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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: 101- (27/09/05)

The EU beckons
The delivery of Gotovina to The Hague is widely perceived as the sole pre-condition for Croatia's entry into the EU, but the truth is that there are others, including reform of the judiciary. Joining Europe demands acceptance of the European model of the functioning of justice. The reform of the judicial system that this entails is bound to take time.
Croatia is faced with the problem of a large number of unsolved court cases, for example. Sometimes the parties have to wait for five, ten or more years. This creates among other things an atmosphere that discourages Croatian citizens and foreign investors alike.

Croatian 'Unflappable Mac'
Prime Minister Ivo Sanader problems at home. But in a style somewhat reminiscent of 'Unflappable Mac,' the UK premier Harold Macmillan, he is dismissing media speculation about early elections as "little local difficulties," saying his conservative government was stable and would serve its term until late 2007. 
Sanader, whose country hopes to start European Union membership talks this year, was speaking on state radio amid mounting opposition criticism of the government's economic record. "Forget about early elections. This is a stable government. Next elections will be, as is due, in November 2007," Sanader said when asked about the possibility of an early poll. 
Brussels postponed the start of Croatia's EU membership talks in March because of what it said was Zagreb's failure to cooperate fully with the United Nations war crimes tribunal in The Hague. Croatia has since stepped up efforts to cooperate. The EU is expected to reassess Zagreb's bid soon, but the issue of general Gotovina remains an open sore. 
Croatia's opposition, led by ex-Prime Minister Ivica Racan's Social Democrats, have supported Sanader's EU bid but has been fiercely critical of his cabinet's economic performance. They say the government has no coherent economic strategy and accuse it of failing to boost employment, raise living standards, lower taxes and increase economic growth. 
Observers believe Sanader may face a serious challenge when voting on the 2006 budget in parliament, where his Croatian Democratic Party (HDZ) has a fragile majority and relies on support from several small parties and independent deputies. 
Nacional weekly has reported that Sanader had made a pact with the right-wing Party of Rights (HSP), under which the HSP would vote for the budget, while the government would in turn support HSP leader Anto Djapic, the new mayor of the eastern city of Osijek. 
Earlier this year, the cabinet comfortably pushed a 2005 budget revision through parliament in July, indicating that Sanader's grip on power was not as shaky as it appeared. Sanader mustered 80 votes in favour in the 151-seat assembly. 

Croatia's DC calls for economic zone in Adriatic
Croatia's Democratic Centre (DC) party called on the parliament recently to declare an economic zone in the Adriatic Sea and pass a law establishing a coast guard, the Croatian News Agency Hina reported.
The move came after a recent proposal by Slovenia to proclaim an ecological zone in the Adriatic. The problem of demarcation of the border with Slovenia should be resolved through international arbitration, which the DC has always seen as the only proper instrument for resolving the issue," the party's secretary for international affairs, Radovan Fuchs, was quoted as telling reporters in Zagreb. Fuchs said that by then the two countries should refrain from taking unilateral steps or provoking incidents as agreed by their respective governments at a meeting on the northern Croatian Adriatic islands of Brijuni. DC president Vesna Skare Ozbolt, who also serves as minister of justice in the present government, said that proclamation of an economic zone would mean nothing unless control and protection system was established.

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AVIATION

Russia offering Croatia MiG 29 fighter jets

Russia has offered Croatia 24 MiG 29 fighter jets in exchange for old Croatian MiG 21s, the Russian daily newspaper Jutarnji reported.
Russia proposed the deal and Croatia would only have to pay the difference in value between older and new models. The paper also said the Russians told how Serbia, former enemy of Zagreb during 1990s Balkan war, intended to buy Sukoi SU-30 jets, which would mean Belgrade would have a stronger air force. Croatia currently has 24 MiG 21s, not all airworthy. Croatia announced that it will modernise its air force by 2010, when MiG 21s are to be withdrawn from service.

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CREDIT RATINGS

S&P affirms Croatia's BBB credit rating, outlook stable

Ratings agency Standard & Poor's affirmed Croatia's BBB long-term foreign currency credit rating and kept its outlook stable, citing strong economic and structural reforms, New Europe reported recently. 
S&P also said it was keeping its A-3 short-term foreign currency rating as well as the BBB+ long-term and A-2 short-term local currency sovereign credit ratings in place.
The ratings on Croatia are supported by its strong record of economic and structural reform over the past few years, as well as the policy anchor provided by European Union integration and the economy's good growth prospects, said S&P sovereign credit analyst Remy Salters.
However, the ratings are constrained by the high, although stabilising, private sector net external debt burden, the need for further structural reforms, as well as significant reliance on the performance of the tourism sector, he added. A further upgrade for Croatia would require more fiscal consolidation and sustained progress with structural reforms, Salters said.

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ENERGY

INA teams up with Syria's Petrol, Gas 

Croatian oil company INA has inked a long-term agreement on the sale of gas to the Syrian Petroleum Company and the Syrian Gas Company, the Croatian news agency Hina reported, citing INA in a statement.
The gas was discovered in the research bloc Hayan northeast of Damascus, covering an area of 5,000 square kilometres. INA holds a 100 per cent concession in the area. The company said the deal marks the start of joint work of INA and the two Syrian companies on putting the discovered oil and gas field into operation.

EU MEMBERSHIP

Croatia says ready to open EU membership talks 

Croatian Foreign Minister, Kolinda Grabar-Kitarovic, recently urged European Union governments to set a new date for opening membership talks with her country, saying Zagreb was ready to start negotiations as soon as possible, Deutsche Presse-Agentur (dpa) reported. 
Speaking to the foreign affairs committee of the European Parliament, Grabar-Kitarovic, said Croatia was putting a great deal of effort into demonstrating full cooperation with the international war crimes tribunal in the Hague. She also pointed to efforts to undertake a thorough reform of Croatia's police and intelligence services. 
EU governments delayed the planned March opening of membership negotiations with Croatia over the government's failure to locate and extradite the fugitive general and war crimes suspect, Ante Gotovina. 
Several EU lawmakers said the Zagreb government must do more to remove posters of general Gotovina from public places. Responding to Slovenian members of the European assembly, Grabar-Kitarovic said that while Slovenia's recent declaration of an ecological zone in the Adriatic was contrary to the international law of the sea, Croatia would not escalate the dispute. Zagreb wanted to continue discussing the issue but would resort to binding international arbitration if dialogue failed, she said. 
The Croatian foreign minister was to attend an informal meeting of EU foreign ministers in Wales recently to make another direct appeal for a start to membership talks. 
Britain, which holds the EU presidency, has said it will convene a meeting of the bloc's taskforce on Croatia in September to examine the issue. However, other EU countries, including Austria and Hungary, are pushing for talks with Croatia to start before those with Turkey in early October. In a related development, despite their government's efforts to ensure the opening of European Union accession talks this autumn, most Croatians oppose joining the 25-member bloc, a poll showed. The poll of 900 people, published by the daily Vecernji list newspaper, showed 44 per cent of Croats were against joining the EU, 39 percent were in favour, and 16 per cent were undecided. 
Support for EU membership among Croats began to plummet after the EU postponed accession talks. The centre-right government of Prime Minister Ivo Sanader is lobbying hard to ensure the talks begin in autumn. 
Alexandra Kolaric, a former government spokeswoman and public relations expert, said Croats feel unwanted by the EU and that it was a case of: "If you don't want me, then I don't want you either."

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FOREIGN LOANS

WB and Croatia sign port deal 

An agreement on US$1.75m advance payment on a loan to be used for a project of modernisation of the southern port of Ploce was signed in that Adriatic town on September 3 by Croatian Finance Minister, Ivan Suker, and the director of the World Bank's office for Romania, Bulgaria and Croatia, Anand K. Seth, Hina News Agency reported. 
The entire project covering the construction of a container terminal and a bulk cargo terminal is worth between US$60m and US$75m. The US$1.75m advance payment will be used for the preparation of the necessary documentation.
Minister Suker said that the loan would be granted under the currently most favourable terms with a grace period of five years, a 15-year repayment period and at an interest rate of 2.3 per cent.
World Bank Vice President for Europe and Central Asia, Shigeo Katsu, who attended the ceremony in Ploce, said that the bank set the development of regions as one of its key tasks, and voiced hope that this project would manage to integrate needs for growth and sustainable development. The biggest southern Croatian seaport is mainly used as a gateway by neighbouring Bosnia-Herzegovina for the export of its goods and import of raw materials. 
Present at the ceremony in Ploce were Croatian Sea and Transport Minister, Bozidar Klameta, members of parliament and local officials.

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FOREIGN RELATIONS

Czech president visits Croatia 

Czech President Vaclav Klaus arrived in Zagreb on September 6 on his first official visit to Croatia for talks with his counterpart Stipe Mesic and Prime Minister Ivo Sanader, New Europe reported.
The sides were expected to sign agreements on cooperation in tourism and trade. Croatia's ambitions to join the EU were also on the agenda.

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