Books on Croatia
% of GDP
Update No: 093- (28/01/05)
President Mesic re-elected
Croatian President Stipe Mesic has won a second five-year term in office, after
defeating the candidate of the ruling conservative Croatian Democratic Union (HDZ),
Jadranka Kosor, in a runoff vote on 16th January.
Preliminary results from the State Electoral Commission showed the incumbent
winning 66 per cent of the vote, compared to 34 per cent for Kosor. According to
the Croatian news agency HINA, some 51 per cent of the 4.4 million eligible
voters went to the polls.
Once the electoral commission confirmed his victory, Mesic thanked his
supporters and pledged to lead the nation into the EU. "I thank everybody
who voted for me as well as all those who cast ballots. I am proud of the
maturity of Croatia's democracy," the president said in an address to the
nation early Monday. "Today Croatia is taking big steps into Europe and we
now have to be united, we need a national consensus to achieve our
objectives," he added.
Mesic, 70, was first elected president in February 2000, succeeding the HDZ's
late nationalist leader, Franjo Tudjman. He is credited with helping Croatia
come out of its international isolation following the 1991-1995 conflict and for
advancing democratic reforms during his first term, which saw the country become
an official EU candidate.
Croatia is scheduled to begin its accession negotiations with Brussels in March
and is expected to join the EU in 2009, during the final year of Mesic's second
term. A pro-Western reformer, Mesic -- a former Croatian prime minister and the
last president of the former Yugoslavia in 1991 -- marched towards election
victory, enjoying the support of the country's main opposition
parties."There are different parties and opinions, but strategic goals must
be uniform," the president said after winning Sunday's vote. "My
appeal to you is let's all head together towards a just, modern Croatia,"
Kosor, who serves as deputy prime minister, conceded defeat before the election
commission announced the results and congratulated Mesic on his victory. She
also thanked Prime Minister Ivo Sanader for his support. "I thank Prime
Minister Sanader for having the courage to put forward a woman as a candidate of
the biggest and most historic Croatian party," she said Sunday night,
addressing supporters at HDZ headquarters in Zagreb. "I'm proud to have
maintained a high level of dialogue in my campaign. I have not spoken badly of
Sanader in turn thanked all those who voted for Kosor, viewing the results as an
indication of strong electoral support for the HDZ. "These results show
nothing but that the HDZ is the strongest political party in Croatia," HINA
quoted Sanader as saying. He described Kosor as the most successful woman
politician since Croatia's independence, one who had proven capable of facing a
strong opponent like Mesic.
"The people did not want the same party to have all key pillars of
power," political analyst Zeljko Trkanjec said in comments for Reuters.
"They wanted a head of state who will act as a corrective. And he will be
well received in Europe."
The EU beckons
The European Union (EU) has agreed to start membership talks with Croatia, which
could have far-reaching implications for the rest of the Balkans. If the
negotiations are successful, it would demonstrate to other governments in the
region how a country deeply involved in the Balkan wars of the 1990s can deal
with the past, democratise and restore relations with its former foes.
EU leaders meeting in Brussels decided on December 17th to open accession
negotiations with Croatia, setting April 2005 as a probable starting point.
Croatia, with a population of 4.5 million, hopes to enter the EU in 2007, at the
same time as Bulgaria and Romania, although diplomats say 2009 is more
Although the Balkan region is still plagued by corruption and high unemployment,
as well as a reluctance to embrace economic and judicial reform, officials from
both Croatia and Serbia - once hardened enemies - say the prospect of EU
membership could be the single most important incentive for introducing change.
As a condition of the start of negotiations, EU leaders want the Zagreb
government to do everything possible to deliver Ante Gotovina, a former general,
to the UN war crimes tribunal in The Hague. The court, formally the
International Criminal Tribunal for the former Yugoslavia, indicted Gotovina in
2001 for war crimes against Croatian Serbs, including the killing of at least
150 Serbs from Krajina and responsibility for the deportation of 200,000 members
of the Serb minority.
Since then, Croatian officials have told The Hague they cannot find Gotovina. On
December 16th, however, shortly before the EU summit meeting was due to begin,
Croatia's prime minister, Ivo Sanader, vowed to cooperate fully with the
tribunal. "I am going to say very clearly that Croatia is fully
cooperating" with the court, Sanader told reporters in Brussels. "We
are fully committed to this cooperation."
This marks a big change in Croatia, particularly since Sanader is from the
Croatian Democratic Union party, locally called the HDZ. Under former President
Franjo Tudjman, who died in December 1999, the Croatian Democratic Union party
was a staunchly nationalist party that tried repeatedly during the Balkan wars
of the 1990s to expand Croatia into western Herzegovina in Bosnia, while
Slobodan Milosevic, then Serbia's president, tried to expand Serbia into eastern
and northern Bosnia.
Sanader, elected over a year ago, has managed to defy the critics and
hard-liners in his party by pressing ahead with economic reforms required to
meet certain EU criteria before accession negotiations can begin. Against the
odds and considerable opposition, he has started to make Croatia look outward.
"It is hard to explain the changes," said the deputy foreign minister,
Hido Biscevic, who is not a member of any political party. "We made a
decision to move toward Europe. This meant addressing our relations with Serbia.
It meant treating the Serb minority in our country without discrimination. It
meant allowing refugees who fled during the war to return. It meant building
homes for them. It meant returning property to Serbs. We are now doing all these
For several years, these issues, along with the Gotovina case, dogged Croatia's
relations with the EU in a way that only helped the nationalists. ."Some in
the HDZ did not want change because it meant confronting the past and the
problems arising from the wars," Biscevic said. "Besides, they would
lose their influence." A few months into the job, Sanader surprised the old
guard in his party by shaking up the leadership in an attempt to nudge the HDZ
toward becoming a more European-type conservative party. Then in November
Sanader went to Belgrade, making the first visit to the Serbian capital by a
Croat head of government since Yugoslavia broke up in 1991. The sooner
"Croatia becomes an EU member state," he promised his hosts, "the
faster Serbia and Montenegro will join."
Sanader has also started changing the top tier of Croatia's intelligence
services. Croatian officials who requested anonymity said they would not be
surprised if hard-liners in the intelligence services and Sanader's party had
withheld information from the government and The Hague over Gotovina's
whereabouts. "We are not looking for scapegoats to explain why we have not
caught Gotovina," a Croatian official said. "You must remember he is
seen by many as a hero who defended our country."
Under pressure from Theodor Meron, president of the UN tribunal in The Hague,
Sanader recently replaced the head of counterintelligence and will put all the
security and intelligence services under a special supervisory board. For
experts trying to prepare Croatia for EU negotiations, the Gotovina problem will
not go away. "It is always in the background," said Tamara Obradovic,
deputy minister for European integration, who since 1999 has been trying to
prepare Croatia for membership talks. "Still, once we get the date to start
negotiations with the EU, it will be a signal for the region as a whole,"
Obradovic said. "It will also be a real twist in history. Croatia always
saw itself as being different from the region. And now it is tying itself toward
Croatia's exports, imports increase
In the first 11 months of 2004, Croatia exported 44bn kuna (US$7.25bn) in goods
to foreign markets, but it imported twice as much, namely 91.19bn kuna
(US$15.02bn), the Central Bureau of Statistics said in a statement recently,
HINA News Agency reported.
The coverage of imports with exports was 48.2 per cent while the country's
foreign trade deficit amounted to 47.2bn kuna (more than US$7.77bn).
Expressed in kuna, Croatia's exports in the first 11 months of 2004 rose by 15.7
per cent in relation to 2003, while imports went up by 5.7 per cent. Expressed
in US dollars, exports rose by 28.2 per cent and imports by 17 per cent.
The majority of Croatia's exports in the first 11 months of last year was
machinery and transportation devices (US$5.23bn or 11.8 per cent more than in
Croatia's most important foreign trade partner in the first 11 months of 2004
were European Union countries (US$4.7bn in exports and US$10.47bn in imports).
Croatia's exports to the EU countries rose by 22.6 per cent while the country's
imports from the EU went up by 13.5 per cent.
Individually, Italy is Croatia's number one foreign trade partner. Croatia's
most important non-EU foreign trade partner is Bosnia-Herzegovina.
Foreign investment in Croatia in first nine months of 2004 totals US$877m
According to the latest report of the Croatian National Bank (HNB), foreign
direct investments in Croatia in the first nine months of 2004 totalled
US$877.1m, with foreign investments in the period between 1993 and the end of
September 2004 amounting to US$10.4bn. Since 1999, annual foreign direct
investments exceeded one billion dollars, with the 2003 investments being the
highest, totalling US$1.97bn, HINA News Agency reported.
In the period between 1993 and the end of the third quarter of last year,
ownership investments accounted for the largest part of overall foreign direct
investments - around US$6.6bn. Most ownership investments referred to
investments in the telecommunications sector (20.32 per cent), the banking
sector (19.86 per cent), the pharmaceutical industry (10.89 per cent) and the
oil industry (7.65 per cent). More than one-quarter (25.64 per cent) of all
foreign investments in the period between 1993 and the end of last September
were made by companies from Austria, and more than one-fifth (20.42 per cent) by
those from Germany. Austrian and German investments accounted for almost one
half of overall foreign investments in the first three quarters of 2004, which
In the first three quarters of 2004, Croatian companies invested US$102.4m
abroad, and in the period between 1993 and the end of September 2004,
investments in foreign countries amounted to around US$1.3bn.
Croatian minister announces strategies for shipbuilding, steel industries
The Uljanik shipyard in the northern city of Pula is the first state-run
shipyard which should be ready for privatisation in 2005, Croatian Economy
Minister, Branko Vukelic, said recently, presenting plans of his ministry for
the year, HINA News Agency reported.
The minister also announced a programme for restructuring the entire
shipbuilding sector, adding that the government will soon adopt a new plan with
reduced subsidies for this branch of the economy.
The item in the 2005 budget for state subsidies provides for some 405m kuna as
state support to the shipbuilding sector, which is 10 per cent less than in
2004, Vukelic said.
In the long run, subsidies for shipyards will be further cut so as to prepare
them to operate without state support, the minister added. In 2005, the Ministry
of the Economy, Labour and Entrepreneurship is expected to complete a strategy
for the iron and steel industry and find solutions for ailing iron plants.
The ministry is also expected to draw up a strategy for the textile, leather and
footwear industries which can count on 20m kuna as state support in 2005.
The minister said an agency for foreign investments and exports would start
operating in 2005.
The ministry will be also engaged in Croatia's membership talks with the
European Union, which will be opened on 17 March 2005.