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Diplomacy in Action

FY 2007 SEED Act Implementation Report


Bureau of European and Eurasian Affairs
FY 2007 U.S. Government Assistance to and Cooperative Activities with Central and Eastern Europe
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Country Overview

U.S. FOREIGN POLICY AND FOREIGN ASSISTANCE OBJECTIVES & PRIORITIES

U.S. strategic interests in Croatia, and more broadly in South Central Europe, remain to promote lasting peace, stable democratic systems, and economic prosperity. The USG aims to promote closer ties between Croatia and its friends and allies, a vibrant market-oriented economy, and transparent and accountable democratic systems so that Croatia becomes a force for regional stability and a strong partner in Euro-Atlantic institutions.

Toward these ends, the USG assists Croatia’s implementation of the requirements for membership in the North Atlantic Treaty Organization (NATO) and the European Union (EU). These efforts simultaneously advance Croatia’s market-orientation, build more effective democratic institutions and processes, strengthen Croatia’s relationships with its neighbors, and enhance the country’s capacity to promote regional security and combat international terrorism.

The most important aim of U.S. foreign assistance is securing the last mile in Croatia’s journey into NATO and the EU. To do this, USG priorities are: to promote private sector led economic growth leading to higher per-capita incomes for Croatians and a more attractive market for U.S. exports and investments; to strengthen broad-based democratic institutions, including local government and civil society, leading to improved governance, less corruption and greater citizen participation and trust; to encourage Croatia to expand its bilateral relations and economic integration with other southeastern European countries, thereby securing the benefits of peace and stability for other countries in the region; to support Croatia’s NATO ambitions, enabling it to fulfill its potential to contribute to regional and global security; and to strengthen Croatia’s engagement in battling transnational threats of terrorism, trafficking, organized crime, and corruption.

OPERATING ENVIRONMENT

Croatia’s steady progress towards Euro-Atlantic integration, while promising, largely reflects its success in completing first tier reforms. The remaining journey will be more difficult as special interests are challenged and the requirements of adopting both EU and NATO pre-conditions consume Croatia’s limited implementation capacity. While Croatia’s general macro-economic health is good (with 4.8% real Gross Domestic Product [GDP] growth in 2006, a shrinking deficit, a stable exchange rate, and strong employment growth), the government must increasingly focus on complex micro-economic reforms such as reducing the regulatory burden on investors, improving the effectiveness of commercial courts, and eliminating corruption.

On the democracy front, decentralization to local and regional governments has gained momentum but financing for local authorities must come out of other parts of the budget. Likewise, Croatia will continue to struggle with judicial reform. While caseload backlogs are dropping, they are still so large as to hamper effective functioning of the courts. Corruption remains a problem, but the new national-level anti-corruption commission has registered some successes in 2007, including one large and high-profile investigation of the national privatization fund.

In a September 2007 review of Croatia's membership preparations, NATO recognized Croatia’s readiness for membership. While efforts to boost public support for NATO should continue, the government has succeeded in educating the public regarding the obligations and benefits of NATO membership, and polls at the end of FY 2007 indicated an increase by some 20 percent in public support for Croatia's membership.

FY 2007 Country Program Performance


PEACE AND SECURITY

Croatia continued to work towards meeting NATO membership criteria under the Long Term Development Plan for the Croatian Armed Forces it adopted in 2006, creating a more efficient and responsive military. Under this revised doctrine, Croatia has recognized that it no longer faces regional security threats and has focused on responding with the international community to global security challenges and on becoming a strong regional leader on military and security issues. Entering FY 2008, Croatia participates in 14 UN peace support operations. This year, Croatia increased its contribution in support of international efforts in Afghanistan to 200 troops with a commitment to expand that number to 300 in 2008. The Croatian Government’s communications strategy led to strong growth in public support for NATO membership to around 50%. In FY 2007 Croatia became eligible for military training under a Presidential waiver but remained ineligible for USG Foreign Military Funding, per the provisions of the American Service members Protection Act (ASPA).

In FY 2007 Croatia continued to build cooperative relationships with its neighbors, a critical component for regional peace and stability. Under bilateral agreements which provide for cooperation on criminal matters with Bosnia and Herzegovina (BiH), Montenegro and Serbia, prosecutors and judicial authorities collaborated with their peers in prosecuting and adjudicating war crimes cases and providing witness security. Prosecutors continued to transfer case evidence to Montenegro and Serbia, permitting trials where defendants were located to overcome constitutional bans on the extradition of citizens. Police and customs authorities strengthened capabilities in combating organized crime and corruption, including arresting some officials for corruption and seizing narcotics-related assets. Croatia supported international efforts to build BiH state institutions and resolve Kosovo’s final status. Normalizing relations with Serbia remained a top government priority, and both countries’ leadership met throughout the year. Progress continued toward reintegrating the displaced ethnic Serb minority.

Law Enforcement Reform - During FY 2007 the peace and security rule of law objectives were to develop joint police and prosecutor capacities to combat organized crime and corruption and to increase management skills and professionalism in police administration.

In FY 2007 the USG trained 239 law enforcement professionals in several specialized activities including mid-level management issues, homicide investigation, and task force establishment. Croatian police participated in training programs on domestic violence, hostage negotiations, terrorism investigation and prevention, judicial police techniques and advanced surveillance. Rule of law programs donated equipment to the police academy to establish an English language lab in order to improve officer skills and enhance international cooperation. The USG provided training and assistance to 120 customs officers on border security, terrorism awareness and response, non-proliferation controls, interdiction, port vulnerability and security, and recognition of dual-use and munitions-controlled commodities.

In addition, in FY 2007 USG rule of law programs worked with mid- and upper-level management to improve long-range planning and implement policies and procedures that provide accountability. Training and a study visit emphasized delegation and accountability. An organized crime advisor worked with the police and the special prosecutor's Office for Combating Organized Crime and Corruption (USKOK) in efforts against human trafficking, corruption, and organized crime. Design of a case management software system for prosecutors was completed.

As a result of USG funding, U.S. mentoring, and in coordination with a complementary EU Community Assistance for Reconstruction, Development, and Stabilization (CARDS) program, the Criminal Police and USKOK created the first joint police-prosecutor task force to target a specific criminal organization. With USG advice, the asset forfeiture law was amended to place the burden of proof on the suspect, and during the year USKOK successfully undertook its first major corruption case, arresting several officials and freezing assets. Croatia also adjusted its methods of criminal investigation, using the U.S. model of intelligence-led policing. Police successfully uncovered a trafficking ring and arrested those suspected of a long-standing operation through the region. Based on the U.S. model, the Croatian police established an ad-hoc fugitive tracking task force to successfully locate an individual; they commenced plans to establish a permanent unit.

Border Security - The objective for the border security program is to strengthen border police and customs capacities to detect and deter movement of illicit goods and trafficked persons across Croatia’s borders. The USG-funded program worked with the GOC to implement and enforce export controls, which was also coordinated with the EU to fill urgent gaps not covered by other donors’ assistance or to complement their efforts.

Croatia took steps to improve its export control regime, using USG assistance to strengthen, implement and enforce export controls through ongoing revisions to existing dual-use and munitions-control legislation, and customs and criminal codes. Croatia continues to extend cooperation with the U.S. and regional states in narcotics interdiction and enforcement of non-proliferation export controls.

In FY 2007 Croatian Customs officers continued to increase the number and size of interdictions of contraband with 30 major seizures of illicit drugs, cigarettes, intellectual property, animals, jewelry, and currency. Nearly half of these seizures were made using the $1.5 million worth of detection tools donated by the USG to date, including busters, fiberscopes, and mobile x-ray equipment. Considerable training and equipping of border police remains to be implemented, but Croatia continues to follow a comprehensive strategic plan in partnership with German and Slovenian experts under the EU CARDS Border Police twinning program.

Humanitarian De-mining - The overall objective of the humanitarian de-mining activities is to promote the return of refugees and economic development of war-affected communities. The USG provided de-mining funds to war-affected regions, giving priority to projects in communities that promoted refugee returnand stimulated economic development. De-mining projects were initiated to de-mine approximately 1.88 square kilometers of mined territory in Croatia. An estimated 997 square kilometers in Croatia remain mine-suspected. The USG's humanitarian de-mining program provided recreational and rehabilitation programs for young mine victims in the region and partially funded the construction of a permanent rehabilitation center. USG assistance also supported mine risk awareness workbooks, performances and other materials for school-aged children around the country.

De-mining continued to be a high priority for the Croatian Government, which prioritized categories of types of land to be de-mined and funded the bulk of demining. Facing decreasing donor funding, regional governments set aside funds from their own budgets and looked to the private sector for additional support. The GOC estimated that Croatia will be mine-impact-free by 2012. In 2007, the number of casualties due to land mines continued to decrease. The GOC continued its efforts to educate at-risk populations about the dangers of mines.

War Crimes Project - The objective of the war crimes project is to improve prosecutor and judicial capacity to fairly prosecute remaining war crimes cases, including those transferred from the International Criminal Tribunal for the former Yugoslavia (ICTY). The project is designed to reinforce the growing political will to prosecute war crimes without regard to the ethnicity of the defendants or victims. Activities included roundtables, polling and discussion on dealing with the past, and publication of a related book and a manual for monitoring war crimes cases. The USG pursued the design and implementation of a case tracking software system for the prosecutors, which will improve prosecutor efficiency and provide a secure tracking system for serious crime cases. USG assistance also supported activities to raise awareness of war crimes. Projects included development of an NGO manual for monitoring war crimes cases and a book on criminal law.

In FY 2007 Croatia demonstrated significant political will and professional commitment to prosecuting war crimes, even when defendants were ethnic Croats, including cases involving an active member of parliament and two Croatian generals. The quality of witness protection and war crimes prosecutions improved, according to international observers, although some concerns remained. Following USG assistance, the Ministry of Interior's witness protection unit provided assistance to endangered witnesses. The Judicial Academy continued training based on modules developed during USG-funded education programs on witness protection, prosecuting international crimes in domestic courts, right to a fair trial, media relations, massacre cases, and sexual assault in armed conflict. Reporting on war crimes was, by and large, objective and balanced.

GOVERNING JUSTLY AND DEMOCRATICALLY

FY 2007 Croatia advanced democracy and governance by introducing a framework for more representative local governments, strengthening anti-corruption and anti-trafficking in persons efforts, protecting ethnic minority rights, and improving an enabling environment for civil society. Through USG-funded democracy activities, U.S. assistance was primarily aimed at civil society development and local government reform and administration. While FY 2006 was the last year of full development funding for Croatia, some of these funds were carried over into FY 2007 and were used to consolidate democratic gains made over the past 15 years.

Civil Society Strengthening - The goal of civil society sector programming was to build capacity and financial sustainability for non-government organizations (NGOs) and media to have a strong voice in assuring transparent, accountable democratic systems.

The USG supported NGOs to improve advocacy and organizational capacity, financial viability, and their ability to partner with government and other stakeholders to recommend public policies. Assistance supported NGO advocacy activities in anti-corruption, legislative oversight and political process, corporate social responsibility, ethnic minority rights, and entrepreneurship. The USG assisted the newly-appointed National Council for Civil Society Development, an advisory body to the Government, to develop an action plan and to build capacity for future activities. Additional support was provided to the Government Office for Cooperation with NGOs to organize two public events on issues directly related to the legal framework for civil society and to develop a document that analyzes the Croatian legal framework and provides suggestions for improvement. To improve the financial sustainability of civil society organizations (CSOs), the USG provided grants and organized conferences on innovative fund-raising, self-financing and social enterprises. Additionally, support was provided to Donacije.info, an indigenous organization, to promote philanthropy, establishing for the first time in Croatia a donation “marketplace.” The USG also promoted philanthropy in Croatia through conferences, training programs, media campaigns and a new web page where all information about Croatian foundations is located. Additionally, the USG managed a number of targeted activities that improved outcomes in the sector, including small grants and support for media. NGOs received grants in the areas of reconciliation, refugee returns and anti-corruption. Croatian journalism students attended U.S. universities and participated in internships with local U.S. television newsrooms. U.S. trainers conducted in-country workshops for students and journalists.

Advocacy NGOssupported with USG assistance continued to carry out national level campaigns on volunteerism, anti-corruption, political process reform, entrepreneurship, human rights, and free legal assistance, resulting in the adoption of the Law on Voters Lists (02/2007), Law on Financing Political Parties and Campaigns (12/2006), the Code of Good Practices in Public Financing of NGOs (2/2007) the Law on Volunteerism (5/2007) as well as the government - civil society strategy’s Operational Plan (02/2007). Institutional strengthening enabled 60 NGOs to improve institutional and organizational standards, thereby strengthening their ability to meet their stated mandates. Financing assistance enabled 30 NGOs to diversify their funding sources and increase domestic financing by 30%.

The USG provided small grants for projects focusing on reconciliation in Eastern Slavonia, improving anti-corruption efforts in local and national governments, and developing television documentaries on refugee returns. Through media programs, Croatian journalists studied volunteerism in the United States. Croatian students improved their professional skills during their U.S. study, and U.S. trainers educated students and journalists in Croatia.

USG small grants to NGOs and independent radio served to better inform the public about NATO and improve public support for Croatia’s NATO membership. For example, the youth branch of the Atlantic Council received a small grant to improve and expand its NATO public education efforts, and a small grant to an independent radio station resulted in a series of informative programs about Croatia’s candidature for NATO membership. The Atlantic Council and its youth organization opened new branches in the coastal city of Split, enabling it to expand its NATO public education efforts there.

USG assistance helped NGOs become credible voices strengthening Croatia’s democratic procedures and institutions. Public debate and discussion on the perception of NGOs and their contribution to society led to improved public trust of NGOs while media training improved NGOs’ public relations skills and advocacy. A recent study showed that 72% of citizens trusted NGOs’ work – an increase of 12% in the past four years. Improved public trust helped NGOs’ advocacy yield significant results. For example, many NGOs participated in drafting the National Operational Plan for the Civil Society Strategy and the Volunteerism Law. In the area of legislative oversight, NGOs, which received USG assistance, successfully advocated for anti-corruption measures resulting in enactment of the Law on Financing Political Parties and Campaigns. NGOs, through advocacy and community programs, developed in partnership with the government, businesses, and other stakeholders, assisted communities to improve local economic and agricultural development, tourism promotion, provide better services and effective use of public spaces. For example, eleven Croatian firms signed memoranda of understanding to develop corporate social responsibility models. New opportunities were created for domestic financial support of the NGO sector resulting in an increase in corporate philanthropy, better skills for income generation and new fundraising techniques. As a result of longer-term USG efforts to promote philanthropy, four new regional community foundations were established. With USG support, three Civil Society pillars including the Council for Civil Society Development, Government Office for Cooperation with NGOs, and National Foundation for Civil Society Development have become key in strengthening Croatian civil society and building stronger partnerships between NGOs and government.

Through media assistance, several documentaries on U.S. volunteerism were aired on Croatian National TV, and journalism students in the U.S. produced balanced programs and articles on U.S. society.

Local Government Reform - The aim of local government reform programs was to help balance Croatia’s tradition of strong central government and support USG goals for transparent, accountable democratic systems that include full integration of minorities into local political and administrative structures.

A USG-funded local government reform project provided public administration training and introduced modern management practices. This enables them to address local affairs through advocacy, legislative reform, outsourcing, and training. USG assistance supported an asset inventory in five selected cities allowing them to manage and derive increased income from property leasing or sales. The USG introduced an EU-compatible procurement system, providing local governments with guidance and training required to carry out competitive, transparent, and cost-effective procurement. Local government leaders were sent to the US to observe how state legislatures, lobbyists and NGO advocates work. Through articles published on their trips, public debates on campaign financing and lobbying began, broadening the Croatian public’s understanding of the roles of such practices in a democratic society.

USG assistance supported drafting and review of the Law on Direct Election of Mayors, Deputy Mayors and County Prefects, the Law on Local and Regional Self-government, and the Law on Financing Local Governments, all of which were adopted in FY 2007. Assistance improvedassetmanagement enabling partner cities to catalogue $2.3 billion in local government assets generating over $77 million in revenue for those cities. USGtraining included six universities and institutions that offered public administration courses to over 100 participants from local and regional governments. To improve procurement procedures an EU-compliant public procurement system is now in place. This system provides governments and vendors with a source of information for conducting transparent and open procurement. By April 2007 local governments outsourced 213 contracts and over 800 grants valued at $43 million, using the Public Procurement System, including standard forms and templates. The process was developed in close coordination with the GOC’s Office of Procurement and the European Union, and will remain Croatia’s procurement standard for the future.

In FY 2007 the impact of USG local government assistance was most clearly demonstrated by the role that the US-supported Croatian Association of Cities (AOC) played in advocating for legislative reform and the successful development and implementation of a more transparent and accountable public procurement system supported by USG funding and training. In FY 2007, the AOC established itself as the strongest, most active voice for local government interests by promoting legislative reform and fiscal and administrative decentralization. The AOC participated in the drafting and sponsoring the new Law on the Direct Election of Mayors and County Prefects. With USG assistance, the Association established a Local Government Advocacy Office to provide a center for its activities. Upon project completion in FY 2007, the AOC continued to function without USG financial assistance. The Association prepared new laws related to roads, schools, land use, and permitting – areas that local governments deem important for bringing citizens into decision-making processes. Second, USG assistance in preparing an EU-compliant procurement system ensured that the national and local governments will adhere to accepted practices of public procurement, thus reducing mismanagement, stemming corruption and building trust and respect for Croatia’s procurement system.

Justice System - USG goals in this sector aimed to improve coordination in Croatia’s criminal justice system for prosecuting and convicting perpetrators of trafficking in persons (TIP) offenses. Support to Croatian anti-TIP efforts was bolstered by a USG speakers program in which U.S. experts trained Croatian judges and prosecutors on TIP related issues.

In March, two day-long workshops were funded through the U.S. Speakers Program to train approximately 45 Croatian prosecutors and judges in order to further enhance their capacities to prosecute TIP cases. Judicial employees were trained in methods of evidence collection, coordination between police and prosecutors during the investigative phase, legal aid for TIP victims, pre-trial and post-trial protection of victims, root causes of TIP, modus operandi of perpetrators, and the best legal practices regarding the suppression of TIP.

As a direct result of both programs, Croatian law enforcement, prosecutors and judges improved their capacity to investigate, prosecute and adjudicate TIP offenses. In the first 8 months of 2007, 11 victims of human trafficking had been discovered and identified. To date the National Coordinator for Trafficking reported one conviction and two related convictions for international prostitution, slavery, and illegal capture. While it is premature to see outcomes in terms of increased numbers of convictions, the USG is optimistic that the Croatian criminal justice system will be able to arrest, bring to trial and convict those responsible for TIP crimes.

ECONOMIC GROWTH

The Croatian economy grew at 4.8% in 2006, fueled by investment, capital inflows and consumer spending. Increased tax revenue and more disciplined fiscal policies have enabled the government to reduce the deficit to 2.8% of GDP in 2006, with a target of 1.5% in 2009. Inflation remained moderate while job growth accelerated slightly, although unemployment remained high. Economic reform policies continued, led by a major initiative to reduce regulation and speed the issuance of licenses. There was some further progress on privatization, including the state-owned metals industry. However, the Privatization Fund continues to manage a large portfolio of state-owned assets. The state’s share of GDP has dropped to 31%, exceeding Mission targets and expectations. State subsidies to loss-making parastatals accounted for 3% of GDP, with shipyards accounting for a large portion of these transfers. Private sector credit growth continued, despite restrictive measures put in place by the National Bank, bringing Croatia's foreign debt to 85% of GDP. Continued problems with the judiciary, corruption and property registration acted as a brake on foreign investment. USG development programs targeting economic growth will be phasing out due to Croatia’s success at implementing market reforms. As a result, economic growth programs were structured to achieve short-term impacts through regulatory and policy reforms while improving the capacity of private sector counterparts and “legacy” institutions to continue efforts to improve business productivity and competitiveness.

Private Sector Competitiveness - The goal of USG assistance in this sector is to build economic institutions, laws, and policies that foster private-sector economic growth, sustainable development, and poverty reduction. USG assistance help strengthen quality standards and product marketing to improve the competitiveness of Croatian industries, an important consideration with EU accession on the horizon. USG assistance in this sector also supported the building of the institutional capacity of business associations and worked with private sector counterparts to advocate for business environment reforms. Specific initiatives carried out through USG assistance aimed to improve the regulatory burden on investors, streamline and rationalize tax administration, support the development of a centralized quality standards institution, and identify and address skills shortages in the information and communications technology sector. The USG funded two complementary activities; an agribusiness competitiveness enhancement program and another one to raise the incomes in economically distressed areas by supporting farmers, livestock producers, and organizations in dairy production, swine production, and horticulture. The projects worked at all levels in the food chain to improve production quality, processing capacity, distribution, and marketing of agricultural products. The projects helped to organize and support producer and buyer cooperatives and improve access to finance for farmers and cooperatives through commercial bank loan guarantees. Implementers trained farmers in production techniques and helped them comply with international sanitary, phytosanitary, and other production standards. The projects also provided small grants to farmers and cooperatives, particularly those in war-affected areas of the country.

As of September 2007, activities undertaken had contributed to over 7,718 newly created jobs, with 1,958 of these jobs in economically distressed areas. Assisted firms increased total revenue by over $358.8 million

Economic Opportunity - USG assistance in this area aimed to support the policy environment for micro and small enterprises and strengthen enterprise productivity. During FY 2007 USG assistance continued to support implementation of a small enterprise performance assistance program. Assistance was provided to more than 3,324 enterprises through regional development agencies, economic development offices of counties and through business associations. More than 4,481 people (56% female) were trained in best practices of business operations, market access and quality standards in industries that span wood working, ICT, boat building and manufacturing. Regulatory work was undertaken with key counterparts. The first was an analysis of tax reform prepared on behalf of and in conjunction with the Croatian Employers Association. The second major area of regulatory assistance was in the establishment an inventory of non-tax related business laws.

As a result of USG regulatory assistance, at the end of its first phase in June 2007, the regulatory project was successful in creating an inventory of all regulations that affect business. The office that was created to manage the project will continue its work, becoming a permanent regulatory impact assessment body, a first in the history of Croatia.

Financial Sector - The main goal of USG assistance in this area were to improve financial services so small and medium sized enterprises have better access to credit. USG assistance was able to mobilize more than $48 million in credit guarantees in partnership with the Office of Development Credit and Commercial banks in Croatia for small and medium enterprises. These credit guarantees will reduce the excessive collateral requirements imposed by banks and allow businesses with good cash flow and low collateral to gain access to business finance. Through work with the banking sector to increase knowledge about various financing options, over 2,741 enterprises employed new credit lines.

FY 2007 Measures of Country Performance

The following data are based on the Monitoring Country Progress in Europe and Eurasia system developed by the United States Agency for International Development (USAID) to measure and track progress in the region. The system uses four different indices to monitor progress, drawing on readily available standardized country-level data on economic reform, economic structure and performance, democratic reform, and human capital. The primary data sources are the European Bank for Reconstruction and Development (EBRD), the World Bank, the United Nations Children’s Fund (UNICEF), and Freedom House. The data for each of the four indices are converted and standardized to a 1-to-5 scale, with a “5” representing the best performance of the Eastern Europe and Eurasia region, and a “1 the least advancement of the region.

Croatia’s Democratic Reform* Scores in 2006 compared to Romania and Bulgaria in 2002

Date: 01/01/2008 Description: The graph to the left shows Albanias democratic reform scores in 2006* (the grey shaded area) as compared to the average of Romanias and Bulgarias democratic reform scores in 2002 (the bold line) when they were invited to join NATO and received favorable indications of future EU membership. State Dept PhotoThe graph to the left shows Albania’s democratic reform scores in 2006* (the grey shaded area) as compared to the average of Romania’s and Bulgaria’s democratic reform scores in 2002 (the bold line) when they were invited to join NATO and received favorable indications of future EU membership.

*Actual 2007 scores not yet available


Croatia’s Democratic Reform Scores in 2006 compared to its Reform Scores in 1999

Date: 01/01/2008 Description: The graph to the left shows Croatias democratic reform scores in 2006* (the grey shaded area) as compared to its democratic reform scores in 1999 (the bold line). State Dept PhotoThe graph to the left shows Croatia’s democratic reform scores in 2006* (the grey shaded area) as compared to its democratic reform scores in 1999 (the bold line).

*Actual 2007 scores not yet available

*Democratic reforms include the electoral process (the extent to which elections are free, fair and competitive), civil society (primarily NGO development), the independence of media, public governance and administration, rule of law (primarily judicial reform) and the scope of corruption as well as anti-corruption income.


Croatia’s 1st Stage Economic Reform* 2007 Scores Compared to Bulgaria and Romania in 2002

Date: 01/01/2008 Description: The graph to the left shows Croatias stage one economic reform scores in 2007* (the grey shaded area) as compared to the average of Romanias and Bulgarias economic reform scores in 2002 (the bold line) when they were invited to join NATO and received favorable indications of future EU membership. State Dept PhotoThe graph to the left shows Croatia’s stage one economic reform scores in 2007* (the grey shaded area) as compared to the average of Romania’s and Bulgaria’s economic reform scores in 2002 (the bold line) when they were invited to join NATO and received favorable indications of future EU membership.


Croatia’s 1st Stage Economic Reform 2007 Scores Compared to its Scores in 1999

Date: 01/01/2008 Description: The graph to the left shows Croatias stage one economic reform scores in 2007* (the grey shaded area) as compared to its democratic reform scores in 1999 (the bold line). State Dept PhotoThe graph to the left shows Croatia’s stage one economic reform scores in 2007* (the grey shaded area) as compared to its democratic reform scores in 1999 (the bold line).


Croatia’s 2nd Stage Economic Reform 2007 Scores Compared to Bulgaria and Romania in 2002

Date: 01/01/2008 Description: The graph to the left shows Croatias stage two economic reform scores in 2007* (the grey shaded area) as compared to the average of Romanias and Bulgarias economic reform scores in 2002 (the bold line) when they were invited to join NATO and received favorable indications of future EU membership. State Dept PhotoThe graph to the left shows Croatia’s stage two economic reform scores in 2007* (the grey shaded area) as compared to the average of Romania’s and Bulgaria’s economic reform scores in 2002 (the bold line) when they were invited to join NATO and received favorable indications of future EU membership.

Croatia’s 2nd Stage Economic Reform 2007 Scores Compared to its Scores in 1999

Date: 01/01/2008 Description: The graph to the left shows Croatias stage two economic reform scores in 2007* (the grey shaded area) as compared to its democratic reform scores in 1999 (the bold line). State Dept PhotoThe graph to the left shows Croatia’s stage two economic reform scores in 2007* (the grey shaded area) as compared to its democratic reform scores in 1999 (the bold line).

*Economic reforms include “first stage” reforms of privatization, stabilization, and liberalization (domestic price liberalization and trade liberalization), and “second stage” reforms in the financial sector, infrastructure (physical and energy), corporate governance and competition policy.

Croatia’s Progress on the USAID Country Progress Indices between 1998 and 2007

Date: 01/01/2008 Description: Croatias Progress on the USAID Country Progress Indices between 1998 and 2007. State Dept Photo


(1) Economic reforms index include “first stage” reforms of privatization, stabilization, and liberalization (domestic price liberalization and trade liberalization), and second stage reforms in the financial sector, infrastructure (physical and energy), corporate governance and competition policy.

(2) The economic structure and performance index tracks indicators such as the size of the private sector as % of GDP, export share of GDP, and the size of the small and medium enterprise sector as % of GDP, economic growth, inflation, debt, and foreign direct investment.

(3) The Democratic reforms index include the electoral process (the extent to which elections are free, fair, and competitive), civil society (primarily NGO development), the independence of media, public governance and administration, rule of law (primarily judicial reform), and the scope of corruption as well as anti-corruption efforts.

(4) USAID tracks progress on the Human capital index by analyzing trends in health (life expectancy, under five mortality rates, and public expenditures on health), education (secondary school enrollment rates and public expenditures on education) and per capita income.



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