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  CROATIA

REPUBLICAN REFERENCE

Area (sq.km)
56,400

Population
4,334,142

Capital
Zagreb

Currency
Kuna

President
Stipe Mesic

Private sector
% of GDP

55%

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Background:
In 1918, the Croats, Serbs, and Slovenes formed a kingdom known after 1929 as Yugoslavia. Following World War II, Yugoslavia became an independent communist state under the strong hand of Marshal TITO. Although Croatia declared its independence from Yugoslavia in 1991, it took four years of sporadic, but often bitter, fighting before occupying Serb armies were mostly cleared from Croatian lands. Under UN supervision the last Serb-held enclave in eastern Slavonia was returned to Croatia in 1998.

Update No: 059

The economy in Croatia has been faring rather well, with solid growth over the last two years, GDP rising 3.7% in 2000 and 4.2% in 2001.Inflation has come down, being only 2.8% on an annual basis in 2001. The reform process is well under way with international approval
But there are naturally appalling problems, notably a very high unemployment rate of over 20%. This means certain regions have horrendous unemployment, well over one third being out of work.
The Croats had a difficult time in the1990s, a war with the Serbs and an appalling hangover of cronyism and dictatorship from the days of the former Yugoslavia. The economy fared badly. By sharing out state-owned assets and trading licences among its supporters the regime stifled investment, notably from abroad. But things are now looking up.
The key event was the death of Franjo Tudjman, the president, as if on cue to greet a new millennium, in December 1999. That cleared the way for a long overdue overhaul of the Croatian polity, without which none of the progress of the last two years would have been possible.
Elections were held in early 2000.Stipe Mesic won the presidency and Ivica Racan the premiership. Racan began a series of wide-ranging reforms.
The government has privatised key sectors and established 11 free trade zones. The country is after all potentially a tourist paradise on the Adriatic Sea with one of the best climates in the world. Its central location in the northern Balkans makes it the natural gateway to the whole region. Foreign investors have entered in droves, their sum total of commitment now reaching US$4.2bn. That is the Croats best hope; to become the best entrée into the Balkans.

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AVIATION

Croatia Airlines now an Aerospace client


Shannon Aerospace, which carried out its first maintenance check on the airline's A320, has predicted a long-term relationship with Croatia Airlines. "In the face of the current economic difficulties with tough negotiations and stiff competition, we are proud to win this contract," stated Martin Kaiser, chief executive at Shannon Aerospace, New Europe has reported.
The Croatian Airline has now joined the Shannon Aerospace customer base along with customers such as AirOne, SAS, Air France, Volare, LT, Transavia, Alitalia, Lauda, Lufthansa and Swissair. "Croatia Airlines along with many other national carriers, have been faced with additional costs and in choosing Shannon Aerospace for our heavy maintenance check we know that our budget will be met," commented Roman Gebauer, vice president, maintenance and engineering Croatia airlines.

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ENERGY

Croatian INA oil company to sell White Nights oilfields in Siberia

The Croatian Oil Company (INA) confirmed on 19th February that it was closing down the White Nights oilfields in west Siberia after Russia's Sibneftprovod blocked access to an oil pipeline linking the fields with the terminal on the Black Sea, and was resuming talks on their sale, HINA News Agency has reported.
Due to the oil pipeline blockade and insufficient container capacity in the fields, INA was forced to stop production and started closing the oilfields.
The media have quoted Russian sources as saying the oil pipeline was closed because INA was not fulfilling its obligations from the contract on the purchase of the oilfields.
Officials responded by saying the Russian company was only looking for reasons to worsen INA's position in negotiations on the sale of White Nights.
They also claim that business problems in the Russian Federation were not only affecting INA but other foreign companies as well.
"There are a dozen strong, rich Russian oil companies which, like other multinational companies in the world, do not hesitate to use pressure when dealing with smaller independent producers in order to take them over and strengthen their position on the Russian oil market. Another problem with White Nights is that it is not a vertically integrated company and does not have guaranteed crude oil sales on Russian territory but directly depends on offer and demand every month. It is a fact that White Nights is a member of an association of small oil producers in the Russian Federation but that is an increasingly unreliable institution," INA officials say.
These are the reasons which made INA decide several months ago to sell White Nights, which proved to be anything but an easy and short process.
The media have been speculating that INA is negotiating the sale of White Nights with Slavneft, but the possibility of negotiations with other interested buyers is not excluded due to an unsatisfactory price and some other elements of a possible contract.
INA bought the oilfields White Nights in late 1998 at a price of US$18m.

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