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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: 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," he added. 
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 my rivals." 
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 realistic. 
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." 

Domestic revolution
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 things." 
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 the region." 

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EXPORTS, IMPORTS

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 2003).
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. 

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FOREIGN INVESTMENT

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 totalled US$877.1m. 
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.

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SHIPPING

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.

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