Books on Croatia
% of GDP
Update No: 104- (01/01/06)
Gotovina grabbed at last
A prime obstacle to Croatia's accession to the European Union (EU) has been
removed. Croatian war-crimes fugitive Gen. Ante Gotovina has been arrested after
a four-year manhunt, boosting Croatia's bid to join the EU and increasing
pressure to track down other former Balkan War leaders still on the run. There
is no doubt that his capture is a major event, and a positive one for Croatia.
The arrest by Spanish authorities, as Mr. Gotovina dined at a hotel in the
Canary Islands, also underscores how the EU's policy of "soft power"
-- holding out the carrot of membership in the world's largest trading bloc --
can prompt countries into moving toward more-democratic systems.
Gotovina was arrested on the Canary island of Tenerife on December 7th and flown
to The Netherlands aboard a Spanish military aircraft. From Rotterdam airport he
was taken to the detention unit of the U.N. court in The Hague.
Gotovina had been a fugitive since he was indicted by the U.N. International
Criminal Tribunal for the Former Yugoslavia (ICTY) in 2001.
One of three top fugitive suspects from the 1990s Balkan wars, Gotovina, 50,
faces charges relating to the death of about 150 ethnic Serb civilians during a
Croatian offensive in the Serb-held Krajina region in 1995. The indictment said
Croatian forces under Gotovina went on a rampage of persecution, murder, plunder
of property, destruction of towns, deportation and inhumane acts. He faces three
counts of crimes against humanity and three of war crimes.
But he is considered a hero by many in Croatia. He is admired notably in the
Zadar region, where he was born, for repelling Serb forces in 1993. Local
officials presented him with the keys to the town and until recently his
portrait hung over the main gate in the town's medieval walls. Thousands of
people gathered in Zadar to express their support for him, national television
reported. The maximum sentence he faces is life imprisonment. Mr. Gotovina has
declared his innocence.
North Atlantic Treaty Organization Secretary-General, Jaap de Hoop Scheffer,
hailed the arrest as "good news for the world" and for Croatia. Olli
Rehn, the EU commissioner in charge of enlarging the 25-nation bloc, said he
hoped it would "urge other countries in the region to track down their
suspects" and allow Croatia to "focus on reforms and establishing the
rules of law."
But Carla del Ponte, the chief United Nations war-crimes prosecutor who thanked
Croatian and Spanish authorities while announcing the arrest, immediately turned
up the heat on Serbia and Montenegro to help track down Bosnian Serb wartime
leader Radovan Karadzic and his military chief, Ratko Mladic, the court's top
two remaining fugitives. "I'm still angry because Karadzic and Mladic are
still at large, and that is a real scandal," Ms. del Ponte said before
meeting with Serbian Prime Minister, Vojislav Kostunica.
Serbian President, Boris Tadic, congratulated Croatia and said his government is
doing "everything possible" to bring in the six Serb war criminals
still at large. He also admitted that his government's policy of "voluntary
surrender" -- trying to lure war criminals through negotiation instead of
aggressively hunting them down -- might have to change. "Something has to
happen," he said after meeting with Mr. Rehn in Brussels. "Otherwise,
we can't join the EU."
Into the EU
The EU, like NATO, has said it will deny membership to any country that still
has Balkan war criminals at large. The EU agreed in October to start membership
talks with Croatia after a U.N. ruling that the country was doing all it could
to find Mr. Gotovina. EU officials continued to say the missing war criminals
would be a stumbling block.
Now Croatia, with its strong economy and stabilizing political situation, looks
likely to join the EU in 2009, following the planned memberships of Bulgaria in
2007 and Romania in 2007 or 2008. The extradition of the former French Foreign
Legion officer "will remove the residual risk that the EU can backtrack on
accession talks and say Croatia is not cooperating," says Stanislav Gelfer,
an emerging-markets analyst for Credit Suisse First Boston.
EC forecasts GDP growth rise in 2006-2007
Everything is preparing the way for Croatia's EU accession in this decade. Its
economic performance is under close scrutiny in Brussels. According to the
European Commission's report on economic growth in the EU and the Eurozone,
Croatia's real GDP growth in 2005 is expected to come down to 3.6% from 3.8% in
2004, as a consequence of lower growth of private consumption and gross fixed
Based on stronger private investment in the context of ongoing privatisation and
enterprise restructuring, and a continued strong merchandise export and tourism
performance, forecasts show four per cent growth in 2006 and 4.4% in 2007. EC
forecasts moderate growth of private consumption of 3.7% in both 2005 and 2006
and of 3.8% in 2007 as further EU integration increases consumers' confidence.
Growth of fixed capital formation is expected to accelerate over the forecast
period from 3.6% in 2005 to 5.3% in 2007, as a result of stronger private
investment following further improvements in the overall business environment.
Real exports will continue to grow by 6-7% annually, in particular backed by
strong services exports. A rising stock of foreign direct investments will
gradually improve the prospects for merchandise exports. Real imports are
expected to expand more slowly than exports, but they will accelerate in line
with growing GDP. Accordingly, net exports will contribute by almost half a
percentage point to GDP growth each year over the forecast period, the EC says.
As a result of higher oil and food prices annual average consumer price
inflation is expected to rise by 3% in 2005. Further adjustments of
administrative prices and indirect taxes will slightly accelerate inflation
further in 2006 and 2007 to 3.1% and 3.2% respectively.
In line with accelerating GDP growth, employment growth is forecast to
accelerate slightly from 0.9% in 2005 to 1.2% in 2007. This will lead to a
gradual reduction of the unemployment rate from 13.3% in 2005 to 12.1% in 2007.
Real wage growth is expected to accelerate in 2006 and 2007, slightly above
average productivity gains, leading to an increase in real unit labour costs.
The general government deficit is expected to be reduced to 4.5% in 2005 as
compared to 4.9% of GDP in 2004. The forecast assumes a further reduction of the
deficit to 3.7% in 2006 and 3.4% in 2007.
The fiscal impact of the agreed repayment of old pensioners' claims starting in
mid-2006 remains unclear and contributes a potential downside risk to fiscal
performance over the forecast period.
The general government debt-to GDP ratio is expected to be reduced to 43.1% by
2007. The trade deficit is expected to come down only slightly in 2006 and 2007,
as import growth remains strong, reflecting a rather high import content of
exports and a stronger private consumption growth in 2007.
Croatia, Ukraine sign bilateral protocol
At a meeting of a working group in Geneva, Croatia and Ukraine signed a
bilateral protocol on access to commodities and services markets in
consideration of Ukraine's application to join the World Trade Organisation,
Interfax News Agency reported.
Though the countries had firm positions regarding access to the markets for
goods and services of Ukraine, the two countries' delegations managed to reach
consensus and to sign a bilateral protocol, the press service noted.