Books on Croatia
% of GDP
Update No: 094- (24/02/05)
The triumph of Mesic
Croatian President Stipe Mesic won a crushing victory over his ruling
conservative party rival in an election runoff on January 16th, securing a
second five-year term and promising to lead the former Yugoslav republic into
the European Union. Official results gave Mesic 66 per cent of the vote compared
to 34 per cent for Deputy Prime Minister Jadranka Kosor of the Croatian
Democratic Union (HDZ). Ms Kosor is a close ally of Prime Minister Ivo Sanader,
who conceded defeat even before official results were out.
Mesic will oversee the country's EU entry, planned for 2009. His foreign policy
adviser Ivica Mastruko said that his victory would be greeted as good news in
European capitals. "Mesic guarantees continuity, in terms of relations with
Balkan neighbours, with the European Union and with the United Nations war
crimes tribunal," he said.
EU leaders have said that they would open accession talks with Croatia in March,
but they warned that progress hinged on the transfer of war crimes indictee,
Ante Gotovina, to the UN tribunal at The Hague. Sanader insists that Gotovina, a
former general who remains a hero to many Croats, is no longer in the country,
and Mesic said during the election campaign that Zagreb merely had to prove to
Brussels that it was "doing everything" to find him.
Mesic, who had the backing of the three main opposition parties, also reminded
voters of the autocratic rule of Franjo Tudjman, who died in 1999, and warned
against giving too much power to one party. While Kosor is a relative newcomer
to Croatian politics, Mesic was able to campaign on his first-term record of
democratic reform and improved international relations following the isolation
of his hardline nationalist predecessor, HDZ founder, Tudjman.
The liberal corrective
Western diplomats see Mesic as a useful counterweight to the centre-right HDZ,
which controls the cabinet and parliament, and praise him for his courage in
denouncing war crimes committed by Croats during conflicts that tore apart
socialist Yugoslavia. "In many respects, Mesic has been the moral
correction in this country," a senior EU diplomat in Zagreb said. "If
Kosor had won, there would have been a change of atmosphere. It would be more
limiting with the same party having presidency and cabinet."
Croatia is due to start EU accession talks on March 17 if it cooperates fully
with the U.N. war crimes tribunal, particularly in tracking down fugitive
general Ante Gotovina. "We now must prepare for the European Union and meet
all its standards. I have brought the country close to the EU and believe I can
help further," Mesic said on his victory.
Mesic, long a figure in Yugoslav politics, re-emerged as the surprise winner of
a landmark ballot in 2000, replacing the late Franjo Tudjman, who led Croatia to
independence but was later shunned by the West for his extreme nationalism.
The clemency and chivalry of the victor
"I thank everybody who voted for me as well as all those who cast ballots.
I am proud of the maturity of Croatia's democracy," Mesic said in a victory
speech, immediately after the official results were announced. "Today
Croatia is marching with big steps towards Europe. Now we have to be united and
have a national consensus to achieve our goals. We can do it only if we are
Mesic, 70, has pledged to lead the Balkan country of some 4.4 million people
into the EU before the end of the decade, a major prize for a country that was
ravaged by a brutal inter-ethnic war only 10 years ago after it split from the
Yugoslav federation. "We have travelled a long way and Croatia's democracy
has been confirmed. The world can see that and that's why we're standing at the
doorsteps of Europe," said Mesic, a centrist politician who ran in the
election as an independent.
Kosor, a 51-year-old former radio journalist and the first woman to make the
second round of a Croatian presidential race, congratulated Mesic but praised
HDZ supporters and her party chief, Prime Minister Ivo Sanader, for his support.
"I thank Prime Minister Sanader for having the courage to put forward a
woman as a candidate of the biggest and most historic Croatian party," she
told supporters at HDZ headquarters. "I'm proud to have maintained a high
level of dialogue in my campaign. I have not spoken badly of my rivals. In the
runoff I did not accept a dialogue of disqualifications, which was sometimes
below any acceptable level."
Sanader still the man in charge; into the EU
The premiership is still a more important post than the presidency. Sanader
has transformed HDZ into a mainstream conservative force since he was elected
prime minister in November 2003. "In this election we showed that the HDZ
has a permanent, strong and loyal constituency," he said, adding:
"Maybe the time has not yet come for Croatia to have a woman
He is very much the driving-force of Croatian politics and determined to show as
much in the crucial months ahead.
The key issue is membership of the European Union (EU). The summit meeting of
the EU in mid-December 2004 was dominated by the organization's drive toward
expansion to embrace all of Europe and beyond. Turkey was naturally given key
billing. But Croatia was not far behind.
As the world political configuration moves toward multipolarity, each regional
power centre is constrained to push for the greatest reach that it can achieve
in its geographical area until a stable configuration emerges. For the E.U.,
that imperative means a partial transformation from a "community"
based on common standards defining a distinctive form of social life to a power
bloc united by a confluence of interests. The EU's overriding interest is to
absorb as much as possible of its periphery into itself in order to gain maximum
economic power and strategic advantage.
The goal of expansion was served at the summit by decisions to open formal
accession dialogues with Turkey and Croatia. The prospective addition of Turkey
to the E.U. attracted the most interest because its accession would extend the
E.U. into the Middle East and the Muslim world, and would pave the way for E.U.
expansion into the Transcaucasus and for the creation of a sphere of influence
in the Arab world. Croatian accession attracted less attention, but it would
also have strategic significance by setting the stage for eventual E.U.
incorporation of the successor states of the former Yugoslavia.
Along with Romania and Bulgaria, with which Croatia desires to enter the E.U. in
2007, Croatia lags behind member states in economic and political development.
After it declared independence from Yugoslavia in 1991, Croatia was plunged into
the ensuing Balkan wars, first losing territory to Serbia and then, in 1995,
reclaiming it. The wars severely damaged Croatia's infrastructure and impacted
its tourist industry negatively, and allowed nationalist President Franjo
Tudjman -- elected in 1991 -- to solidify an authoritarian regime that lasted
until he died in 1999, which isolated Croatia from its neighbours and the E.U.
After Tudjman's death, Croatia made a change of direction towards the West
similar to those taken by Georgia and Ukraine in 2004. Bridling under their
country's isolation and anxious for economic revival, Croatia's electorate
unseated the ruling Croatian Democratic Union (H.D.Z.), replacing it in the 1999
parliamentary elections with a left-centre coalition pledged to economic reform
and democratisation with the aim of opening Croatia to the West. The transition
was sealed in the 2000 presidential election when a member of the left-centre
coalition, Stipe Mesic, won the vote and committed himself to vigorous
restoration of the rule of law.
Croatia took its last major step of political Europeanization in the 2003
parliamentary elections, when the H.D.Z., which had transformed itself into a
European-style centre-right conservative party, narrowly recaptured control of
the government, promising to execute the economic and political reforms
necessary to move Croatia into the E.U. At least in form -- and in great part in
substance -- Croatia had become politically a "European" country with
the standard configuration of a centre-right and centre-left competition, and a
nationalist right held at bay. The achievement by Croatia of the party structure
typical of E.U. states is the basis of the willingness of the E.U. to begin the
accession dialogue with the expectation of its speedy and successful conclusion,
despite persisting political and economic issues.
The Accession Agreement
The E.U. took the step of opening up the accession dialogue with Croatia
with full awareness of the country's shortcomings and problems. The most
important of those are hangovers from the human rights violations perpetrated in
the Balkan wars of the 1990s. In its wars with Serbia, Croatia regained its
territories at the expense of ethnically cleansing at least 200,000 ethnic
Serb-Croatians. The post-Tudjman governments in Zagreb have been committed to
repatriating ethnic Serb-Croatians, most of whom remain refugees in Serbia, and
restoring their property to them, and to sending accused Croatian human rights
violators to the International Criminal Tribunal for the Former Yugoslavia in
The Hague, Netherlands. Zagreb has made progress towards those goals, but it has
been halting and imperfect.
Although Zagreb had promised to return all Serb property by the end of 2004,
only 40 percent of private property used for temporary accommodation and only 20
percent of forcibly occupied property has been retrieved by its owners. In
addition, Croatian state prosecutor Mladen Bajic has opened an investigation of
a criminal conspiracy between officials in Croatia's state Real Estate Agency
and a Serb real estate agency, in which forged powers of attorney were
reportedly used to sell more than 10,000 houses in Croatia without the knowledge
of their Serb owners.
More important to the E.U. than the refugee question is the failure of Zagreb to
capture former Army General Ante Gotovina, regarded by many Croats as a war
hero, and extradite him to The Hague. Indicted in 2001 for planning the massacre
of 150 Serbs and the ethnic cleansing of 150,000 Serbs during Croatia's
successful 1995 offensive, Gotovina went underground and has evaded arrest.
Zagreb insists that Gotovina has fled Croatia, whereas United Nations war crimes
prosecutor Carla Del Ponte has complained to the Security Council about Zagreb's
"lack of cooperation" in the case.
The decision to open the accession negotiations was clouded by initial E.U.
insistence that Zagreb hand Gotovina over to The Hague tribunal before the
dialogue could begin. Zagreb resisted "conditionality" and a
compromise was reached that Croatia would have to give "full
cooperation" to the tribunal, without specifying criteria that would
confirm it. The accession dialogue is scheduled to begin on March 17, 2005.
Croatia's economy also does not come up to E.U. standards. Under its Country
Assistance Strategy, the World Bank approved a $1.5 billion lending program to
Zagreb on December 22 in order to "support the government's growth and
reform strategy for successful E.U. accession and integration." The loan
came with the directive that Zagreb shift "the sources of growth from
public sector expenditures and consumption to private sector investment and
The bank's reservations are an acknowledgment that Croatia's economic growth
since 1999 has been based in great part on post-war infrastructure renewal and
expansion, and domestic consumption, both financed by debt. The chief economist
at Croatia's Zagrebacka Bank, Zarko Miljenovic, has noted that those stimuli
have played themselves out: "Now the country does not invest so much in
roads and there is no more room for growth of personal consumption."
Having gone through a growth spurt since 1999, in which G.D.P. per capita
increased from US$4,371 to US$6,484 in 2003, Croatia still has a high
unemployment rate of 18.1 percent and now has a foreign debt of US$25.45
billion, which exceeds 80 per cent of G.D.P. and is double what it was in 2000.
In December, the International Monetary Fund called on Zagreb to take
"difficult measures" to hold its budget deficit at 3.7 per cent of
G.D.P., including dampening wage increases in the public sector, paring down the
bureaucracy, scaling back indexation of pensions, restraining social welfare
expenditures, stepping up privatisation -- especially of inefficient shipyards
and steel companies -- and curbing soaring health care costs.
Under pressure from the World Bank and the I.M.F., Croatia is now in the
familiar position of lagging European states that face demands from
extra-national organizations to execute market reforms and exercise fiscal
discipline, and from the domestic public to maintain the social safety net,
whether in the form of entitlements, welfare benefits, public employment or
subsidies to non-competitive industries. To Zagreb's advantage, economic growth
has not stalled and hovers at around 4 percent per year, and exports --
dominated by machinery and transportation equipment -- have been increasing
relative to imports. Nonetheless, at $15 billion in 2004, exports are only
one-half the total of imports.
With a balance of agricultural, industrial and service sectors, Croatia's
economy is not inherently weak, yet its future growth depends on its ability to
attract private investment and on the general health of the major European
powers. It is not clear that Zagreb will be able to execute successfully the
reforms demanded by international organizations and come up to EU economic
standards. Although Croatia's economic problems were not a major issue at the EU
summit, they are likely to become one during accession negotiations if reform
continues to falter and Zagreb proves incapable of maintaining fiscal
discipline. In that case, Brussels will have to choose between its geostrategic
objectives and its standards.
Having gone through a period of economic growth based on debt-driven,
post-war rebuilding and private consumption, and a genuine, though imperfect,
democratisation, Croatia is poised to enter the E.U. burdened with structural
economic weaknesses and the possibility of a strengthened nationalist
opposition, no longer completely at bay. The country is now in a new phase of
post-Tudjman politics, in which the centre-right and centre-left establishment
can no longer claim enthusiastic support, and faces scepticism about its ability
to engineer broadly distributed economic growth, and resentment against E.U.
demands for cooperation with The Hague tribunal.
The pro-European political forces in Zagreb have responded with half measures to
the calls of international financial organizations for reform, and with partial
compliance to demands for action on war criminals.
Given the hard choices posed by outside powers, the established Croatian
political class will face increasing stress because it can no longer count as
confidently as it had on popular support. It will be difficult for any
government to overcome domestic resistance to economic reform and resistance to
vigorous compliance with The Hague tribunal. The "engine" of the
former Yugoslavia is sputtering.
First Croatian wind power plant put into service
Croatia's first commercial wind power plant "Ravne 1", installed on
the northern Adriatic island of Pag, was put into service on February 4th, HINA
News Agency reported.
The 5.6-megawatt plant was formally opened by the Minister of the Economy,
Labour and Entrepreneurship, Branko Vukelic, who said that the project would
have a positive impact on the entire economy.
The power plant was built by the Croatian-German company Adria Wind Power d.o.o.
[shareholding company], which has invested 6.5 million euros in it.
However, there is a government decree that bans the construction of facilities
using wind power for the production of electricity on the islands.
Asked to comment on the decree, Vukelic said he had seen for himself that the
wind power plant had no adverse effects on the environment. "Economic
development must be sustainable, without negative effects on tourism and the
environment, so it is necessary to seek a compromise in this regard," the
Vukelic said that the government decree encouraged investment along the coast
and that it also provided for the development of wind power plants on the
Pipeline to Adriatic through Croatia safe for transport of oil, says company
The results of tests that have been performed on pipelines of the Adriatic Oil
Pipeline (JANAF) company show that the oil pipelines are a closed technical
system, safe for the transportation of oil, JANAF said in a statement recently,
HINA news agency reported.
According to the statement, there are no leakages from the system. JANAF thus
responded to claims by environmental associations that the pipeline was damaged
and that JANAF did not want to make the findings of the tests public.
Vodatel and SES Astra introduce net, video services
SES Astra, an SES Global company, and Vodatel, a company based in Zagreb,
Croatia, announced the conclusion of an agreement for satellite Internet
services via Astra 23.5 degrees East and new interactive entertainment services
for Croatian households under the brand name eTV, spacedaily.com reported
ETV provides a variety of multimedia services comprising Video On-Demand with a
choice of 100 movies every month. Users will also have access to more than 100
international and local TV channels. The services are available via the eTV
Media Centre box connected to a TV set and a satellite dish pointed at Astra
23.5 degrees East. In addition, Vodatel will introduce the Sat ADSL service for
the Croatian residential market offering broadband access via satellite to the
Internet with speeds of up to 1,024 Kbps. Sebastian Popovic, chairman of Vodatel,
said: "Our eTV media centre box enables interactive home entertainment with
very attractive services such as Video-On Demand, TV & Radio, music Jukebox,
email and many others. Thanks to our agreement with the leading satellite
operator in Europe, SES Astra, we are able to provide reliable and high-quality
broadband and multimedia services to the residential market in Croatia."
Commenting on the agreement, Philippe Glaesener, VP and general manager Sales
Broadband and IP of SES Astra, said: "We are pleased that through this
agreement with Vodatel, Croatian households can now enjoy new broadband and
interactive multimedia services via the Astra Satellite System. This agreement
further underlines SES Astra'' commitment to the region."
Lidl chain to open shops in Croatia
Germany's Lidl supermarket chain is to open shops in 17 Croatian towns this
November, the daily Jutarnji list reported on January 24th, Deutsche
Presse-Agentur (dpa) reported.
Lidl is expected to invest around 440m Euro (US$52m) in the first wave of
expansion into the Croatian market. Stores will be located in towns mostly in
central and eastern Croatia and also in towns on the Adriatic coast. Economic
analysts estimate that Lidl, owing to its low prices, may soon take a large
share of the market in Croatia and may jeopardise Konzum, currently the biggest
such chain in the country.