  the Czech minority has 2 kindergartens and 8 primary schools; the Hungarian minority 2 kindergartens; 1 primary and 1 secondary school and the Jewish minority has 1 kindergarten.  The Ministry of Education is responsible for financing and providing the curriculum for these institutions.  Croatia welcomes assistance in the democratization process, but requires understanding at the same time.  It is impossible to change the system overnight, so patience in implementing economic and social measures would allow more constructive criticism, and not impulsive reactions to selective measures. 6.  Croatia—United States 6.1 Current activities and future plans  The Croatian Embassy will continue to intensify its work on developing bilateral relations with the United States.  This quality in Croatia's relationship with the United States was  especially confirmed during the January visit to Washington by the Minister of Defense Gojko Susak. His meetings with the high State Department and Pentagon officials acknowledged Croatia's contributions in the region, and set the stage for future measures which will strengthen the Croatian position in the international community, and bring it closer to inclusion in Western political and security integrations.  Unfortunately, wrong interpretations of President Tudjman's speech, in which some of his comments were taken out of context, created a false impression that Croatia had altered its position, particularly regarding the Dayton peace process. In meetings with various representatives of the U.S. government, the Embassy had to emphasize Croatia's actions and achievements, its continuous commitments to obligations that Croatia undertook, but appreciates a more constructive approach and thoughtful criticism.  We feel that Croatia is often used as a scapegoat, neglecting its active contribution to peace in the region.  As the most reliable party, prepared to work towards the establishment of lasting stability, Croatia finds itself a victim of this position, where its achievements are often discounted, although its cooperation is an indispensable element to the solution to existing problems.  The Embassy plans to organize high-level visits by the Deputy Prime Minister and Minister of Foreign Affairs, Dr. Mate Granic, a visit by a delegation from the Croatian State Parliament, and a visit by the President of the Republic of Croatia, Dr. Franjo Tudjman by the end of this year.  These visits are directed at furthering Croatia's goal toward becoming a member of the Partnership for Peace program, as well as strengthening bilateral relations. In addition, the Embassy plans to organize a number of different promotional activities, particularly in the economic field.  These activities will be complemented by visits of the Minister of Economy Nenad Porges, the Governor of the Croatian National Bank Dr. Marko Skreb, and the Deputy Prime Minister and Minister of Finance Borislav Skegro.  Finally, the American Croatian Friendship Association will be formed, consisting of prominent Americans from various spheres of American society and professional life.  One of the outstanding issues that Croatia has been pursuing is the question of succession and assets of the former SFRY.  For example, in Washington alone there are five buildings and in New York two, that have been used by the F. R. Yugoslavia for diplomatic purposes.  Regrettably, the FRY is in possession of these buildings, a situation that harms the legitimate rights of other successor states.  Furthermore, these buildings, belonging equally to the five successor states, are not maintained, causing their depreciation in value and loss in the final allocation of assets.  The Embassy intends to reiterate its claim, in concert with the other successor states, to gain the portion belonging to Croatia. 6.2 Relations with the Congress  With respect to the United States Congress' power and influence in the area of foreign policy, it is very important to closely follow congressional activities. Thus, the following committees have been identified as our targets within the Senate: the Foreign Relations Committee (Subcommittee on Europe), Appropriations Committee (especially Subcommittee on Foreign Operations and Defense Subcommittee), Armed Services Committee. On the House side these are: the Committee on International Relations, the Committee on Appropriations (Subcommittee on Foreign Operations), the Committee on National Security, the Committee on Ways and Means and House Appropriations National Security Subcommittee. It is imperative that a "core group" of members who support Croatia and deal with the country in any aspect, be well informed about critical issues and that well-defined congressional objectives be articulated.  In this sense, Croatia needs to be more present in foreign assistance programs (USIAD, Ex-Im, OPIC, etc.), with respect to its current efforts in development and reconstruction.  It is of great importance for Croatia to have access to these funds in ways that are conducive to furthering our bilateral relations and avoiding a situation in which some of these funds are used in counterproductive projects (such as the financing of Feral Tribune).  Although the perception of Croatia in Congress is not favorable, but more importantly one that Croatia does not deserve objectively, there are many opportunities to improve our image through various activities.  Frequently, the views of Congressmen and their aides are based on information that is incredulous and groundless.  An example which comes to mind is a recent resolution (H. RES. 375), which is based on a fundamental misunderstanding of the situation in Croatia regarding the development of democracy and human rights.  Beside the Embassy's efforts, it is essential to include in this process the coordinated efforts of the Croatian American community in presenting a realistic picture of Croatia as a modern democratic country with a pro-Western orientation. It is very important that specific members and staffers from states with high Croatian American constituencies be targeted and a systematic effort be made to assure that they are well-informed about critical issues as outlined in previous sections. 6.3 Economic relations  The structure of Croatia-U.S. economic and trade relations are solid.  In 1996 two U.S. Presidential trade and business missions came to Croatia to explore economic opportunities.  Unfortunately, the first mission led by the late Secretary of Commerce Ron Brown ended tragically.  This mission was continued by former Secretary of Commerce Mickey Kantor.  Important strides were made in laying the foundations for important trade and business agreements between Croatia and the United States.  Generally, the economy in Croatia is on a positive trajectory. The real growth in 1997 is estimated at 6.5%, with inflation of 3.6%. Foreign exchange reserves total $4.9 billion, and foreign investments (as of December 1996) amount to $894.45 million.  The are many opportunities to expand the current balance of economic exchange between Croatia and the United States. At present, the United States is the eighth Croatian trading partner, both regarding export and import. Import from Croatia in 1996 amounted to $89 million (1.97% of total Croatian export); export to Croatia in 1996 amounted to $213 million (2.73% of total Croatian import). The projects under negotiations (highway network development, power plant development and upgrading, tourist industry, port development, environmental projects) could significantly increase these numbers.  Croatia's economic indicators are showing continuous improvements in the economic sector, and favorable foreign investment legal frameworks indicate that we can expect increased direct investment.  Last year, after numerous efforts by the Embassy, the Export-Import Bank of the United States (Ex-Im) finally opened to conduct business transactions with Croatia.  Ex-Im is an independent agency of the U.S. Government established to facilitate and stimulate U.S. exports by insuring export transactions from political and commercial risks in other countries, as well as approving medium and long term goals.  At this moment, the cost of guarantees covered by Ex-Im for transactions with Croatia is high, due to the fact that Croatia is deemed to be a so-called Category 6 country (out of 8 categories within which countries are assessed).  The lower the rating, the cheaper the costs of the transaction.  This low categorization of risk assessment differs from the investment rating given to Croatia by similar institutions in other countries, or from those determined by the four leading international credit rating agencies.  The Embassy is trying to effectuate the re-evaluation of the risk assessment for Croatia, so that next year Ex-Im can place Croatia in a more favorable ratings group.  This will allow for cheaper loans.  Ex-Im financing is available for all transactions to Croatia, so that it is also open to interested Croatian American businesses. 6.4 Military Cooperation  The Memorandum of Cooperation between the Croatian Ministry of Defense (MoD) and the U.S. Department of Defense (DoD) was signed on November 29, 1994, outlining a variety of possible military cooperation programs. But, at best, the military cooperation with the U.S. Armed Forces can be described as a low-level cooperation.  It has maintained some basic levels of cooperation, primarily in the area of training and education.  Frequent meetings of military delegations at all levels have played a very important role in solving frequent disputes and differences of opinions and have helped in establishing good understanding and mutual trust.  The area in which we have achieved the best results is IMET (International Military Education and Training). This program, funded by the U.S. Government, brings Croatian MoD officers and civilians to American military schools. Croatia finds this program very useful, because our combat-experienced but young senior officers often lack a formal military education. In FY96 $200,000 was allocated for Croatian students under IMET program. The IMET fund for Croatia was increased in FY97 to $350,000, but more importantly, Croatia received slots in senior level military colleges. Further improvements in overall bilateral relations will help Croatia to further increase its participation in this program.  Other signs of good cooperation are contacts with the U.S. European Command (EUCOM). A EUCOM Liaison Office was established in Zagreb at the Croatian MoD. The Office has been assisting in coordinating a number of small programs (Joint Contact Teams Programs) that have contributed to the development of closer relations and better understanding. One of the programs—the National Guard State Partnership Program—can be seen as a real bridge-building tool between the two countries, for the full scope of the program exceeds its military aspect. At the beginning of 1996, Minnesota was assigned to work with Croatia under this program. Since then, a number of high level visits have been exchanged between Croatian members of the MoD and the Minnesota National Guard.  One of the most important bilateral issues that has not been solved yet is the issue of Croatian eligibility to acquire U.S. military equipment. The lack of "Presidential Determination" that would make Croatia eligible for Foreign Military Sales and Foreign Military Financing presents a formal obstacle for deepening the cooperation between our two countries. All Croatia's neighbors became eligible for FMS in 1996 (with the exception of FRY—PD was given to it in 1973, but has not been effective since 1991).  Recent successful meetings that the Croatian Minister of Defense had with high level U.S. officials were very promising in that regard. With Croatia's determination to buy only NATO compatible military equipment, such a step would be a great contribution in keeping the balance of power in the region intact. 7. Role of the Croatian American Community  The Croatian American community has played a very important role in the creation of the democratic, independent and modern Croatian state. Croatian Americans have had a very important impact on American society, either through their active organizations and groups, or as successful individuals. This influence is visible in politics, economy, science, culture, sports, and other fields of life. With this important position in American society, Croatian Americans are important promoters of Croatian interests in the United States.  The Croatian Government is well aware of this important role by the Croatian American community, recognizing both their contribution and their future potential, in developing friendly and substantive relationships between their two homelands. Developing stronger ties between Croatia and Croatian Americans is a constant priority.  To that end, the Croatian government has recently undertaken several institutional and legal measures. Examples include are the opening of the Consulate General in Cleveland in June 1996, the Consulate General in Los Angeles in April 1997, and the planned opening of the Consulate General in Chicago later this year.  The Croatian American community, with its special position and interest in improvement of Croatia and Croatian American bilateral relations, has an important role to play. As Croatia tries to become a member of the Partnership for Peace program, and later NATO, an active promoter of Croatia's positions to policy-makers is very helpful. NATO expansion is discussed not only on the Hill, but within think tanks, universities and other institutions. Emphasizing Croatia's capabilities, and particularly the contribution it made to current international operations in Bosnia and Herzegovina (IFOR; SFOR), raises Croatia's standing in those circles as well. The prospect of joining these programs and institutions creates a positive influence on developments in Croatia, bringing it back to the family of nations it naturally belongs to.