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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: 111 - (25/08/06)

The Croatians are immensely intrigued by the secession of Montenegro from Serbia. They wonder what this portends for them.

The Montenegrin moment
They have a new rival as a tourist attraction; that is for certain. Montenegro is every bit as attractive a place, perhaps even more so. Properties are going for a song - but not for much longer (see below).
Montenegro has no scruples about financial matters. Monte Carlo is bone fide by comparison. It is a potential Liechtenstein; it just has to declare itself a tax haven and it would become a magnet for funds fleeing to the Balkans, by-passing Dubrovnik.
And then there is the tantalizing prospect that it has oodles of oil off its coast in the Adriatic, although this has yet to be confirmed. 
The Croats have an interesting new neighbour, a potential Lichenstein-cum-Kuwait no less. Who knows?

The Dalmatian dream
With Montenegro going independent, it is increasingly being coupled with Croatia as a prime site for tourist development. The Dalmatian coast of the Adriatic is indubitably one of the most beautiful places in Europe, perhaps the world.
Someone who got their first is Andrea Marston, the general manager at Dream Property Croatia & Montenegro, a British real estate agency that entered the Croatian market four years ago and Montenegro two years later. Marston said the best properties in Montenegro would not sell cheaply, especially because traditional stone buildings in good condition - the kind most buyers want - are in short supply. "All the old stone properties are being snapped up rapidly," she said. 
Yet Marston said she expected prices to continue to rise in all segments of the Montenegrin housing market for the next few years, basing her analysis on the experience of neighbouring Croatia, which is a similar market in many respects. 
"Montenegro is not anywhere near the top of the curve yet. It is still behind Croatia, and prices in Croatia are still increasing, a little bit slower than they once did but not much slower," she said. "Montenegro will catch up with most of Croatia, probably in five years, but it will not catch up with Dubrovnik in the same time." 
(The average price per square meter for properties on the Croatian coast is 1,500 Euro, although prices have gone as high as 5,000 Euro to 6,000 Euro in Dubrovnik.) 

Dubrovnik has few rivals
Croatia is a splendid place of course, with great scenery along its Adriatic coastline, magnificent mountain views and ancient towns. The jewel here is indeed the capital, Dubrovnik.
Tourism is the main engine driving the Dalmatian Coast economy these days, so visitors receive welcoming smiles. In the right weather, Dubrovnik can feel like a museum city, with visitors eager to experience its beauty and marvel at the intricacy of its historic buildings. Obviously, this can no longer be considered one of Europe's best-kept secrets. Few other cities on the continent quite compare with it.
Dubrovnik is an al fresco sort of town in the warm seasons and during the dry days. The massive wall that surrounds the old city, or Stari Grad, is a wonderful place to gain an overall impression of Dubrovnik. Built between the 13th and 15th centuries to repel enemy sieges, it is a wide and lofty barricade, 80 feet tall and fully intact. It has all the turrets, forts, towers and casemates with cannons that a Hollywood scenic designer could wish for.
The wall covers slightly more than a mile, uninterrupted, with fine views -- sea, harbour, the orange-tiled rooftops of dwellings within the old city and modern Dubrovnik clinging to the foothills just outside the gates. A stroll on the Dubrovnik wall has to be one of the best walks in Europe.
The wall bridges the two most distinct aspects of Stari Grad. Visitors typically come for the wonderfully preserved or restored historic sites, most of them at ground level. That is where the tour guides hold up their umbrellas and explain the palaces, the Franciscan and Dominican monasteries (built for further protection), the churches and the odd artifacts like Orlando's Column. (Sculpted in 1417, its statue of Roland, the legendary medieval knight, is a symbol denoting benevolent powers protecting the city.)
The guides never fail to mention St. Blaise, the city's patron, usually depicted holding a model of Dubrovnik as it looked before the devastating earthquake of 1667.
Up on the wall, down along its base and along the sides of V-shaped Stari Grad, visitors with time can obtain a look at homes and the villagers who occupy them. They represent only a small percentage of Dubrovnik's 45,000 residents, but they serve as excellent ambassadors for all the rest. No wonder the United Nations Educational, Scientific and Cultural Organization (UNESCO) has declared the Stari Grad a World Heritage site. 
A hike up the terraces is rewarded with close looks at tucked-in apartments and the cozy Hotel Stari Grad, one of only two hotels within the walls. The other, the exclusive Pucic Palace, shares a terrace with the morning market, where farmers and artisans sell their goods.

The history of Dubrovnik
Through the centuries the city endured many shifts in power and allegiance: Romans, Turks, Venetians, the Croatian-Hungarian kingdom, all had their moments. The 1667 earthquake levelled the city-state, which had been an important seat of Renaissance enlightenment. Citizens rebuilt it, but trade declined. The artistic treasures and cultural riches were destroyed.
At the turn of the 19th century, Napoleon's forces ruled. Then came the Austro-Hungarian Hapsburg Empire. Croatia tried and failed to break away from its Austrian rulers. In 1867, Hungary ruled Croatia, but Dalmatia, (including Ragusa, Dubrovnik's earlier name), stayed in Austria's grip.
Fast-forward to post World War I when an uneasy bundle of Croats, Serbs and Slovenes were gathered together as the Kingdom of Yugoslavia (i.e. southern = yugo - Slav).
Around that time, Ragusa became Dubrovnik, named after the dubrava, the holm oaks, or holly trees, that grew on the hillsides. The area fell under fascist rule during most of World War II. Afterward, it was part of Tito's Yugoslavia and his independent-minded communist regime. Tito, himself a Croatian, forcefully rejected Croatia's bid for independence, but his break with Stalin in 1948 did allow for more tourism and a slightly freer spirit than in most parts of the Soviet sphere.
Communism collapsed in the late 1980s. In the wake of Slovenia who defied Belgrade and left the federation, Croatia declared independence from the Yugoslav federation when it became clear that it had become dominated by the Serbian component, and its leaders removed Serbs from public office. The Yugoslav federal army under Serb command stepped in, beginning in June 1991. That autumn, the city and all of the southern Dalmatian coast fell under attack by the Yugoslav army, navy and Montenegrin militia. On Dec. 6 shells, pounded Dubrovnik's old town, killing 19 people and wrecking several buildings. That put a stop to the fast growing tourist industry for a number of years, as Serbia had cynically intended, the assault being on the Croatian economy, not its military.
With the help of a shocked world community, especially the European Union, but mainly through its own stiff resistance and punishing counter-attacks, Croatia did gain its independence and gathered the strength to repair and rebuild after the siege ended in 1992. The work has been done so skilfully and with such an eye for authenticity that it is hard to comprehend how extensive the damage was.

The Russians are coming to town
"The Russians are coming," is the order of the day in Croatia and Montenegro. Money is no object to these new investors, the real estate agents say. "If you've got it, flash it," is the motto.
A Russian investor has demanded a change in the local building regulations on the Croatian island of Mali Losinj so that he can extend his hotel to 2,100 beds from the current 1,200.
In Herceg Novi at the entrance to the Bay of Kotor in Montenegro, a Russian consortium has bought a vast property of 100,000 square metres in a prime location. The property is on the Lustica peninsula, which used to be a military zone covering 36 square kilometres and has thus not been developed for tourism.
These top holiday locations have drawn the attention of well-to-do Russians in particular. According to media reports, Moscow Mayor Yuri Lushkov has bought more than 12,000 square metres for four million euro. A short distance away, Russian cosmonaut Alexei Leonov also owns property.
The flood of money from Russia has also meant a change in the origin of the guests in many Adriatic resorts. Russians currently set the tone, rather than Germans, Austrians or Britons. But already those big travel agencies that 'make' the package tour industry have rediscovered the attractions of the coast and the future augers well 

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Croatia hosts summit on SEE issues
An SEE (South East Europe) conference was recently held in Drubovnik. Leaders and political officials from across Southeast Europe met in early July for a summit on regional security and integration into the EU and NATO. Dubrovnik hosted many important political figures from the region and beyond at a summit that targeted security and integration. A total of 80 top officials representing over 40 countries and international organisations attended the two-day summit, which began on July 9. 
The participants discussed the future of the region and its role in the modern political world. Strong emphasis was also placed on the key goals of EU and NATO membership. 
Participants included the prime ministers of Albania, Bosnia and Herzegovina, Montenegro and Serbia, as well as the hosts of the event -- Croatian President Stjepan Mesic and Prime Minister Ivo Sanader. Kazakh President Nursultan Nazarbayev was also in attendance,this central Asian figure is believed to be potentially a big investor in the region. 
In their addresses at the summit, Mesic and Sanader both termed EU and NATO integration a national priority for Croatia. Mesic also urged all SEE countries to leave behind the divisive politics of the past and to look forward to a brighter future. 
In his speech, Sanader said he dreamed that one day a tourist or businessman could drive the entire way from Vienna to Istanbul without stopping at a single border control. "Let's just imagine the effects that unique shape of freedom would have on the strength and well-being of Europe," he said. 
While problems still remain in the Balkans, it is important that the solutions offered do not generate new crises, participants said. They also agreed that while countries should work together to tackle issues, implementation of agreed-on solutions should come from domestic institutions, rather than external ones. 
Protection of minorities was another issue discussed, with many focusing on the political and economic benefits of accepting minorities and treating them equally. There was also a call for larger countries, including those already a part of the EU, to show the way forward for the smaller countries, and help out wherever possible. 
The summit ended on an optimistic note, with a general conclusion that Southeast Europe was finally headed in a positive direction and has a bright future to look forward to. 

The Babic suicide - unanswered questions by Janet Anderson and Helen Warrell, 
One of the Yugoslavia tribunal's key insider witnesses, Milan Babic, committed suicide in his cell at the Hague detention unit on 5 March 2006, dealing a blow to prosecutors in future trials in which he was slated to testify, according to tribunal insiders. Babic, the former leader of the rebel Serbs in Croatia's Krajina region, was serving a 13-year sentence after pleading guilty to being a co-perpetrator in persecutions against Croats on political, racial and religious grounds between 1991and 1992. As part of a plea agreement, Babic had already testified at a series of trials - including that of former Yugoslav president Slobodan Milosevic -and was due to appear in court on 6 March again as a prosecution witness. But he was also expected to take the stand in many other trials over the next few years. '[Babic] was one of the most critical high-ranking tribunal insider witnesses,' said Edgar Chen, representative of the Coalition for International Justice at the Tribunal. 'He's given key evidence across the entire gamut of the Croatia indictments.
'According to tribunal insiders, his suicide was a blow for the prosecution, because he was an 'excellent' witness in all the trials he took part in so far. Babic's testimonies were marked by recurring expressions of personal shame and remorse. He told the court at his trial in 2004: 'Innocent people were persecuted; innocent people were evicted forcibly from their houses; and innocent people were killed..
I kept silent and I became personally responsible for the inhumane treatment of innocent people.' He presented himself in court as someone who was misled and betrayed by Milosevic, once a key ally, and repeatedly expressed regret for the way that Serb political leaders planned to 'ethnically cleanse' large swathes of Croatian territory and attach it to Serbia proper in an attempt to build a 'Greater Serbia'.

Appeal to 'brother Croats'
During the brutal war in Croatia, which began in the summer of 1991, Babic became president of the so-called Republic of Serbian Krajina (RSK). Thousands of non-Serbs were killed and tens of thousands expelled in the conflict. At each trial, he repeated an appeal from his own trial that his 'brother Croats forgive us their brother Serbs'. In Croatia, his admission of guilt and pleas for forgiveness were treated with angry contempt, while in Serbia he was seen as a traitor in nationalist circles. Indeed, Babic said repeatedly that his cooperation with the prosecutor's office had provoked numerous threats against him and his family.
Babic was due to take the stand again to continue his testimony against Milan Martic, another Croatian Serb leader who eventually ousted him from the RSK presidency. He was reaching the end of his cross-examination by Martic's defence counsel, Predrag Milovancevic, who described him as the trial's 'most important prosecution witness'. This would have been the third week of his testimony.
Babic was expected to return to The Hague to testify in the trial of Franko 'Frenki' Simatovic, who founded and was the first commander of a special operations unit known as the Red Berets, allegedly responsible for ethnic cleansing in Croatia, Bosnia and Kosovo. He was also due to give evidence against Jovica Stanisic, former head of the Serbian state security service, and Serb ultra-nationalist politician Vojislav Seselj.The former RSK leader first made contact with the tribunal back in 2001, when he found that he had been named in the indictment against Milosevic as a co-perpetrator in a 'joint criminal enterprise' to remove the non-Serb population of Croatia. In the event of Bosnian Serb army general Ratko Mladic -still at large - an alleged ringleader of the 1995 Srebrenica massacre in which some 8,000 Muslim men and boys were killed - eventually being arrested, Babic would also have testified against him, as another member of the joint criminal enterprise.
In 2002, Babic gave evidence against Milosevic, describing a parallel command structure established by Milosevic's secret police. He confirmed that events had not been controlled from Knin, the capital of the RSK, but rather by Belgrade. He also testified against former Bosnian Serb parliamentary speaker Momcilo Krajisnik in 2004, but behind closed doors.
Earlier that year, as part of a plea agreement, he pleaded guilty to one count of crimes against humanity - persecution of non-Serbs on political, racial and religious grounds - in return for the prosecutor recommending an 11-year prison sentence. In the end, the trial chamber decided to hand down a 13-year sentence, later confirmed by the appeals chamber. As part of the plea agreement, Babic accepted 'full responsibility' for the actions listed in the indictment against him. In the factual statement accompanying his plea, Babic acknowledged that during his time as president of Serb-held Krajina, he had become 'an ethnic egoist, a person who exclusively wanted to see to the interests of people to which [he] belonged'. He also conceded that he had 'neglected the interests and suffering of the Croatian people'.
Few high-ranking leaders have so far confessed to their actions at the tribunal since the first guilty plea in May 1996, when Drazen Erdemovic admitted to involvement in the Srebrenica massacre. The biggest breakthrough for the prosecutor's office was when another ethnic Serb - former Bosnian Serb president Biljana Plavsic - pleaded guilty in October 2002. But she did not agree to testify against others. To prevent this situation from recurring, the prosecution changed their strategy so that when Babic submitted his plea, he was required to 'freely answer' all questions put to him by the prosecutor's office.
Babic's death is the second case of suicide at the tribunal's Scheveningen detention unit. In June 1998, Slavko Dokmanovic, a municipal official charged with having participated in the massacre of some 250 non-Serbs in the Croatian town of Vukovar, was found to have hung himself from his wardrobe door with a tie, just days before his verdict was due to be announced. The tribunal's internal inquiry found that there had been no 'negligent behaviour' by Dutch detention staff, who were checking the accused at half-hourly intervals. However, the official report also states that the detainee made two unsuccessful attempts to commit suicide on the evening he died, which were not visible to prison guards. Milosevic was under constant suicide watch when he was first transferred to the tribunal. This was gradually relaxed after he announced in October 2001 that he would never kill himself because of his determination ' to overthrow this court and this mockery of a trial and its paymasters'. 

Star performance
Between July 2005 and the beginning of February 2006, Babic was held at an undisclosed European jail. He was subsequently kept isolated from other prisoners at the detention unit because of his special circumstances. His star performance in the Martic trial had observers riveted. He repeated accusations that the military and political leadership in Belgrade were orchestrating armed rebellion in Croatia at the beginning of the nineties. 'Armed forces in Krajina were commanded by two parallel structures of command, and on top of them both were Slobodan Milosevic,' he told the court. Below Milosevic, stated Babic, was Stanisic and below him Martic. Babic also described how Belgrade aimed in 1991 to provoke the Croatian police, in order to draw the Yugoslav People's Army (JNA) into the emerging conflict, on the side of the Serbs. His testimony is bound to be challenged by Martic's defence lawyers, but legal observers believe that much of it will be allowed to stand because it was already subject to robust cross examination.
Babic's lawyer, German advocate Peter Michael Mueller, said that he did not believe that his client had committed suicide because of threats against his family. He told IWPR that Babic was 'a very intelligent and deliberating man, and was not prone to make sudden decisions'. Media speculation has focused on the theory that the Serb leader was receiving threats against his family who were being kept in hiding. Babic's wife and children were too afraid to attend his Serbian Orthodox funeral, which attracted about 500 mourners in Belgrade on 21 March, and could only express their regret by letter. When asked about ongoing security measures for Babic's family, Mueller said, 'If they still believed protection was appropriate, then it would continue.' But he disputes the threats had intensified. 'There had always been, for many years, a general threat, ever since he testified openly in trial proceedings against Milosevic,' he said. 'Threats would be the last thing I would expect [as a reason for suicide]. If he was being threatened, his first job would be to contact me, as he had done in the past. We discussed this issue very openly,' said Mueller, adding that in the weeks leading up to Babic's death he had received no such complaint. But he hit out at security procedures at The Hague, saying he was 'amazed and stunned' to hear that Babic had managed to kill himself at the detention facility. Guards checked on him every 30 minutes but did not have him under constant video surveillance.

Attacked from both sides
Less than a week after Babic's suicide, Milosevic was also found dead in his cell at the tribunal's Scheveningen prison facility. Milenov, however, told IWPR that the tribunal 'certainly tends to the security of all the detainees under its care'.
Those who plead guilty at The Hague are in a difficult position. Dubbed traitors by their former colleagues, and reviled by those they have persecuted, they are attacked from every side. Mueller confirmed that Babic had often felt as if he was 'running against a wall'. 'Neither the Serb side nor the Croatian side wanted to hear the truth,' he said. 'People in Croatia evidently think in a very antagonistic way. The situation was bitter for him, because he had Croatian relatives in his own family. His contact with family members from the former Yugoslavia was reduced to practically zero.' The Serb media have been far from complimentary. One Belgrade-based daily newspaper ran an article addressed to the former leader: 'God should make the earth throw you up' and 'God may forgive you but Krajina Serbs will not', the piece stated.
Mueller insists that the tribunal should ensure better protection for those who have pleaded guilty saying, 'Security matters should get more attention than they have done in the past.' This, Mueller claims, was the least the tribunal could have done for a key insider witness who was a 'fountain of information' and had to be restrained from revealing ever more stories, 'I always warned him, during tribunal proceedings against him, don't make a big story of yourself, don't mention information which is not of use in your own case.' But, as Babic's three-week testimony against Martic showed, this was a man driven to spill the details of what he had been involved in. 'He wanted to promote the truth. he wanted to contribute to reconciliation and peace in the Balkans,' said Mueller. 'He did not want lies to be broadcast.
'Janet Anderson is director of IWPR's international justice programme and Helen Warrell is an IWPR reporter in The Hague. 

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BANKING

Euroherc acquires Nava Bank

Croatian Financial Services Supervisory Agency (HANFA) has approved Euroherc insurance offer for the takeover of Zagreb-based Nava bank, new agency reporter.gr said.
Liability for the publishing of the takeover offer started when, at the end of March this year, Euroherc, Jadransko, Agram life and Sunce insurance companies - members of the Agram Group - acquired 50,000 shares (32.98 per cent) of Nava bank. Companies operating within Agram Group recapitalised Nava Bank with 20 million crowns, increasing the bank's consolidated capital to 60,644 million crowns. Each of the listed companies owns 12,500 shares of Nava bank. Euroherc will offer 700 crowns for each share of Nava bank. The nominal value of each share stands at 400 crowns.

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EU ENTRY

Blair positive on country's EU track 

There's nothing to stop Croatia from joining the European Union as soon as it meets the bloc's membership criteria, British Prime Minister, Tony Blair said recently after meeting with Croatian Prime Minister, Ivo Sanader, in London, news agency reporter.gr said. 
"There is no political block at all on Croatia coming in," Blair said. "That political decision has been taken, Europe wants Croatia as a full member of the European Union. The sole question is meeting the criteria," he added. Blair and Sanader said their talks were the first-ever official meeting between the prime ministers of Croatia and Britain, although the two men have met informally. Blair said Croatia did not have to wait for any other country to be ready to join the EU. It began membership talks with Europe at the same time as Turkey and some have speculated the two bids might be linked. Blair said that was untrue. Sanader said he was eager to work with Blair to push Croatian membership in the EU and NATO.

High hopes for EU membership by 2009 

Croatian Prime Minister, Ivo Sanader, said recently that he hopes his country will be in the European Union in time to take part in European parliamentary elections in 2009. At a press conference during the 5th meeting on Stability in South East Europe, he said he was confident Croatia would be able to complete its membership negotiations with the EU by 2008, Deutsche Presse-Agentur (dpa) reported. 
However, he added that more important than a concrete accession date were good negotiations with the EU. 
The much-quoted feeling in the EU against further enlargements was not in fact the prevailing attitude among the population, Sanader said. In the most recent Eurobarometer survey, 57 per cent of EU citizens had said Croatia should be a full member. In the 10 new member states, the proportion had been as high as 72 per cent, while in the "old" EU states it had been 53. Bosnian Prime Minister, Adnan Terzic, agreed, saying the anti-enlargement feeling was more "political rhetoric" than genuine popular opinion. Albanian Prime Minister, Sali Berisha, said independence for Kosovo was a condition for peace and stability in the region. The investments of the EU had already had great effect. Austrian Chancellor, Wolfgang Schuessel, praised the positive development of the region. "South East Europe today is with five to six percent annual growth the most dynamic region in Europe. In the past few years, South East Europe has changed massively for the better." The prospect of getting into the EU was also important for stability and democracy in the region, Schuessel said.

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FOREIGN ECONOMIC COOPERATION

Economic ties with Kazakstan

Croatian President Stjepan Mesic and his visiting Kazak counterpart, Nursultan Nazarbayev, vowed to boost economic cooperation between the two countries, news agency reporter.gr said recently.
Mesic said Kazakstan was a country of a strong economic growth with ongoing infrastructure projects and fast reforms, adding that the two presidents signed a transport agreement. Nazatbayev said his visit to Croatia was his first trip to Europe after the last inauguration, adding that his country highly appreciated dynamic relations with Croatia. The Kazak president attended the Croatia Summit 2006 held earlier in August in Dubrovnik. Nazarbayev said Kazak companies were interested in entering the Croatian market and expressed hope that Croatian companies would be interested in doing business in Kazakstan. 

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