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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: 110 - (27/07/06)

Support for former foe's EU drive in first visit to Zagreb by Serbian head of state 
There is no more important relationship for the Croats than that with the Serbs for very obvious reasons. In 1991, Croatia seceded from Serb-dominated Yugoslavia. Belgrade sent in tanks to crush the independence drive and then backed and armed Croatian Serb separatists. The war ended in 1995, leaving some 20,000 dead on the Croatian side.
Serbian President Boris Tadic visited former foe Croatia in late June in a bid to boost ties between Balkan neighbours seeking to put the hostility of the 1990s behind them and win membership of the European Union. 
Tadic, a reformer often openly at odds with Serbia's more nationalist Prime Minister Vojislav Kostunica, said he backed Croatia's EU bid as vital for the future of other Balkan states, Serbia, Montenegro, Albania, Bosnia and Macedonia. "It is in Serbia's interests that Croatia realises its strategic goals, so that other Balkan countries can follow," Tadic, the first Serbian head of state to visit Zagreb, said after talks with Croatian President Stjepan Mesic. 
Despite progress made since hardline nationalists lost power in both countries in 2000, Tadic said he was still unhappy with the pace at which Croatian Serb refugees were returning to the homes they fled during Croatia's 1991-1995 independence war. "The return of refugees is not going in the best possible way, although efforts have been made. I do expect Croatia to do more to enable the Serbs to return," said Tadic. 

Croatia, Serbia open border checkpoint
Relations are also on the mend at a prime ministerial, not just presidential, level. There could not have been a more symbolic moment for both countries than an event in late July.
Croatian Prime Minister Ivo Sanader and Serbian Prime Minister Vojislav Kostunica opened the modernised border checkpoint at Batrovci-Bajakovo, which was co-financed by the EU on July 21. 
Sanader went on to Belgrade for meetings with President Tadic. He said bilateral co-operation has increased significantly over the past year, and expressed confidence that Serbia's action plan for co-operation with the UN war crimes tribunal would bring results. 

Croatia Proves Reforms In Region Are Possible, Says Sanader
Croatia has become proof that reforms in the region are possible and is a model to all its neighbouring countries, Sanader said on July 25 at London's International Institute for Strategic Studies in a talk on Croatia as the 28th member of the European Union. 
The talk marked the end of the first day of Sanader's two-day trip to London, during which he spoke to Prime Minister Tony Blair and met business people in the City of London. Sanader briefed the Institute's members of the current political and economic situation in Croatia and said Croatia was very similar to those countries which joined the EU two years ago. He said that what had been achieved was not accidental but the result of a lot of work.
Sanader voiced confidence that the formalities of Croatia's EU membership would be met soon, voicing hope that the Union needed Croatia because of its important role in the stabilisation of the region. He assessed the stabilisation of the region as a key achievement and voiced confidence that the South Eastern Europe Cooperation Process, which Croatia is currently chairing, would soon replace the Stability Pact for Southeast Europe, which he said had filled its role.
Answering questions, Sanader said a solution for Kosovo must ensure the protection of minority rights in accordance with the highest standards and that Belgrade must be involved in the finding of a solution so that Serbia, and the entire region, would not be destabilised.
Asked if Croatia would help Serbia implement its Action Plan for full cooperation with the Hague war crimes tribunal, Sanader said Croatia would contribute as much as it could to the arrest of Bosnian Serb fugitives Ratko Mladic and Radovan Karadzic so that they could finally face the indictments before the tribunal.
Sanader underlined that there should be no yielding to Serbia regarding cooperation with the UN court. He said Croatia had cooperated and that Europe's doors opened only when it met the last condition for full cooperation.

Croatia hosts summit on SEE issues
Leaders and political officials from across Southeast Europe met in early July in Croatia for a summit on regional security and integration into the EU and NATO. Dubrovnik hosted many important political figures from the Southeast European region at a summit that targeted security and integration. A total of 80 top officials representing over 40 countries and international organisations attended the two-day summit, which began 9 July. 
The participants discussed the future of the region and its role in the modern political world. Strong emphasis was also placed on the key goals of EU and NATO membership. 
Participants included the prime ministers of Albania, Bosnia and Herzegovina, Montenegro and Serbia, as well as the hosts of the event -- President Mesic and Prime Minister Sanader. Kazakh President Nursultan Nazarbayev was also in attendance. 
In their addresses at the summit, Mesic and Sanader both termed EU and NATO integration a national priority for Croatia. Mesic also urged all SEE countries to leave behind the divisive politics of the past and to look forward to a brighter future. 
In his speech, Sanader said he dreamed that one day a tourist or businessman could drive the entire way from Vienna to Istanbul without stopping at a single border control. "Let's just imagine the effects that unique shape of freedom would have on the strength and well-being or Europe," he said. 
While problems still remain in the Balkans, it is important that the solutions offered do not generate new crises, participants said. They also agreed that while countries should work together to tackle issues, implementation of agreed-on solutions should come from domestic institutions, rather than external ones. 
Protection of minorities was another issue discussed, with many focusing on the political and economic benefits of accepting minorities and treating them equally. There was also a call for larger countries, including those already a part of the EU, to show the way forward for the smaller countries, and help out wherever possible. 
The summit ended on an optimistic note, with a general conclusion that Southeast Europe was finally headed in a positive direction and has a bright future to look forward to. 

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EU MEMBERSHIP

Country remains on EU membership path 


The Croatian PM, Ivo Sanader, spent more than an hour with European Enlargement Commissioner, Olli Rehn, in his Berlaymont office on day one of the EU summit. Wheezing in from the EPP summit in Meise the PM said after his tete-a-tete with the Finnish Commissioner that the topics they discussed spanned Croatia's EU bid and football, New Europe reported. 
He said that Rehn bragged about watching the Croatia-Brazil match in the Brussels cafe Rio but claimed his support for Croatia. That same evening in Brussels the 25 EU heads of state or government were attending a working dinner at the European Council rehashing the future of the EU Constitution, how to continue and also how to make sure the necessary arrangements for further EU enlargement are made on time. 
"I am extremely satisfied since we discussed institutional arrangements once Croatia ends its negotiations on EU accession. We talked about ways for Croatia to become the 28th member state even without making major changes in the Nice Treaty, that was designed for only 27 member states," Sanader summed up his meeting with Rehn. The Premier added that one should expect an even more dynamic accession process during the Finnish Presidency of the EU that kicks off on July 1. "Following the opening and closing of the first chapter science and research the new dynamism will bring added value to the Croatian path to the EU," the Split-born prime minister sounded convinced. At the EPP summit in Meise earlier, overwhelming support for assessment of each country heading for the EU according to its own achievements was expressed. Sanader is strongly in favour of that idea because of the bad aftertaste of the Coreper meetings on the first negotiating chapter science and research when things temporarily came to a standstill for Croatia due to Coreper's divergences over Turkey. 
Sanader also mentioned that in the course of the next few days the Croatian chief negotiator Vladimir Drobnjak would head to the Finnish capital Helsinki. "The purpose of that trip is to make sure that Finland is 'working dynamically' and to agree on next steps in the Croatian negotiating process," said the Croatian premier. 

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FOREIGN INVESTMENT

EBRD acquires 8.33% stake in Agrokor 

The European Bank for Reconstruction and Development (EBRD) acquired an 8.33 per cent stake in Croatia's Agrokor, company officials stated after signing the contract in London, New Europe reported. 
The EBRD will invest a total of 110 million Euro in the company, which will be used by the company to restructure the balance sheet after a series of domestic and foreign acquisitions and to prepare for the future initial public offer. The EBRD President Jean Lemierre said that Agrokor was a successful company with a significant regional growth, assisting economic growth in Croatia and overall employment rate increase in the country and the region. "Agrokor should be an example to other Croatian companies, looking into the regional expansion," Lemierre said. 
The EBRD's investment would also assist the company to improve business operations by increasing domestic market share and by improving the company's rating among potential investors ahead of the initial public offer. Agrokor President, Ivica Todoric, said that EBRD's investment would aid the company in expanding outside Croatia. Previously, the EBRD approved a syndicated credit worth 170 million Euro for Agrokor in 2000 for restructuring and regional expansion, and in 2004 EBRD financed the acquisition of Serbia's Frikom with a credit totalling 13 million Euro, it was reported. EBRD has so far invested a total of 1.3 billion Euro in 76 different projects in Croatia.

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PHARMACEUTICALS

Barr to pay US$2.2bn for Croatia drugmaker

Barr Pharmaceuticals agreed recently to buy Pliva, Eastern Europe's biggest drugmaker, for US$2.2nb in cash, topping a bid from the Actavis Group of Iceland, the International Herald Tribune reported on June 28th.
Barr offered 705 kuna, or US$122, a share for Pliva, which is based in Zagreb, Croatia, 6 per cent more than its closing price, the companies said in a statement. Actavis's last offer, of 630 kuna on April 20th, was rejected by Pliva as too low.
The purchase will allow Barr, the largest US maker of birth control pills, to expand in Europe, where it does not have major operations. Barr, which had revenue of US$1.2bn in the year that ended March 31st, said its annual sales would rise to US$2.5bn after the merger as it gained Pliva's established markets in Russia, Britain, Germany, Spain and Italy. "Right now, Barr has practically no presence in Central and Eastern Europe," said Vladimira Urbankova, an analyst at Erste Bank in Prague. For Pliva, "the drugs they have in the pipeline will be better marketed with Barr than without Barr."
Barr gets about two-thirds of its sales from generic medicines. The company specialises in women's health products, selling the Plan B "morning after" emergency contraceptive as well as the Seasonale birth control pill.
Shares of Barr were down US$1.27, or 2.6 per cent, at US$47.50 in afternoon trading in New York. Pliva's global depositary receipts rose US$1.47 or 6.5 per cent, to US$23.95 in London. Each GDR represents 20 per cent of a Pliva share. The GDR's which have gained 78 per cent this year, are worth about 689.50 kuna, compared with Pliva's record closing price of 685.01 kuna in Croatia.
Barr is developing about 50 generic medicines, while Pliva will bring an additional 120, the companies said.
The transaction will leave Pliva's management in charge of European operations, and the Pliva brand will continue to be used there, the company's chief executive, Zelijko Covic, said at a news conference.
But analysts, including Urbankova, said that Barr may not want to keep Covic on as the head of its European operations in the long term. Pliva had a US$75m net loss in 2005 partly because the company abandoned its unprofitable proprietary drug-making operations.
Under Covic, Pliva relied too much on royalty revenues from patented products and paid too little attention to maximising profit from sales of generic products, Urbankova said. Pliva has struggled to recover from the expiration of the US patent on its azithromycin antibiotic. The medication generated nearly 25 per cent of Pliva's revenue for the first nine months of 2005.
Pliva's competitors, including Budapest-based Gideon Richter and Prague-based Zentiva, have pre-tax profit margins on generic sales of about 20 per cent, whereas Pliva's is about 10 per cent, she said. Still, "It may be that Pliva is on the verge of major growth in generics, as the company has been saying," said Frances Cloud, an analyst at Nomura Code in London.
An Actavis spokesman, Halldor Kristmannsson, declined to comment on the planned deal. The offer is contingent on Barr's getting at least 50 per cent of Pliva's shares, Covic said.

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