Nations in Transit - Croatia (2005)

Capital: Zagreb
Population: 4,400,000
Status: Free
PPP: $4,540
Private Sector as % of GNI: na
Life Expectancy: 75
Religious Groups: Roman Catholic (87.8 percent), Orthodox (4.4 percent), Muslim (1.3 percent), Protestant (0.3 percent), other and unknown (6.2 percent)
Ethnic Groups: Croat (89.6 percent), Serb (4.5 percent), Bosniak (0.5 percent), Hungarian (0.4 percent), Slovene (0.3 percent), Czech (0.2 percent), Roma (0.2 percent), Albanian (0.1 percent), Montenegrin (0.1percent), other (4.1 percent)

Executive Summary

Thirteen years after Croatia split from Yugoslavia and declared independence, the country has not completely recovered from the bloody war which marked its separation. Even now, the consequences of war hang over the country and are apparent, on the one hand, in politics and the judicial system, where collaboration with international legal institutions is still a very sensitive subject, and on the other hand, in the traumatized economy. The regions that suffered most are still financed with significant amounts of budget money and so are war veterans and refugees. Until 2000, under the authoritarian leadership of President Franjo Tudjman, the Croatian Democratic Union (HDZ) was the dominant force in both national and local governance. During his rule accusations of many human-rights violations and extreme nationalist politics slowed the process of transition and blocked Croatia's chances of progressing further toward European integration. Tudjman's leadership, his politics of involvement in the war in the neighboring Bosnia and Herzegovina, as well as his discriminatory steps against the Serbian national minority in Croatia, all led to the international isolation of the country.

By the end of the 1990s, the opposition gained pace, capitalizing on public frustration with the authoritarian regime and promising sweeping changes and prosperity. Tudjman died in December 1999, and the following year the HDZ was ousted in parliamentary and presidential elections. A center-left coalition took power and launched a series of reforms of state structures. Presidential powers were limited through constitutional changes that defined Croatia as a parliamentary democracy in which the head of the state holds a largely ceremonial role. However, the president still co-creates foreign policy with the prime minister and influences domestic affairs. Other changes included abolishing the upper house of Parliament in 2001 and introducing health and defense reforms that are now under way. The pro-reform coalition put Croatia on the fast track to European Union accession during its term in office, but near-constant infighting significantly weakened the government's focus and effectiveness, leaving it unable to adequately tackle pressing domestic issues such as high unemployment, an inefficient judiciary, and corruption. As a consequence, the coalition lost the confidence of the electorate and was defeated in November 2003 general elections. The HDZ regained power under the leadership of Ivo Sanader, who insisted that the party had broken with its nationalist past. He promoted a new image of a conservative party committed to democracy and the rule of law.

Sanader has managed to convince the international community that his party has truly transformed itself and uprooted its hard-line policies. He has signed agreements with representatives of the national minorities, initiated judicial reform, and extradited to the Hague-based International Criminal Tribunal for the Former Yugoslavia (ICTY) eight suspects accused of war crimes and atrocities during the 1990s conflicts. Sanader also declared that joining the EU and NATO were Croatia's foreign-policy priorities. Croatia passed the first major European test successfully in April 2004 when it received a positive assessment (avis) from the European Commission on its readiness to begin EU membership negotiations. Soon the country was granted membership candidacy status and Brussels specified that accession talks could start in 2005 provided Croatia cooperated fully with the ICTY. Sanader's government hoped to finish the negotiations and fulfill all the conditions over a period of two years, enabling Croatia to join the EU in the next enlargement round in 2007, together with Romania and Bulgaria. However, most analysts see 2009 as more realistic.

National Democratic Governance. The European Commission's positive assessment and achievement of EU candidacy status gave the official confirmation that Croatia had built stable, well-functioning democratic institutions which respect the limits of their responsibilities. But Brussels also warned that Zagreb still had big tasks to take care of before joining the Union: more effort on minority rights, refugee return, judicial reform, regional cooperation, combating corruption, and cooperation with the UN war-crimes tribunal. Despite the HDZ's campaign promises to reorganize and downsize the state apparatus, the government machinery still remains extensive. There are fewer ministries 14, down from 19 but little apparent cost savings or increased efficiency. Nor has the freedom of information law passed in 2003 yet become fully functional. These factors contribute to the widespread perception of the administration as unprofessional and irresponsible. Croatia's rating for national democratic governance is set at 3.50. Although the EU has officially acknowledged Croatia as a country devoted to democracy and human rights, the public sector remains slow and heavily bureaucratized.

Electoral Process. After almost four years in opposition, the HDZ swept back into power in the November 2003 parliamentary elections, and formed a majority coalition with the backing of the Croatian Pensioners Party (HSU) and representatives of the ethnic minorities who, for the first time, became part of Croatia's political mainstream. Presidential elections scheduled for 2 January 2005 will be the fourth since independence in 1991. Incumbent president Stjepan Mesic was expected to be challenged by a record 13 candidates, but all opinion surveys found that Mesic, who took office in February 2000, still enjoyed the backing of most Croats. His most serious challenger was expected to be Deputy Prime Minister Jadranka Kosor of the HDZ. A novelty of the presidential race was a new campaign finance law that bars donations by public companies or companies in majority state ownership and requires candidates to report the amount and sources of campaign funds to the Election Commission within 15 days of polling day. A leading NGO, GONG, although praising the new regulations, pointed to its many deficiencies, such as its failure to foresee sanctions for irregularities. GONG also recommended making the State Electoral Commission (DIP) a permanent body and extending campaign finance rules to cover all elections, not just presidential. Croatia's rating for electoral process improves from 3.25 to 3.00 on the strength of the new campaign-financing law. The lack of a permanent election commission remains a weak point in the electoral system.

Civil Society. There are around 17,000 registered nongovernmental organizations (NGOs) in Croatia. Although this number is quite high, their impact on the decision-making process is still low. For most, financing remains one of the biggest problems. An additional stumbling block is the government's decision to re-introduce the compulsory value added tax on foreign donations for a substantial part of the civil society sector. Humanitarian, religious, and sports organizations remain exempt from this tax. As the Organization for Security and Cooperation in Europe (OSCE) has noted, many NGOs face financial and other difficulties that stem from a lack of clear legal and procedural standards. New regulations designed to ease the functioning of civil society groups are being prepared. The civil society rating remains 3.00 reflecting the government's decision to impose an additional financial burden on NGOs despite their growing number.

Independent Media. Freedom of the press is generally respected, but additional legal reforms are needed to safeguard journalists from unjustified prosecution. This is especially important with regard to a 2004 provision of the media legislation which gives the State Attorney's Office the authority to demand that a journalist reveals a source if considered necessary for the protection of the public interest and national security. The Croatian Journalists' Association objected, warning that the law does not clearly define who determines the public interest and that it would be very easy to abuse that ambiguity and to endanger investigative journalism. The association also stated that access to information had deteriorated since the HDZ's return to power. The journalists claimed that officials and state agencies frequently avoid answering their questions in a timely manner and tend to withhold information. They also demanded that libel should be addressed exclusively through civil procedures. However, journalists' vulnerability to libel charges has been slightly eased by a decision that their criminal responsibility is limited to cases where the libel is found to be intentional. At the end of 2004, the public was stirred by a scandal involving a journalist interrogated for several hours by security agents during an investigation into organized crime. An investigation concluded that agents may have made procedural errors but had not broken the law. The whole affair ended in dismissal of the head of the Counterintelligence Agency (POA). The incident not only revealed inadequacies in the supervision of the secret services, it also reminded many, as pointed out by the Croatian Helsinki Committee, of the 1990s, when "the journalists were the first victims of the degeneration of democracy." The state remained the largest single owner on the media market and is exempt from anti-monopoly legislation. The independent media rating remains 3.75. Although several important laws were adopted, overall access to information deteriorated and the state remained the largest media owner.

Local Democratic Governance. Despite the constitutional obligation to devolve power to local representative bodies, in practice the system of state governance is still centralized. Local governance and self-governance reforms announced several years ago met with frequent delays and had not fully taken effect in 2004. Scarce financial resources continue to hamper local authorities from achieving their constitutionally-mandated authority. At the same time, it is very obvious that some local authorities lack the ability to manage their resources successfully and/or meet the needs of citizens efficiently. During the 2003 parliamentary election campaign, all parties supported the idea of direct election of mayors, but after coming to power, the HDZ scotched the idea, arguing that society was not yet ready for such a major change. There are two levels of subnational government in Croatia. Cities and municipalities comprise the level of local self-government, and counties are the units of regional self-government. Municipal and county elections are held every four years; the next elections will take place in May 2005. The rating for local democratic governance is set at 3.75. The constitution establishes a framework for local self-government, but in practice the system is still centralized and local authorities remain dependent on financial support from central authorities.

Judicial Framework and Independence. The state of the judicial system remains the country's main social problem and the key area where the European Commission has told the government to do more to achieve positive changes and European standards. The court system is faced with a backlog of 1.3 million cases, most dating from the pre-2000 period. The European Commission's avis concluded that citizens' rights are not being fully protected owing to delays in judicial proceedings. The government initiated the first concrete efforts aimed at systemic judicial reform. These should be completed by the end of 2007. In order to reduce the number of unresolved cases, the state increased the number of court consultants and gave them additional powers; it also allowed the transfer of cases from overburdened courts to those less burdened. Simultaneously, Croatia's judiciary is preparing to deal with war-crimes cases expected to be transferred from the ICTY as the tribunal begins winding up its mission. These will be cases involving medium- and low-level defendants. Parliament has accepted amendments to the criminal code, the first stage in the Justice Ministry's planned reform of criminal law. The second stage will focus on introducing harsher penalties and extending the statute of limitations. The rating remains 4.50. Despite the first concrete steps toward systematic judicial reform, the court system is still faced with a sizeable backlog of cases and unreasonably long trials.

Corruption. Transparency International's Corruption Perception Index suggests that Croatia is making little progress against corruption. The perception of corruption in 2004 was slightly poorer than in the previous year. Croatia shared 67th position on the list of 146 countries. Citizens believe that corruption is widespread in the health system, judiciary, and local government. Mild penalties for engaging in corrupt acts and the prevalent custom of bribing are the most important causes of corruption. The conflict of interest law passed in 2003 established a commission to prevent conflicts of interest. However, in 2004 the commission's role was mostly decorative as its work was blocked by numerous disputes over the nomination of members and their responsibilities. The new HDZ government came into office declaring its commitment to the principle of transparency, but throughout 2004 the government was drawn into several affairs which shook public confidence in its efforts to curb corruption. In the autumn, Foreign Minister Miomir Zuzul was linked to a series of corruption scandals which provoked the opposition to call for his resignation. The Justice Ministry plans to propose a new national anti-corruption program in 2005. The rating remains 4.75.

Outlook for 2005. The challenges facing the government in the near term are closely linked to the EU accession process. Accession talks with Brussels were provisionally set for March 2005, but the government has been warned that the European Commission will meticulously scrutinize fulfillment of certain conditions: further judicial reform, return of war refugees, and cooperation with the ICTY. Croatia's steps toward greater European integration in 2005 and its EU membership negotiations will be overseen by a newly elected president. On the local level, elections will be held in spring, decentralization measures should pick up, and a local-government reform is expected to begin.

National Governance (Score: 3.50)

During 13 years of independence, Croatia has managed to consolidate its democratic governance system, based on a constitutionally-guaranteed separation of legislative, executive, and judicial powers. The pace of transition slowed due to the war in the first half of the 1990s and the ethnic and territorial divisions that accompanied it. The most recent parliamentary elections, held in November 2003, were judged free and fair, and proved the maturity of the political system and the established mechanisms for transferring power. The sluggish legal system and inert state administration, which citizens perceive as unprofessional and irresponsible, continue to be sore points. Setbacks to reforms in the administration and judicial sectors have also affected Croatia's rating on the World Economic Forum's Global Competitiveness Report 2004-2005. Ranked alongside 103 other countries, Croatia dropped from the previous year's 53rd position to 61st on the growth competition index and from 62nd to 67th on the business competition index.

The Croatian Democratic Union (HDZ) returned to government in 2003 promising a more efficient and slimmed-down state apparatus. State bureaucracy remains extensive, however. Although the party cut the number of ministries from 19 to 14 as well as founding four new major state offices neither cost savings nor increased efficiency ensued because the government simultaneously set up many supplementary bodies. Around 70 different committees, commissions, councils, or working groups now help Prime Minister Ivo Sanader and his cabinet with everyday tasks. The civil service is still politicized to a great extent and lacks clear distinctions between political and career posts. Large amounts of budget money are poured into the administration. More than 57,000 people work in the state administration, and according to World Bank data, the costs of the bureaucracy amount to 11.5 percent of GDP. Croatia, thus, spends more resources on the public sector than any other country in the region except Montenegro.

In the foreign-policy arena, 2004 was exceptionally good for Croatia. In April, it received a positive opinion (avis) from the European Commission on its readiness to begin full EU accession negotiations. The commissioners stated that Croatia had stable, well-functioning democratic institutions which respect the limits of their responsibilities. Zagreb received indications that it could be able to fulfill all criteria to close negotiations within five years. In June, the EU granted the country official membership candidate status and in December European leaders specified that accession talks could start in March 2005, provided Zagreb cooperated fully with the International Criminal Tribunal for the former Yugoslavia (ICTY) in The Hague.

Although the tribunal continued to hand down indictments of Croatian war-crimes suspects in 2004, this did not shatter political peace nor, as previously, fuel an atmosphere of insecurity in the country. The shadow of war crimes remained a serious obstacle to Croatia's ambitions to join the European bloc. Eight accused Croatian army officers have voluntarily surrendered to the ICTY, but the case of General Ante Gotovina, one of The Hague's most wanted fugitives, remained unresolved. He is accused of crimes against humanity, murder, and the disappearance of ethnic Serbian civilians during the 1990s war for independence. In her report to the UN Security Council in November 2004, the tribunal's chief prosecutor, Carla del Ponte, urged the international community to keep up the pressure on Croatia to hand over Gotovina. Del Ponte stated that Gotovina had enjoyed and continued to benefit from a well-organized support network, including forces from within the state structures. The government repeatedly claimed it was doing everything possible to find and extradite Gotovina, phrasing its statements in the context of fulfilling the EU's demands.

By gaining candidacy status, Croatia committed itself not only to continuing reform at home, but also to encouraging further positive developments in the region. In November 2004, Prime Minister Sanader made a landmark visit to Serbia, the first Croatian head of government to do so since the disintegration of Yugoslavia. Sanader`s visit was interpreted as a strong signal that the two neighboring countries were ready to put the legacy of war behind them. Throughout 2004 Croatia could not manage to solve a maritime border dispute with Slovenia; nevertheless, new EU member Slovenia supported Croatia's EU aspirations.

Candidacy status opened the door to financial aid from three EU funds: the PHARE institution-building program, ISPA for infrastructure support, and the SAPARD rural development program, amounting to 105 million euros ($136,000,000) in 2005 and 140 million euros in 2006. By accepting these funds Croatia has the obligation to develop and implement projects intended to speed up refugee return, judicial reform, minority rights, the battle against corruption, and cooperation with the ICTY.

Since the end of the Tudjman era, marked by authoritarian nationalism, the Croatian constitution has been changed to shift power away from the head of state to the legislature. The Croatian Parliament (Hrvatski sabor) is a unicameral body constitutionally mandated to supervise the government. Parliamentary sessions are broadcast on national television (HTV), although audience figures are very low, averaging 2.4 percent. Information about the work of the parliament and the government is available on the Internet and via public-relations departments within the ministries. Nevertheless, media professionals criticize the system as too closed. In October 2003 Croatia adopted an act on the right of access to information, which has not yet become fully functional. The Croatian Journalists' Association has repeatedly warned that access to information has been limited since the HDZ gained power. This was confirmed by a study conducted by a group of 17 respected NGOs as part of a campaign to increase the public's awareness of its right to information. The study found that between September and November 2004, state offices answered less than half of the questions received. The government's public-relations office performed worst. The Croatian Helsinki Committee concluded that those in power still do not understand the importance of adhering to standards of transparency, good communication, and responsibility.

The activities of the intelligence agencies are no longer as controversial as during the 1990s, but security agencies are often still accused of having a hidden agendas and acting in certain politicians' or lobbyists' interests.

A reorganization took place in 2002, when Croatian parliament adopted the new Law on security services, following which the Tudjman-era intelligence community was dissolved. The change affected the Croatian Intelligence Service (HIS), Service for the Protection of the Constitutional Order (SZUP), Security Information Services (SIS), and Intelligence Service (OS). The National Security Office (UNS), an umbrella organization that coordinated various intelligence activities, was dissolved. SZUP was replaced with the Counterintelligence Agency (POA), HIS by the Intelligence Agency (OA), SIS and OS by the Military and Security Agency (VSA).

The president and the prime minister have shared authority over the appointment or removal of the head of the secret services. They can be neither appointed nor relieved of their duties without the signatures of both the president and the prime minister. Work of the intelligence community is supervised by the Parliament through its Committee for Internal Policy and National Security and since 2003 by the Council for Civilian Supervision, and is coordinated by the Council for the National Security.

Despite the reorganization, an effective system of civilian control to guarantee that they function in accordance with the law key to the establishment of a transparent and democratic state is not completely in place. The lack of real supervision is also visible in the constant leaks of documents which are then used by politicians to damage rivals. In December 2004, the head of the Counterintelligence Agency (POA) was dismissed amid a scandal provoked by agents who harshly interrogated a journalist. President Mesic entrusted the new head of the POA with forming a team of experts unencumbered by party affiliation or ties with other state services, tasked with comparing domestic and European Union intelligence services as a step toward improving the existing legislation in that sector.

Electoral Process (Score: 3.00)

Croatia entered 2004 with a completely new distribution of political power, following the most closely contested election since the country gained independence, when in November 2003 the HDZ swept back to power, trouncing the center-left coalition led by the Social Democratic Party (SDP). The HDZ is inseparably linked with Franjo Tudjman, its longtime leader whose hard-line policies while head of state repelled the West. The party led Croatia to independence, but left it isolated on the international stage during its rule marred by numerous human-rights violations, extremism, and xenophobia.

In the 1990s, the HDZ had used war as an excuse for manipulating the electoral system for its own gain by extensive gerrymandering, media pressure, and a ban on independent observers at polling stations. The party was swept from office in 2000 when the electorate opted for the pro-reform center-left coalition. The coalition promised sweeping improvements and economic prosperity, but the pace of reform was slow and the main partners in government could not agree on how to introduce changes. The HDZ turned out to be the primary beneficiary of the government's crises. New leader Ivo Sanader declared that the party – after almost four years in opposition – had broken with its nationalist past and transformed itself into a modern, traditional conservative party. Sanader presented a strong pro-European agenda and quickly began racking up diplomatic successes abroad. After the 2003 elections, the fifth since the introduction of a multiparty system in 1990, the HDZ held 66 out of 152 parliamentary seats, then gained an outright majority in coalition with representatives of the national minorities and the Croatian Pensioners Party (HSU). By calling on Serbian refugees to return to Croatia and by signing a post-election agreement with minority representatives, Sanader has also managed to assuage international concerns and to convince the international community that his government is committed to democracy, the rule of law, and human rights. Through agreements with the HDZ, minorities have for the first time become part of the political mainstream and have been given the chance to influence the decision-making process.

The 2003 parliamentary elections were again conducted on a proportional system. The electorate voted in 12 constituencies. The country was divided into 10 territorial constituencies; another constituency was created for citizens living abroad and one for the minorities, who chose eight representatives, up from five in the previous elections in 2000. There are 8 minority MPs – in the chart, 3 of them are listed as independent deputies. The change reflected a realignment of the minority composition of Parliament in accordance with constitutional legislation on minority rights. Turnout was 59.6 percent, compared to 70 percent in the 2000 elections. Observers unanimously deemed the elections free and fair; however, the OSCE observer mission voiced concern over the absence of a permanent, professional electoral commission. These elections took place in a less contentious and charged atmosphere than the previous national vote. Social issues were the focus of the parties' campaigns and there was almost universal support for the main foreign policy goals, primarily the process of joining NATO and the EU.

The 2003 elections had a major impact on the political arena. Radical centrist and rightwing parties such as Croatian True Revival (HIP), Croatian Bloc (HB), and the Croatian Christian Democratic Union (HKDU) were swept from the scene as the 5 percent election threshold proved too high for them. The post-election period was troublesome for the liberal option as well and liberal parties experienced turmoil.

Presidential elections scheduled to be held on 2 January 2005 will be the fourth since independence in 1991. Incumbent president Stjepan Mesic was expected to be challenged by a record 13 candidates, but all opinion surveys found that Mesic, who took office in February 2000, still enjoyed the backing of most Croats. His candidacy was also supported by the center-left opposition parties. His most serious challenger was expected to be Deputy Prime Minister Jadranka Kosor of the HDZ. Croatia's 2000 constitution restricted the president's power, but the head of the state still co-creates foreign policy with the prime minister and influences domestic affairs. Reflecting the country's democratic progress, the OSCE decided not to observe the balloting. Activists from the country's most prominent independent election watchdog, GONG, planned to monitor the voting.

A novelty of the presidential race was a new campaign finance law that bars donations by public companies or companies in majority state ownership and requires candidates to report the amount and sources of campaign funds to the Election Commission within 15 days of polling day. Although most legal experts agreed that the law marked a very positive step, they pointed out its serious deficiencies. GONG warned that the new law did not take into account the threat that donors could misuse NGOs as channels for financing a presidential campaign. There was also criticism that the legislation did not set a cap on donations and that it imposed no sanctions on irregularities in campaign financing.

Civil Society (Score: 3.00)

According to figures from the government's Office for Cooperation with NGOs, there are around 17,000 nongovernmental organizations in Croatia. The exact number of NGOs is between 17,000 and 19,000, but numerous NGOs, though registered, are not active. However, the impact NGOS have on the decision-making process is still less than this very high figure might suggest. Croatians remain quite apathetic toward the idea of taking action to solve social problems, in the view of the Center for Development of Nonprofit Organizations. The state is also suspicious of the activities of civil society groups.

While in the 1990s, when the civil sector benefited from generous financial backing from abroad, its focus was on humanitarian concerns; today a number of NGOs are working on social and gender issues and environmental problems. Most NGOs are located in urban areas and there is still a large gap between the development of the civil sector in urban and in rural areas. Most government support still goes to NGOs located in the greater Zagreb area and a few other larger cities, with comparatively little making its way to NGOs in rural communities. An example of a well-developed NGO active throughout Croatia is GONG, which promotes voter awareness and monitors elections. Local authorities often do not accept NGOs as partners and have little understanding of their role. Most NGOs rely on volunteers; very few can afford to hire paid staff. NGOs throughout the country point out that government funds go more often to sports clubs and veterans' groups than to organizations working on issues of governance and human rights.

According to Justice Ministry data, since 1999, when the Office for Cooperation with NGOs was founded, the state has spent 105 million kuna (around $17.5 million) supporting the activities of the civil sector. In 2003, this office set up the National Foundation for the Development of Civil Society to provide technical support and training to NGOs. However, throughout 2004 the foundation was not significantly involved in helping the civil scene except for making recommendations on the distribution to the sector of $4.5 million in state funds. When EU accession talks get under way, civil society should be able to take advantage of financial help from several EU funds. For the time being, though, financing is one of the sector's biggest problems. An additional stumbling block is the government's decision to re-introduce the compulsory value added tax on foreign donations for a substantial part of the civil society sector, including for groups involved in human and minority rights, gender issues, and democratization. Humanitarian, religious, and sports organizations remain exempt from this tax. A well-organized group of NGOs initiated a petition drive against the decision and began meeting Finance Ministry officials for further discussion of the VAT decision.

As the OSCE has noted, many NGOs face financial and other difficulties that stem from a lack of clear legal and procedural standards. New regulations designed to ease the functioning of civil society groups are being prepared. These include a code of good practice, standards and criteria for NGO programs and financial support, and a law on volunteer work. Another positive step toward the development of a solid civil society base is the formation of elected national minority councils at local and regional level. The councils are just beginning to form, but they hold the promise of becoming an important voice in the local governance process.

Trade unions are still the largest organized interest groups organizations in Croatia and they exert significant influence on all issues related to economic and social reforms. The most vigorous and active are unions in the public and state sector. Three science and education unions organized a warning strike in schools in 2004, demanding salary hikes and higher state spending on education. Six major union associations comprise a third of Croatia's 1.4-million-strong workforce. However, union membership continues to drop, a sign that the workforce is losing faith in the strength and power of the unions and their leaders. For instance, data from the Labor Ministry shows that the strongest union alliance, the Association of Independent Trade Unions of Croatia (SSSH), lost almost 28 percent of its members between 1999 and 2003.

The education system in Croatia is generally free of political pressure, although in 2004 the governing HDZ came under attack for appointing party members or people close to the party to posts as school principals. The Catholic Church has major influence in society and it often interferes in public matters. In 2003, the government abandoned plans to introduce optional yoga classes for high-school teachers after the church slammed the idea. In 2004, the church opposed a safe-sex program in schools, labeling it as explicitly against Christian moral teaching. "Under the pretext of protecting adolescents against AIDS, they are actually practicing techniques of using condoms and other means of prevention," the Croatian Conference of Bishops fumed in its statement. The program, which was designed to help adolescents learn about AIDS and approved by the Health Ministry, is taught by experts in optional sessions in public high schools.

The teaching of Croatian history deteriorated throughout the education system in the past decade, but the problem is slowly being reversed. The HDZ government pledged to introduce new textbooks on Croatia's recent history for about 3,800 students in Serbian-language elementary and high schools in the Danube region. During the peaceful reintegration of that region (1996-1998) Croatia agreed on a five-year suspension of classroom teaching about the Homeland War, which refers to the violent conflict in Croatia during the breakup of Yugoslavia and the ensuing wars in the region.

The government also promised reforms and modernization of education system. These steps have yet to be fully defined or initiated. According to the last census from 2001, more than 7% of Croatian citizens are highly qualified, meaning they have university education.

Independent Media (Score: 3.75)

Freedom of the press is generally respected, but observers say additional legal reforms are needed to safeguard journalists from unjustified prosecution. This is especially important with regard to a 2004 provision of the media legislation which gives the State Attorney's Office the authority to demand that a journalist reveal a source if this is considered necessary for the protection of the public interest and national security. The Croatian Journalists' Association objected, warning that the law does not clearly define who determines the public interest and that it would be very easy to abuse that ambiguity and to endanger investigative journalism. On the other hand, a 2004 revision to the criminal code eased the threat of prosecutions for libel by limiting journalists' criminal responsibility to cases where libel is judged intentional. The law still treats libel in this instance as a criminal offense, however, leading the journalists' association to demand that libel be addressed exclusively through civil procedures. The association also stated that access to information had deteriorated since the HDZ-led government took office in late 2003. This was one problem cited by the press freedom advocacy group Reporters Without Borders. The organization's 2004 Press Freedom Index ranked Croatia 54th of 167 countries surveyed. The Croatian Journalists' Association also charged that government offices and agencies frequently avoid answering questions in a timely manner and tend to withhold information.

At the end of 2004, the public was stirred by a scandal involving a journalist interrogated for several hours by security agents during an investigation into organized crime. An inquiry concluded that agents might have made procedural errors but had not broken the law. The whole affair ended in dismissal of the head of the Counterintelligence Agency (POA). The incident not only revealed inadequacies in the supervision of the secret services, it also reminded many, as pointed out by the Croatian Helsinki Committee, of the 1990s, when "the journalists were the first victims of the degeneration of democracy."

The state remains the largest media owner in Croatia. After several postponements of the tender, privatization of the country's third-largest daily, Slobodna Dalmacija, finally got underway in November 2003. The highest tender was submitted by Europapress Holding (EPH), which already publishes several Croatian weeklies and three daily newspapers. The state Agency for the Protection of Market Competition concluded that EPH's takeover of Slobodna Dalmacija would not put it over the limit of 40 percent of market share. However, the agency determined that the sale could endanger the distribution market and told EPH it would have to sell its share in the Tisak wholesale newspaper distributor before buying the daily. The future of the other state-owned and heavily subsidized daily, Vjesnik, is still uncertain, although the government has pledged to privatize it. Along with the two daily newspapers, the state owns the HRT national broadcaster, the Hina news agency, and dozens of other media outlets. Such a concentration has been heavily criticized by many media and legal experts, who have warned that the state is completely immune from the laws restricting monopoly. They have also pointed out that many local authorities continue to co-own local electronic and print media and that this poses a potential threat to editorial independence. The OSCE warned that such practices often result in political pressure on local media or refusal by local authorities to cooperate with private media that do not support their policies. Although the law stipulates that media outlets disclose their ownership structure, this is rarely adhered to.

During the Tudjman era, state-run Croatian Radio and Television (HRT) came under heavy pressure by the government and it acted as the HDZ's mouthpiece. Following the change of government in 2000, the public was promised that HRT would be transformed into a modern public broadcaster. However, HRT still has to deal with political pressures and faces difficulties in the process of becoming truly independent. When, for example, a speaker in Parliament criticized HRT's coverage of parliamentary activities, a heated public debate ensued, with media professionals stating that such criticism represented unacceptable political interference in the broadcaster's editorial policy.

In 2004, the new government announced it would draft new legislation, on advice from the OSCE and the Council of Europe, to enhance the role of civil society in the HRT oversight body, the HRT Program Council. During the year the Croatian media scene was enriched by the nationwide launch of a new, private television station, RTL, which won the bid to broadcast on the frequency formerly used by the third program of Croatian Television. Croatia has three nationwide television stations, broadcasting on four channels, and a number of local television stations. Despite competition, HTV news still remains the most watched current-affairs program in the country.

Media professionals and leading representatives of civil society argue that Croatia still lacks a self-regulatory system to successfully arbitrate complaints against the media. They propose establishing a media council to help improve media quality and realign the media sector to the European model. As the Council has not yet been established, it is not quite clear who would be responsible for the nomination of the Council members. However, along with journalists, the members of the future Council would also be publishers and representatives of civil society tasked with the promotion of professional and ethical standards. Within the profession, the Croatian Journalists' Union has warned, many media employees still work without legal contracts and basic social security.

Local Governance (Score: 3.75)

The Croatian constitution sets out a framework for democratic local self-government. Citizens exercise their right to self-government through elected local and regional representative bodies. The units of local self-government are the 120 cities and 420 municipalities; counties are the units of regional self-government. Municipalities and cities deal with issues directly affecting citizens' lives, such as land and urban planning and management, child care, social care, primary health care, primary school education, culture, sport, environmental protection, etc. Counties are responsible for issues of regional importance such as education, economic development, transport infrastructure, etc. The national capital, Zagreb, has both city and county status. Although formally substantial government powers have been devolved to local authorities, in practice the system is still centralized.

In 2001, the government launched a decentralization program through legal amendments granting local self-government units greater competencies in education, health, and welfare. Despite the complementary transfer of fiscal competencies, local authorities still cannot achieve their full autonomy in these areas due to scarce financial resources. They remain dependent on financial support from central authorities. A special equalization fund was set up to assist local authorities with financing. The fund was set up in 2001 when Amendments to the Financing of Units Local Self Government and Administration Law were passed. Pursuant to this law, the government passed a decree determining the manner of calculating the amount of equalization grants to be given to cities and counties for decentralized functions. Zagreb is the only city that is practically independent from the state budget and that has enough money for significant capital investments. Many local governments suffer from lack of management capacity, technical expertise, staff, and adequate resource levels.

Broad reform of local and self-government is constantly being postponed. During the 2003 general election campaign, all political parties supported the idea of direct election of mayors as a means to ensure greater accountability of mayors to their voters and not, as under the existing system, to the party that appointed them. However, the victorious HDZ decided not to go through with the plan, maintaining that a model for direct elections best suited to Croatian society still had not been found. However, direct election of local officeholders remains a plank in the government's reform program, which it promised to achieve by 2007. Direct election of mayors was also proposed by the Association of Alliance of Cites and Alliance of Counties, a formal and permanent body, along with the suggestion that the state channel more income-tax monies to local and regional self-government units as they take over decentralized functions. The alliance proposed that municipalities receive 40 percent of income-tax receipts instead of the current 34 percent, and that bigger cities receive 60 percent of collected income tax.

The U.S. Agency for International Development continued to give financial assistance to Croatian towns and cities through its Local Government Reform Project, which provides training in modern financial and public administration skills and introduces basic public management models that enable local officials to address the increased demands of decentralization.

Local and regional elections are held every four years. The next elections were set for May 2005. The coalition partners from the previous national government the Social Democratic Party, Croatian People's Party, and Croatian Peasant Party announced that they would renew their co-operation. The last local elections in 2001 were conducted according to a proportional system and their principal result was an increase in multi-party representation in local and regional administrations. They were also marked by huge voter abstention (turnout was only 35 percent). Increased Serbian representation in local councils, formation of joint Serb-Croat administrations and election of Serbian mayors occurred in parts of central and southern Croatia. The OSCE's observer mission judged the elections fair and stated that they provided a positive example of a maturing and persistent democratization process in Croatia.

Croatia's ethnic minorities are entitled to participate in decision-making processes at local level through their councils or representatives. A constitutional act enabled the election of National Minority Councils, which were founded in 2003 and consist of 10 elected members in municipalities, 15 in cities, and 25 in counties, depending on the minorities' total population. Individual minority representatives can also be elected when a minority group constitutes at least 100 persons within a self-government unit. Local governments are required to consult the National Minority Council on official acts affecting minority rights.

Voter turnout for the 2003 elections to the councils was very low, at approximately 15 percent of registered ethnic minority voters. Additional and repeat elections were held in 2004 but the turnout was even worse: around 7 percent in cities and 13 percent in municipalities. Out of a possible 432 councils, only 230 were constituted owing to the low level of voter participation. One reason for the low turnout may have been a widespread lack of understanding regarding the role and purpose of the councils. Some sections of the international community and many NGOs criticized the government for not providing adequate support and funding for voter awareness, including information on the purpose of the minority councils. In addition, some analysts attributed the low turnout to the stigma of being labeled a minority. The councils have yet to emerge as a significant voice for minority concerns and as a tool to help minorities participate actively in public life and management of local affairs. The work of the councils so far has focused on the formal issues of establishment and funding.

Judicial Framework and Independence (Score: 4.50)

The state of the judicial system remains the country's main social problem and the key area where the European Commission has told the government to do more to achieve positive changes and European standards. Reform of the judiciary, together with the return of refugees and full cooperation with the ICTY, is one of the three explicitly listed requirements which Croatia has to fulfill during the process of joining the EU.

The European Commission's avis on the country's readiness to begin accession talks concluded that because of delays in judicial proceedings, Croatian citizens' rights were not fully protected. The EC reiterated that Croatia has to simplify court procedures in order to limit their abuse. The court system is slowed by a backlog of 1.3 million cases, most dating from the pre-2000 period. The OSCE's mission to Croatia has cautioned that while backlog reduction is most frequently discussed in technical terms, as an improvement in the "efficiency" of the judiciary, it is in fact legally necessary in order to comply with the requirement that courts must decide cases within a reasonable amount of time.

The Constitutional Court has increased its role as an effective domestic overseer of delayed judicial proceedings. According to the OSCE, between January and October 2004, the Constitutional Court issued 165 judgments finding unreasonable delays in local courts and the Supreme Court, and ordered the state to pay more than $250,000 in damages. This constituted nearly four times the number of such judgments issued by the court in 2003.

Aiming to reduce the number of unresolved court cases, in 2004 the state increased the number of court consultants and gave them additional powers, as well as allowing the transfer of cases from overburdened courts to those less burdened. The state will receive financial support from the EU through the CARDS program for the task of judicial reform, which the government intends to complete by the end of 2007. The judicial reform plan also includes the establishment of a free legal-aid scheme in civil cases. This was planned to be implemented at the beginning of 2005.

The European Commission designated improved cooperation with the ombudsman's office as a short-term priority for legal reform. The office was introduced in 1992 as the only place where citizens could seek free legal advice. According to the Ombudsman's 2003 annual report, most complaints were related to social welfare entitlements and property rights and a significant number had been submitted during field visits outside the capital. Croatia also established two specialized ombudsman institutions in 2003: the Ombudsman for Children and the Ombudsman for Gender Equality.

Simultaneously, Croatia's judiciary has continued preparations for dealing with cases the ICTY intends to transfer to its jurisdiction in accordance with the tribunal's completion strategy. These will be cases involving medium- and low-level defendants. The ICTY Prosecution Office indicated in September 2004 that the first indictment it would refer to Croatia would be that against retired Croatian army generals Rahim Ademi and Mirko Norac. Ademi and Norac stand accused of the killings of several dozen Serbian civilians during the 1993 "Medak Pocket" army operation. In a domestic proceeding, Norac has already been convicted and sentenced to 12 years in prison for war crimes committed in the Gospic area in 1991.

The Justice Ministry and officials from the Hague tribunal have begun preliminary training sessions in anticipation of transfer of cases from the ICTY. The participants were judges and prosecutors mainly from Zagreb, Osijek, Rijeka, and Split, where special war-crimes courtrooms have been prepared. However, some international organizations have voiced concern over the domestic judiciary's capacity to adequately address cases transferred from The Hague. In December 2004, Human Rights Watch gave its assessment that war-crimes trials in Croatia were ethnically biased basing its argument on the finding that the number of indictments against Serbs was proportionally much higher than the number of indictments against Croats. Ethnic Serbs have been convicted where the evidence did not support the charges, the organization concluded. The OSCE mission to Croatia mentioned that "the origin of defendants and, possibly even more importantly, that of victims continued to affect war-crime proceedings." The OSCE's statistical overview recorded that in 2004, as in previous years, Serbs still constituted the vast majority of war-crimes suspects at all stages of the criminal process. There were some improvements regarding war-crimes trials. In the first months of 2004, the Supreme Court reversed 15 of 23 war-crime verdicts or remanded the cases for re-trial. One of these is the so-called Lora case, in which eight men were accused of war crimes against Serbian civilians at Split's Lora military prison in 1993. Numerous irregularities and threats against prosecution witnesses had marred the original trial.

The return of ethnic Serbs who fled Croatia during the conflicts of the early and mid-1990s also needs to be addressed. Concerns remain about solving the housing problems of Serbs who lived in publicly-owned flats with occupancy or tenancy rights before they fled the country. It is estimated that up to 30,000 refugee households are affected by wartime terminations of occupancy/tenancy rights, and the government housing program for this group have gone largely unimplemented. Other refugee-related housing issues are being dealt with more forcefully. The repossession of property could be completed in 2005. This issue refers to private property belonging to Croatian Serbs and allocated for temporary use, mostly to Bosnian Croats, under the 1995 Law on Temporary Take-over and Administration of Specified Property. Approximately 1,400 such cases still remain and their resolution is linked to the physical provision of alternative housing for the temporary occupants. There are still cases of illegally occupied residential properties, but their number is low (few dozens). Illegal occupants are those whose private houses have meanwhile been reconstructed by the State and who should therefore leave the property, as well as those who did not leave despite being ordered to do so or who received alternative housing from the Ministry but still refuse to vacate the property.

In 2004, Parliament accepted amendments to the criminal code to introduce new crimes such as international terrorism. Any form of discrimination, including that based on sexual orientation, and the dissemination of racist or xenophobic speech by computer or otherwise, also qualify as crimes. Under the bill, libel no longer qualifies as a crime, except when the existence of intent is proven; crimes against humanity carry a prison sentence of at least five years, and from one to eight years in cases of command responsibility for such crimes. The Justice Ministry announced that these amendments represented the first stage in rewriting the criminal legislation. The second stage will focus on introducing harsher penalties and extending the statute of limitations.

Corruption (Score: 4.75)

Transparency International's Corruption Perception Index suggests that Croatia is making little progress against corruption. The perception of corruption in 2004 was slightly poorer than in the previous year. Croatia shared 67th position on the list of 146 countries. These subjective rankings put the country in much the same position as in 2003 and 2002. Transparency International's Croatian branch (TIH) blamed the continued poor showing partly on a lack of convincing devotion to the anti-corruption reforms and the problem of implementing the laws against corruption.

In another 2003 survey, TIH found that almost 86 percent of Croatians believed corruption was widespread, especially in the health system, judiciary, and local government. Poor legislation, lack of sufficiently harsh punishments, and the prevalent custom of bribing were seen as the most important causes of corruption. Assessing corruption at national level, almost 55 percent of respondents said that ministers and their deputies were inclined to corruption. A large majority of those questioned, 92 percent, thought that state officials should file property declarations annually, or as a minimum at the beginning and end of their term in office. Respondents also mentioned that public access to information on the organization and workings of public institutions and enterprises would prove to be a successful instrument in the fight against corruption. In order to encourage the public to bring suspected corruption cases to court, TIH plans to launch an anti-corruption legal counseling center financed with European Commission funds. TIH also suggested that corruption in public administration could be reduced by introducing a well-organized system of awards for employees designed to boost professional ethics. In 2005, the Justice Ministry planned to reveal a new national corruption-prevention initiative. The ministry also proposed changes to strengthen the Office for the Prevention of Corruption and Organized Crime (USKOK). The changes were proposed in 2004 but they were not actually carried out. It was only announced that the administrative and operational capacity of the USKOK would be strengthened.

The law on conflict of interest passed in 2003 established a commission to monitor and prevent the problem. However, the body's role has so far been largely decorative as numerous disputes over the nomination of members and their responsibilities have blocked its work. The commission is empowered to decide whether officials have violated the conflict of interest rules or used their authority for illegal benefit. It has the power to issue a warning or demand a salary deduction for violations of the law.

The new HDZ government came into office declaring its commitment to the principle of transparency, but throughout 2004 the government was drawn into several affairs which shook public confidence in its efforts to curb corruption. The media uncovered several instances where court apprentices (people training to become judges) were hired based on connections within the party and not on merit. The affair implicated the role of the Justice Minister, who herself denied any wrongdoing. In the autumn, Foreign Minister Miomir Zuzul was linked to a series of corruption scandals, provoking the opposition parties to call for his resignation. According to a media report, Zuzul allegedly took a bribe in return for securing the government's intervention on behalf of a local company in a privatization deal. Zuzul had been involved in other allegations since taking office in December 2003. The press has accused him of not paying tax on income from leased property and also claimed he arranged a lucrative deal with the U.S. firm Bechtel to build a stretch of motorway without a public tender. The government backed out of the deal on pressure from the opposition and the media and a warning from the European Commission. Prime Minister Sanader finally announced the government would invite tenders "in order to refute all suspicion of petty politics." The opposition parties claimed the scandals had damaged Zuzul's reputation and credibility to such a degree that he should resign, especially considering that he is supposed to represent Croatia in accession negotiations with the EU.

Author

Barbara Peranic is a journalist and political reporter with BBC Croatia.