Croatia aims for NATO membership, economic growth in 2008

04/02/2008

Croatia's priorities for 2008 include furthering its Euro-Atlantic accession bids, fighting inflation and maintaining economic growth. The new government will also address the necessary issues for EU reforms.

By Natasa Radic for Southeast European Times in Zagreb -- 04/02/08

Inflation has risen to 5.7%, raising costs in the country significantly. [Getty Images]

For Croatia, the beginning of 2008 was marked with the inauguration of the new government -- the tenth since the country's independence. The country's main priorities were summarised in parliament as part of the new government's mandate. MPs agreed that there is much to be done in 2008, and that losing time is not an option.

New government

The new government took office on January 12th -- almost two months after the November 25th 2007 elections. "We are entering a period during which Croatia, led by this government, will achieve its main strategic goals," Prime Minister Ivo Sanader told parliament after they approved the cabinet.

The country is aiming to receive an invitation to NATO in April, and to continue on the path of implementing reforms in order to join the EU in 2010. Sanader said the new cabinet will do everything possible to speed up EU negotiations, which are expected to be closed by the end of this year.

"The government will do everything for ... a quick implementation of reforms and timely adoption of laws," needed to meet EU standards, Sanader said. However, the year's tasks are monumental, and may not be smooth sailing for the country.

Economic problems

The economy will be addressed as a top task for the new cabinet. Due to the country's international aspirations, the economy -- GDP growth, inflation and the standard of living are all issues that need to be improved upon. Currently, GDP growth in the country is expected to decrease this year, according to the Croatian Economic Outlook Quarterly. In 2007, there was a 5.3% growth in the GDP. This year, the growth is expected to be around 4.4%.

Sanader and Economy Minister Damir Polancec are expected to address the inflation problem immediately. Inflation has risen to 5.7%, raising costs in the country significantly. In Zagreb, housing costs have increased 22%. Seeing that the national salary average did not follow the same path, national trade unions have announced that they will hold protests in April against the cost of living in the country.

Currently, the standard of living in Croatia is too high for most citizens. The Croatian National Bank announced that commercial banks might increase their interest rates, which would result in higher credit instalments for the citizens. Three out of four Croatian households have financial problems when paying monthly bills.

Croatians hope that there will be a new economic boost and that the upcoming tourist season will result in more money in the state budget. Fighting unemployment remains another economic priority.

Prime Minister Ivo Sanader has said he will speed up reforms and negotiations with the EU. [Getty Images]

NATO, EU accession

According to the statements coming from Brussels, Croatia should expect to receive an invitation to join NATO at the Alliance's April summit in Bucharest. However, NATO Secretary-General Jaap de Hoop Scheffer said that Croatia still "needs to make final efforts needed to get the invitation to join the Alliance". Reinforcing the commitment to fulfil all the necessary obligations, Sanader visited NATO headquarters last month, and addressed the North Atlantic Council.

"Go the final mile," de Hoop Scheffer told the prime minister. However, although the government plans to make the effort and accept the invitation, the majority of citizens do not support the action. Opinion polls show that less than 50% of citizens support the country's membership in the Alliance.

As of January 1st, Croatia became a non-permanent member of the UN Security Council. Diplomats hope the country will successfully deal with the most important international issues, the Kosovo status issue being one of them.

However, the country's goal of joining the EU remains a wish for the future. Croatia has not been as successful as expected where negotiations are concerned. Judiciary reform and the fight against corruption remain the biggest problems. Officials in Brussels are not satisfied with the measures the country is using to addresses these problems.

Also, a new EU-Croatia-related problem has popped up. The EU has blocked a number of financial programmes for Croatia, criticising the way the state administration handles these funding opportunities. Many experts have left the ministries and gone into commercial or financial businesses, and EU officials fear that the new, inexperienced candidates might slow the negotiation process even more.

If the country wants to keep in line with its goal of joining the Union in 2009, negotiations must be complete by the end of this year.

The protected fishing zone has caused issues with EU-member states. [Getty Images]

ZERP, troubles with Slovenia

Although EU entry is not imminent, Croatia must continue with negotiations and implementing EU measures. One of the main hurdles the country is now facing is the protected fishing zone (ZERP) that was implemented at the beginning of the year.

The zone, which affects EU-members Slovenia and Italy, has been a main major point of contention. As Slovenia is currently holding the EU presidency, the issue has heated up. "If Croatia wants to speed up the negotiations process, it clearly knows what to do," diplomats in Brussels said.

If Croatia refuses to budge on the fishing zone, and does not implement the necessary reforms in time, the country may lose six to nine months in its accession, because the ratification process in member states cannot be launched without the approval of the European Parliament.

Compounding the fishing zone issue is the ongoing land border dispute between the two countries.

Croatia and Slovenia have been unable to agree on a number of territorial issues since they declared their independence from the former Yugoslavia in 1991. As a result, numerous border incidents have occurred in the past years, including at Piran Bay in the northern Adriatic Sea and in the area of the Mura River.

Slovenia, whose Adriatic coastline is less than 50km long, is seeking a solution that would allow it to have direct access to international waters, without having to pass through Italian or Croatian territorial waters. It is expected that the two countries will refer their longstanding border disagreements to the International Court of Justice (ICJ) in The Hague.

The fact remains, however, that with so many open issues, Croatia must put forward a massive effort this year in all sectors to get on track for European accession.