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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)
56,542

Population
4,422,248

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. 
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, 2003, 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. 
The Croats are a people with a long 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 peacefully 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 the 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.
In 1990 Croatia held its first multi-party elections, in which long-time nationalist Franjo Tudjman 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, democratization, regional cooperation and refugee returns.

Update No: 082 - (01/03/04)

Croatia's international standing has not always been untarnished. In the Second World War the Ustashe movement in the republic collaborated with the Germans. But the leader of the Partisans, Marshall Tito, as he became, was a Croat and stout defender of his country, Yugoslavia, as it was.
In a gratifying gesture, Israel has named six Croats 'Righteous Among the Nations,' a recognition of those who risked their lives to save Jewish lives in the war. Ana Jukic, Joza Jagodic, Olga Neumann, Vera Oberiter, Ludvik Valentincic and Dane Vukovic received medals from Israel's ambassador to Croatia, Yael Rubinstein, on Holocaust Remembrance Day, marked recently for the first time in the former Yugoslav republic. The ceremony in Croatia marks the anniversary of the January 27th, 1945 liberation of the Auschwitz concentration camp by the Soviet Red Army. Rubinstein said "examples of those brave people who were willing to risk their lives during WWII to save their Jewish fellow citizens, can be an inspiration to younger generations." In addition to the ceremony held in Zagreb, schools in Croatia recently dedicated one hour to a special history lesson where students were given lectures about the Holocaust. Expert seminars were also held on that day on the subject of the former Jasenovac concentration camp. Jasenovac, established in the summer of 1941 by the Ustashe, forces of the Nazi puppet state that ruled Croatia during World War II, was the most devastating concentration camp in all of the former Yugoslavia.
The war that still leaves a terrible scar is that of 1992-95, which was run by President Franjo Tudjman, no gatherer of foreign esteem and approval. Croatia has been cooperating with the Hague over war criminals, a fact which did not improve the popularity of the governing party.
The eternal return of the HDZ
The incubus of a retrogressive nationalist regime was removed by the death of Tudjman in December 1999, just in time for a new start in the new millennium. The Social Democrats, under Premier Ivica Racan, ruled for nearly four years, but are now out, having lost elections late last year.
Elections to the 150-seat parliament were held on November 23rd, which were expected to be very close. In fact they were clear cut.
Ivo Sanader, the leader of the HDZ, said on December 4th that he had negotiated sufficient support in parliament for his future government. The HDZ won 66 seats in the parliamentary elections. Sanader said his party had also secured the backing of another 11 lawmakers from ethnic minorities and small right-wing parties, giving his coalition a majority in the 140-seat chamber. Former Prime Minister Ivica Racan and his previous Social Democrat coalition secured just 66.
With a mere 60 percent of the 4.3 million people eligible to vote actually casting a ballot, voter turnout was at its lowest in a decade. The low turnout was seen as a bonus for the right wing, which has a stronger tradition of motivated and disciplined voting.
Sanader has done his utmost to give his party a makeover from the old days. He has moved it forwards on Europe, into which he wants Croatia integrated, and tried to put the cronyism of the Tudjman years behind it. He has expelled nationalist extremists from the party and said that he will pursue moderate policies from a mainstream European conservative perspective. Dissatisfaction with a large national debt, social hardship and high unemployment of officially 22%, but actually, according to the unions, over 30%, led to the triumph of the centre-right party.
Nevertheless there are doubters that the leopard has really changed its spots. Says one resident of Zagreb: "He pretends to have purged the HDZ, but all those who were well-intentioned had quitted the party before he took over the reins. The remainder are canaille." 

Key minority party stays aloof
It is doubtless this common perception that has made minority parties loath to join the coalition. After consultations with Croatian President Stjepan Mesic regarding the appointment of the premier-designate, Croatian Party of Rights (HSP) leader, Anto Šapic, told reporters that his party would not support the HDZ-led government.
"At this moment nothing has changed which would make the HSP alter its position," Šapic said, adding that the party would hold a session to discuss the HSP Presidency's decision not to support Sanader's government. 
Šapic stressed that Mesic had clearly told him there were no obstacles for the HSP to become part of the government in Croatia. "President Mesic also said it was inadmissible for anyone to interfere with the forming of the Croatian government. He criticized the inappropriate behaviour of certain EU ambassadors regarding election results in Croatia and post-election agreements," Šapic told reporters.
This behind-the-scenes pressure by the EU has been effective. Only one minority party, the centre-right Democratic Centre, has agreed to form a coalition with the HDZ. Its one and only MP will be justice minister in the Sanader government, a poetic justice for its extremist past. Others, such as the Croatian Peasants' Party and the Party of Pensioners said that they would vote for the new government, but not join a coalition.

The new dispensation
The HDZ“s electoral triumph, indeed, was made even more impressive by the fact the EU and many in the West openly supported Mr. Racan“s leftist coalition.
Yet most Croatian voters rejected the outside meddling for one simple reason: They understood that Mr. Racan“s economic policies had failed. Under his leadership, as we have seen, unemployment remained high at 17 percent, while the public debt soared. Rather than scoring a "brilliant victory," as Mr. Sanader claimed on November 23rd, the HDZ benefited significantly from widespread frustration with Mr. Racan“s stagnant regime.
The HDZ leader is a pragmatic technocrat, who insists he now leads a revamped, pro-European party committed to Western-style conservatism. The centerpieces of his campaign were a general tax cut and advocacy of Croatia's entry into the EU by 2007.

The poisoned chalice
Politicians like being in power; but they can often have a harrowing time of it. The legacy left by the preceding regime is not so munificent. Racan for all his reformist zeal and good intentions, was not able to address the hard issues of the antiquated political structures in the country, the innumerable petty tyrants in its local administration, the revengeful from the days of the war, the racketeers and crooks who abound in the interstices of the only partly private economy, the war profiteers and the postwar profiteers, the stubborn ethnic cleansers and the fierce nationalists, many of whom would certainly have voted for HDZ. Since its independence in 1991, Croatia has failed to confront its communist past. Croatia“s economic life remains rife with Titoist-style bribery and cronyism.
Thus the true test of Mr. Sanader“s conservatism is still to come. If Mr. Sanader is serious about leading a conservative revolution in the Balkans, he must start an immediate, sweeping decommunisation. The massive public bureaucracy, dominated by former apparatchiks who oppose economic reform, must be dismantled. A legal framework is needed to protect private property rights and the rule of law, and encourage entrepreneurship and creation of investment capital. 
Most importantly, the HDZ leader must vigorously campaign against corruption. He can start by having the Croatian parliament pass a law making it a criminal offence for public officials to engage in bribery, kickbacks or have cronies and family members receive government contracts practices common not only in Croatia but throughout the region.
Yet perhaps the greatest obstacle Mr. Sanader faces is the issue of cooperation with the war crimes tribunal for the former Yugoslavia in The Hague, Netherlands. One fugitive war crimes suspect being sought is General Ante Gotovina. Brussels has made it clear Zagreb“s entry into the EU hinges upon unconditional cooperation with The Hague tribunal, especially regarding the court“s chief request to arrest and extradite Gotovina, who has been in hiding since his 2001 indictment. Mr. Sanader has pledged full cooperation with the tribunal.
Gotivina is not at large in Croatia, according to the government. But the International Criminal Tribunal for the former Yugoslavia (ITCY) is convinced he is. Like Karadzic and Mladic in Serbia or Serbian Bosnia, he is probably being protected by security forces still loyal to the old regime. One person keen to see a HDZ victory at the polls was undoubtedly General Gotovina. Another would have been General Janko Bibetko, also prominent in the 1991-95 war. 
For any decision to hand over Gotovina would spell the end of his ruling center-right coalition. Gotovina is widely viewed as a hero by most Croats for his role in leading a 1995 military operation that ended the Croat-Serb war. Extradition of the general would 
spark mass protests and civil unrest.

EU candidacy on the way
Victory for the HDZ undoubtedly sets back Croatia's chances of joining the EU soon, to which it made a formal application for membership in February in 2003 in Athens, when the fellow Balkan state, Greece, held the revolving presidency. Racan said Zagreb would have fewer chances of joining because HDZ would be less keen on co-operating with ICTY. Successful co-operation with the ICTY is the most important condition of EU membership, he added.
The British and others have made the case of handing over Gotovina a precondition of membership. Racan visited London in late September for talks with Tony Blair. He also made an answer to 4,000 questions on the country's legislation, economy and political system to Brussels. The questionnaire had been brought to Zagreb personally by EU President Romano Prodi in July, testifying to the real interest of Brussels in clinching EU adhesion for Croatia. Zagreb has made a strong statement of intent through the first-ever multimedia presentation of an application to the EU, consisting of a document and a CD-ROM, entitled "Re-Member Croatia."

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ENERGY

Syrian oil company signs US$10m deal with Croats


The Syrian Oil Company signed a US$10m contract recently with a Croatian oil and gas company, authorising it to exclusively explore, develop and produce oil in northern Syria over a period of four years, reported New Europe recently.
The contract stipulates that the Croatian company, INA Industrija Naffte, will conduct geological and geophysical surveys and drill two oil wells in Salameya, some 240 kilometres northeast of Damascus, the Syrian capital.
The contract also provides for two extension periods of two years each, during which the Croatian company will conduct earthquake surveys and drill two other oil wells, at a cost of US$11m.
The Syrian government will take 12.5% of the total future oil production, according to the contract.
The contract, signed by Syrian Oil Minister Ebrahim Haddad and INA's executive director, Zeljko Belosic, also provided for a development period of 25 years starting from the date of the first phase of commercial oil production. Syria already produces some 600,000 barrels of oil per day.

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FOREIGN ECONOMIC COOPERATION

Croatian, Bosnian banks sign 2m Euro agreement on export financing

The Croatian Bank for Reconstruction and Development (HBOR) and LT Gospodarska Bank d.d. Sarajevo on 22nd January signed a framework agreement on export financing, worth 2m euros. This is the first such agreement between the HBOR and a foreign bank. The framework agreement was signed by HBOR management board president, Anton Kovacev, and LT Gospodarska bank d.d. Sarajevo general director, Mijo Misic, HINA News Agency reported. 
The overall trade between Croatia and Bosnia in the first nine months of 2003 amounted to US$923m, which is 28 per cent more than in the same period the year before. Croatia's exports to Bosnia accounted for US$739m of this amount, while imports from that country amounted to US$184m. Bosnia is Croatia's second most important export partner after Italy.

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TOURISM

Croatia's tourism industry earns US $5.6bn in 2003

New Europe reported recently that the Croatian tourism industry last year earned US$5.6bn, its highest figure since the end of the 1990s war, the National Bureau for Statistics (DZS) said recently. Also, according to DZS figures, 7.1m foreign guests last year visited Croatia, 7% more than the year previous. Most of them were Germans, followed by Austrians, Italians, Slovenes, Czechs, Slovaks and Hungarians. DZS said that such figures, representing rises in both tourist arrivals and income, could be explained as a result of the higher quality of services that Croatia was offering to its guests. Because of the improved quality, DZS said, more western than eastern European tourists visited the country in 2003 than in previous years. In 2002, the country made around US$4bn. Tourism is Croatia's most important source of foreign revenue and is also seen as an engine of growth for the entire national economy. The country saw a decline in foreign arrivals in the 1990s owing to the Croatia-Serbian war, but since 2000 tourism appears to be getting back on its feet, analysts said.

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