Leading Croatia to Europe

In a time of an unstable global economy, with rising unemployment across Europe and corruption sweeping the Western Balkans, Croatia has chosen for president a newcomer to politics, who has promised to take on organized crime and strengthen the country’s troubled economy that could speed entry in the European Union.

EU membership will require major adjustments for Croatia, progress in the fields of justice, security and the country’s internal market. Thus January’s presidential election was a pivotal choice between Social Democrat Ivo Josipović and independent Milan Bandić.  More than half of the Croatians living in the country took part in the elections, according to the Croatian embassy in Vienna, and roughly 15% of registered voters residing in Austria.

The result, after a run off, was a convincing victory for Josipović collecting over 60% of the vote in the second round – one that made him the country’s third president since gaining its independence in 1991. Regardless of his limited political experience, Josipović connected with the public, promising to pull the country out of the economic recession and lay the foundations of a more just Croatia, in preparation for joining the European Union in 2012.

"They [the voters] recognized -- and rewarded -- his personal, professional and political success as a result of hard work, knowledge and integrity," said Zoran Jašić,   Croatian Ambassador to Austria. "But most of all, people voted for him because he promised a decisive fight against corruption and crime in Croatia."

Corruption has been an issue in the country, dating back from the first years of its independence from Yugoslavia, leading to high levels of public frustration. Currently, the country ranks 66th on the list of corrupt countries worldwide, with 4.1 points out of 10 in the Corruption Perceptions Index in 2009.

As promising as his statements are, however, Josipović has still a long way to go to fulfill Brussels’ expectations. In addition to decreasing the scale of corruption and crime, he will face the enormous challenge of stabilizing the home economy in the aftermath of the financial crisis, a task that has eluded the current Croatian government.

According to information provided by the International Monetary Fund, the economic turmoil has resulted in a decrease in Croatian GDP rates of more than 3% in the course of two years. "In the end of 2008, Croatian economy entered recession stemming from a sharp decline in domestic demand," Dr. Vedran Dzihić, professor for political studies at the University of Vienna, pointed out. With the contraction of capital inflows into the country, the former Yugoslav state now depends primarily on foreign investment, meaning high levels of external debts that account for nearly 94% of the country’s gross domestic product.

The real estate sector has been severely affected as well.

"[There] we are in a critical situation, because of the rise of unemployment," said Jašić, citing a level 16.7% in December 2009, an increase of nearly 3% over three years. "In order to stop this trend, the Government and the Croatian National Bank set up special funds to stimulate exports, most notably in wood- and metal-processing industries," Jašić said, "as well as agricultural production." By creating more jobs, the government hopes to lower unemployment and gradually ease financial anxiety.

Crucial for the future development of Croatia is, though, the relationship between the two main political parties. It is not the change of the governing party per se, however.

"At the moment, the priorities will stay the same: joining the European Union and fight against financial and economic crisis," Jašić stated. Progress will depend on the tight cooperation between newly elected Ivo Josipović and Prime Minister Jadranka Kosor, member of the Croatian Democratic Union.

At this point, mutual support seems manageable, as both Josipovic and Kosor share the goal of fighting corruption. How long this will continue, however, is less clear. "The SDP and HDZ still represent two different positions," Dr. Dzihić stated. "But with Jadranka Kosor being more pragmatic and focusing on reforms and EU integration, there is probably a possibility for more pragmatic and constructive cooperation between two major political parties in Croatia."

A lot of hard work, cooperation and compromises await the government if they want to stabilize their country’s economy and become a part of the European Parliament. And while accession by the EU is one of the main goals, it is definitely not the only one.

"The other important foreign policy priority would be strong cooperation with neighboring countries and resolving the remaining open issues," Jašić said. "Good neighborly relations are also important for economic reasons, because the economies of our region are compatible and complementary with each other and there are numerous opportunities for joint action in third markets."

In a time when Croatia is facing negative consequences from the economic crisis, mutual support between neighboring states seems to be one of the most efficient ways of dealing with the current strains, enhancing Croatia’s development not only as an independent country but also as a part of the Balkan community.