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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: 100- (25/08/05)

'Mother of all battles'
History dominates everything in the Balkans, never more so than now ten years after fateful events concluded several vital conflicts. The 5 August 1995 offensive is celebrated in Croatia as Victory Day and Homeland Thanksgiving and most Croats look back on it as a brilliant army operation. Supporters of an open debate on Operation Storm war crimes face opposition from the public, which largely remembers it with unqualified approval.
The speaker of the Croatian parliament, Vladimir Seks, described the operation as a "luminous victory" for the Croatian army. "Today, with pride and dignity, Croatia marks the day of victory and homeland thanksgiving day," he said. 
"Today we mark the 10th anniversary of Storm, the mother of all battles, the final and the last battle of the Homeland War, the last battle and, let us hope, the last armed battle in Croatia in both the past and the future." 

War crimes overshadow victory in Croatia
Ten years after Operation Storm captured Knin and surrounding areas in which Croatian Serbs had proclaimed their own state, the military action is still causing controversy. The war crimes that occurred during and after the action and the fact that General Ante Gotovina, who commanded it, has since been indicted by the war crimes tribunal in The Hague, now burdens popular memories.
The case of Gotovina, on the run since he was indicted in 2001, has become a millstone around Croatia's neck, stalling its progress towards membership of the EU.
According to the Croatian Helsinki Committee for Human Rights more than 400 Serb civilians were killed and over 22,000 homes burned during and after Operation Storm. The exact number of Serbs who fled their homes has never been agreed but the figure ranges from 150,000-300,000, depending on the source. The Hague tribunal's indictment of Gotovina cites 150,000-200,000 refugees.
The Croatian authorities no longer deny that war crimes took place but claim that they were committed by renegade gangs and were not organized or authorized.
Mate Granic, Croatia's Foreign Minister when Storm took place, claims in his soon-to-be published memoirs that around 3,000 people were questioned. There is no official data on how many of those were actually punished. "There is no doubt that matters went out of control after Operation Storm, which stained this otherwise brilliant victory," writes Granic in his book.
A debate on the war crimes committed during 1995 is still an unpopular topic in Croatia ten years after they occurred. Attempts to raise the question of these crimes are often qualified as "besmirching the Homeland War" by a large section of the population, especially war veterans.
There are, of course, some who distinguish between the crimes and the wider military operation, including the parliamentary deputy Damir Kajin, one of the first individuals to speak out about them. "The crimes that happened after Operation Storm are true and it is impossible to look the other way, but they do not negate the legitimacy of the military action," he said. "These crimes should be condemned."

Whole operation condemned by the Hague, not just 'excesses'
A far greater burden for Croatia is the Hague tribunal's indictment against Gotovina, which describes Operation Storm as a "joint criminal enterprise". The indictment states that Gotovina, along with other individuals, including Ivan Cermak, Mladen Markac, and the late president Franjo Tudjman, took part in a joint criminal enterprise whose common goal was to permanently remove the Serb population from the Krajina region by force. It says that this was conducted through acts that involved looting, damaging and permanently destroying Serb property in order to deter and prevent them from returning and resettling their homes.
The description of Operation Storm as a joint criminal enterprise is deeply resented by Croatia's prime minister, Ivo Sanader, whose government has called it "completely unacceptable".
Sanader, who advocates cooperation with the Hague tribunal as the only way to expedite Croatia's accession to the EU, has had to face down major internal dissent from veterans' groups and sections of his own party, the Croatian Democratic Union (HDZ), many of whose members are nationalist hardliners.
Law experts, including the Zagreb law school professor and socialist deputy Ivo Josipovic, defend Operation Storm as a legitimate military operation under international law. "There is no doubt the Croatian side committed war crimes during the Homeland War and Operation Storm and The Hague tribunal has qualified them as serious criminal acts," said Josipovic. "But they must not be compared with the Srebrenica massacre in which 8,000 people perished, which is what some people are trying to do."
Serbs who have remained in Croatia feel otherwise. "We are bothered by the fact that Serb victims are never mentioned at the anniversaries celebrating Operation Storm," said Vojislav Stanimirovic, chair of the Independent Democratic Serb Party (SDSS) and a parliamentary deputy. "Those celebrating it only mention a brilliant and magnificent victory, which we do not deny, but we maintain that in order for the truth to be said, Serb civilian victims should be mentioned, too."
The Croatian parliament was due to adopt a special declaration on the significance of Operation Storm shortly before its 10th anniversary, in which it will style it an "anti-terrorist action". The draft version of the declaration condemned all individual crimes committed during Operation Storm, but expressed concern that the Hague tribunal treated the operation as a criminal enterprise whose main objective was ethnic cleansing.
The authorities now seem determined to combat what they see as the tribunal's unfair qualification of Operation Storm in the courts. "Public declarations will resolve nothing," said one Justice Ministry official. "A declaration [by parliament] might appease groups in Croatia who are offended by the qualifications expressed in the [Gotovina] indictment but Croatia has better ways of resolving this problem. We will dispute it in court."

Serb ceremony 
In a conciliatory gesture, Croatian President Stipe Mesic has asked for forgiveness from those wronged in the name of his country. Several hundred Serbs attended a ceremony at a Belgrade church to remember those who died in the Krajina exodus. Relatives of the dead and missing also staged a silent protest outside the Croatian embassy. 
Serbian Prime Minister Vojislav Kostunica has described Operation Storm as the biggest example of ethnic cleansing since World War II. 
But Croatia says there is no comparison with the genocide of 8,000 Muslims by Serbs at Srebrenica in the same year.

Croatia still in the dock
Croatia's relatively good level of cooperation with the International Criminal Tribunal for the former Yugoslavia (ICTY), hitherto, had accelerated the country's accession to candidate status until recently. 
However, the new government, headed by Ivo Sanader, elected in November 2003, is under enormous pressure at the moment from Carla Del Ponte of the ICTY regarding the case of General Gotovina, accused, as we have seen, of the deportation of more than 200,000 Serbians. These pressures have pushed back membership negotiations of the European Union (EU), scheduled to open on March 17th 2005. Due to Croatia's perceived unwillingness to collaborate with the ICTY, negotiations over membership have - for the first time - been postponed. 
The case of Croatia and the "Gotovina affair" illustrates the undetermined nature of the relations of the EU with non-member states. Particularly where the Balkan bloc is concerned.
Gotovina, who is still on the run, will certainly have to answer for his crimes in court. But many Croats interpret this European stubbornness about the arrest of one man, however guilty he may be, with disfavour, especially when the fundamental laws in other candidate countries are questionable. The Luxemburg presidency has demanded more information on the case before taking decisions on initiating discussions with a view to eventual membership in 2007. Furthermore, the Croatian government's responsibility in the non-arrest of General Gotovina remains to be proved. However, the EU does recognise the democratic, political and economic efforts that Croatia has made to come in-line with the Community standards, an essential condition of the negotiations.
The problem of course is that Gotovina is a hero to many Croats. Generally, they see themselves only as victims of the events of 1992-95, victims of course of the likes of Milosevic and the Serbs. 

Most Croats oppose EU entry
It would be a mistake to suppose that the Croatians are as eager as other Central and Southern Europeans for EU membership, with the Gotovina factor highly relevant here. A majority of Croats are opposed to their country becoming a member of the EU, according to a poll published by the daily Vecernji list recently. 
The poll found that 44% of Croats would vote against EU entry in a referendum, while 42% would endorse joining the bloc. Some 13% were not sure which way they would vote. Vecernji polled 900 people. 
This is the first time that a poll has shown a majority of Croatians opposed to joining the EU. Analysts attributed the drop in support precisely to the "Gotovina affair." 

The ghosts of the war
Following the chaos that the war in Yugoslavia caused, the Balkans are still a long way from finding a peaceful and lasting stability. The EU is aware of this and has initiated a process of stabilisation and association in this region. Relations between Croatia and Slovenia, which has been a member of the EU since May 2004, are perhaps the most strained as the two countries are still arguing over their maritime borders. While President Msic insists on creating an exclusive economic zone for Croatia in the Adriatic Sea, Slovenia, supported by Italy, is understandably not in agreement. However, as an existing member of the EU, the Slovenian government is not in a good position to play on its 'superiority' over Croatia, its historical brother.
'Full cooperation' with the ICTY remains the determining factor before Croatia's membership discussions can be initiated. The decisions will be all the more significant as they will be made in a very uncertain context. NATO forces will progressively withdraw their remaining troops from the Balkans, leaving behind them a situation that is far from being resolved. Speaking about the Slovenian border, Croatian writer Predrag Matvejevic wondered if "a wall, a gate or even a bridge or a bastion would be erected facing the neighbours with whom we share so much history". Perhaps the EU will encounter further difficulties in carrying its integration policy through to a successful conclusion with the Balkan countries?

Croatia banks on Austria help for EU talks 
Croatia still hopes to start its European Union membership talks during Austria's presidency next year, Croatian Prime Minister Ivo Sanader said after meeting Austrian Chancellor Wolfgang Schuessel. Schuessel arrived in Croatia at Sanader's invitation to watch a football match between Croatia and Brazil. 
The two government heads held informal talks after the game. "For us (Croatia) it is extremely important that Austria will be presiding over the EU," Sanader said. "We hope that we will then get green light for our accession talks." 
Vienna has always supported Zagreb on its path toward EU membership, and Croatia and Austria have good bilateral relations. Austria is the biggest foreign investor in the Croatia economy.

Hungary backs Croatia to EU
Another country that is keen to get the Croats to join up is Hungary, Croatia was for centuries a part of Austro-Hungary and a neighbour with a less sensitive relationship with Croatia than Slovenia. Hungarian President Ferenc Madl, on a one-day official visit to Croatia recently, said in Zagreb that Hungary would support Croatia's progress towards the EU, Croatian News Agency, HINA, has reported.
Madl, who met in Zagreb with his Croatian counterpart, Stjepan Mesic, said Hungary would do its best to help Croatia become a full EU member as soon as possible. President Mesic said such Hungarian support would be very important for Croatia, which already has good cooperation with Hungary in the fields of economics, culture and education. The two presidents also discussed possibilities of further improvement of cooperation especially in the banking sector and oil industry.
But for all the good offices of Budapest, Zagrab has first got to persuade its own people of the advantages of EU membership.

"Exemplary candidate"
Other European leaders also have made sure they have sent some encouraging signs to Croatia, besides the "Gotivina affair". During an official visit to Zagreb, Chris Patten, the then European Commissioner for External Relations, described Croatia as an "exemplary candidate", capable of influencing its Balkan neighbours on the road to integration. 
It is true that Croatia has returned to a state of remarkable health, mainly thanks to tourism, after the dramatic episode of the war in the 1990s. It has a higher GDP than Romania and Bulgaria, who are both supposed to join the EU in 2007, but its GDP is also higher than that of some new member states such as Lithuania and Latvia. 
But, obviously, it is not just economic criteria that counts for membership to the EU, and Europe prides itself on enforcing democratic and elementary Human Rights values.

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FINANCIAL NEWS 

EIZ sees Croatia GDP growth of 3.2% for 2005 


Analysts at the Institute of Economics in Zagreb (EIZ) forecast that Croatian positive economic trends will be maintained by the end of this year. However, due to not so good a start for 2005, this year's gross domestic product will grow by a moderate 3.2 per cent, and GDP growth will be 3.5 per cent in 2006, Hina News Agency reported.
According to the latest Croatian Economic Outlook Quarterly issued in July, EIZ analysts do not believe that a stronger economic development could be expected owing to measures which the authorities are taking to curb the growth in the external and public debt in the current circumstances when the private sector is not strong enough to enable quicker growth on its own.
Inflation is expected to decelerate during the year reaching an annual rate of 2.8 per cent. At the end of the year, the inflation rate is likely to fall to two per cent with the same rate being maintained in 2006. The current account deficit should be below five per cent of GDP.
Higher risks are tied with the height of the fiscal deficit particularly in the context of plans to pay back debts to retirees in 2006, EIZ analysts said. They also believe that the economic upswing in the European Union will produce positive effects on the Croatian exports.

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FOREIGN LOANS

World Bank supports Croatian science and technology 

The World Bank approved a US$40m loan for a science and technology project for Croatia. The project will help to improve the competitiveness of Croatian industry both in domestic and foreign markets, Reporter said recently.
Croatia has made significant progress in its transition towards a market economy. However, more remains to be done to improve the competitiveness of the Croatian economy and propel it forward on a path to sustained economic growth. 
An increased productivity and technological base, and strengthened linkages among research and development (R&D) institutions and industry, will help Croatia's economic integration with global markets, and facilitate Croatia's future accession to the European Union. The science and technology project will yield a positive return for Croatia's economy in the long run by reducing the burden of R&D institutions on the state budget. The project has a maturity of 15 years, including a five-year grace period.

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TOURISM

Kalvitis visits Croatia, talks focus on tourism 

Latvian Prime Minister, Aigars Kalvitis, and his Croatian counterpart, Ivo Sanader, signed an agreement on tourism cooperation on July 22 in Zagreb, Deutsche Presse-Agentur (dpa) reported. 
Sanader invited Kalvitis to visit the Croatian Adriatic coast himself in order to become a promoter of Croatian tourism in Latvia. 
The two leaders also discussed other possibilities to further improve mutual cooperation between Croatia and Latvia. 
Kalvitis stressed his country would strongly support Croatian efforts to enter the European Union and NATO. While in Zagreb, Kalvitis also met with the Croatian president, Stjepan Mesic.

Croatia becoming a hot tourist destination 

Around 4.9 million tourists vacationed in Croatia in the first seven months of 2005, a seven per cent increase over the same period last year, tourism officials said recently. Croatian National Tourist Association (HTZ) also said there were 26 million overnight stays, eight per cent more than in 2004. HTZ however did not say how many of the 4.9 million tourists were foreign. Estimations say Croatia's tourism industry may earn around six billion Euro this year. HTZ boss, Niko Bulic, said the number of tourists will continue to rise at least until 2010, due to good advertising, favourable prices and Croatia's close proximity to many EU member states, New Europe reported. 
In a related development, tourist officials said that Croatian lighthouses have become tourist attractions and vacations in all of them are being sold until October. Most of the guests keen on spending their summer vacation in a lighthouse in the Adriatic Sea are Germans and Italians, according to the Plovput company, in charge of renting out lighthouses. One week's stay in a lighthouse costs between 1,000 and 1,300 Euro officials said. Probably the most popular lighthouse in the Croatian Adriatic is Sveti Ivan Na Pucini (St. John of the High Seas). Built in 1853, it is popular among tourists looking for Robinson Crusoe-like vacations.

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