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CROATIA





In-depth Business Intelligence 

Key Economic Data 
 
  2003 2002 2001 Ranking(2003)
GDP
Millions of US $ 28,322 22,421 20,300 61
         
GNI per capita
 US $ 5,350 4,640 4,550 70
Ranking is given out of 208 nations - (data from the World Bank)

Books on Croatia

REPUBLICAN REFERENCE

Area (sq.km)
56,542

Population
4,496,869

Capital 
Zagreb

Currency 
Kuna

President 
Stipe Mesic

Private sector
% of GDP 
55%


Update No: 108 - (30/05/06)

The US Vice-President, Dick Cheney, is certainly throwing his weight about on the world stage these days. He was in Vilnius in early May where he fulminated against the retrograde regimes in Moscow and Minsk, addressing the assembled company of Baltic and Caucasus leaders, plus those of Ukraine and Moldova.

Dubrovnik Summit Meeting Of US-Adriatic Charter 
He then went to the Balkans. A summit meeting of the prime ministers of Croatia, Albania and Macedonia, all members of the US-Adriatic Charter, was held on May 7th in the southern Croatian seaside resort of Dubrovnik, and Cheney attended this forum aimed at promoting cooperation between the three aspirants for NATO membership.
Opening the event, the meeting's host, Croatia's premier, Ivo Sanader, expressed gratitude to the United States for launching this initiative for the establishment of the said charter, which he said was useful for Croatia's efforts to join NATO. "NATO membership is a strategic goal of Croatia, that is aware that peace and security cannot be achieved in isolation. We recognise in NATO a uniquely efficient political and defence alliance based on the values of peace, freedom, democracy and market economy," the Croatian premier added.
Since the visit of US President Bill Clinton in 1996, Cheney has been the highest US official to arrive in Croatia, Sanader said, emphasising strong ties between Washington and Zagreb.
The US Vice President expressed strong support for the aspirations of the three members of the US-Adriatic Charter for joining the Euro-Atlantic community, adding that Albania, Croatia and Macedonia had made great headway. "We deeply appreciate the fact that the three countries have already been engaged alongside forces of the United States and NATO in Afghanistan and Iraq," Cheney said. 
He described the Dubrovnik meeting as an important event for the assessment of the progress they had made in preparing themselves for NATO membership. "We understand the desire to join NATO and the European community," Cheney said at the Charter meeting. "It's very important -- both for NATO and the EU -- to take in new members, people who aspire to join the organisation, help rejuvenate it, and to help us rededicate ourselves to those basic fundamental values of freedom and democracy that are a very important part of our collective security arrangements," added Cheney. 
Sanader, and his counterparts, Sali Berisha of Albania and Vlado Buckovski of Macedonia said they expected that their countries would receive a clear signal from the coming NATO summit in the Latvian capital of Riga about the timetable for their accession to the alliance. Berisha and Buckovski also expressed the readiness of their countries to deploy their forces together with NATO and US contingents anywhere in the world.
After the meeting, PM Sanader said that there had been no mention of the agreement on non-extradition of US soldiers to the International Criminal Court (ICC), i.e. its controversial Article 98, on this occasion. Sanader, however, expressed readiness of his country "to continue talks on the matter."
Asked by reporters whether the US side asked for the deployment of Croatian troops in Iraq, the premier answered in the negative, adding that Croatia would continue playing an advisory role in that country.
"It is our hope that in addition to receiving a strong signal for our future membership in the Alliance at the next NATO summit in Riga, this November, a clear timeframe for those talks will be set," said Sanader. 
On the day before the conference opened, Cheney held talks with Sanader and Croatian President Stipe Mesic. They discussed bilateral ties, Croatia's contribution to the global war against terrorism and reforms the country is undertaking on its path towards NATO. 
Americans are "tremendously impressed with Croatia's progress over the past few years," Cheney said. "We are strongly supportive of Croatia becoming a full member of the trans-Atlantic community, in terms of working with NATO and the EU," he added. 

EPP-ED Parliamentary Group's Meeting In Split
Croatia has some splendid historic cities, ideal venues for conferences. Dubrovnik is one; another is the southern Croatian seaport of Split. 
The latter deserves to be remembered for more reasons than one. But to an observer of the British political scene it has the distinction of having given rise to one of Dennis Healey's famous witticisms when he said at the time of the Vance-Owen plan to bring peace to Bosnia in the 1992-95 war that for his irenic efforts David Owen deserved to be made Lord Owen of Split.
A two-day meeting of the European People's Party and European Democratic Christians (EPP-ED) parliamentary group began in Split on May 11th, which Prime Minister Sanader has described as one of the most important political events in Croatia this year.
The meeting at the Split hotel was opened by Hans-Gert Poettering, chairman of the EPP-ED group in the European Parliament. He complimented Croatia and underlined the big friendship between the strongest group in the European Parliament with Croatia and his personal friendship with PM Sanader. Poettering explained a misunderstanding surrounding his recent interview with Reuters by stating that he said that European Union enlargement without a EU Constitution was questionable, but that Croatia was on its road to the Union.
Complimenting the Croatian government, he said he had always believed Sanader when he was saying that he did not know the whereabouts of war crimes fugitive Ante Gotovina and that this was why Croatia could not arrest him. "That proved to be correct because Gotovina was arrested in Spain and it was the Gotovina case which prolonged Croatia's EU integration," added Poettering.
In his address, Sanader welcomed the parliamentarians from all over Europe, saying he was proud and happy that such an event was taking place in Croatia and in his home town of Split. Europe can create a peaceful future for all its citizens and this is the only way, said Sanader, adding that the European unification project was important for all citizens of the continent.
He recalled that it was the EPP which immediately after World War Two advocated Europe's unification, and that he was certain Croatia would be a member of the EU today, if a war had not been imposed on it in the early 1990s.
Croatia also serves as the EU's bridge to Southeast Europe and it is very important that Croatia as well as other countries become EU members as soon as possible, said Sanader. He added this was where the EPP became very important because it was a great friend and one of the biggest advocates of Croatia's EU membership.
The main part of the conference began under the title "On the Road to Joining the EU". The EPP-ED group has 264 deputies from all 25 EU member countries.

Croatia May not Achieve 2009 EU Entry Date 
Nevertheless, a word of caution is appropriate as regards the timing of the whole process. Croatia will not make the grade on Brussels-required reforms in time for a 2009 EU entry, the German press has reported - a significant source since Germany is a traditional ally of Croatia and strongly backs its EU entry.
Croatian leader Ivo Sanader and his government recognise that EU membership by early 2009 is unrealistic. "For us, this is not about an early date, but about the 100 percent fulfilment of all EU criteria," said foreign minister Kolinda Grabar Kitarovic. 
Membership talks with Croatia are currently at the screening stage and it has become clear that aligning Croatia's laws with EU rules could be a very slow process indeed. "If we continue at the current speed, we will need years to make the adjustments," Neven Mimica, chairman of the Croatian parliament's European integration committee, was quoted as saying. 
In its November progress report, the European commission regarded improved functioning of the Croatian judiciary a "major challenge." Corruption also continues to be "a serious problem", although the legal framework to combat corruption is largely in place. 
Some progress has been made, however, after the Croatian parliament adopted a series of EU-conform laws in an effort to reform the justice system. But there are still legislative proposals sent back and forth, a ping-pong between the Croatian bureaucracy and into parliament. 
"From an enterprise point of view, the speed of the necessary reforms has not held step with overall economic development," Peter Presber, head of the German-Croatian Chamber of Industry and Commerce, told Handelsblatt. 
Also criticised are lengthy permission procedures, lack of transparency in public tenders, slow progress on privatisation plans and the unclear situation regarding tax laws. 
One issue that will weigh heavily in Zagreb's accession talks is its attitude towards minority rights, especially concerning Croatian Serbs. Of the more than 300,000 Serbs who fled during the Serbian-Croatian war of the early nineties, only half have returned. Most are older families who earn a living farming. Younger and middle-aged Croatian Serbs are not eager to return for fear of unemployment and discrimination.

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BANKING

Generali plans acquisition of Podravska Bank
 

Italian insurance group Generali will become the largest single owner of Podravska bank (POBA) from Koprivnica, the tenth largest bank in Croatia, Croatia Today reported.
According to reports, this would be a direct deal between Generali and one of the largest stockholders of Podravska bank, according to which the third largest European insurance company would acquire in the first stage about 10 per cent of POBA's shares.
POBA is majority owned by Italian capital, while the largest shareholders are Lorenzo Gorgoni (9.34 per cent), Trieste-based company Cerere (9.30 per cent), the owner of Cerere Djuro Predovic (8.74 per cent), the entrepreneur from Milan Miljan Todorovic (8.18 per cent), and the family of bankers Montinari from Leche, which currently holds more than 20 per cent in POBA. It remains unknown whether POBA would be re-capitalised by all or only larger shareholders, but this would probably mean a more significant ownership restructuring.
Montenegro's Hipotekarna bank from Podgorica is also mentioned as a serious contender for an ownership stake in POBA. Hipotekarna bank was at the end of 2005 also acquired by the majority owners of Koprivnicka bank: families Gorgoni and Montinari and company Cerere.

Zagrebacka Bank posts 2005 net income up by 7.1% 

Zagrebacka bank (ZABA) Group generated pre-tax revenues of 1.25 billion crowns last year, which is by 5.6 per cent up against 2004, while net revenues reached 1.02 billion crowns higher by 7.1 per cent, Croatia Today reported.
Total revenues amounted to 3.38 billion crowns, ZABA officials stated. Total assets of the group reached 71.81 billion crowns (11.6 per cent up on 2004) at the end of last year, it was reported. Approved credits totalled 38.9 billion crowns, which represents an increase of 22.3 per cent. At the end of 2005, client deposits reached 47.17 billion crowns, which represents an increase of 6.9 per cent.

Societe Generale buys HVB Splitska Bank 

Societe Generale SA, France's third largest lender, will buy Croatia's HVB Splitska Bank for one billion Euro to gain access to an economy that is growing three times as fast as its home market, Croatia Today reported.
The Paris-based bank will acquire 99.8 per cent of the Croatian lender from Bank Austria Creditanstalt AG, a unit of Italy's UniCredit SpA, Societe Generale said.
The transaction will be completed by the end of June, the company said. "It's right for them to proceed with this strategy even though the prices are higher now because of the fewer opportunities." Societe Generale, led by Chairman Daniel Bouton, has expanded into countries such as Russia and the Czech Republic to offset limited opportunities for growth at home.
The Croatian economy grew 4.3 per cent last year, outstripping France's 1.4 per cent rate. The purchase "fully supports Societe Generale's strategy to expand its retail banking network in attractive high-growth markets in Europe," Societe Generale Chief Executive Officer, Philippe Citerne, said. Split-based Splitska is the fifth-largest lender in Croatia, which started talks to join the European Union in October. It hopes to join the EU by the end of the decade. Splitska has 112 branches, 460,000 retail clients and 2,000 corporate customers, Societe Generale said.
It acquired Splitska through its 21 billion Euro takeover of Germany's HVB Group last year. This is the second company that Societe Generale has bought from Milan-based UniCredit this year.

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FOREIGN INVESTMENT

First HPB Alpha fund established 


The association for investment fund management HPB Invest has established HPB Alpha fund, an open investment fund with a private offer, which is the first of its kind in Croatia, Croatia Today reported.
HPB Alpha fund will collect financial assets by privately offering stakes in the fund, meaning that the offer is directed to a limited number of so-called qualified investors. This provides investors with an opportunity to structure their portfolios and develop investment strategies especially adjusted to their needs and desires, with a goal of achieving above-average revenues. The founder of this fund, HPB Invest, is operating within Hrvatska postanska bank (Croatian postal bank).

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FOREIGN RELATIONS

Croatia to boost ties with South Korea and India
 

Croatia is currently beefing up ties in Asia: in international relations with South Korea and in business relations with India. South Korea and Croatia have agreed to strengthen diplomatic ties with plans for embassies in each other's countries and cultural and tourism exchanges, the South Korean presidential office said during a visit to Seoul by Croatian President Stipe Mesic, Deutsche Presse-Agentur reported. 
During the visit, aimed at drumming up Korean investment in the Balkan country, Mesic met with his South Korean counterpart, Roh Moo Hyun for talks in which he highlighted Croatia's modernised rail network and port facilities and the establishment of a free trade zone.
Croatia's possible entry to the European Union would lead to bilateral trade and investment, Roh was quoted as saying. Following their meeting both presidents signed two agreements on reciprocal investment guarantees and abolition of double taxation. The two countries have had diplomatic ties since 1992. 
Moreover, Croatia is also making efforts to attract Indian entrepreneurs to start businesses there. Leading these initiatives is the Croatian ambassador to India, Dino Debeljuh, and a group of north-Indian entrepreneurs. Debeljuh headed the first Indian tourist delegation to Croatia.
The 15-member team, comprising industrialists, doctors, real estate developers and tourists, is the first organised delegation from India to visit Croatia. Presently, of the nine million tourists visiting Croatia annually, only about 500 are from India, said Debeljuh. "This year an estimated 2.2 million Indian tourists would go abroad. We hope many of them will visit Croatia," he said during a press conference. "We will launch a publicity campaign to attract Indian tourists. After Chandigarh, our campaign would start in Delhi, Mumbai and Chennai," he continued. Naveen Sharma, trustee of the Delhi-based Millionaires Trust and author of the first e-book on Croatia, is one of the three Indian entrepreneurs who have set up businesses in Croatia recently. While Sharma has set up an Indian resort and restaurant, Dr K R Arya, chairman of the Rehabilitation Council of India (RCI), has set up a hospital. K K Dheer, another entrepreneur, has started a school. Sharma said Croatia has relaxed its visa norms and made them people-friendly recently. "We are also holding dialogues with Bollywood producers and directors to get them to shoot their films in Croatia with all the best of European scenic beauty intact and at much less cost," Debeljuh said. He added that Croatia is also keen to increase bilateral trade with India, which now stands at US$43 million.

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INDUSTRIAL PRODUCTION

Industrial production down 6.8% in Jan-Feb 2006


For the first two months of 2006 compared to the same period last year industrial production efficiency increased 6.8 per cent, while the number of employees in the Croatian industrial sector recorded an annual decrease in February 2006 as compared to December 2005, according to the initial results published by the Croatian Statistics Bureau (DSZ), Croatia Today reported recently.
The total number of employees in the industrial sector decreased this February 1.1 per cent compared to the same month last year. While compared to December, the total decreased 0.4 per cent.
Reduction in the number of employees in the industrial sector this February, compared to the same month last year, was recorded in mining and extraction by two per cent and in the processing industry 1.2 per cent. In electricity, gas and water supply sectors, the number of employees increased 0.2 per cent.
At the same time, a significant annual increase of 41.5 per cent was recorded in the production of motor vehicles, trailers and semi-trailers.
Significant growth was also recorded in the production of radio, TV devices, equipment (10.6 per cent), metal products - aside from machines and equipment - (5.1 per cent) and of other non-ferrous mineral products (3.4 per cent).

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TELECOMMUNICATIONS

T-Com selects ECtel for project implementation
 

Integrated revenue management solutions provider ECtel announced that it has received a first time order from T-Com Croatia, Croatia's national telecom operator, for the implementation of its Fraud View fraud prevention and revenue assurance solution, Croatia Today reported.
This order follows previous business within the T-Com group. "We are very pleased that another leading member of the T-Com group has chosen ECtel as its partner in the combat against fraud and revenue leakage, and we will continue our efforts to further penetrate the group," ECtel President and CEO Eitan Naor was reported as saying. "We are looking forward to having a long-term partnership, and are confident that Fraud View will provide excellent protection against revenue leakage concerns which T-Com is facing, and deliver a fast return on investment."

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TA against T-HT's acquisition of Iskon

The Croatian Telecommunications Agency (TA) has been clear in its attempts to prevent T-HT's acquisition of Iskon. "We will spare no efforts and means trying to prevent T-HT's planned acquisition of Iskon, as such an acquisition would send completely the wrong message to the Croatian Telecommunications market that anything is allowed and that if you have enough money, you can buy whatever you like and destroy the market competition. This would, in the end, be a direct loss for end-users, as they would be deceived, while power distribution on the market would be heavily misbalanced," warned TA Council president, Gasper Gacina, referring to the acquisition announced by T-HT, Croatian Today reported.
By acquiring Iskon, T-HT will strengthen its position in the sphere of business users, where Iskon occupies the leading market position, it was reported. In the segment of private users, Iskon also acquired a large number of clients - more than 140,000 and about 12,000 DSL subscribers - which is why T-HT would remove the strongest competitor in this sphere after the merger.
Operators Vodatel or Globalnet and new fixed phone network operators H1 and Optima Telekom, aiming to strengthen their position in the sphere of integrated services, such as in phone networks, internet and television, will definitely face major difficulties in the future.
They would be competing against T-HT and Iskon, which would be, according to the announcements from both companies, keeping its own brand. This in turn would represent an extremely difficult, almost impossible task.

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