Nations in Transit - Croatia (2004)

Capital: Zagreb
Population: 4,300,000
Status: Free
PPP: $4,550
Private Sector as % of GNI: na
Life Expectancy: 74
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

Croatia gained independence in 1991, when it seceded from Yugoslavia in a violent civil war, but spent the rest of the decade under the authoritarian rule of late president Franjo Tudjman and his Croatian Democratic Union (HDZ). Tudjman led Croatia into international isolation by refusing to stay out of the affairs of neighboring Bosnia and Herzegovina, to allow Serb minorities to reenter the country, and to cooperate with the International Criminal Tribunal for the Former Yugoslavia (ICTY). Tudjman also clamped down on the media and undertook a mass privatization that left his closest supporters rich and the Croatian economy shattered.

Opposition to Tudjman grew strong in the late 1990s and, feeding on public displeasure with the regime, ousted the HDZ in January 2000 with victories in both parliamentary and presidential elections. Tudjman himself had died in December 1999. The new ruling center-left coalition led by the Social Democratic Party vowed both to end Croatia's international isolation and to punish individuals who had plundered the state economy under Tudjman, but it succeeded in fulfilling only the first pledge. In response, public confidence and support for Croatia's new leaders, including President Stjepan Mesic and Prime Minister Ivica Racan, began to wane.

The year 2003 began on a sour note, with European Union (EU) officials discouraging the Racan government from applying for membership. However, Croatia made the bold decision to submit its application anyway and ultimately improved its chances of being invited to negotiate for membership. Key to Croatia's sudden progress was the government's mobilization of political and diplomatic support, including that of the now reformed HDZ, for integration with Western institutions in general and EU membership in particular. This, in turn, suggested to EU officials that Croatia might be able to succeed in meeting its key political conditions for opening membership talks: cooperation with the ICTY, judicial reform, and minority Serb returns. Despite this victory at the international level, the Croatian public's displeasure with the slow pace of domestic reforms led to the Racan government's ouster in November parliamentary elections and the surprising return to power of the HDZ.

Electoral Process. The 2003 general elections marked the return to power of the HDZ. The reformed nationalist party campaigned on a pro-West platform and promised to complete Croatia's integration with the EU. After its near collapse in 2000, the HDZ was victorious in 2003, reflecting the end of an intraparty struggle in which Ivo Sanader, a more centrist politician, elbowed out rivals leaning further to the right. International and domestic observers deemed the 2003 elections free and fair – only the second in the country's post-Communist history. However, the Organization for Security and Cooperation in Europe (OSCE) did voice serious concerns about the country's legislative framework for elections and the absence of a permanent election administration. The HDZ won 66 out of 152 parliamentary seats and went on to form a new government. Voter turnout declined from 75 percent in 2000 to 66.8 percent. Although the 2003 elections were free and fair, significant weaknesses in Croatia's electoral system remained unresolved. Croatia's rating for electoral process stays the same at 3.25.

Civil Society. The Government Office for Cooperation with NGOs took steps in 2003 to decentralize the funding process for civil society groups by establishing two bodies: the Council for the Development of Civil Society and the National Foundation for Civil Society Development. The foundation's work was strengthened by the passage of a law entitling the body to state budget funds for programs developed by nongovernmental organizations (NGOs) and grassroots initiatives. Passage of the Law on Tax Benefits for NGO Donors and the Law on Public Benefit Organizations, both intended to boost incentives for contributions, was delayed. In 2003, the government allocated 2.3 million euros for the sector, the same disbursement that had been granted in 2002. In 2004, all ministries will have separate budgets for civil society projects. Nonliberal organizations still play a prevalent role in society, particularly veterans organizations that are closely affiliated with right-wing political parties. Croatia's rating for civil society remains 3.00, as it is too early to judge the effectiveness of the Council for the Development of Civil Society and the National Foundation for Civil Society Development. Likewise, important laws creating incentives for contributions to NGOs had not been passed at year's end.

Independent Media. Parliament adopted improvements in 2003 to the Law on HRT (Croatian Radio and Television) by terminating the Board of Managers, which had been appointed directly by the legislature. Although the sale in 2003 of HRT3, a state-owned television channel, will increase pluralism in the country's media landscape, the privatization process lacked transparency. Responding to pressure from NGOs and the Croatian Journalists' Association, Parliament approved the 2003 Law on the Media, which places limits on state media ownership. In addition, the NGO sector successfully pushed the government to adopt the Law on Access to Information in 2003. Croatia's independent media rating remains 3.75. Although Parliament approved several important pieces of legislation and privatized HRT3, the positive effect of these moves on media independence will take time to be felt.

Governance. Croatia's drive to become a candidate for EU membership was an important generator of administrative and legislative reform in 2003. Through its Ministry for European Integration, the government assembled over 300 experts to help harmonize Croatia's laws with those of the EU. The EU awarded 62 million euros to Croatia in 2003, with another 76 million euros awaiting in 2004, for the purpose, among other things, of improving administrative efficiency. During the year, Parliament passed a long-awaited Law on Access to Information as well as a Law on Prevention of Conflict of Interest. Overall, the reforms undertaken failed to lead to immediate improvements in governance or in decentralization of government authority. For this reason, the rating for governance remains unchanged at 3.75.

Constitutional, Legislative, and Judicial Framework. Despite an 18 percent increase in state budgetary allocations for judicial reform, the government is not addressing problems in a systematic manner. Beyond political bias, the greatest challenge facing the judiciary is a backlog of approximately 1.3 million cases. Laws on civil and criminal procedures were both revised in 2003 to reflect Western standards, but it remains to be seen how these changes will bring about relief for the country's understaffed and inexperienced court system. Croatia revised its criminal code in July 2003, but the Constitutional Court nullified the amended version in November on the grounds that, as an organic law, it needed more votes. Croatia's judiciary remains biased in favor of right-wing political parties, with a sizable portion of judicial appointees from the Tudjman era remaining on the bench. This rating falls to 4.50 from 4.25 owing to the slow pace of judicial reform in Croatia. Among the problems that remain insufficiently addressed are the judiciary's sizable case backlog, its understaffed and inexperienced personnel, and the lingering political bias exhibited by Tudjman-era appointed judges.

Corruption. An overwhelming majority of Croatian citizens believe that corruption is a serious problem in the country. They perceive corrupt activities to be more widespread in the economy than in politics. Although in 2002 the government introduced the National Anticorruption Action Plan and put in place the necessary legal and institutional framework to support it, little progress was made in 2003 in combating the problem. The plan provides a solid foundation for tackling corruption, but its enforcement is weak. Similarly, the Office for the Suppression of Corruption and Organized Crime, which was established in 2001, needs better state funding and stronger institutional support. The rating for corruption remains unchanged at 4.75 owing to the government's failure to provide better enforcement of its anticorruption framework.

Outlook for 2004. The whole nation will look to the European Commission in 2004 for its opinion on Croatia's application for membership in the EU. If it is positive, Croatia must act rapidly to begin negotiations on the acquis communautaire chapter framework. The process of membership negotiation not only will be the main driving force for reform, but will test the new HDZ government's ability to comply with the EU's political preconditions for negotiations. These qualifications include the arrest of fugitive general Ante Gotovina, who is accused of committing war crimes against minority Serbs during Croatia's war of independence and is widely supported among the HDZ's core constituency of nationalist conservatives and patriots. The ruling party will face the challenge of balancing the EU's demands with those of its supporters, all the while being scrutinized by the new opposition.

Electoral Process (Score: 3.25)

Croatia's post-Communist electoral system has developed under extreme conditions, including violence, war, and the former authoritarian regime of Franjo Tudjman. Today, the system's main weaknesses include unstable electoral laws, unconsolidated voter registries, unregulated campaign financing, and the absence of a permanent electoral administration. A driving political force in Croatia's breakup with the former Yugoslavia, the Croatian Democratic Union (HDZ) consolidated power in its first multiparty elections in 1990 and its first elections as an independent state in 1992. Over time, Tudjman purged all members of the opposition from the government, the army, the judiciary, and public enterprises. His regime also put immense pressure on Serbs who refused to join the Croatian Serb rebel state during the 1991-1995 hostilities. Tudjman's HDZ expressed no interest in creating a stable and transparent electoral system, confident that with the country in a permanent state of weakness, it could easily manipulate voters for its own gain. The party's electoral tactics included extensive gerrymandering, intimidation of the media and the opposition, and the placement of bans on independent observers at polling stations.

When the war ended in 1995, the opposition began to gain strength while the HDZ found that its capacity to use the war as an excuse for scare tactics was weakening. This turn of events culminated in 2000 with the surprising defeat of the HDZ in both parliamentary and presidential elections. Not only did the country turn a corner by voting for the opposition and its platform, which was rooted in economic and political reforms, but the already weakened HDZ allowed for the most open and free elections to date. Most state media bias favoring the HDZ was balanced by the pro-change sentiment expressed on private media and by civil society groups, particularly animated youth and women's organizations. The coalition that came to power was led by the Social Democratic Party (SDP) – Croatia's reformed Communist Party – and its leader, Ivica Racan, who became the prime minister. The coalition rallied public support by promising to end Croatia's international isolation, to deal with Tudjman's disastrous and corrupt privatization program, to support the development of a free and independent media, and to decrease unemployment.

Upon assuming power in 2000, Prime Minister Racan's government went out of its way to reverse a decade of isolationism under Tudjman and to reintegrate Croatia into the international community. This task was particularly hard because Racan was forced to balance the demands of supporters abroad with those of the Croatian population. For example, the international community insisted that the Racan government arrest Croats accused of war crimes in the 1990s, end state support for Croats in Bosnia and Herzegovina, and create conditions supporting the return of Croatian Serb refugees. However, to weather the pressure at home, Racan compromised with the nationalists by agreeing to not remove them from important positions in the judiciary, the military, and the intelligence services. Ultimately, though, stalling reforms in these sectors not only failed to win the nationalists' support, but also alienated Racan from his core constituency of pro-Western and anti-HDZ urban voters.

In November 2003, Croatia held free and fair elections for only the second time in its post-Communist history. Although President Stjepan Mesic formally called for the elections just a month in advance, the vote had been widely expected to take place before the end of the year. The campaign period was free of threats, media bias, and right-wing calls to arms – all features of previous parliamentary elections. Instead, parties adopted modern methods of campaigning, including hiring the services of well-paid public relations and advertising experts and attracting the support of pop stars. The free and fair manner in which the elections took place confirmed that Croatia has stepped into an era of greater electoral and institutional stability.

The HDZ returned to power in 2003 by promoting a pro-European Union (EU) platform and presenting itself as a modern European conservative party. The Racan coalition, in contrast, was hurt by constant intracoalition quarrels and, apart from the EU initiative, the lack of a unified voice on policies and reforms. The public based its vote on dissatisfaction with the substance and slow pace of change under the Racan government as well as attraction to the HDZ's newly professed values and image. However, one well-known civic organization, the Citizens Organized to Monitor Voting (GONG), expressed its disapproval for all parties and candidates involved by sponsoring a "Plug your nose and vote" campaign, encouraging voters to go to the polls even if they felt no party deserved their support.

The return of the HDZ is especially interesting because this once all-powerful party was on the verge of collapse in 2000, at which time it was swept from office following Tudjman's death. The party's comeback began in the 2001 local elections, after a number of left-wing voters abstained amid Racan's failure to deliver on some of his most publicized campaign promises (in particular his pledge to bring to justice the supporters and cronies of the HDZ who had become enriched through the country's flawed privatization process). In the local elections, the HDZ secured a clear majority in 4 out of 20 counties and received the most votes in 16 out of 20 counties.

The HDZ's revival continued in 2002, when the leader of the moderate faction within the party, Ivo Sanader, defeated his hard-line opponent, Ivic Pasalic, for the party's leadership post. Pasalic subsequently left the HDZ to form the radical nationalist Croatian Bloc (HB) and took with him his closest allies in the HDZ. Pasalic's rebellion ended in disaster in 2003 when the HB failed to meet the 5 percent threshold for securing seats in Parliament. Sanader, meanwhile, went out of his way to present the HDZ as a reformed, pro-European party. The HDZ also capitalized on its ability to present consistent views on major issues facing the country, something the Racan coalition failed to do.

In 2003, only 26 women entered the Parliament – a decline in female representation from 28 to 17 percent. The SDP's poor showing in the elections explains most of the drop: it had the most female representatives in Parliament from 2000 to 2003.

Observers unanimously deemed the 2003 elections free and fair. The media featured a variety of views, and the Public Broadcasting Service provided balanced coverage of candidates. However, the Organization for Security and Cooperation in Europe (OSCE) voiced important concerns regarding weaknesses in the legislative election framework, the absence of a permanent election administration, and the limited access to polling places for refugee voters outside Croatia. As the OSCE's monitoring report stated, "The Law on the Election of Representatives to the Croatian Parliament provided an adequate basis for the conduct of the elections but, as in previous elections, had to be supplemented by key instructions and other detailed directives by the State Election Commission." The report went on to note that the "short electoral period and absence of permanent election administration contributed to late promulgation of polling procedures, which created significant challenges in communicating them effectively to election participants." The OSCE also reiterated that campaign financing is still unregulated. According to the organization GONG, Croatia also needs a reformed Law on Voter Registries and a stable Law on Electoral Districts.

The Croatian presidency has undergone a major transformation since the death in 1999 of Franjo Tudjman. President Stjepan Mesic, who was elected to a five-year term in February 2000, was fiercely criticized by the nationalist political opposition at the start of his term. Once a high-ranking Communist and the last president of the former Yugoslavia, Mesic was also at one time an HDZ member. However, during the 2000 campaign he presented himself as an outsider and an anti-Tudjman figure. In addition, he maintained the image of a friendly and accessible people's president – a stark contrast to Tudjman's elitist posture and humorless manner.

During Mesic's four years as president thus far, his persona has evolved from that of a popular politician, famous for telling jokes during speeches, into a crucial balancing figure in Croatian politics. His transformation was completed in 2003 when he repeatedly bridged a wide gap between political parties of the Left and the Right, particularly with regard to the controversial case of fugitive General Ante Gotovina, who is wanted by the International Criminal Tribunal for the Former Yugoslavia (ICTY). Through his strong lobbying of the international community, Mesic also successfully promoted Croatia's bid in 2003 for EU membership.

Under Mesic, the office of the president has become one of the most transparent and trusted institutions in the country. It will be extremely difficult for any future president to undo Mesic's changes and turn the presidency back into the elitist and inaccessible institution it was under Tudjman. Mesic, who regularly tops polls as the most popular politician in Croatia, has a strong chance of being reelected in 2004. Nevertheless, there will likely be numerous candidates, as the 10,000-signature requirement to run has not proven a great obstacle. Thirteen candidates vied for the presidency in 2000.

Croatia's Law on Elections went through four incarnations during the first decade of independence. The latest version, adopted in 2003, is the Law on Election of Representatives. This law provides for a proportional voting system, with 10 districts holding 14 seats each, plus 4 seats for the diaspora and 8 for minorities.

The frequent changes to Croatia's 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 participation from members of the diaspora, who overwhelmingly favor the party. Tudjman's tactics also included significant gerrymandering of voting districts to weaken opposition support. The latest changes to the law were proposed by the SDP-led coalition to improve its chances of victory in the 2003 parliamentary elections by weakening the influence of diaspora voters while bolstering that of minorities.

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 who account for more than 8 percent of the population. In reality, though, this provision applies to no one: according to the 2001 census, the largest minority group, that of the Serbs, constitutes only 4.5 percent of the population, while the remaining minorities account for less than 8 percent of the population combined. However, the law contains another provision that sets aside five to seven seats in Parliament for minorities making up less than 8 percent of that population – that is, all of them.

Croatian governments had been under significant international pressure 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 Racan government worked on the 2003 Law on Elections with the OSCE Mission, the Council of Europe's Venice Commission, and various nongovernmental organizations (NGOs) and minority representatives. The law guarantees minority seats for an array of groups (see table). Minorities may also choose to vote in regular districts, forgoing their rights to vote for minority representatives with guaranteed seats.

The new Law on Elections allocates eight seats to minorities, representing an improvement in minority rights following considerable deterioration in the decade after 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 as a whole could count on five seats. However, after Croatian forces overran the Serb region of Krajina in 1995, Parliament dropped the provision in the Law on Elections 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.

In 1995, the Law on Elections was amended again to award Serbs three seats in Parliament and other ethnic minorities four seats. Nevertheless, the deterioration of the Serbs' position continued into 1999, when additional amendments to the Law on Elections provided only one seat for Serbs. Although the three seats that Serbs now hold are still insufficient to provide them with the necessary influence to restore the rights they enjoyed prior to the 1991 hostilities, they do represent an improvement over the trend of the previous decade.

According to the Croatian Information and Document Reference Agency, Croatia's political landscape features 93 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. The number of parliamentary parties is high, a result of several coalitions consisting of a strong national party and a small local one. As a result, only 7 parties have more than two representatives.

Despite the high number of registered parties, only the HDZ claims to have a massive membership base. According to voluntary disclosures by parties in the last four years, around 770,000 people, or nearly 17 percent of the total population, are active members of political parties, with the HDZ claiming 432,000 members. (The HDZ's numbers are likely to be inflated.) The low levels of party membership in Croatia overall could be attributed to the fact that parties do not aggressively court supporters save during election seasons. Parties are often headed by opportunistic politicians who seek personal gain over that of their constituencies. This, in turn, increases public reluctance to engage in more active political involvement such as party volunteerism.

There is a significant difference in voter turnout for local and national elections. In the 2001 local elections, turnout was only 46.85 percent, a dramatic decline from 75.3 percent and 63 percent, respectively, for the 2000 parliamentary and presidential elections. Local elections always draw fewer voters, but the dramatic decline in 2001 was attributed to the inability of the SDP-led ruling coalition to push forward many promised reforms and to continuous intracoalition quarreling. Turnout for the parliamentary elections in 2003 was 66.8 percent. Continuous growth in the number of registered parties and relatively high voter turnout for national elections suggest that the public is ready to take an active role in the electoral process. However, the average citizen's political involvement remains limited to voting, with little party-driven activity taking place outside election seasons.

Civil Society (Score: 3.00)

Although Croatia's civil society is not fully developed, it is slowly becoming more vibrant. After 45 years of Communism, in which Croatians' human and political rights initiatives had been closely monitored, the civil society sector struggled for another decade following independence under Tudjman. Both regimes provided for and encouraged humanitarian aid but were intolerant of any independent political or civic movement that expressed a difference of opinion with the ruling party.

To keep voices of liberalism in check, Tudjman's authoritarian governments proclaimed the third sector an enemy of the state. They especially targeted foreign-based organizations advocating for democracy and an open society in Croatia. Throughout the 1990s, groups like Human Rights Watch and the Helsinki Committee were labeled Western agents infringing upon Croatia's newfound sovereignty. George Soros's Open Society Institute was particularly disliked by the regime owing to the financial assistance it disseminated to independent media outlets that were critical of Tudjman.

Despite Tudjman's dislike of foreign NGOs, hostilities in Croatia in the early nineties attracted a large number of international humanitarian organizations. These groups focused mainly on providing aid, such as refugee assistance, that dealt with the consequences of war. A number of organizations also served as logistical bases in support of humanitarian aid activity in the neighboring Bosnia and Herzegovina. Following the end of hostilities in 1995, a number of veterans and women's organizations sprang up across the country, many of which were locally based but received little state assistance and depended on foreign donations.

The most vibrant period of civil society activity in Croatia took place between 1998 and 2000, when it became apparent that the Tudjman regime and the international isolation it had brought upon the country could not last much longer. The growing strength of opposition groups of the center and the Left inspired individuals to become more active in civil society, especially encouraging young people to become more politically active. During this period, today's household names such as GONG and BaBe (Be Active, Be Emancipated, a women-rights NGO) began to receive media coverage of their work. Today, research shows that the public's perception of NGOs is generally positive (65 percent). However, there is still significant skepticism about their capacity to bring about real change in society, with 57 percent of people claiming NGOs produce few results. According to polling conducted by BaBe, about 95 percent of respondents named television as their main source of information on NGOs.

Since the structural and legislative foundations for the growth of the Croatian civic sector remained weak, civic enthusiasm seemed to follow that of the country's politics. However, the growth spurt in NGO activity in the late 1990s subsided as the center-left ruling coalition, which was elected in 2000, proved to be unstable and reluctant to move on promised reforms. However, the Racan government did break Tudjman's long-standing impasse with NGOs. In particular, he took a number of initiatives to improve the civic sector's legal infrastructure and provide regular financial assistance for NGOs. The Law on Associations came into effect in 2002 and significantly simplified the registration process and limited the possibilities for government interference.

In 2003, the Government Office for Cooperation with NGOs (UZUVRH) took further steps to decentralize the state's funding process for NGOs by establishing the Council for the Development of Civil Society and the National Foundation for Civil Society. Both institutions will take over some responsibilities from the UZUVRH, which will continue to serve as an intermediary body between NGOs and the government. The council consists of NGO and ministerial representatives, as well as tax, legal, and financial experts, whose main objective is to act as an advisory body on civil society to the Croatian government. The foundation was established in February 2003 and, according to the OSCE, is intended to be "the operational core embedded within the NGO sector, constantly interacting with its members, measuring needs, evaluating viability, advising newer NGOs, [and] fund-raising." The foundation will be separate from the government, though some government officials will be active on its board. It is still too early to judge the quality and effectiveness of these new bodies.

NGOs face a favorable tax regime and a number of exemptions, but their financial viability remains the most serious barrier to long-term sustainability. This is particularly true for groups operating at the local level. In 2003, the government introduced drafts of a Law on Tax Benefits for NGO Donors and a Law on Public Benefit Organizations, both intended to increase incentives for contributions to the civil society sector. However, their passage had been delayed as of year's end. The European Commission's 2003 Stabilization and Association Agreement report notes that the government had allocated 2.3 million euros for the civil society sector in 2003 – the same as in 2002 but significantly less than the 3 million euros allocated in 2001. However, the OSCE's annual status report for 2003 mentions that in 2004, all ministries will have separate budgets for "civil society projects" and effectively make up for the decline.

Though the estimates vary, there appear to be about 20,000 registered NGOs in Croatia. Of these, about 15 percent deal with issues of ethnicity, veterans, youth, human rights, environment, humanitarian aid, and women. However, the number of groups that are truly active is probably much lower than 20,000. For example, the OSCE's 2003 status report for Croatia quotes a regional official who claims that only 40 out of 700 NGOs on his registry are active. Consolidation of the NGO registry is another task ahead of the Council for the Development of Civil Society.

In general, the organizational capacity of Croatian NGOs is limited. There is a wide gap between established, national organizations and small groups operating at the local level. The larger NGOs have clear missions and strategies, while the smaller ones struggle with basic material issues. However, the needs of small groups are somewhat alleviated by NGO support centers that provide grassroots organizations training, technical assistance, and necessary equipment and facilities. These centers are primarily supported by foreign donors.

In addition to women's groups, human rights organizations, environmental organizations, and election watchdogs, several strong nonliberal right-wing organizations project significant influence in society. Veterans organizations, for example, opposed the Racan government and President Mesic for their efforts to decrease the military's influence over society and politics. The Racan government also cut the generous state benefits that veterans had enjoyed during the Tudjman era. The most prominent veterans organization is Croatian Homeland War Veterans with Disabilities (HVIDRA). According to the research of CroNGO, HVIDRA ranks second after GONG as the most recognized NGO in the country.

The Catholic Church is a major influence in Croatian society and remains the most trusted institution in the country. The church played a significant role in the Croatian national awakening leading up to Croatian independence and, as a consequence, enjoyed a privileged position under Tudjman. Since the change in government in 2000, the church has remained closely associated with right-wing segments of society. Prior to the 2003 elections, some church officials issued statements suggesting to the public how they should vote, clearly hinting at their support of the HDZ. The church's main publication, Glas Koncila, is regularly filled with xenophobic and racist commentary. The vast majority of Croats are Catholic, with Orthodox Serbs forming the largest religious minority. Non-Catholic religious institutions, namely Orthodox and Muslim, enjoy state recognition and support.

Over 60 percent of Croatia's workers are union members. Unions are independent but were somewhat marginalized in 2003 in the political arena. Following the passage of the 2003 labor code, there was a change in leadership at the largest trade union confederation, the Union of Autonomous Trade Unions of Croatia. The group's membership base was not happy with what they saw as the union giving in to demands by the government and the Employers' Association for a more flexible labor code. Other large unions are 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 picked up significantly in early 2003 in an attempt to negotiate a more favorable labor code; however, the move achieved the opposite effect as the public and the government failed to take many of them seriously.

Croatia's education system is mostly free of political influence and propaganda, but there remain reservations about the treatment of recent history, religious content, and language. After the country split from Yugoslavia in 1991, 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. Today, these topics are being shaped more by academia and less by politically charged "experts." With the HDZ back in power, though, it remains to be seen whether this positive trend will continue. Catholic religious education has been introduced in Croatia's public schools.

Independent Media (Score: 3.75)

Television remains Croatia's most trusted and important source of information. As was the case with other former Yugoslav countries, electronic media played an enormous role in the rise of nationalism. Croatian Radio and Television (HRT), for example, became quick prey of the Tudjman regime in the early 1990s, effectively turning it into the HDZ's mouthpiece. Throughout the decade, state-owned media was filled with propaganda and hate speech, while the few independent media faced significant pressure from the government. Even though strong independent print media emerged in the second half of the decade, television remained the last bastion of the Tudjman regime until the party lost power in 2000.

Following its election victory in 2000, the Racan government made serious attempts to transform the HRT into a public broadcasting system. However, it stopped short of achieving the goal, possibly because it had hopes of retaining some political influence over the broadcaster. In February 2003, Parliament adopted the Law on HRT, which dismantled the controversial Board of Managers. Appointed by Parliament, this body had wielded considerable influence over the HRT. Under the new Law on HRT, the HRT Broadcasting Council is the highest governing body to be filled through a public tender and approved by Parliament.

The OSCE has noted several shortcomings in the appointment process to the HRT Broadcasting Council. In particular, the law describes the process for parliamentary approval as "harmonization" of views on candidates, does not bar members of Parliament from being nominated, and offers no clear guidelines on who may nominate whom. In short, as the OSCE puts it, "Anyone may nominate anyone," and, in an extreme case, the council "may consist of MPs alone." This scenario seems highly unlikely. However, given the tendencies of past governments, the possibility of political interference cannot be excluded. Despite the shortcomings and after much "harmonization," the Parliament finally approved the 11-member HRT Broadcasting Council in November 2003: it consists of politically inactive individuals approved by Parliament, 6 favored by the government and 5 by the opposition.

A major development in September 2003 that may help diversify Croatians' access to information was the sale of HRT3, a part of the HRT system. The Racan government had promised the sale for over a year and finally gave a 10-year national concession to a joint venture between RTL, a Luxembourg-based German media giant, and several Croatian corporations. This will be only the third national television channel, together with the HRT and Super Nova. The channel will be called HRTL and will offer serious competition to the HRT due to its access to significant capital. Super Nova, in contrast, has struggled to compete with the heavily subsidized HRT. The sale of HRT3 received considerable publicity for the number of serious offers that were made, including by the News Corporation. Many argue that the selection process was less than transparent and that Racan hand-picked the winner using unspecified criteria.

Like the electronic media, Croatian print media were under the heavy influence of the HDZ for most of the 1990s, resulting in biased, pro-Tudjman reporting in all state-owned and much private press. The emergence of independent views in popular magazines changed the trend in the second part of the decade and coincided with the strengthening of opposition political voices. By the time the Tudjman regime crumbled in the 2000 elections, the best-selling political weeklies Globus and Nacional had established a critical editorial approach free of political influence. One weekly that fiercely criticized the Tudjman rule throughout the 1990s was the Feral Tribune, a publication from Split created by staff purged from the popular Slobodna Dalmacija daily after the HDZ took control of it. Peak circulation for Globus and Nacional is about 70,000 each.

Croatia's 2003 Law on the Media refined policies on limiting ownership in Croatian media outlets. The law specifically responded to demands from NGOs and the Croatian Journalists' Association (HND) that the state should act preemptively to avoid consolidation of media ownership among a very limited number of corporations. The NGO sector, including the HND, also took an active role in pushing the government to accept the Law on Access to Information, which was finally adopted in October 2003.

Both the OSCE and the European Commission in their 2003 reports noted that a variety of sources and opinions are represented in the Croatian media and that the sector is considered independent and free from political or other pressures. However, these assessments did not prevent Reporters Without Borders (RSF) from ranking Croatia 69th among 166 countries in 2003. This dramatic drop of 36 places was due primarily to defamation-related rulings against journalists and the draft penal code that, instead of decriminalizing libel, actually proposed prison sentences for journalists and publishers. The RSF report produced strong reactions in Croatia, with most organizations and officials regarding it as too harsh.

Although the penal code's libel clause was eventually dropped, the fact that the issue affected Croatia's rankings in the RSF survey is hardly surprising. Croatian courts, especially the Zagreb District Court, have a tendency to award sizable sums to plaintiffs with dubious accusations of having suffered "emotional pain" over information contained in a news report. Such plaintiffs are often business and political elites associated with the HDZ. In 2003, the number of libel suits appeared to be in decline.

Freedom House's 2003 annual Survey of Press Freedom places Croatia in the upper echelon of "Partly Free" countries, ranking it 80th out of 188 countries. The study cites economic pressures as the greatest obstacle to a free press in Croatia. Overall, this represents an important improvement, as Croatia ranked 128th in the last year of the Tudjman regime.

In 2003, close to 20 percent of the country's population used the Internet. This was almost double the figure of two years earlier and signaled that Croatia's information technology sector is enjoying rapid growth. There are about 10 Internet service providers in Croatia, and the state imposes no obstacles to their business or barriers to access.

Governance (Score: 3.75)

Croatia has executive, legislative, and judicial branches. The Parliament is unicameral with 152 seats, and the president heads the executive branch. The Constitutional Court and lower courts form the judiciary. The system appears stable even though the judiciary remains a subject of much delayed reform. The main parameters of stability are the now functioning system of checks and balances among branches of government, increasing transparency and accountability, and successful changes in governments.

The lack of retaliation by newly instituted governments over previous ones is also a good indication of political maturity, considering that the opposition took power in the last two general elections in 2000 and 2003. However, changes in leadership at the most prominent state-owned corporations, such as the Croatian electricity production and distribution monopoly Hrvatska elektroprivreda (HE), to figures with close ties to incoming governments are still to be expected. Even though, in principle, public servants should be regarded as professionals first, heads of financially powerful state-owned enterprises are usually affiliated with the party in power. The Racan administration did leave some HDZ-affiliated individuals in their positions when it took power; it remains to be seen whether the HDZ will act in a similar manner.

Croatia's legislative process is transparent and includes greater levels of input from NGOs and the international community. The public has easy access to both drafted and passed laws through media and the governmental publications. The Parliament has sufficient resources to draft and implement laws, and it has been doing so with improving efficiency.

Problems remain with the process of procurement, as there are no clear guidelines on how to award government contracts. In 2003, for example, two high-ranking officials – Zlatko Tomcic, the president of the Parliament, and Radomir Cacic, the minister of public works – were found guilty of awarding government contracts to firms owned by their family members. However, the country's new Law on Prevention of Conflict of Interest, passed by Parliament in October 2003, should provide sufficient mechanisms to prevent future misuse of the current procedures and lend additional stability to Croatia's system of governance.

The main potential source of instability is the inability of local governments to be financially independent. The 2001 Laws on Local Self-Governance and Financing of Local Governments are regarded as insufficient to address the most pressing needs of local entities. The primary deficiency is the tax collection system, which allocates few financial resources directly to local governments, making them almost entirely dependent on the central budget. For that reason, some municipalities have turned communal services into revenue-generating enterprises. Even though the Racan government has advocated public administration reform aimed at increasing government efficiency and diminishing corruption, the latest report by Croatia's ombudsman outlines administrative delays and inefficiencies as the most common source of citizens' complaints.

An important generator of administrative and legislative reform has been Croatia's drive to become a candidate country for EU membership. Through its Ministry for European Integration, the government has assembled over 300 experts into 14 working teams to help harmonize Croatian laws with those of the EU. Each of the 14 teams corresponds to a chapter in the acquis communautaire. As there are 30 chapters in the acquis, another 16 teams should be formed early in 2004.

The EU awarded 62 million euros to Croatia in 2003, with another 76 million euros expected in 2004, for the purpose of, among other things, improving administrative efficiency. The EU also demands reforms in the judiciary and minority returns process – areas that contribute greatly to the perception of inefficient public administration but are actually sensitive political issues. For example, if there was a genuine desire at the local level to increase minority returns, administrative inadequacies would be used less as tools to obstruct the process. That is, Croatia's ineffective system of public administration is not just a symptom of structural weaknesses; it is also partly a product of insufficient political will for reforms.

Croatia's local authorities are elected in free and fair local elections, the last of which took place in 2001, when the HDZ won the most votes in 16 out of 20 counties but secured a stable majority in only 4. In addition to its 20 counties, Croatia has 123 cities and towns, 424 municipalities, and the capital, Zagreb, which functions as both a county and a city.

Constitutional, Legislative, and Judicial Framework (Score: 4.50)

Since gaining independence in 1991, Croatia functioned under a presidential system that served as a buttress to Tudjman's authoritarian-style rule. The reformist Racan government that took the office in 2000 did not wait long before transforming the Constitution to provide for a modern European parliamentary democracy. The country has a system of checks and balances among the three branches of government, with the Parliament as the effective lawmaking institution.

The latest revision of the Constitution took place in 2001, when the lower house of the Parliament was dissolved. Among other things, the Constitution significantly reduced the role of the president. However, as President Mesic had played a significant role in the constitutional changes after 2000, he made sure the Constitution did not reduce his role to that of a mere ceremonial figure; he kept some authority over security issues, appointments of military personnel, and transfers of power between governments. As a result, the presidency has played an important balancing role among the government, the Parliament, and the judiciary.

The reform that took place after 2000 was successful in two of the three branches of the government. The Parliament has become a transparent institution with televised debates, significant input from NGOs, and documentation available to the media. The government has also become more accountable to both the Parliament and the public, partly because of the new constitutional framework, but also because the public expected a different approach to governance. The judiciary, however, has remained an acute problem due to the slow pace of judicial reform and a backlog of cases inherited from the 1990s.

In particular, the judiciary is widely seen as biased in favor of the HDZ and other right-wing elements in Croatian politics. All of this has contributed to the EU placing judicial reform at the top of its list of demands for Croatia to become a candidate for membership. The Racan government insisted that judicial reform was impossible overnight: most high-level judges were appointed during the HDZ's years in office, when the whole judiciary was shaped to serve the Tudjman regime. When the Racan government came into power, it did not establish mechanisms for rapid revision of judicial appointments partly amid fears that it would be attacked as revisionist and vengeful. The government also lacked the capacity to implement sweeping changes immediately. Since the new Constitution provided the judiciary with unprecedented independence, it effectively cemented the status quo in the sector. Racan's indecisiveness over the issue cost him dearly among his supporters, who expected the cleanup or removal of Tudjman's supporters from the sector.

According to the European Commission's 2003 Stabilization and Association Agreement report, the functioning of Croatia's judiciary is a "serious problem." Despite an 18 percent increase in budgetary means aimed at reform of the judiciary, problems are still not being addressed in a systematic manner. Beyond political bias, the greatest problem facing the judiciary is the backlog of approximately 1.3 million cases. Laws on civil and criminal procedures were both revised in 2003 with an eye to simplifying and shortening procedures, but it remains to be seen how these will bring about relief for the understaffed and inexperienced court system. According to the European Commission, it is estimated that judges spend half their time on administrative and paralegal duties, while about two-thirds of them have less than seven years of experience.

The OSCE maintains that the best indicator of the attempted reforms is the appointment of new judges. In its 2003 status report on Croatia, the OSCE notes that "despite hundreds of appointments, some localities still have no permanent judge assigned to the municipal court and are served on a part-time basis by judges from other courts." The report goes on to state that "judicial vacancies have remained unfilled in some instances in which Serbs were the only candidates considered by the State Judicial Council." The OSCE has also highlighted problems associated with the judicial selection process and has advocated the introduction of standardized criteria.

A key area for improvement is judicial education. In addition to providing better training of current judicial personnel, the government has lobbied for changes to the law curriculum at universities so that incoming professionals will better prepared for their legal careers. The current curriculum is considered outdated and inadequate to provide young professionals with the skills they need to address the sector's numerous problems.

The Constitution provides for equality before the law. According to the Council for Europe, "The criminal legislation of the Republic of Croatia protects human rights in accordance with the requirements of three principal international instruments." These are the Universal Declaration of Human Rights, the International Covenant on Civil and Political Rights, and the Convention Against Torture and Other Cruel, Inhuman, or Humiliating Punishments or Procedures.

Croatia revised its criminal code in July 2003, but the Constitutional Court nullified the new law in November. The Constitution demands that an organic law be passed by a minimum of 76 votes, whereas only 56 voted for the criminal code. The criminal code will likely be revised again in 2004.

The Parliament passed the Law on Criminal Procedure in March 2003. The new law is in accord with international standards, including the presumption of one's innocence, the right to a fair and public hearing, and the right to an independent defender. Suspects and prisoners are protected against arbitrary arrest, detention without trial, search without a warrant, torture, and abuse. Although significant delays are plaguing the entire judicial system amid complicated procedures and a huge case backlog, the State Judicial Council has tried to address the problem. For example, the OSCE notes that the council has "suspended at least one judge in Karlovac in central Croatia for failure to issue nearly 30 written decisions within a reasonable time." Measures have also been taken against judges in Split and Korcula in southern Croatia.

Corruption (Score: 4.75)

Corruption is a serious problem in Croatia. Weak institutions, lack of public knowledge of what constitutes corruption, and a relatively high tolerance for corrupt behavior create fertile ground for unlawful acts. The state has taken serious and systematic measures in recent years to establish the framework for a more efficient response to corrupt behavior. In 2002, for example, the government adopted the National Anticorruption Action Plan, which was drafted by a group of independent experts. Focus areas in the plan are the administration of criminal justice and public administration. The plan defines corruption as "any form of abuse of public authority with the purpose of achieving personal benefit."

Some of the tasks outlined in the plan had already been fulfilled by the time of its adoption. First, the Ministry of Internal Affairs formed a Crime and Corruption Department. Second, Parliament established the Office for the Suppression of Corruption and Organized Crime (USKOK). The creation of USKOK, formally part of the Office of the Public Prosecutor, solved the country's need for an independent and specialized anticorruption entity, as prescribed by Article 20 of the Council of Europe's Criminal Law Convention on Corruption, which Croatia signed in 2000. Under the plan, the government adopted new regulations for local self-government laws and joined the OSCE convention and the Stability Pact's Anti-Corruption Initiative.

There is no single definition of corruption in the Croatian legal system, but it is conventionally regarded as offering and accepting bribes. The criminal code outlines a variety of acts that constitute corruption. These include illegal trading in influence, abuse in performing governmental duties, abuse of office and official authority, concluding a prejudicial contract, the disclosure of an official secret, and the disclosure and unauthorized procurement of a business secret.

According to Transparency International's 2003 Corruption Perceptions Index, with a 3.7 score Croatia shares 59th place out of 133 countries surveyed. A year ago, the score was 3.8, and in 2001 it was 3.9, with 10 being clean and 0 being the most corrupt. Croatia's slight drop to 3.7 might be attributed to the high expectations for reform that the Racan government created upon coming to power in 2000. According to Transparency International's survey, Croatia belongs to the group of countries with medium levels of corruption.

Transparency International also reported in 2003 that 85.9 percent of the Croatian population believes corruption is a serious problem, more so in the economy than in politics. Trends in public opinion suggest that the public is increasingly sensitive to reported corruption. At the same time, media and NGOs are rarely intimidated and function freely in pointing out corruption in all segments of society. The media provide extensive coverage of corruption scandals, and the political and business elite is growing more responsive to demands for transparency. Public officials and members of Parliament and the government are required to fill in "property cards" prior to entering office and after completing their term. Although these cards are insufficiently scrutinized, it is hoped that the country's new Law on Prevention of Conflict of Interest, passed in October 2003, will bolster the cards system and produce more effective reporting.

Croatia's extensive state bureaucracy increases opportunities for corruption. The Wall Street Journal and the Heritage Foundation's 2003 Index of Economic Freedom states that "Croatia's bureaucracy, like the bureaucracies of other post-Communist regimes, remains entrenched, and red tape abounds." The report continues: "Corruption (inspired by impenetrable thickets of bureaucracy) seems to be a source of worry for foreign businesses. Often, gratuities are requested to speed up the process."

Author

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