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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)

REPUBLICAN REFERENCE

Area (sq.km)
56,400

Population
4,334,142

Capital 
Zagreb

Currency 
Kuna

President 
Stipe Mesic

Private sector
% of GDP 
55%

  

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: 080 - (01/01/04)

New government forms
Elections to parliament were held on November 23rd, which were expected to be very close. In fact they were not so close. The penultimate results with more than 90% votes counted give the advantage decisively to the Croatian Democratic Union (HDZ), which has assured at least 75 seats, for 63 for the centre-left coalition.
The party of FranjoTudjman, (HDZ), ruled throughout the 1990s, but lost power to the Social Democrats in early 2000. It is now back in office with a vengeance, being clearly ahead in the 150-seat parliament. As the largest party represented it has a decisive edge in forming a coalition government.
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 government of HDZ is led by its leader, Ivo Sanader, who 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.
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 quitted the party before he took over the reins. The remainder are canaille."

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. Time will tell whether Sanander can fare better than the bien-pensant liberals. 

EU candidacy on the way
Victory for the HDZ undoubtedly sets back Croatia's chances of joining the EU soon, to which it made a formal application for membership in February in 2003 in Athens, when the fellow Balkan state, Greece, held the revolving presidency. Racan said Zagreb would have fewer chances of joining because HDZ would be less keen on co-operating with the International Criminal Tribunal for the former Yugoslavia (ICTY). Successful co-operation with the ICTY is the most important condition of EU membership, he added.
One fugitive war crimes suspect sought by the ITCY is General Ante Gotovina. He is not at large in Croatia, according to the government. But the ITCY is convinced he is. Like Karadzic and Mladic in Serbia or Serbian Bosnia, he is probably being protected by security forces still loyal to the old regime. One person keen to see a HDZ victory at the polls was undoubtedly General Gotovina. Another would have been General Janko Bibetko, also prominent in the 1991-95 war. 
The British and others have made the case of handing over Gotovina a precondition of membership. Racan visited London in late September for talks with Tony Blair. He also made an answer to 4,000 questions on the country's legislation, economy and political system to Brussels. The questionnaire had been brought to Zagreb personally by EU President Romano Prodi in July, testifying to the real interest of Brussels in clinching EU adhesion for Croatia. Zagreb has made a strong statement of intent through the first-ever multimedia presentation of an application to the EU, consisting of a document and a CD-ROM, entitled "Re-Member Croatia."

Tourism up
One success story in Croatia is a surge in tourism, the largest foreign currency earner for the republic. Its scenery and coastline, dotted by many islands, are spectacular. By no means all the old architecture was destroyed in the war. 
Around 7.3m foreign tourists visited Croatia in the first nine months of this year, 6% more than the same period last year, Deutsche-Presse Agentur (dpa) reported recently, citing figures released by the Central Bureau for Statistics (DZS).
According to DZS, foreign tourists accounted for 89.5% of all visitors and 40.06% of all overnight stays, which is 4% more than in 2002.
Most of the foreign visitors came from Germany (26.4%), followed by Italians (13%) and Slovenes (12.9%), the DZS said. Also, Croatia saw 1.2m or 7% more domestic tourists this year, accounting for 4.72m of overnight stays, which is an increase of 6% to last year. Croatian Tourism Minister, Pace Zupan Ruskovic, said it was the tourism industry's best year since 1991, before war broke out, decimating the sector.

Croatia in the Council of Europe 
Croatia was one of the countries chosen for a series of media-related events in November. The Council of Europe organised the events in the framework of the Stability Pact for South-Eastern Europe.
Zagreb hosted a roundtable discussion on media concentrations. It also hosted a number of other Council-scheduled activities. Europe is keen to see Zagreb become a regional centre, which it is richly qualified to do.

Popular president, but not so popular premier
The new president, now in harness for nearly four years, is Stipe Mesic He was the last occupant of the revolving Yugoslav presidency, a fact to which Milosevic strongly objected and which was a 'causus belt' of the Croat war against Serbia for independence for the Yugoslav federation. He has the right enemies and was the ideal person to lead a delegation of reconciliation to Serbia recently.
The presidency is however, largely a ceremonial job. The real decisions are taken by the premier. 

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FINANCIAL NEWS

Paying back next year's debts will not be problem - Croatian Finance Ministry

The new government should not have problems to pay back the country's debts next year, as the largest part for the payment of a total of 17.5bn kuna of the debt the outgoing government had incurred in the country and abroad, will be collected in the second half of 2004, the incumbent government's financial experts have said, HINA News Agency has reported. 
Next year, 8.6m kuna of the domestic debt and 4.9bn kuna of the foreign debt are to be collected. This covers the principal and additional 4bn kuna should be ensured for paying interest rates.
The largest part of this sum is to be collected in the third and the fourth quarter of 2004, an official in the Finance Ministry said on 4th December.
At the end of January 2004, the government should pay about US$100m to the Paris and London Clubs, and the funds for this purpose have already been secured, the same source said. In other words, US$100m from the Structural Adjustment Loan (SAL) has not been used this year but it has been transferred for the coming year to cover the said amount.
The financing of the state in the first three months of 2004 is secured under a decision on temporary financing, made by the parliament this autumn.
The incumbent Finance Ministry's personnel has prepared a draft budget for 2004, and 80 per cent of its items in spending are already known.
The revenues, without the income from privatisation, are planned to reach 76.9bn kuna. The ministry believes that the revenues can rise by additional 4bn to some 81bn kuna, on condition that the current tax system would not be drastically changed.

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FOREIGN LOANS & AID

EU donates equipment worth 200,000 Euros to Croatia

Representatives of the European Commission and the Croatian Mine Action Centre on 8th December signed an agreement under which the European Commission donated 200,000 Euros worth of equipment to the State Geodetic Bureau to held rid the country of mines, HINA News Agency has reported. 

Croatia signs loan with World Bank

Croatia and the World Bank signed a US$12m loan recently aimed at supporting an energy efficiency market, the bank's office in Zagreb, said, the Deutsche-Presse Agentur (dpa) reported. 
The object of the project is to facilitate the creation of a market with greater efficiencies in energy use, improving the affordability of energy services and making Croatia's economy more competitive, it was said. "Efficient and clean energy supply is central to sustainable economic development. Increased efficiency in energy can help improve business productivity," said Anand Seth, the bank's director in Zagreb.

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INTERREGIONAL COOPERATION

Croatia, Bosnia suspend visas, sign accords to strengthen economic cooperation

The eighth session of the inter-state council for cooperation between Croatia and Bosnia-Herzegovina was held in Sarajevo on 5th December, Croatian Radio has reported. President Mesic took part in its work. The two countries signed several agreements and annexes, which should further strengthen cooperation. 
Zoltan Kabok reported for the radio from Sarajevo: The agreement between the two governments on the suspension of visas, the protocol on the cooperation in Euro-Atlantic integration, the annexe to the agreement on joint locations at border crossings, and the agreement on cooperation and joint participation at third markets, clearly indicate the direction in which the relations between the two countries are heading, President Mesic and the chairman of the Bosnia-Herzegovina Presidency, Dragan Covic, said. 
Of all these agreements, the most important for the citizens is certainly the one on the suspension of visas, about which Covic commented: "From 1st January 2004 all citizens can cross the border between Bosnia-Herzegovina and Croatia as regulated by the agreement, which means with their ID alone."
The inter-state council particularly focused on the ways of expanding economic cooperation. The two delegations did not specifically mention the status of the port of Ploce, even though Covic said that the two countries should work together on communications, including the Vc corridor. 
At the end of his visit to Sarajevo, President Mesic held a brief news conference at which he commented on the future policies of the new government, which will be the minority HDZ [Croatian Democratic Union] government. 
Stjepan Mesic said: "I think that Croatia's foreign policy will remain the same both towards Europe and our neighbours, but this government will probably have different priorities from the previous one." 

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PRIVATISATION

Privatisation processes should be continued - Croatian minister

Ongoing privatisation processes, such as the privatisation of the IPK Osijek agricultural plant or Slobodna Dalmacija daily should be continued because it would be a pity to start privatisation procedures all over again, and bids will be decided on by the new government, Economy Minister Ljubo Jurcic said on 27th November, HINA News Agency has reported. 
Jurcic said that the outgoing government could complete privatisation proceedings in cases where company shares were sold to workers.
In all other cases, the proceedings that were started should be resumed and the new government will decide whether it will accept submitted bids, Jurcic said.
It would be a pity to start those proceedings all over again, because it would be detrimental to the companies, Jurcic said.

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