"Globes" has learned that the incoming Croatian government has frozen the project for upgrading Croatian Air Force Mig-21s. At the end of 1999, the previous Croatian government chose Elbit Systems and Israel Aircraft Industries (IAI) to implement the $120 million upgrading project.
Elbit Systems, which was to have been the chief contractor for the project, even announced that it had won the project, which it defined as "significant" to its business. IAI also confirmed its participation yesterday. No agreement, however, has yet been signed between the two countries on the matter, nor any commercial agreement.
The announcement of the suspension was communicated by a senior Croatian government delegation visiting Israel, headed by Deputy Prime Minister Goran Granic, and including the Croatian Minister of Defense and Air Force commander. The delegation met with Deputy Minister of Defense Ephraim Sneh and visited IAI plants near Ben Gurion Airport and Elbit Systems in Haifa.
A senior defense source, who participated in the talks with the Croatian delegation, today told "Globes": "The existence of the project is in doubt. It was stopped at the decision of the new government in Zagreb, which announced that it is not bound by the decision of the outgoing government. The main reason given is budget difficulties. Sources in the Croatian delegation said that an effort would be made to find budget sources to finance the upgrading, but made no commitments."
It appears that other defense projects on the agenda between Israel and Croatia will also be delayed. The overall volume of these projects is $300 million.
Defense relations between Israel and Croatia are not close, and diplomatic relations were established only in 1997. The background to the coolness between the two countries is the collaboration between Croatia and Nazi Germany, as well as the statements by former Croatian president Franjo Tudjman that Croatia was not implicated in crimes against the Jews. The election of current Croatian president Stjepan Mesic is expected to thaw relations between the two countries.
Published by Israel's Business Arena on August 1, 2000