VIEWS FROM THE CAPITALS
ZAGREB - Croatia is on track for the EU but its economic and political road will be rocky
Croatia and the EU have at last reached the final phase of the accession negotiations, with formal discussions now taking place on competition policy, the judiciary and fundamental human rights, and also on foreign security and defence policies. The talks are expected to be tough, but Croatia’s Prime Minister Jadranka Kosor believes they will be wrapped-up by the end of this year, putting Croatia firmly on track to becoming the 28th member of the Union by 2012.
The country’s president Ivo Josipović has, meanwhile, launched a new foreign policy approach towards Croatia’s near-neighbours. By paying tribute to the victims of massacres belonging to all three major ethnic groups in the region, he sent the clearest possible message about reconciliation. Josipović has also visited several World War II sites of mass executions raising hopes that his presidency will see an end to long-standing ideological divisions within Croatia and turn it into a forward-looking nation that’s ready to play a full part in the EU.
But Croatia’s immediate economic outlook is far from rosy. Central Bank Governor Željko Rohatinski says that expectations about a recovery in the first half of 2010 were over-optimistic, and has warned that the economy could still shrink by another 1.5% this year following the sharp slowdown of 2009. Falling GDP and lower tax revenues are expected to see state revenues down by about 4%. The government raised around €1.8bn on the U.S. markets in July, a feat that was presented as an economic success by Finance Minister and Deputy Prime Minister Ivan Suker. But Rohatinski then told the government it should stop borrowing for the rest of the year, adding that Zagreb still needs to cut public spending and revise the annual budget. A weak but welcome light at the end of the economic tunnel has been an upturn in tourism. A slight increase in GDP is expected for the third quarter, but that is unlikely to compensate for declines in the first half of this year.
The continuing economic gloom is doing nothing to ease the government’s political difficulties, with measures to fight the crisis running into stiff opposition. The agricultural sector won its fight against planned subsidy cuts after protests in March, and a recent trade union-organised petition to force a referendum on draft amendments to labour legislation attracted 800,000 signatures, well above the required 450,000. It now remains to be seen whether a new voting system adopted by parliament in June will be used in this referendum. Under the new rules, a referendum will be decided by a majority of those voting on the issue, whereas previously it had to be a majority of all registered voters. These easier conditions may also facilitate EU accession, since recent polls have underlined public reservations about membership – with a meagre 50% in favour and almost a third against.
Croatia’s Parliament, too, is presenting the government will problems, despite the two-thirds majority it secured for the constitutional reforms back in June. Disgruntled Social Liberals left the ruling coalition in July, upset over accusations of disloyalty and by the recent performance of the government.
The departure of Justice Minister Ivan Šimonović has also caused political ructions. His appointment as UN Assistant Secretary-General for Human Rights was a feather in the cap of national diplomacy since it is the highest-ranking international position held by a Croatian official. But his replacement, Dražen Bošnjaković, gained only partial support from the opposition, whose members feel increasingly that the present government won’t survive its full term, and have therefore begun to put together a new coalition.