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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)

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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: 083 - (19/03/04)

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.
The new leader, Ivo 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, which promised tax cuts.
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 quit the party before he took over the reins. The remainder are canaille." 

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 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 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 decommunization. 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.

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BONDS

Croatian government to issue 150m euros in bonds to keep debt down


The Croatian government decided on March 12th to issue 150m euros worth of government bonds on the domestic market, Finance Minister, Ivan Suker, said at a government session in the eastern city of Osijek, HINA News Agency reported.
Suker said the bond issuance would be used to service old loans so that the country's debt did not increase. The 150m euros issuance includes 600m kuna (about 80m euros) for a short-term loan for Croatian Railways, which was spent last year, the minister said. The government bonds will be issued at a fixed annual interest rate of 5.5 per cent for a period of 10 years.

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FOREIGN ECONOMIC COOPERATION

Moldova, Croatia sign free trade agreement


Moldovan Economics Minister, Marian Lupu, and the state secretary at the Croatian Ministry of Economy, Labour and Entrepreneurship, Vladimir Vrankovic signed a free trade agreement between Moldova and Croatia on 27th February in Chisinau. The document will enter into force after ratification by the Moldovan and Croatian parliaments.
The free trade agreement between Moldova and Croatia, drafted in accordance with WTO practices and exigencies, provides for a gradual cancellation by 1 January 2006 of trade customs barriers. Moldovan-Croatian trade totalled US$7.1m in 2003, or 28 per cent more than in 2002. Moldova imported US$3.5m worth of goods from Croatia in 2003. Exports totalled US$3.6m over the same period, Basapress News Agency reported.

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Romanian, Croatian premiers discuss oil pipeline construction, cooperation

The construction of the Constanta-Omisalj pipeline for the transport of oil from the Caspian Sea is one of the main topics of interest in the Romanian-Croatian economic relation. Prime Minister, Adrian Nastase, on Friday 5th March said to his Croatian counterpart, Ivo Sanader, on a visit to Bucharest, the Romanian side's interest in the start of this project, given that studies so far conducted show this project is feasible. The Croatian prime minister said that Italian authorities voiced interest in expanding the project to include Trieste, Rompres News Agency reported.
Croatian company Podravka has voiced intention to build a production facility in Romania under a greenfield investment project. At present, commercial exchanges between the two countries amount to US$144.7m, US$124.2m being exports and the remainder imports. The amount has greatly increased over the past year, while in 1996 commercial exchanges stood at US$17m and at some US$23m in 2000.
Nastase voiced Romania's support for Croatia's integration into NATO and the European Union, given that Croatia wants the summer European Council to set the date for the beginning of EU accession negotiations. Croatia submitted a bid for accession to the EU on 21st February 2003, the main condition imposed by the European Commission being cooperation with the International Criminal Court.
Romanian Foreign Minister, Mircea Geoana, and his Croatian counterpart, Miomir Zuzul, have signed two cooperation agreements in the presence of the two prime ministers.

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