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CROATIA



 
Key Economic Data 
 
  2002 2001 2000 Ranking(2002)
GDP
Millions of US $ 22,421 20,300 19,000 63
         
GNI per capita
 US $ 4,640 4,550 4,600 70
Ranking is given out of 208 nations - (data from the World Bank)

REPUBLICAN REFERENCE

Area (sq.km)
56,400

Population
4,334,142

Capital 
Zagreb

Currency 
Kuna

President 
Stipe Mesic

Private sector
% of GDP 
55%

  

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: 076 - (28/08/03)

An integrationist past
The Croats are a people with a long coherent past, that is profoundly marking their present and future. But of abiding significance is their mountainous and hilly geography, which has, moreover, changed, albeit slowly, during the centuries. In particular it underwent a long process of deforestation, which left many uplands bare.
They are situated in a vulnerable location, on the threshold of the Balkans, yet betwixt central and eastern Europe. They have consequently had to accommodate themselves to a whole series of more powerful peoples for a while, often lasting centuries. This can help explain their eagerness to surrender sovereignty today.
Yet their location gave them great opportunities as well, notably for sea-faring across the Adriatic and into the Mediterranean. But for this they needed timber to build boats. Hence the deforestation and the longer run tribulations of the countryside.
After migrating from Ukraine and settling in modern Croatia in the sixth century, the Croats enjoyed a period of self-rule. But the incursion of Magyars in the ninth century in central Europe changed everything. In 1091 the Croats agreed to submit themselves to Hungarian authority under the Pacta Conventa. By the mid-1400s fear of Ottoman encroachment led the Croatian Assembly to invite the Hapsburgs, under Archduke Ferdinand, in to assume control and responsibility for Croatia. After various vicissitudes Croatia became largely free of Turkish rule by the 18th century. In 1868 Croatia regained domestic autonomy, but significantly under Hungarian authority.
It became absorbed into Yugoslavia after the First World War, but broke away in the Second World War under the Ustase who collaborated with Germans, the most discreditable episode in Croatian history. But the Partisan leader himself was a Croat, Marshall Tito, who proceeded to found the Federal Socialist Republic of Yugoslavia after the war. Croatia became a relatively successful part of that federation, the one communist polity that allowed its citizens to leave freely and could thus be justly called a socialist country, rather than a socialist prison.

Independence at last
In 1990 Croatia held its first multi-party elections, in which long-time nationalist Franjo Tudjmann was elected president. Independence was declared next year, which triggered off a four-year war with Belgrade. In December 1995 Croatia signed the Dayton Accord and agreed to the return of all refugees.
The death of Tudjman in December 1999 was a blessing, allowing Croatia to enter the new decade, century and millennium with a clean slate. A new president and coalition government, under a new premier, have been able to pursue national reconciliation, democratisation, regional cooperation and refugee returns.

The economy slowly turns around
The government of Premier Ivica Racan has a huge task on its plate. Reform was stalled throughout the 1990s bar some very shady privatisation deals. Unemployment climbed to 22% officially, but was almost certainly over 30% for a while, as the new employers divested themselves of surplus labour.
Some progress has been made subsequently. GDP grew by 2.9% in 2000, by 3.8% in 2001, by 5.2% in 2002 and by a prospective 5.2% in 2003. Inflation, after being in high double figures for most of the 1990s, is now running at 2.3%. Unemployment is down to 14.8%, at least officially.

EU and NATO membership is the answer
The government, like so many regimes in Croatian history, sees the salvation of the country in an integration into larger structures outside. The two most important are of course the EU and NATO. Croatia formally requested to join the EU on February 25th, despite being warned by various Brussels officials that its bid was too early. It is now agreed on all sides that entry into the EU is realistic after all for 2007.
Croatia was cold-shouldered from being even a Partner for Peace of NATO in the 1990s with Tudjman in charge and Croatian war criminals at large. Many of these have now been handed over with the full cooperation of the government with the Hague authorities. NATO entry within a few years is on the cards. Croatia is at last coming in from the cold.

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ENVIRONMENT

Croatian minister discusses environmental projects, cross-border cooperation

Croatia's Environmental Protection and Zoning Minister, Ivo Banac, and his associates on 4th August visited the nature park of Kopacki rit and the Agency for the Reconstruction and Development of Tvrdja, the historical part of Osijek, HINA News Agency has reported. 
The minister and his hosts discussed projects that are being implemented in Kopacki rit. The projects are financed with a 3m Euro World Bank loan and a 400,000 Euro donation of the Dutch government.
Banac was also accompanied by Serbia and Montenegro's Ambassador, Milan Simurdic, as the talks addressed efforts to intensify cross-border cooperation in environmental protection.

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FISHING INDUSTRY

Croatian, Italian regional officials sign protocol on cooperation in fishery

Regional fishery officials from Croatia's Istria and Primorje-Gorski Kotar counties and the Italian regions Emilia Romagna, Veneto and Friuli Venezia Giulia signed a protocol on cooperation at the Festival of the Sea event in Rovinj on 4th August, HINA News Agency has reported.
The signing of the protocol creates conditions for the implementation of cross-border and inter-regional fishery projects in the northern Adriatic, which lean on the European Union's programme Interreg III B Cadses. One of the projects envisages the construction of fish markets with the EU's financial assistance and their linking with the EU's fishery infrastructure.

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FOREIGN ECONOMIC RELATIONS

Libyan leader accepts invitation to visit Croatia; leaders discuss business

Libyan leader Mu'ammar al-Qadhafi has accepted an invitation by visiting Croatian President Stjepan Mesic to visit Croatia, HINA News Agency has reported. 
At a formal dinner given in Mesic's honour on 11th August, Qadhafi stressed perspectives of the development of bilateral and business cooperation between Croatia and Libya.
He said he supported a united Europe with Croatia as a part, adding that Libya was working on African unification.
Mesic thanked his host for the warm welcome extended to the Croatian delegation. He noted that the two delegations had extensive talks on the first day of the visit.
"I think it's very important that we're talking not just about political issues but also about very specific economic interests and projects, which is shown by the fact that a large number of business representatives from both sides are involved in the talks," the Croatian president said.
Mesic recalled that Libya was the first non-European country to recognize Croatia as an independent state.
Mesic also met Libyan Prime Minister Shukri Ghanim [Secretary of the General People's Committee] for talks on business issues.

Croatian, Slovene foreign ministers discuss economic zone

Croatian Foreign Minister, Tonino Picula, and his Slovene counterpart, Dimitrij Rupel, on 11th August held talks over the telephone about the proclamation of an economic zone in the Adriatic, an issue which has been topical lately both in the Croatian and Slovene republics, the Croatian ministry said in a statement, HINA News Agency has reported. 
Rupel relayed the Slovene side's doubts regarding the establishment of an economic zone in the Adriatic. Picula informed Rupel about the activities of a government task force following the reform of the EU's joint fishing policy and the drawing up of stances regarding ways to solve the issue, the statement said.
Croatia and Slovenia will continue consultations about the issue and try to involve in the discussion countries which are interested in the subject, the ministry reported. It added that international subjects were expected to contribute to the countries' efforts to settle the matter.

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SHIPPING

Shipyard owner to pay US$1m, government to activate guarantees

The majority shareholder of the Viktor Lenac shipyard, Giancarlo Zacchello, should shortly pay US$1m for workers' wages, after which the Croatian government, as a sign of good will, will activate state guarantees worth US$7.4m for the construction of a platform, Economy Minister Ljubo Jurcic said on 11th August, HINA News Agency has reported. 
The minister met representatives of the shipyard's trade union and its acting manager, Ognjen Antunac, to discuss solutions to the current situation in the company. Zacchello, who according to a previous agreement is to provide US$1.7m, has promised to pay half a million dollars and by 1st September another half a million, to be used for workers' salaries, Jurcic said.
As a sign of good will, the government will then activate US$7.4m-worth state collateral it previously gave the shipyard for the construction of the "Marica" platform. These funds are earmarked funds and will not be used to cover previous losses and expenses, the minister said.
Experts should then draw up a plan to reorganize the company's ownership, technological and financial structure.The government would supervise the process because of its significant financial involvement in the company, totalling some US$68m, Jurcic said. The government's objective is to keep the company operational and to keep workers, he said.
Jurcic could not say what would happen from 1st September until October, when the company's owners and creditors are to reach agreement on its financial restructuring. He did say though that every move of the government would be conditional on concrete steps of the owner and creditor-banks.
The minister could not say what would happen with the shipyard ultimately , but he admitted that efforts were being made to postpone bankruptcy as long as possible, as in the case of bankruptcy all debts would have to be paid. He recalled that the company's debt totalled some US$120m, while its obligations towards domestic and foreign suppliers amounted to around US$25m. The company has landed contracts worth some US$35m.
The company's owners, creditor banks and the Croatian Bank for Reconstruction and Development signed a US$28.7m agreement on the shipyard's financial restructuring in July. According to some statements, the agreement should take effect in October.
However, the agreement does not provide for the payment of debts to domestic suppliers, nor does it cover the period between July and October, Jurcic said.

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