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Croatia (04/02)


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For the most current version of this Note, see Background Notes A-Z.

PROFILE

OFFICIAL NAME:
Republic of Croatia

Geography
Area: 56,538 sq. km. (slightly smaller than West Virginia).
Major cities (2001 census est.): Capital--Zagreb (770,000). Others--Split (200,000), Rijeka (168,000), Osijek (130,000).
Terrain: Croatia is situated between central and eastern Europe. Its terrain is diverse, containing rocky coastlines, densely wooded mountains, plains, lakes and rolling hills.
Climate: Croatia has a mixture of climates. In the north it is continental, Mediterranean along the coast and a semi-highland and highland climate in the central region.

People
Population (2001 census est.): 4,381,352.
Growth rate (2001 est.): 1.48%
Ethnic groups: Croat 78.1%, Serb 12.2%, Muslim 0.9%, Hungarian 0.5%, Slovenian 0.5%, and others 8.1%.
Religions: Catholic 76.5%, Orthodox 11.1%, Slavic Muslim 1.2%, others 11.2%.
Language: Croatian (South Slavic language, using the Roman script).
Health (2001 est.): Life expectancy--male 70.28 years; female 77.73 years. Infant mortality rate--7.21 deaths/1,000 live births

Government
Type: Parliamentary democracy.
Constitution: Adopted December 22, 1990.
Independence (from Yugoslavia): June 25, 1991.
Branches: Executive--president (chief of state), prime pinister (head of government), Council of Ministers (Cabinet).
Legislative--Unicameral People's Assembly or Sabor.
Judicial--three-tiered system.
Suffrage: Universal at 18 or 16 years if employed.
Political parties: Social Democratic Party of Croatia (SDP); Croatian Social Liberal Party (HSLS); Croatian Peasant Party (HSS); Liberal Party (LS); Croatian People's Party (HNS); Croatian Democratic Union (HDZ); Croatian Christian Democratic Union (HKDU); Istrian Democratic Assembly (IDS); Croatian Independent Democrats (HND); Action of Social Democrats of Croatia (ASH); Slavonija-Baranja Croatia's Party (SBHS); Democratic Centre (DC); Croatian Party of Rights (HSP); True Croatian Revival Party (HIP).

Economy
Real GDP growth (2001 est.): 4.3%.
Inflation rate (2001 est.): 4.8%.
Unemployment rate (2001 est.): 22.3%.
Natural resources: Oil, bauxite, low-grade iron ore, calcium, natural asphalt, mica, clays, salt and hydropower.

GEOGRAPHY
Croatia serves as a gateway to eastern Europe. It lies along the east coast of the Adriatic Sea and shares a border with Yugoslavia (Montenegro and Serbia), Bosnia & Herzegovina, Hungary, and Slovenia. The republic swings around like a boomerang from the Pannonian Plains of Slavonia between the Sava, Drava, and Danube Rivers, across hilly, central Croatia to the Istrian Peninsula, then south through Dalmatia along the rugged Adriatic coast. Croatia is made up of 20 counties, plus the city of Zagreb and controls 1,185 islands in the Adriatic Sea, 67 of which are inhabited.

HISTORY
The Croats are believed to be a purely Slavic people who migrated from Ukraine and settled in present-day Croatia during the 6th century. After a period of self-rule, Croatians agreed to the Pacta Conventa in 1091, submitting themselves to Hungarian authority. By the mid-1400s, concerns over Ottoman expansion led the Croatian Assembly to invite the Habsburgs, under Archduke Ferdinand, to assume control over Croatia. Habsburg rule proved successful in thwarting the Ottomans, and by the 18th, much of Croatia was free of Turkish control.

In 1868, Croatia gained domestic autonomy while remaining under Hungarian authority. Following World War I and the demise of the Austro-Hungarian Empire, Croatia joined the Kingdom of Serbs, Croats, and Slovenes (The Kingdom of Serbs, Croats, and Slovenes became Yugoslavia in 1929). Yugoslavia changed its name once again after World War II. The new state became the Federal Socialist Republic of Yugoslavia and united Croatia and several other states together under the communistic leadership of Marshall Tito.

After the death of Tito and with the fall of communism throughout eastern Europe, the Yugoslav federation began to crumple. Croatia held its first multi-party elections since World War II in 1990. Long-time Croatian nationalist Franjo Tudjman was elected President, and one year later, Croatians declared independence from Yugoslavia. Conflict between Serbs and Croats in Croatia escalated, and one month after Croatia declared independence, civil war erupted.

The UN mediated a cease-fire in January 1992, but hostilities resumed the next year when Croatia fought to regain a third of the territory lost the previous year. A second cease-fire was enacted in May 1993, followed by a joint declaration the next January between Croatia and Yugoslavia. However, in September 1993, the Croatian Army led an offensive against the Serb-held Republic of Krajina. A third cease-fire was called in March 1994, but it, too, was broken in May and August 1995 after Croatian forces regained large portions of Krajina, prompting an exodus of Serbs from this area. In November 1995, Croatia agreed to peacefully reintegrate Eastern Slavonia, Baranja, and Western Dirmium under terms of the Erdut Agreement. In December 1995, Croatia signed the Dayton peace agreement, committing itself to a permanent cease-fire and the return of all refugees.

The death of President Tudjman in December 1999, followed by the election of a new coalition government and President in early 2000, brought significant changes to Croatia. Croatia's new government, under the leadership of Prime Minister Racan, has progressed in implementation of the Dayton Peace Accords, regional cooperation, refugee returns, national reconciliation and democratization.

GOVERNMENT AND POLITICAL CONDITIONS  
The Croatian Parliament, also known as the Sabor, recently became a unicameral body after its Upper House (Chamber of Counties) was eliminated by constitutional amendment in March 2001. The remaining body, the Chamber of Representatives, consists of 151 members, who serve 4-year terms elected by direct vote. The Sabor meets twice a year--from January 15 to July 15 and from September 15 to December 15.

The powers of the legislature include enactment and amendment of the Constitution, passage of laws, adoption of the state budget, declarations of war and peace, alteration of the boundaries of the Republic, and carrying out elections and appointments to office. During the parliamentary elections of January 2000, six parties united to form a coalition government (SDP, HSLS, HSS, IDS, LS and HNS). The IDS left the coalition in June 2001.

The President is the head of state and is elected by direct popular vote for a term of 5 years. The President is limited to serving no more than two terms. In addition to being the commander in chief, the President appoints the Prime Minster and Cabinet members with the consent of Parliament. Following the death of President Tudjman, the powers of the presidency were curtailed and greater responsibility was vested in Parliament.

The Prime Minister, who is nominated by the President, assumes office following a parliamentary vote of confidence in the new government. The Prime Minister and government are responsible for proposing legislation and a budget, executing the laws, and guiding the foreign and internal policies of the republic.

Croatia has a three-tiered judicial system, consisting of the Supreme Court, county courts, and municipal courts. Croatia's Supreme Court is the highest court in the Republic. The Supreme Court assures the uniform application of laws. Members of the high court are appointed by the National Judicial Council, a body of 11 members, and justices on the Supreme Court are appointed for life. The court's hearings are generally open to the public.

The Constitutional Court is a body of 13 judges appointed by Parliament for an 8-year term. The Constitutional Court works to assure the conformity of all laws to the Constitution.

Principal Government Officials
President--Stjepan Mesic
Prime Minister--Ivica Racan
First Deputy Prime Minister--Drazen Budisa
Deputy Prime Minister--Goran Granic
Deputy Prime Minister--Slavko Linic
Deputy Prime Minister--Zeljka Antunovic
Minister of Foreign Affairs--Tonino Picula

ECONOMY
Following World War II, rapid industrialization and diversification occurred within Croatia. Decentralization came in 1965, allowing growth of certain sectors, like the tourist industry. Profits from Croatian industry were used to develop poorer regions in the former Yugoslavia. This, coupled with austerity programs and hyperinflation in the 1980s, contributed to discontent in Croatia.

Privatization and the drive toward a market economy had barely begun under the new Croatian Government when war broke out in 1991. As a result of the war, the economic infrastructure sustained massive damage, particularly the revenue rich tourism industry. From 1989 to 1993, GDP fell 40.5%. Following the close of the war in 1995, tourists reemerged, and the economy briefly recovered.

The solid growth that began in the mid-1990s halted in 1999. A recession, which was caused primarily by weak consumer demand and decrease in industrial production, led to a 0.9% contraction of GDP that year. Furthermore, inflation and unemployment rose, and the kuna fell, inciting fears of devaluation.

In the second half of 2000, the tourism industry once again contributed to a recovery, helping Croatia grow 3.7% that year. This trend continued in 2001, when the economy expanded by 4.3% aided by an approximately 6% increase in industrial production, 12% growth in tourism--which generated about $3.7 billion in revenue--a stringent fiscal policy, and continued remittances from the Croatian diaspora. Unfortunately, forecasts for 2002 are less positive, with growth projected at 3.0%-3.5%. A decline in export markets and a decrease in foreign investment are predicted to temporarily slow the growth of the Croatian economy in 2002. However, the planned privatization of the national insurance, oil, and gas companies, and an expansion of telecommunication services, during 2002-03 should stimulate foreign investment and boost revenue over the near term.

FOREIGN RELATIONS
Croatia is in the midst of pursuing a policy of greater Euro-Atlantic integration. In October 2001, Croatia took another step closer to membership in the European Union (EU) after Prime Minister Racan signed a Stabilization and Association Agreement (SAA) with the EU. Croatia was admitted into the Partnership for Peace Program (PfP), which was designed by NATO member states in 1994 to strengthen Euro-Atlantic security, on May 25, 2000. Croatia has been a member of the United Nations since 1992, and recently contributed troops to a UN operation in Sierra Leone. Croatia is also a member of the World Trade Organization and hopes to become a member of Central European Free Trade Organization later this year.

Although Croatia has made progress under Prime Minister Racan in implementation of the Dayton Accords and Erdut Agreement, the status of refugees displaced from the 1991-95 war; property restitution for ethnic Serbs; and resolution of border disputes with Slovenia, Bosnia and Herzegovina, and Yugoslavia, remain key issues influencing Croatia's relations with its neighbors.

U.S.-CROATIAN RELATIONS
U.S. engagement in Croatia is aimed at fostering a democratic, secure, and market-oriented society that will be a strong partner in Euro-Atlantic institutions. The U.S. opened its embassy in Zagreb in 1992, and has continued to work with Croatia to overcome the legacies of communism, war, ethnic division, and authoritarian government.

In an effort to promote regional stability through refugee returns, the U.S. has given almost $5 million since 1999 for the removal of landmines in Croatia. Croatia hopes to remove an estimated one million remaining mines by 2010. The U.S. also has provided additional financial assistance to Croatia through the Southeastern European Economic Development Program (SEED) to facilitate democratization and restructuring of Croatia's financial sector.

Principal U.S. Embassy Officials
Ambassador--Lawrence G. Rossin
Deputy Chief of Mission--Patrick Moon
Consular Officer--Russel Brown
Public Affairs Officer--Allen Docal
Commercial Officer--Beryl Blecher
Agency for International Development--Pamela Baldwin

The U.S. Embassy in Croatia is located in Zagreb at Andrije Hebranga 2, 10000 Zagreb; telephone: [385] (1) 661-2200; Web site: www.usembassy.hr.



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