Accession negotiations, fight against organized crime and uncertain economic prospects

Institute for International Relations

Slovenia blocking Croatia’s Accession to the EU
Croatia’s ambitious accession agenda that should be completed by the end of 2009 has been jeopardised by bilateral border disputes with Slovenia, who vetoed the opening and closing of negotiations on several chapters at the EU-Croatia intergovernmental accession conference on the grounds that the attached documents prejudice the future borders between the two states. The blockade came as a shock to the Croatian public and the government which was hopeful that by 19 December 2008, the ten remaining negotiation chapters would be opened and five chapters would be provisionally closed for which the benchmarks were already met. The mediation and attempts of the French EU Presidency to convince Slovenia to withdraw the veto failed. In the 2004 enlargement round the EU left the bilateral disputes out from the accession process. After all, bilateral disputes of Slovenia with Croatia and with Italia over several matters did not block the accession of Slovenia to the EU. The Prime Minister Ivo Sanader, in his first reactions to the blockade has mentioned that this is an unprecedented situation and stated that “Croatia will not buy its membership in the EU with its territory”.[1] President Mesić in his reaction mentioned that the blockade is now also a problem for Brussels and not only for Croatia, keeping in mind that the other 26 members were in favour for the opening of the remaining negotiation chapters.[2] The Croatian media also reported the statement of Kristina Nagy, spokeswoman of Commissioner Olli Rehn, who expressed regrets that the efforts of the French Presidency failed and that Slovenia did not accept its proposal.[3] Instead, only one chapter was opened and three closed, making altogether 22 opened and 7 temporarily closed (out of 35), which does not adequately reflect Croatia’s preparedness for accession. Slovenian Prime Minister Pahor proposed continuation of talks, which was accepted by Prime Minister Sanader under condition that the representative of the European Commission should also be present. Czech Prime Minister Topolánek stated that if the issue could not be solved bilaterally, solution for the disputed borders should be found at the International Court of Arbitration.[4] This has been the Croatian proposal for more than two years, but this idea has not been very attractive to Slovenia so far. Czech Foreign Minister Schwarzenberg has stated that the Czech Republic will do all it can to enable Croatia to become a member of the EU, as this is also in the interest of the EU.[5] Italy also attempted to assist to find a solution in this dispute during the official visit of Minister of Foreign Affairs, Franco Frattini to Zagreb in January.[6] Discussions among academic circles seem to be more flexible and innovative than high level politics in simulating possible solutions at bilateral conferences and meetings, as showed at a recent graduate student conference jointly organised by Zagreb and Ljubljana Faculties of political and social sciences.[7] Most recently, Olli Rehn launched an EU initiative to form a sort of mediation council which will be headed by Finnish Nobel Laureate Marti Ahtisarri to assist Slovenia and Croatia in finding the acceptable solution for the 18 year long border dispute and unblock the Croatian accession negotiations.[8]
Fight against corruption and organized crime intensified after appointment of new ministers in the last quarter of 2008
Fight against corruption and organized crime remains amongst the top priorities of Croatian government, especially after shocking and brutal murders of journalist Ivo Pukanic, the editor of political weekly Nacional and Ivana Hodak, attorney apprentice and a daughter of the renowned Croatian attorney Hodak, in October 2008. Both murders happened on the streets of Zagreb, underlining the poor state and the lack of coordination of the police and the Ministry of Interior. The public pressure on the government to take all the possible measures to ensure security to ordinary citizens was enormous, resulting in some immediate changes in the top positions of the police and ministers of the interior as well of justice. For the first time the Government of Prime Minister Sanader has replaced these positions with experts and not loyal HDZ party members, which was well received by general public. Some media analysts however consider it as an alibi for inability to find a quick solution to the problem of organized crime which is deeply rooted and sometimes even politically sponsored.[9] New appointed Justice Minister is Professor Ivan Šimonović, while Tomislav Karamarko was appointed as new Interior Minister and Vladimir Faber as head of police. The newly appointed minister Šimonović had to act quickly and proposed adoption of immediate legislative changes that further strengthened the authorities of USKOK (Office for the Fight against Corruption and Organized Crime) as well as procedures of prosecution and investigative judiciary.[10] Other changes that followed were the adoption of changes in regulation including the laws that prevent the conflict of interest, changes in court procedures which expedite processes in courts, as well as changes in legislation to speed up the enforcement and execution of financial procedures in favour to creditors.[11] In addition, some presidents of the courts had to step down because of allegations of corruption, such as the president of Trade Court Zagreb due to detected donations from Zagreb Holding which is against the law on courts. In the last months the court processes finally started for the main protagonists from Croatian Privatisation Fund of the USKOK action maestro, after a year of investigation. Furthermore, several actions were undertaken to prosecute the notorious cases of corruption at the University of Zagreb and Cadastre Registers.
Economic prospects for 2009 much bleaker – a year of uncertainty is ahead
As elsewhere in the world, the economic prospects for 2009 in Croatia are much bleaker than before and a further deceleration of the GDP which has slowed markedly in the last quarter of 2008 is being predicted. This shows that the global financial crisis has started to affect the Croatian economy. The estimations of the growth of GDP have been revised and lowered down already several times in the last three months[12] The Croatian National Bank was much more cautious and predicted the growth of only 1 percent in 2009 and its Governor Rohatinski was pleading for responsible behavior on all levels in order to overcome the first blows of the crisis in the real sector. [13] The latest Transition Report of the European Bank for Reconstruction and Development (EBRD) predicts that Croatia would not be severely hit by the recession, however it may record a zero growth in 2009.[14] The analysts of the leading banks in Croatia revise the forecasts practically every week and predict that Croatia might even face a negative growth rate.[15] Most recently the analysts of the Economic Institute Zagreb have released the gloomiest forecast so far and envisage the negative growth rate of GDP in 2009 of -1.4 percent which will result in a substantial increase of unemployment and decline of state budget revenues.[16] As times goes by, even these prognoses seam to be over-optimistic.

[1] Statement for HTV (Croatian Television), 16 December 2008.

[2] Statement of Stjepan Mesić at a Press conference on 18 December 2008, available at: (last access: 9 January 2009).

[3] Cf. “Slovenian veto - presedence and scandal“, HRT (Croatian Television ), 18 December 2008, available at:[tt_news]=24247&tx_ttnews[backPid]=37&cHash=e294bfe143 (last access: 25 February 2009).

[4] Cf. “Topolánek: Slovenia and Croatia to the international court,, 7 January 2009, available at: (last access: 20 January 2009).

[5] Vjesnik, on 9 January 2009, p. 5.

[6] Novi list, 9 January 2009, p. 7.

[7] As shown by the statements of Prof Davorin Rudolf, Zagreb, and Prof. Aleš Gabrič, Ljubljana, at the regional conference “Republic of Craoatia and Republic of Slovenia - open billateral issues“, Čatež, 4-6 December 2008, available at: (last access 16 March 2009).

[8] “Marti Ahtisari to solve the Slovenian-Croatian Dispute”, comment of Deutsche Welle, available at: (last access: 30 January 2009).

[9] See for instance Srećko Jurdana: “Severe omissions of security service”, Nacional, 3 November 2008, available at: (last access: 28 Januray 2009).

[10] See the speech of Minister Šimonovic at the Croatian Parliament on 29 October 2009, available at: (last access: 28 January 2009).

[11] Summary of adopted measures in the last quarter of 2008 available in the National Program for Accession of Croatia to the EU for 2009, adopted in December 2008, available at: (last access: 28 January 2009).

[12] The State Budget was made on the optimistic 2 percent GDP growth forecast. See Ministry of Finance: “The Budget Proposal for 2009”; available at: (last access: 29 January 2009).

[13] Interview with Dr Željko Rohatinski, Governor of the Croation National Bank in business monthly, Banka, January 2009, pp. 18-22.

[14] Peter Sanfey, EBRD, on the occassion of the presentation of the Transition Report 2008 at the Zagreb Stock Exchange, 27 January 2009.

[15] See for instance macroeconomic forecasts of Zagrebacka banka in their CEE Quarterly Q4, October 2008.

[16] Institute of Economics Zagreb: “Croatian Economic Outlook Quarterly”, no. 37, January 2009, availbale at: (last access: 30 January 2009).