Nations in Transit - Croatia (2003)

Capital: Zagreb
Population: 4,300,000
Polity: Parliamentary democracy
Economy: Mixed capitalist-statist
Status: Free
PPP: $8,091
Private Sector as % of GDP: 60%
Life Expectancy: 74
Religious Groups: Roman Catholic (76.5 percent), Orthodox (11.1 percent), other (11 percent)
Ethnic Groups: Croat (78 percent), Serb (12 percent), Bozniak (1 percent), other (9 percent)

Introduction

Following the death of autocratic President Franjo Tudjman in 1999 and the defeat of his Croatian Democratic Union (HDZ) in the 2000 general elections, a reform-minded six-party coalition came to power promising swift reforms. The coalition's top priorities were fighting corruption, prosecuting individuals who profited from a fraudulent privatization process and close ties to the previous regime, and arresting Croat war criminals. These sweeping changes were designed to put Croatia on track for accession to the European Union (EU) and NATO, both eagerly awaited developments after years of international isolation.

Following initial success, including the adoption of a new Constitution that transformed the country from a presidential system into a modern parliamentary democracy, the government (led by the Social Democratic Party) hit a wall in 2002. Mired in intracoalition disputes and failing to implement the outlined reforms, the government has stagnated and even backtracked in the second part of 2002. The country's cooperation with the International Criminal Tribunal for the Former Yugoslavia (ICTY) remains a particular point of contention, forcing the government to balance domestic nationalist pressures and the demands of the international community. While it is clear that the current government is a dramatic improvement over the Tudjman regime in terms of transparency and management, its inconsistent approach on popular issues and lack of follow-up on numerous promises has put Prime Minister Ivica Racan's government on thin ice vis-à-vis its constituency, creating an environment that may be ripe for the comeback of the nationalist HDZ.

Croatia has staged a solid macroeconomic recovery following years of ethnic conflict and economic mismanagement in the 1990s. When the current government took over, the Tudjman regime had already succeeded in stabilizing the currency and repairing war damages. The country has a $4,880 per capita income, less than half that of Portugal, which ranks last among EU member states. However, the figure is more than double that of Bulgaria, believed to be next in line to join the EU following the current 10-country wave of expansion. Croatia's gross domestic product (GDP) in 2002 grew by 5 percent, driven mostly by a solid tourist season that brought in over $4 billion and by highway construction, the biggest project of the Racan administration, financed by the state and with obvious political overtones.

If the current government's first two years in office were marked by cutting thousands of jobs and slashing public administration salaries, then 2002 was characterized by a more generous approach to state spending. Unemployment has reached a record 21 percent, and no government wants to commence its last year in office with such a legacy. As a consequence, the government heavily subsidized the shipbuilding and agricultural industries, addressing the needs of the constituents of the country's two leading parties, the Social Democratic Party (SDP) and the Croatian Peasants Party (HSS). The state also overspent in the health and education sectors, swelling the budget deficit to 4.5 percent of GDP.

Personnel cuts in the defense sector and an overhaul of the judiciary came to a halt in 2002, postponing further painful yet necessary structural reforms. The 2003 budget proposal promised an even more generous approach. Clearly sensitive to electoral issues that will arise in 2003, the proposal offers significant support for the shipbuilding and agricultural industries, 4 percent salary increases, and further aggressive borrowing for highway and affordable housing construction.

The projected budget deficit stands at 4.5 percent, but the International Monetary Fund (IMF) believes that it will be closer to 5.8 percent. It will not help the budget that the overdue privatization of large state-owned enterprises will likely wait until after the elections. Companies for sale were to include the Croatian electricity generation and distribution monopoly HEP, the Croatia Insurance Company, and the national third television channel. All of them are likely to be postponed until 2004. Bidding for Industrija Nafte (INA), the country's oil and gas monopoly, is in an advanced stage, with Austrian, Hungarian, and Russian bidders expected to make offers sometime in 2003. As 2002 drew to a close, the government was in negotiations with the IMF for a 2003 loan that would be similar to the one received in 2001. IMF officials stated that the standby would be possible only if the deficit were cut to 5 percent. Finance Minister Slavko Linic stated repeatedly that Croatia did not need the loan but wanted it as an endorsement of its good macroeconomic policy.

The Racan cabinet's fear of public backlash against new job cuts was not the only reason reforms slowed in 2002: near constant intracoalition disputes also significantly reduced the government's focus and effectiveness. The clash revolved mostly around Racan and Drazen Budisa, leader of the Croatian Social Liberal Party (HSLS), the second strongest party in the coalition. Their animosities date back to 2000, when Budisa failed to win the presidency against Stjepan Mesic and felt that Racan did not provide him with enough support. After his failed presidential bid, Budisa tried to secure a high post in the government, but Racan was less than willing to accommodate him. The rift culminated with Racan's resignation, staged in order to receive another mandate and form a cabinet that excludes Budisa and the HSLS. Popularity ratings within the SDP and the coalition deteriorated because the public perceived the government as more concerned about itself than the promised reforms. The main opposition party, the HDZ, was the primary beneficiary of the coalition's crises.

Following the 2000 elections, observers speculated that strong internal factions would quickly destroy the HDZ. The HDZ did split in September 2002, but with minimal damage. The party leader, Ivo Sanader, effectively excommunicated his rival Ivic Pasalic, who then formed the Croatian Bloc (HB), a right-wing party that is now trying to woo HDZ sympathizers. In the meantime, the HDZ recuperated by taking advantage of a series of national political crises and incidents related to Croatian territorial integrity and indictments against Croats by the ICTY. These episodes included territorial disputes with Slovenia in the Piran Bay and the war crime indictment of retired general Janko Bobetko, for many a heroic figure who led Croatian troops in the war of independence from 1992 to 1995. The HDZ-led right-wing opposition has succeeded in weakening Racan's patriotic credentials and portraying itself as a political alternative based on firm principles rather than the constant political maneuvering of the ruling coalition.

Probably the greatest achievement of the post-2000 government has been Croatia's quick reintegration into the international community. Croatia was already a member of the Organization for Security and Cooperation in Europe (OSCE) and the Council of Europe, as well as the Quadrilaterale (with Italy, Slovenia, and Hungary) and the Stability Pact. In 2000, it joined NATO's Partnership for Peace and the World Trade Organization. Croatia will enter the Central European Free Trade Agreement in 2003. The most important agreement, however, is the Stabilization and Association Agreement (SAA) that Croatia signed with the European Union in 2001. The government pledged to enact a series of reforms by 2006, paving its way to EU membership.

According to the European Commission, the necessary reforms include restructuring the judiciary, speeding up the return to Croatia of Serb minorities, and improving regional cooperation. Becoming a member of the EU must be the goal of any administration in the country that wants to shake off the negative image of Croatia as a "Balkan state." Citizen support for joining the EU has been steady in the polls for years and is currently at 77 percent, according to the Ministry for European Integration. Unfortunately, as a direct consequence of the government's refusal to hand over General Bobetko to the ICTY, Croatia has witnessed diplomatic pressure unseen since the Tudjman era. Since the start of the standoff with the ICTY in mid-September 2002, the British Parliament has suspended the ratification of Croatia's SAA and the country has been literally ignored in official EU correspondence regarding either NATO or EU accession. The process seemed to have come to a halt in mid-November, when Jacques Wunenburger, head of the EU Mission to Croatia, stated that Croatia should not apply for membership in 2003. Although Wunenburger explained that the EU would not be ready to consider new members immediately after its pending 10-country expansion, he also strongly hinted that the country's dispute with the ICTY was the main cause of such a stance.

Croatia faces significant challenges as it enters the last year of the current government's mandate. Electoral politics are bound to stall both reforms and cooperation with the ICTY, and the EU's skepticism about extending membership to new countries is likely to grow. Considering that all political platforms will base their appeal on the promise of escaping the Balkans and joining the EU, Croatia may have to do some soul-searching and adjust to new realities. The year 2002 was one of stagnation after two years of dramatic progress; 2003 will likely be the year of awakening to the fact that EU accession may not happen anytime soon.

Electoral Process (Score: 3.25)

A multiparty, center-left coalition government has ruled Croatia since June 2001. The last parliamentary elections took place on January 3,2000, and brought sweeping changes in the country's political landscape. Following the 10-year rule of the right-wing HDZ and the death of its leader, President Franjo Tudjman, in late 1999, voters chose a coalition of six opposition parties led by the SDP, the reformed Communist Party. The election marked the end of Croatian international isolation brought by Tudjman's refusal to stop destabilizing Bosnia and Herzegovina, improve Croatia's human rights record, and cooperate with the ICTY. The new government, headed by SDP leader Ivica Racan, promised to address its campaign promises quickly.

The ruling coalition originally featured the SDP, the HSLS, the HSS, the Istrian Democratic Congress (IDS), the Liberal Party (LS), and the Croatian People's Party (HNS). However, the coalition proved to be very unstable. Following bitter arguments mainly over Drazen Budisa's objections to Racan's handling of cooperation with the ICTY and disputes with Slovenia, Racan dissolved the government in July 2002. President Stjepan Mesic gave him another mandate, and Racan, as expected, left the HSLS out. A number of HSLS members who disagreed with Budisa's party leadership left to form a new party called Libra, which kept 9 of the HSLS's 24 seats in Parliament and certain posts in the Racan government. The IDS had already left the coalition in June 2001, unhappy with the government's inefficiency. Currently, the coalition holds 75 out of 151 seats in Parliament, enough to retain control of the 16-party Parliament.

The 2000 elections were a landmark event for several reasons. Not only did the country turn the corner by voting for economic and political reforms, but the already weakened HDZ allowed for the most open and free elections to date as well. Even though state media remained significantly biased in favor of the ruling HDZ, the improvement in their coverage of the election was obvious. Most state media bias favoring the HDZ was balanced by the pro-change sentiment among private media and in the nongovernmental organization (NGO) community, particularly in animated youth and women's organizations.

Women made significant gains in the 2000 elections. They now make up 28 percent of all members of Parliament, among the highest percentage in the transitional democracies. (See table below.) One practical incentive contributed to this – higher budget financing for parties with more female representatives. In its final report on elections, the OSCE voiced concerns regarding uneven state media coverage, irregularities in electoral commissions, and chaotic voter registries; however, the agency concluded that the 2000 elections stood in stark contrast with the 1995 parliamentary elections, in which the HDZ applied extraordinary pressure at all levels to ensure victory.

Croatia lacks a stable set of procedural laws to insure that the administration and the public are properly and promptly informed about electoral laws. According to Citizens Organized to Monitor Voting (GONG), a well-known NGO that encourages public debate on electoral issues, Croatia needs a reformed law on voter registries, a law on campaign financing, a permanent electoral commission, and a stable law on electoral districts. Representatives of GONG acknowledge that Croatia is holding free and fair elections but believe that better procedural laws would ensure smoother and more transparent electoral processes.

The Law on Elections in Croatia had four incarnations in the first decade of the country's independence, the last one coming just 38 days prior to the 2001 local elections. Croatia has a proportional voting system, with 10 districts holding 14 seats each, plus 6 seats for the diaspora and 5 for minorities. The frequent changes to the Law on Elections have often served to improve the chances of victory for incumbent governments. For example, under Tudjman, Croats with permanent residencies outside Croatia could elect 12 representatives to a Parliament of 120 members. The purpose of the law was to increase support for the HDZ by allowing members of the diaspora, which overwhelmingly supports the party, to participate. Tudjman's tactics also included serious gerrymandering. Fearful of losing the city of Zagreb, he endorsed electoral borders that prevented the city from functioning as a single electoral district. As a consequence, two Zagreb neighborhoods a couple of miles away found themselves in different districts, each bundled with villages well outside the urban area. Rural populations voted mainly for the HDZ, weakening the urban Zagreb opposition.

Party Representation in the Croatian Parliament

Upon assuming power in 2000, Prime Minister Racan's government had before it the difficult task of reintegrating Croatia with the international community following a decade of isolation under President Tudjman. At the same time, Racan fought to keep his "patriot Croat" image at home amid the international community's demands for the arrest of Croats accused of war crimes, the end of state support for Croats in Bosnia and Herzegovina, and the creation of conditions supporting the sustainable return of Croatian Serb refugees. These preconditions did not sit well with the local population, which still possessed vivid memories of war and saw such moves as treason. Racan and his government have often been perceived as sellouts ready to sacrifice Croat heroes and everything they fought for. At least this is the image that the HDZ-led nationalist opposition has reinforced quite successfully. In his attempts to alter this perception, Racan has compromised with the nationalists by not removing them from the judiciary, the military, and the intelligence services. Stalling reforms in these sectors has also alienated Racan from his core constituency, a pro-Western and anti-HDZ urban class.

Another figure fiercely criticized by the nationalist political opposition is President Mesic, the surprise winner in the 2000 presidential elections. After early predictions favoring Budisa, Mesic won the first round of voting on January 24,2000, with Budisa finishing second, followed by former HDZ foreign minister Mate Granic. At one time a high-ranking Communist and the last president of the former Yugoslavia, Mesic presented himself as an outsider and campaigned as an anti-Tudjman figure. He also maintained the image of a friendly and accessible people's president – a stark contrast to Tudjman's elitist posture and humorless manner. And the tactics worked. On February 7, Mesic defeated Budisa in a runoff and ended the presidential elections, which were even freer of improper interference than the parliamentary elections. In particular, the pro-HDZ state media had provided mostly balanced coverage of the 13 candidates who succeeded in collecting the 10,000 signatures needed to enter the race.

The participation of ethnic minorities in Croatian elections has been driven by the dramatic conditions under which Croatia gained independence. The current Law on the Constitution, adopted in May 2000, provides for proportional representation of minorities that account for more than 8 percent of the population. In reality, this provision applies to no one, because according to the 2001 census, the largest minority is that of the Serbs, who constitute only 4.5 percent of the population. The remaining minorities account for less than 8 percent combined. The law also sets aside five to seven seats in Parliament for minorities making up less than 8 percent of population – that is, all of them. However, the Law on Elections, amended in October 1999, contradicts the Constitution by stating that minorities constituting less than 8 percent of the population are to receive five seats in Parliament. More specifically, Serbs, Italians, and Hungarians get one seat each, Czechs and Slovaks together receive one, and Austrians, Germans, Jews, Ruthenians, and Ukrainians are entitled to one seat. In the parliamentary elections of January 2000, minorities were awarded seats according to the electoral, not the constitutional, law.

The allocation of just five seats to minorities is the end result of a constant deterioration in minority rights since independence. The 1991 Constitution provided minorities with various cultural and self-governing rights. In addition, Serbs, who in the 1991 census stood at 12 percent of the population, were entitled to proportional representation, while other minorities could count on five seats: one each for Italians and Hungarians, one for Czechs and Slovaks, one for Ruthenians and Ukrainians, and one for Germans and Austrians. After Croatian forces overran the rebellious and autonomous Serb region of Krajina in 1995, effectively ending the war of independence, Parliament dropped the provision that guaranteed Serbs proportional representation. The move was intended to reflect the fact that as the Croatian army gained control of Krajina, Serbs departed for Bosnia and Serbia. Later, in 1995, the Law on Elections was amended again to award Serbs three seats in Parliament and other ethnic minorities four additional seats. The deterioration of the Serbs' position continued into 1999, when new amendments to the Law on Elections provided the current five seats for minorities, including only one for Serbs.

The current Law on the Constitution is under review in order to fulfill a long overdue obligation, following the country's 1996 accession to the Council of Europe, for a fair Law on National Minorities. The government is working on the new draft with the OSCE Mission, the Council of Europe's Venice Commission, and various NGOs and minority representatives. According to the Venice Commission, the current law does not offer "an adequate response to the political needs of minorities in Croatia." The Racan government tried to push a new draft in an urgent procedure in July 2002, but Parliament rejected it. The law was given a reading, however, and the government was to submit the final draft no later than six months after the reading – that is, by the end of January 2003.

The draft law offered minorities the right to at least five representatives in Parliament. In addition, minorities with more than 1.5 percent of the population are guaranteed a seat. This in effect would apply only to Serbs. Any additional Serb representatives would be determined by the number of Serbs who voted divided by the average number of votes needed to elect one representative to Parliament. All other minorities (those below 1.5 percent) would be guaranteed a total of four seats.

The leaders of national minorities have objected to the latest proposal. Italian minority representative Furio Radin has stated that three amendments need to be added: "First, explicit incorporation into the Law on the Constitution of the standard ... that permits the Parliament to adopt legislation ensuring a special right to national minorities to elect representatives into the Parliament. Second, proportional representation in executive bodies at all levels of government. Third, greater specificity of the cultural autonomy granted to national minorities." The sole Serb representative in Parliament, Milan Djukic, noted that he will not support any law that fails to reflect the freedoms and provisions in the 1991 Law on the Constitution. As is clear, the Serb minority question in Croatia is still one of the most controversial issues in the country. According to a social tolerance poll conducted by the GfK Agency in October 2002,25 percent of Croatian citizens would like to see all Serbs forced out of the country. Many political parties support this public sentiment, making it highly unlikely that Djukic will see his demands fulfilled anytime soon.

Croatia's political landscape features 86 parties, 16 of which currently enjoy representation in Parliament. Since the first postindependence elections in 1990,6 new parties have been added each year in the registry. Some have ceased all activity and exist on paper only. Since the last parliamentary elections, the number of parties in Parliament has increased from 12 to 16, with the most recent additions being Libra and the HB. Considering that the legislative threshold is 5 percent, the number of parliamentary parties is high. However, the number will likely decrease after the elections in early 2004. According to current popularity polls, several parliamentary parties, including Libra, the HSLS, and the HB, will not meet the threshold.

Despite the number of registered parties, only a few have a massive membership base. These include the HDZ and the SDP. According to voluntary disclosures by parties in the last three years, around 370,000 people, or nearly 8 percent of the total population, are active members of political parties.

The opposition is currently led by the HDZ, the second strongest party (34 seats) in Parliament and a right-wing force that experienced a revival in 2002. The HDZ comeback began in May 2001 with the local elections. Overall party support declined from the 1997 local elections, but far less than anticipated considering the events of 1999 and 2000. The HDZ won the most votes in 16 out of 20 counties but secured a stable majority in only 4. Voter turnout was only 46.85 percent, a dramatic decline from 75.3 percent and 63 percent for the 2000 parliamentary and presidential elections, respectively. Local elections always draw fewer voters, but the dramatic decline in 2001 could be attributed to the ruling coalition's inability to push forward many promised reforms and to continuous intracoalition quarreling.

The main problem with the local elections was the adoption of the Law on Elections only 38 days prior to voting, giving parties and the administration very little time to adjust. According to the OSCE's final report on the local elections, the 2001 elections highlighted the need for harmonization of Croatian laws on the elections of Parliament, the president, and local governments. The OSCE also pointed to the absence of a mechanism to punish improper practices by election commissions, nontransparent campaign financing, and infringements on media regulations.

Civil Society (Score: 3.00)

Croatia does not have a developed civil society. Forty-five years of communism followed by a decade of Tudjman's autocracy stripped the average citizen of civic and democratic initiatives. Lack of tradition combined with an unfriendly legal environment and poor overall social and economic conditions stifled the third sector for the whole decade following the country's transition to democracy in 1990. This was helped by the fact that Tudjman's isolationist regime portrayed foreign organizations devoted to civil society building as agents of conspiracy against the newly acquired Croatian sovereignty.

However, toward the end of the Tudjman regime, as the 2000 general elections were approaching, the country saw unprecedented growth in civic action and volunteerism. Vibrant NGO activity helped bring about a change in government through the encouragement of voter participation, awareness campaigns, and constant pressure on the HDZ government to support a transparent electoral process.

The organization GONG started as a pro-vote initiative but developed into an all-purpose advocate offering anything from legal advice to tours of the Parliament. GONG's scope of work is indicative of the enthusiasm that spread in the civil society sector when it became obvious that the Tudjman regime would be seriously challenged in the 2000 elections. GONG and similar groups have played a major role in animating Croatian youths, traditionally an apathetic demographic group, not only to vote but also to become active participants in the democratic process. Croatia's new center-left government has showed a willingness to help strengthen civil society. In November 2000, for example, following a number of discussions, it gathered representatives from numerous NGOs, nonprofit organizations, the public sector, religious institutions, and international organizations to adopt its Program for Cooperation between the government and the nongovernmental, nonprofit sector in Croatia. A number of important measures followed, including the introduction of certain tax breaks for NGOs and the adoption of the Law of Associations. The new law significantly improved the legal framework for NGO activity, including the removal of vague clauses permitting government interference in NGO work; it also eliminated registration and tax hurdles.

Financial independence remains elusive throughout the third sector. The two main obstacles to self-sufficiency are the absence of a philanthropic tradition and the country's poor economic conditions. Limited tax incentives for the private sector's contributions came into being only with the adoption in 2001 of the Law of Associations, and it will take time before regular financing channels are established. Membership-based financing is rare. The main sources of financing continue to be foreign organizations and governments. State contributions are channeled through the governmental Office for Associations and various ministries, but they remain limited.

According to the Office for Associations, there are about 17,000 NGOs in Croatia, of which 2,946 (15.5 percent) are ethnic, veterans, youth, human rights, environmental, social, humanitarian, and women's groups. The rest are various sports, science, technical, hobby, and other organizations.

In addition to women's groups, human rights organizations, environmental organizations, and election watchdogs, there are nonliberal right-wing organizations in Croatia that are capable of destabilizing the government. These are mainly veterans organizations that found themselves out of favor with Croatia's new government, and they oppose the cuts in privileges that the Tudjman government instituted. The strength of groups such as the Association for the Protection of the Homeland War Legacy was displayed during massive demonstrations in 2001 against the arrests of Croat generals. Protesters were able to block main roads, politicize cultural and sporting events, and gather as many as 150,000 people for rallies.

Common slogans at such events call for the removal or even arrest of President Mesic and Prime Minister Racan, as well as certain left-oriented political and public figures. The most recent display of their power came in September 2002 following the ICTY's indictment of retired general Janko Bobetko. Public and political pressure was extraordinary to not cooperate with the ICTY, and veterans organizations went so far as to put armed guards around the general's house. It became obvious that Racan's government, rather than provoke an armed confrontation, was not going to attempt to arrest Bobetko – a strong hit against the government's capacity to enforce the Constitution, in which cooperation with the ICTY is clearly outlined. The constitutional Law on Cooperation with the ICTY was passed by the HDZ-ruled Parliament in 1996.

It is not obvious how the various veterans organizations are funded, but no one doubts their close connections with the HDZ, the HB, the current military establishment, and the Catholic Church. They have helped radicalize a significant segment of the population, especially disaffected youths who have seen few socioeconomic improvements: unemployment, in particular, remains at a record high.

The Catholic Church is a major influence in Croatian society. According to numerous polls, the church is the most trusted institution. However, it represents one of the most backward influences, with extremely conservative leadership. The institution played a significant role in the national homogenization process leading up to Croatian independence and, as a consequence, enjoyed a privileged position during the Tudjman rule. Since the change in government in 2000, the church has remained closely associated with right-wing segments of society. On numerous occasions, church officials have openly criticized the current government on purely political grounds. The church's main publication, Glas Koncila (The Voice of the Council), is regularly filled with xenophobic and racist commentary. Besides the Catholic Church, there are well-organized Orthodox Christian and Muslim religious communities that operate freely and with little outside influence.

Over 60 percent of Croatia's workers are union members. Unions are independent and increasingly influential in the legislative process. The largest of the five major union confederations is the Union of Autonomous Trade Unions of Croatia, followed by the Association of Trade Unions of Croatia, the Confederation of Independent Trade Unions of Croatia, the Council of Croatian Public Employees' Unions, and the Association of Croatian Workers' Unions. The number of strikes, typically small, increased in 2002, mainly over the government's attempts to weaken the bargaining position of unions in negotiating social contracts.

Croatia's education system is not free of political influence, especially on issues of recent history, religious content, and language. After the country split from Yugoslavia in 1991, national homogenization included the emergence of patriot experts who presented themselves as authorities on these issues. Textbooks were rewritten not only to reflect new realities, but also to portray the world as the HDZ regime saw fit. Curiosities included omitting facts that would give a bad name to the Nazi-supported Ustasa regime that ran Croatia during World War II. Catholic religious education was introduced to schools. In addition, a number of commonly used words were designated Serbian and therefore unacceptable for use. Indeed, correcting someone who had just used a Serbian word became a matter of national pride. These phenomena were omnipresent in the media as well, but it was in schools that the approach became institutionalized in the 1990s.

After great lobbying efforts by the Catholic Church and the HSS, the senior partner in the current ruling coalition that holds the Ministry of Education, religious education was introduced to kindergartens in 2002. Parliament is currently debating legislation that would provide better guidelines for the selection of textbooks and give teachers more freedom in the choice of educational materials. Private educational institutions are rare, but there are no major legal impediments to their development.

Independent Media (Score: 3.75)

Croatia's most trusted and penetrating source of information is television. Since Croatian Radio and Television (HRT) remains a state monopoly, though, the public has yet to hear a strong independent voice out of their TV sets. HRT is currently mired in conflict among several groups of journalists, editors, and managers loosely connected to political groups outside the company. During the decade of the HDZ's rule, HRT served as the ruling party's outpost, and any dissent from the party's agenda was effectively purged. Following the change of government in 2000, HRT became a battlefield for already fragmented interests, resulting in numerous resignations and accusations. The public in the meantime was promised that HRT would be transformed into a modern public service free of political influence. In addition, the government has committed to selling the HRT3 channel to a private competitor. Unlike Croatian television, the print media offer independent views through a number of popular dailies and weeklies with diversified ownership and little political pressure.

Since the 2000 elections, the media have seen little interference from the government. Only state television remains a battlefield for various interest groups. The new Law on HRT, passed in February 2001, gave the government one year to dissolve HRT into independent television and radio branches and to sell HRT3. Since then, though, the government has failed to fulfill either task.

In addition, the Law on HRT posed several problems regarding HRT's conversion to a true public service provider. According to the OSCE's analysis, the law leaves too much room for political interference, delegating power to a Board of Managers that is appointed mostly by Parliament. Also, the 1999 Law on Communications, as amended in 2000, grants most executive regulatory control to the government's inspector for telecommunications. The Council for Radio and Television, at the same time, is responsible for issuing and revoking licenses, without the power to control the state-owned media or impose fines on its own merit. Moreover, Parliament has the right to remove any member of the council at any time, effectively leaving the government as the ultimate authority. As of this writing, the government was working on fulfilling its promises in the 2001 law and instigating a public debate about a new draft law.

According to a study commissioned by the Croatian Journalists' Association, HRT is the prime source of information in the country, with 90 percent of those polled naming HRT as a source of information and 74 percent naming it as the only source. Until the government sells HRT3, there will be no real competition to HRT. HRT is heavily subsidized by the government, and independent ventures without major capital investment simply cannot compete in the market.

Croatia's print media have been in a better position since the removal in 2000 of various government control mechanisms, ranging from secret service surveillance and threats against journalists to numerous legal and tax hurdles. The two best-selling dailies are Vecernji List and Jutarnji List, circulating at about 200,000 copies a day. Both are independent, with relatively balanced coverage, yet neither has been able to clearly delineate editorial and news content. This problem is common to most media, whether independent or owned by the state. The most popular political weeklies are Nacional and Globus, with circulation of about 70,000 copies each, and Feral Tribune, which has won numerous international awards.

Questionable court decisions against journalists, newspapers, magazines, and publishers continue to have a chilling effect on reporting. The concept of "emotional suffering" (dusevna bol) is popular among members of the political and business elite who were close to the Tudjman regime, and in the 1990s courts awarded significant amounts of money to these individuals. According to the Croatian Journalists' Association, plaintiffs collected about $200,000 in 96 cases.

With the change of government in 2000, many believed that the era of dubious court decisions had passed. However, according to some estimates, 1,200 libel suits against journalists remain backlogged in the court system, and recent court decisions of some cases suggest that the judiciary is still showing considerable bias against independent and critical reporting. In February 2002, the district court in Zagreb ordered the weekly Feral Tribune to pay $23,700 to Marica Mestrovic and Zeljko Olujic, who pressed charges in 1998 for two articles that allegedly caused the plaintiffs emotional suffering. The writer of the first article, art historian Zvonko Makovic, argued that Mestrovic was not competent to run the foundation she was heading. Makovic was acquitted during the trial, and his article was recognized as a legitimate form of public criticism. However, the court concluded that the article still had caused Mestrovic suffering and ordered the publisher of Feral Tribune to pay damages.

Olujic, who is also Metrovic's lawyer, brought suit against Feral editor Viktor Ivancic for an article that exposed some of Olujic's political views, including claims that the Ustasa regime during World War II was not Fascist and that Jews were responsible for the Holocaust. The decision of a lower court, here confirmed by the district court, suggested that Ivancic's article "reeks of cosmopolitan views and attitudes." Feral's bank account was blocked following the court decision, nearly taking the weekly out of business.

The monthly Croatian Left is another publication that was hit with a ruling that had a chilling effect on the independent press. In March 2002, the district court in Zagreb ordered the publication to pay $13,000 to retired general Janko Bobetko for emotional distress suffered when his name was mentioned among others responsible for crimes against Serbs in Sisak during the Croatian war of independence. One has to question such financial punishment for a little-known publication whose annual circulation does not equal in value the figure awarded to Bobetko.

At the same time, the Croatian Helsinki Committee for Human Rights (HHO) has identified the problem of unprofessional, untrue, and inflammatory reporting. In its quarterly report, the HHO singled out a number of cases in which independent publications such as the Globus weekly used unfounded accusations, politically motivated tirades, and sensationalist language. In addition, the HHO has noted instances of unethical reporting, in which the media published the full names and photos of indicted individuals whose trials had not yet taken place, as well as regular bias against the Roma.

Croatia's Internet sector is growing steadily in terms of both users and providers. Currently there are 480,000 Croatians online, according to GfK, representing 11 percent of population. There are no restrictions on access.

Governance (Score: 3.75)

Improvements in transparency, accountability, and access to information are the principal indicators of the growing stability of Croatian governmental institutions. The main potential source of instability is the dependence of local governments on the central state budget. The inability of local governments to collect and distribute revenues severely limits their capacity to function independently.

The winning political parties in 2000 campaigned on transparency and responsible spending. Indeed, the expectations of the public were so high following the Tudjman regime's decade-long refusal to provide insight into the state's finances that President Mesic had to explain to the media how he was paying for his summer vacation in 2000. By instigating public debate, though, the new government has significantly increased input from expert and NGO sources into the lawmaking process. The new labor code and the Law on HRT are politically sensitive issues that exemplify the new approach. The government changed the draft labor code numerous times following heated debates with trade unions and employers associations, and the Law on HRT saw input from various independent sources. Draft laws and other documents are easily accessible through the media. Final laws are typically the product not only of political deals, but also of a process that includes a fair amount of public input.

Despite significant improvements in access to information, Croatia remains the only country in the region that does not have a freedom of information act. All information not labeled a state, professional, or military secret is accessible by law to journalists, but it is not explicitly stated that the information is free and open to the public. There is even some obstruction of access to journalists, such as the August 2002 episode in Sisak in which Danko Kovac, the president of the district court, forced three journalists to sign a document stating that they were forbidden to report on court witness accounts for seven months. The witness accounts were related to an investigation of crimes committed against Serbs in Sisak during the Croatian war of independence.

The inability of local governments to be financially independent remains a potential source of instability. The April 2001 Laws on Local Self-Governance and Financing of Local Governments are seen as insufficient to address the most pressing needs of local entities. According to a study written by Katarina Ott and Anto Bajo of the Institute for Public Finance, Croatia's administrative structure is not sustainable, because a large number of local units cannot generate sufficient income and are consigned to permanent dependence on central government subsidies.

Croatia comprises 20 counties, 123 cities and towns, 424 municipalities, and Zagreb, which functions as both a county and a city. According to a World Bank-financed study by Inge Perko Separevic of the Croatian Legal Center, growth in the number of administrative units between 1992 and 2000 was dramatic. Forty-four new municipalities were formed, and 49 municipalities gained city status, increasing the number of cities to 123.

Other problems with the legal framework include the overlap of central and local responsibilities. For example, a county governor is an employee of both central and local government. In addition, dependence on the central budget has given local governments the incentive to manipulate communal services to boost local budgets, thereby making it impossible to systematically track and control the communal economies. Ott and Bajo also name the absence of internal audits as a major obstacle to transparent financing.

Constitutional, Legislative, and Judicial Framework (Score: 4.25)

The reformist government that took office in 2000 was quick to transform Croatia's presidential Constitution into a modern European parliamentary democracy based on a system of checks and balances among the executive, legislative, and judicial branches of government. Turning the country into a parliamentary democracy has been one of the most important accomplishments of the new administration. The constitutional framework simply does not provide for a return of a dictatorship and, at the same time, does not reduce the presidency to a merely ceremonial role.

The first overhaul of the Constitution took place in November 2000, and the second one followed in March 2001. The second revision dissolved the House of Counties, the lower house of Parliament, and provided a framework for fundamental reform of the judiciary. Under Stjepan Mesic, the presidency has also taken a dramatic reduction in authority, with the new Constitution transferring most presidential powers to Parliament and the government. Parliament, in turn, has been transformed into a transparent institution with televised sessions, input from NGOs in the work of committees, and documentation that is available to the media. According to the nongovernmental organization GONG, Parliament is a vastly different place when it comes to considering recommendations provided by civil institutions. Mesic did succeed in keeping some authority over security issues and appointments of top military personnel.

Of the three branches of government, the judiciary has been the least willing to reform. Croatia has 250 courts and 1,756 judges, 62 percent of whom are women. The resistance to change emanates mainly from the presidents of courts and representatives of the legislative branch, who are appointed to oversee the functioning of courts but not interfere with issues concerning the branch's independence. Their competencies include the recruitment, selection, training, and appointment of judges and a series of other tasks dealing with operational and financial issues facing courts. Most sitting court presidents were appointed by the State Court Council (DSV), a tool that Tudjman and the HDZ used to dictate the appointments of their cadres. After the formation of the DSV in 1996, the Tudjman regime purged the judicial branch and effectively turned the post of court president into the sole authority of any particular court. Already in 1995, the regime had dismissed 13 Supreme Court justices and 400 judges on political grounds.

A series of laws passed by the Racan administration dramatically reduced the authority of court presidents. The remaining resistance to change in the ranks, therefore, stems not from ideological differences, but from the refusal by individuals who received their appointments during the Tudjman era to give up their high social and professional status. Leading the antireformist sentiment is the Association of Croatian Judges, whose head, Vladimir Gredelj, is also president of the court in Bjelovar County. The association challenged the new laws before the Supreme Court, which dismissed the case on nearly all counts.

Ultimately, this process has stalled the implementation of the new laws. According to the Ministry of Justice, by April 2002 (the legal deadline to appoint court presidents in line with the new laws), only 115 of 249 judges had been appointed; a sizable majority of these were merely reappointments of incumbents. Of the numerous instances of obstructive behavior, one received solid media attention. At the Vrbovec Court, court president Milan Kranjec refused to leave his office, doing so only under escort by the judicial police. While it is certain that the current government has provided the judiciary with a de facto independence that was nonexistent under the Tudjman regime, this newly found independence will hamper attempts to refill posts awarded by the previous regime.

The country's court system is dealing with a great backlog of cases, most dating from the pre-2000 period. According to the Ministry of Justice, the current ratio of solved to new cases is 95 percent. Minister of Justice Ingrid Anticevic-Marinovic has declared that the backlog of over 1 million cases will be eliminated by the end of 2007, primarily by hiring more judges and delegating 700,000 simpler cases to public notaries. The Ministry of Justice also has set up a center for professional education that helps judges, prosecutors, and others deal with their workloads more efficiently. Nevertheless, despite Anticevic-Marinovic's optimism, the transfer of such a large amount of cases remains a concept without clear details on the criteria for delegation or a timeline for making it happen. Ultimately, the Croatian judiciary is sure to remain the country's number one problem impeding progress and change in all segments of society.

Croatia's Constitution provides for all basic human rights, including business and property rights. The country has struggled to enforce the Law on Cooperation with the International Criminal Tribunal for the Former Yugoslavia. Local courts brought several high-profile cases against Croats who allegedly committed crimes against Serbs during the war of independence. However, the process has been mostly unsuccessful. A recent example is the trial against Croat military police who allegedly tortured and killed Serbs at the military prison Lora in Split. The trial featured the release of all defendants by Judge Slavko Lozina, their re-arrest upon pressure from the government and the ICTY, and repeated denials by Serb witnesses to confirm previously signed statements amid the threatening atmosphere. The media widely reported Judge Lozina's cheering at a concert in Split attended by members of the right-wing political and military establishment. The concert featured the singing of pro-Nazi Ustasa songs and chants against President Mesic, with special luxury seats kept empty in honor of Generals Mirko Norac and Ante Gotovina, the former in prison and the latter in hiding for war crimes. The Lora trial reflects the difficult challenges any future government will face in its attempts to reform the judiciary.

A number of human rights violations have been brought before local courts, most relating to the politically sensitive issue of minority returns. Although the government has changed its attitude toward the returnees significantly – through new strategies, public relations campaigns, and correspondence with international institutions – Croatian courts remain biased against them. Court decisions that do favor minorities are often not implemented. While the current government's rhetoric is a vast improvement over the pre-2000 regime, much remains to be done in the coming years.

Corruption (Score: 4.75)

The government elected in 2000 has treated corruption in a manner similar to public administration and the judiciary. That is, it has put in place a solid legal framework and institutions to deal with problems inherited from the previous regime, but their implementation and functioning have been slow or have stalled. This slowdown is reflected in Transparency International's 2002 Corruption Perceptions Index, which ranked Croatia 51st out of 102 countries and gave it a score of 3.8 out of 10. This represents a step back from the previous year, when the country ranked 47th and received a score of 3.9.

Croatia's Parliament adopted the government's National Anti-Corruption Program and Action Plan in March 2002. The document actually was drafted over a year earlier, and certain tasks contained in it had already been completed by the time of its passage. For example, the Action Plan called for the Ministry of Internal Affairs to form a Crime and Corruption Department with toll-free telephone lines for citizens to report specific cases. In October and November 2001, the new department received 240 calls, 20 faxes, and 10 e-mails, and the tips did lead to a few small-scale arrests.

The ministry handed over most of the investigations to the Office for the Suppression of Corruption and Organized Crime (USKOK), which Parliament formed in October 2001 with much publicity. The creation of USKOK has solved the country's need for an independent and specialized entity to fight corruption, as prescribed by Article 20 of the Council of Europe's Criminal Law Convention on Corruption, which Croatia signed in November 2000. Over a year later, USKOK had not produced significant results, but it still may be too early to tell. Under the Action Plan, the government also adopted new regulations for local self-government laws and joined the OSCE Convention and Stability Pact's Anti-Corruption Initiative. To date, however, the government has failed to pass through Parliament legislation on conflict of interest for public officials. Parliament rejected the first draft, judging it too harsh.

According to the Action Plan, 65.8 percent of the country believes that corruption is very widespread; another 32.9 percent considers it merely widespread. In addition, the daily paper Vecernji List has reported that 30 percent of population believes corruption is normal, while only 40 percent finds it unnecessary. Of those polled, at least one-quarter had actually bribed someone, mainly individuals in the health sector (44 percent), the judiciary (13 percent), and public administration (8 percent).

The appointment in 2001 of Radovan Ortynski as public prosecutor was an important part of the Racan government's campaign again corruption. However, Ortynski was fired in 2002 following the rejection by Parliament of his annual report. Already sensing Parliament's dissatisfaction with the document, Ortynski presented the report by announcing that organized crime could not be fought in Croatia because it reaches high into the government and the judiciary. He then followed with a statement saying that he could prove the claim. Although several representatives asked that a commission be formed to investigate Ortynski's allegations, the parliamentary judicial committee refused the request. Both the SDP and the HDZ voted for Ortynski's removal, thus ending an embarrassing episode in the government's fight against corruption and organized crime. To a certain extent, the ordeal exemplified the government's overall success in highlighting the issue of organized crime in Croatia and particularly the looting of state resources by elites close to the Tudjman regime.

Author

Edin Forto is a global risk analyst at the Eurasia Group in New York.