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CROATIA





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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)

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Update No: 119 - (30/04/07)

Looming elections to parliament
It is pre-electoral season in Croatia, even though there is still five months to go before elections in November. But they will decide whether the leading party in the ruling coalition, the Croatian Democratic Union (HDZ), continues in power or not. 

As Dr Johnson said, there is nothing like the prospect of imminent execution to concentrate the mind. Prime Minister, Ivo Sanader, is doing everything with the impact on the electoral result in mind.

Sanader Says Croatia's Joining EU Important For Stability In Europe 
The potential winner here is Croatia's entry into the EU. Sanader is hoping that voters will want continuity in the transition process to membership of the club. He will be telling them in effect not to swap horses mid-stream.

For he has obtained initial agreement from Brussels to proceed. Moreover, he has met the condition to hand over war criminals full on. 

He is well-liked in the councils of Europe, an obvious improvement on the likes of Franjo Tudjman, who ruled the roost in the 1990s with his rabid nationalism.

"It is terribly important for the stability in Europe that Croatia joins the EU after it meets all the necessary criteria," Sanader said at a congress of the European People's Party in Rome at the end of March. "The EU enlargement in 2004 was a great step in creating an integral and free Europe, but I believe that we can all agree that the unification process is not yet completed," Sanader said before several hundred envoys who gathered in Rome.

Sanader recalled that Croatia's EU negotiations talks were launched on 3 October 2005, adding that the country's membership talks should result in Croatia's full membership of the bloc which would confirm the correctness of the Croatian government's policy. Some of Croatia's neighbours are also preparing for a European future, Sanader said, highlighting this fact as an advantage for Croatia.

"Croatia's strength and role in Southeast Europe on this front is of great use to the European Union," Sanader said. Even though Croatia is in the process of accession negotiations, Sanader's speech was included in the work of the first plenary session on Thursday. Talks were also given by the prime ministers of EU member states. 

Push to reform
It is not just electoral expediency that lies behind the premier's enthusiasm for the EU. He realises that unpopular, but necessary, reforms can be pushed through with the backing of Brussels. 

Sanader emphasised successfully implemented reforms in Croatia and the fact that the country was successfully implementing the reconciliation policy, promoting social integration and that representatives of all national minorities in Croatia were taking part in the coalition government with HDZ at its helm.

Croatian successful reforms are an encouragement to all other reform forces in Southeast Europe. "I am very aware of debates currently being held within the EU about how the bloc should be organised in the future. However, this is not and should not be in contradiction with the fast track negotiations with Croatia," Sanader said.

Thanking the Croatian PM on his speech, EPP president Wilfried Martens expressed satisfaction with the fact that the Croatia-EU membership talks had been launched. "We have fully supported Croatia on its path to the EU on a number of occasions and Croatia can count on our support in the future," the EPP president told Sanader. 

Sanader And Spiric: Outstanding Issues Should Be Resolved As Soon As Possible
Croatia is hoping to become a regional leader in the Balkans. It is not as well-off as Slovenia. But it is bigger and closer to the heartlands of the region. With this in mind Sanader visited Bosnia recently.

"Croatia and Bosnia-Herzegovina have a lot more in common and a lot more reasons for cooperation than they have outstanding issues in their relations," Sanader said in Sarajevo on March 29th at the start of a two-day official visit. 

Speaking to reporters after meeting members of the Bosnian Council of Ministers, led by Chairman Nikola Spiric, Sanader said that both sides agreed that it was necessary to strengthen their cooperation and settle the outstanding issues without delay. 

He said that a new proposal had been put forward to Bosnia-Herzegovina to permanently resolve the dispute over the use of the southern Croatian seaport of Ploce. Spiric said that the proposal offered his country the status of most privileged nation in Ploce, and that it would be considered. He noted that Croatia and Prime Minister Sanader were actively pursuing a solution to the problem.

Sanader added that a solution to the Ploce issue should be sought in the context of plans for the construction of transport corridor Vc and that therefore Croatia proposed a modern approach that included giving Bosnia-Herzegovina most privileged nation status.

Speaking of the border issue, the two prime ministers said that most of it had been resolved and that it should be left to experts to try once again to find a solution to the dispute over the border near the Bosnian coastal town of Neum and the border on the Una river near Kostajnica. If those efforts fail, a final solution should be sought through international arbitration, both prime ministers said.

Sanader said he was convinced that the construction of a bridge between the Peljesac peninsula and the mainland would begin soon since an agreement had been reached on all important technical details.

On the subject of ownership of oil pipeline operator Jadranski Naftovod (JANAF), Sanader said that Croatia considered the issue closed in the late 1980s and early 1990s and that it was Croatian property. He, however, added that Croatia was willing to consider any new arguments and evidence offered by Bosnia-Herzegovina.

Sanader said that Croatia strongly supported Sarajevo's application for the seat of the Permanent Secretariat of the Southeast Europe Cooperation Process (SEECP).

Responding to reporters' questions, Sanader said his government believed that Bosnia-Herzegovina needed a more modern solution to its internal organisation than the one offered by the Dayton peace agreement, but that it should be reached with the consent of all three constituent peoples in Bosnia-Herzegovina.

Sanader said he would be glad if Bosnian Croat parties HDZ BiH and HDZ 1990 drew closer to each other or even merged to form a single party. He, however, stressed that it was a matter for the Croats in Bosnia-Herzegovina to decide and that Zagreb would not want to interfere.

Asked if his visit was part of the election campaign in Croatia, Sanader said that was not the case, predicting an outright victory for his HDZ party in November.

Two members of Bosnia-Herzegovina's tripartite presidency, Haris Silajdzic and Zeljko Komsic, received Prime Minister Sanader who led a Croatian delegation on a two-day official visit to Sarajevo.

The officials agreed that bilateral relations were good and that outstanding issues should be settled in line with the common goals of strengthening the already good neighbourly cooperation and drawing closer to Euro-Atlantic institutions.

According to a press release issued by the Bosnian presidency, Sanader said that prospective constitutional changes in Bosnia should guarantee equality for all the three constituent peoples, including the Croats who are the smallest constituent group.

Croatian and Albanian Ministers on Co-operation 
Croatia and Albania for long had very little contact. They were both formally communist, but of very different persuasion. Tito, half Croat and half Slovene, was the least fanatical of communist leaders, a fact spotted by the young Brigadier Fitzroy Maclean, who advised Churchill to back him in the second world war. He allowed a market economy to thrive and allowed people to travel abroad. Yugoslavia was the only communist country that was not a prison.

To Enver Hoxha, leader of Albania, this was all pure heresy. Yugoslavia was the ultimate 'revisionist' state. Relations were put in deep cold storage, pending the overthrow of the revisionists by the true comrades. Hoxha came to have the same view of the USSR. He died in March 1985, the very month a certain Mikhail Gorbachev came to power in Moscow. Things have not quite panned out as Hoxha would have hoped.

This all goes to explain why, although the total trade between Croatia and Albania was increased last year by almost 50% over 2005, it was at a level of only $33.6 million, of which more than $30 million consist of Croatian exports to Albania. This is a paltry scale of trade between near neighbours.

New contacts have been made to rectify matters. The Croatian Minister of Economy, Labour and Entrepreneurship Branko Vukelic met up in mid-April with the Albanian Minister of Economy, Trade and Energetics Genc Ruli, who was heading the Albanian economic delegation in a two-day visit to Croatia. Business meetings were held, among other things, between these two economists. 

According to the ministers' statements, the meeting was dominated by topics of co-operation in the field of small and middle entrepreneurship and of energy, as well as the participation of Croatian companies in the privatisation process in Albania.

The two sides agreed, according to Minister Vukelic, to start the procedure over a co-operation memo of the two countries in the field of small and middle entrepreneurship; and the Albanian side was requested to support the initiative on establishing a regional centre for education of small and middle entrepreneurs in Croatia. Croatia has strong support from the European Commission for the realisation of this project, Vukelic pointed out, because of the progress that was made in this area in the past few years.

The Croatian minister announced that a more significant economic delegation will participate in this year's Autumn Fair, which should give additional incentive to the development of economic relations between the two countries, which are, measured by goods trade, still inadequate, in relation to their potential. 

Minister Ruli primarily expressed an interest on the Albanian side for co-operation with Croatian companies in the field of energy. On this occasion, he pointed out that the Ina oil company was invited during the meeting to join in the privatisation of the Albanian national oil company. Also, he said that Albania, among other things, is planning a construction of several hydroelectric power plants and expects that Croatian companies will show interest for the participation in these projects, especially those companies which are already present on the Albanian market, like Montmontaza, Dalekovod, Konstruktor etc.

Hoxha must be turning over in his grave at all this because all the parties involved are of course dreaded denizens of capitalism. Too bad.

Mesic on Croatia's New Energy Strategy 
The goal of Croatia's new energy strategy will be the establishment of a so-called regional energy crossroads in Croatia, Croatian President Stjepan Mesic said on April 20th in Ohrid at the energy summit of countries of South-Eastern Europe. 

"Modern processes of concentration, primarily of the oil industry, and then gas and electricity industry, show the foundation of discussing conditions and deadlines for the establishment of a so-called regional energy crossroads in Croatia. This is the strategy I advocate, Mesic said. "Croatia alone does not have sufficient sources and we must do everything to obtain fuel. We can do this only by cooperating in the region," Mesic said after the first part of the summit.

The Croatian President announced an energy summit of heads of state for June 23 and 24 in Zagreb, at which he would additionally exchange opinions with the heads of state of South-East European countries. "Some countries have more, some less, but all lack financial resources to activate those sources. This is why we have met here, why we will meet in Zagreb, do discuss the financing of these sources, because without fuel there is no development," Mesic said.

Diversification and long-term security of supply are the chief goals of European Union's energy strategy in securing sufficient amounts of all forms of energy, but the deregulation of energy markets and privatisation of companies in the energy sector must be conducted so that all countries maintain sovereignty over this crucial part of national economy, he said.

The Ohrid summit is an additional stimulus to regional energy cooperation, Mesic said, recalling that a ministerial declaration had been signed in Zagreb at the start of the month between Rumania, Serbia, Croatia, Slovenia and Italy, concerning the pan-European oil pipeline for the transit of oil from the Caspian region from the Rumanian port Constante to Trieste (PEOP).

"This month we will start official negotiations with Slovenia and Italy on a modified version of the DruzbAdria pipeline which we believe to be complementary to the Pan-European pipeline project", Mesic said.

During the summit in Ohrid, Mesic also held bilateral talks with Serbian President Boris Tadic and Macedonian President Branko Crvenkovski. "Bilateral cooperation is more or less good with all countries of the region. The region is only burdened by the issue of the speed of solving the Kosovo issue", Mesic said.

The Croatian president also spoke with his Serbian and Macedonian counterparts about regional cooperation. "We spoke about ways to tie resources of European infrastructure development funds in the entire region", he said.

The Ohrid energy summit, at which the presidents of Albania and Montenegro also participated, as well as Bulgarian vice-president and chairman of the Bosnia-Herzegovina Presidency, ended on April 20th with the adoption of a joint declaration.

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ENERGY

Constanta-Pancevo-Trieste pipeline deal signed

Officials from countries in southern Europe on April 2 signed an agreement they hope will lead to the construction of an oil and gas pipeline linking the Black Sea to Western European markets. The agreement, signed by ministers from Italy, Croatia, Slovenia, Serbia and Romania, envisions a 1,400-kilometre pipeline from the port of Constanta in Romania to Trieste in Italy, transporting up to 90 million tonnes of oil annually by 2012, New Europe reported.
EU Commissioner for Energy, Andris Piebalgs, also signed the ministerial declaration on the construction of the Constanta-Pancevo-Trieste pipeline. The project is worth nearly US$2.6 billion. The signing of this declaration has been postponed several times in the past year. The pipeline will reduce tanker transportation in the Bosporus and Dardanelles Straits and the Adriatic Sea, and as such it is a competitor to the Bourgas-Alexandroupolis project already being implemented by Russia, Bulgaria and Greece.

A pipeline deal will be signed for Balkans, Europe

An agreement for an oil pipeline connecting the Balkans and western Europe will be signed in May at a conference in Zagreb, the Croatian foreign and economy ministries said, "Croatia Today" reported on March 19th. 
The Pan-European Oil Pipeline will run from the Romanian port of Constanza through Serbia, Croatia and Slovenia to Trieste in Italy. From there it will connect to the Trans-Alpine Line, which distributes oil to northern Italy and connects to users in Austria, the Czech Republic and Germany. It could also be linked with a pipeline in Switzerland, according to Croatian media reports.

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FOREIGN ECONOMIC RELATIONS

Sanader, Spiric talk about the port of Ploce 

Croatian Prime Minister, Ivo Sanader, offered the possibility that Bosnia-Herzegovina could be granted favoured status at the Croatian port of Ploce. During a meeting with his Bosnian counterpart, Nikola Spiric, in Sarajevo, Sanader suggested favourable usage of the port in exchange for possible favourable status for Croatia on the 5C corridor expected to link central Europe and the Adriatic coast through Bosnia-Herzegovina in the future, Deutsche Presse-Agentur (dpa) reported. 
Before the dissolution of the former Yugoslavia, the port of Ploce was built mostly thanks to Bosnia-Herzegovina's investment and was an important port for the country. Bosnian and Croatian officials also discussed a number of issues between the two neighbouring states. 

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FOREIGN LOANS

World Bank loans to help country improvement

Bulgaria's Finance Minister, Plamen Oresharski, and World Bank country director for Bulgaria, Romania and Croatia, Anand Seth, signed agreements on March 23rd allotting 155m Euro to assist reforms in several economic spheres, Sofia News Agency reported.
Oresharski and Seth also signed an agreement to finance transport and trade projects. The contracts term of acquittal is 17 years, including a five year gratis period. 
The first loan to be signed is the Development Policy Loan 1 (DPL-1) and will be first of three Development Policy Loans for the total sum of 450 million Euro. These loans will be extended in the equivalent Euro sums. DPL I aims at improving the institutional framework of the labour and social sector and improving the efficiency of the health, education and social protection systems, in view of supporting a stable financial framework of costs and improving the access to basic social services. 
Development policy loans aim at aiding the government in the accomplishment of its medium-term plan for political and institutional reforms. The loan will also help Bulgaria within its EU integration, Sofia news agency reported. The loan is worth 114 million Euro and is intended to aid Bulgaria in the first months of its EU membership. The investment loan for the Second Trade and Transport Facilitation in Southeast Europe Project stands at 40.9 million Euro. 
Bulgaria is providing a co-funding of 13.7 million Euro from the national budget. The loan should help improve the physical capacity and working conditions at selected EU external border crossings, with particular focus on the Trans-European Transport Network; constructing the access road linking the Kapitan Andreevo border crossing point to the Maritsa motorway; enhancing the sharing of relevant border crossing data, and streamlining operational procedures of border crossing agencies, and strengthening institutional capacity.
Seth and Bulgarian Economy and Energy Minister Roumen Ovcharov signed a USD 708,000 grant provided by the Japanese government and administered by World Bank. The grant comes from the Japan Policy and Human Resources Development Fund (PHRD) Fund, which was established in 1990 as a partnership between the government of Japan and the World Bank. It will be used for preparation of the second Development Policy Loan (DPL II) project.

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MINERALS & METALS

CMI in plans to acquire the Split steel mill

US-based Commercial Metals Company announced that its Swiss subsidiary, Commercial Metals International AG (CMI), submitted a bid to acquire "Zeljezara Split" dd Kastel Sucurac (Split) from the Croatian Privatisation Fund, it was reported on April 11th. Split is an electric arc furnace steel reinforcing bar mill with a wire mesh facility.
This is the second of Croatia's two operating steel mills for which CMI has submitted a purchase offer. In February, CMC announced that CMI had submitted a bid for the Valjaonica Cijevi Sisak (Sisak) pipe mill.
All bids for the Sisak mill were subsequently rejected by the Fund which has requested new bids for Sisak due by April 17th, 2007. CMC is studying the tender request for Sisak and intends to have CMI submit a bid on or before April 17th for that facility.
Both of these privatisation efforts are in preparation for Croatia's anticipated membership in the European Union in 2009. CMI is one of six bidders who submitted bids in connection with the proposed privatisation of Split steel mill.
CMI's bid for Split is approximately 155.7 million crowns (USD 28 million). This amount does not include additional working capital requirements for increasing the production levels. The bid is subject to execution of definitive purchase contract.
Split has 30,000 tonnes of mesh capacity. Sisak has currently approximately 70,000 metric tonnes melting capacity and about 300,000 metric tons of tubular manufacturing capacity in its existing product line, which include seamless, welded and cold processed pipe. CMI's bid for Split, which includes the share purchase price, assumption of a portion of the debt due to or guaranteed by the Croatian government as well as the assumption of trade payables, is approximately 155.7 million Croatian kuna. This amount does not include additional working capital requirements for increasing the production levels. The bid is subject to execution of a definitive purchase contract.

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TOURISM

Plans are unveiled to boost the tourism industry

Croatia will boost its tourist industry by two new five-star luxury hotels on the Istrian Peninsula, "Croatia Today" reported on April 11th.
The country's tourist office said the hotels will add 350 bedrooms, suites as well as apartments and villas along the peninsula's west coast. Visitors staying overnight in Dubrovnik and Brac this summer will also be able to take advantage of new luxury accommodation.
Construction work has also begun on a new luxury holiday home estate in Malinska on the island of Krk. Last year, more than 8.6 million people visited Croatia. German tourists made up the single largest group with about 1.6 million of them going to Croatia on holiday in 2006.
Meanwhile, the peasant's party, (HSS) revealed its plans for what it said was the tourism potential for continent Croatia, where they said they want to reach a quota of 30,000 beds, said Javno.com, a website which reports on Croatia for the development of that sector especially mentioned the tourist potential for continental Croatia, where they wish to reach a quota of 30,000 beds. According to the head of HSS, Josip Friscic, "It can raise economic growth by two percent." HSS's Ante Markov, a graduated economist in tourism, put together HSS's plan for tourism and the development of Croatia in which he wants to balance the tourist offerings in Croatia, Javno reported.
He said the problem is visible in the capacity and income which for continental Croatia is less than one percent. "We want to develop a new system of offerings in continental Croatia, and those are village, religious, health and thermal tourism - explained Markov." 

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