{"id":1922,"date":"2024-04-22T15:10:17","date_gmt":"2024-04-22T13:10:17","guid":{"rendered":"https:\/\/www.uaace.org\/?page_id=1922"},"modified":"2024-04-22T15:10:17","modified_gmt":"2024-04-22T13:10:17","slug":"module-6-harmonization-of-ukrainian-legislation-with-eu-law-the-path-taken-by-the-republic-of-croatia-and-lessons-for-legal-reforms-in-ukraine","status":"publish","type":"page","link":"https:\/\/www.uaace.org\/?page_id=1922&lang=en","title":{"rendered":"Module 6. Harmonization of Ukrainian Legislation with EU Law: The Path Taken by the Republic of Croatia and Lessons for Legal Reforms in Ukraine"},"content":{"rendered":"

Click here to view the materials in English<\/a><\/span>
<\/p>\r\n

Croatia: Political Evolution and Relations with the EU<\/strong><\/span><\/h2>\r\n

In addition to its EU accession negotiations and its leadership role in Southeast Europe, Croatia has been a full member of the Union for the Mediterranean (UfM) since 2008. Its geographical location enables it to serve as a \u201cbridge\u201d between Central, Eastern, and Southeastern Europe and the Mediterranean. Croatia welcomes the various components of the reformed Barcelona Process, in particular its openness to all Mediterranean coastal countries, including those in the Adriatic region; the strengthening of political relations; the enhancement of \u201cownership\u201d of the process; cooperation on an equal footing, and greater visibility of relations through major regional and subregional projects. We hope that pooling our efforts and resources will help address common problems and challenges in the Mediterranean region. In March 2009, the Croatian Parliament expressed its intention to join the Euro-Mediterranean Parliamentary Assembly (EMPA). Croatia already benefits from EU funding for transportation, environmental protection, and civil protection in the Mediterranean. The Croatian Euro-Mediterranean Cooperation Network, coordinated by the National Foundation for the Development of Civil Society, is one of the fastest-growing national networks of the Anna Lindh Foundation. The Croatian academic community participated in the development of the joint \u201cMediterranean 2020\u201d strategy.<\/span><\/p>\r\n

The year 2009 was supposed to be decisive for the conclusion of Croatia\u2019s EU accession negotiations. However, it was a year of domestic political upheaval, marked by unexpected changes in the government, the impact of the economic recession, the fight against corruption, the continuation of negotiations with the EU, and the presidential election.<\/span><\/p>\r\n

The Europeanization of Management Practices<\/strong><\/span><\/h2>\r\n

The year 2009 in Croatia was marked by changes in the government. Croatian Prime Minister Ivo Sanader, the former leader of the Croatian Democratic Union (HDZ), unexpectedly resigned on July 1 in the middle of his second term. He was first elected in 2003 and re-elected in November 2007. Sanader\u2019s resignation came as a complete surprise to the country and international observers, and he left the reasons for his decision entirely unclear. His work had previously been well regarded in the EU, where he enjoyed a good reputation, but in the final months of his political career\u2014and especially after his resignation\u2014his name was linked to several corruption scandals in the country. The timing of his resignation was extremely unfortunate\u2014the country\u2019s economic situation was dire, with the effects of the global crisis clearly visible, and negotiations with the EU had stalled. Once a political winner (his government launched EU accession negotiations in 2005 and led the country into NATO in early 2009), he turned into a political loser overnight.<\/span><\/p>\r\n

On July 6, Sanadera was replaced as prime minister by his former deputy, Jadranka Kosor, also a member of the HDZ party. The new prime minister quickly established herself as a strong leader, determined to maintain Croatia\u2019s course toward EU accession and to effectively combat corruption, the economic recession, relations with Slovenia, and ongoing negotiations with the EU. Kosor deepened a number of reforms and launched investigations into state-owned enterprises. Sanader\u2019s resignation did not appear to signify a definitive intention to leave active politics. On the contrary, his attempt to return in early 2010\u2014seen as an attempt to interfere with the government\u2019s work and the party\u2019s leadership\u2014led to his expulsion from the party, where he had served as honorary president since his resignation in July.<\/span><\/p>\r\n

The new Prime Minister, Kosor, has given new impetus to the Europeanization of governance practices, demonstrating strong political will and support for the fight against corruption and organized crime. Investigations into high-level corruption have been launched, and several high-ranking executives and officials have been detained. The Deputy Prime Minister responsible for economic policy has resigned, and the immunity of some former politicians has been lifted. The total number of corruption cases under investigation has increased, and the legislative framework has been improved. Examples include several cases involving state-owned companies, notably Podravka, Croatian Motorways, INA (the national oil company), and others. However, much remains to be done to foster a culture of political accountability for corruption at all levels.<\/span><\/p>\r\n

For example, it should be noted that according to the 2009 Global Corruption Report published by Transparency International, Croatia ranked 62nd out of 180 countries, with a score of 4.1. Scores ranging from 0 (highly corrupt) to 10 (not corrupt) show how a country compares to others in the index and indicate the perceived level of corruption in the country\u2019s public sector. In 2009, Croatia received a lower score than in 2008 (4.4), indicating the need for more effective implementation of reforms in the area of public administration (where public procurement remains a major source of actual and potential corruption) and in the judicial system.<\/span><\/p>\r\n

The country has a large debt burden, with external debt exceeding 80% of GDP. However, despite these negative trends, macroeconomic stability remains intact. Croatian political scientists predict that a slow economic recovery may begin toward the end of the year.<\/u><\/strong><\/span><\/p>\r\n

In late fall, Croatia became the scene of a fiercely contested presidential campaign. Ivo Josipovi\u0107, a highly educated, pro-European, social-democratic law professor and classical music composer, won the presidential election on January 10, 2010. Josipovi\u0107 ran his campaign under the slogan \u201cJustice for Croatia,\u201d focusing on the fight against corruption, and won with the support of over 60% of voters. Newly elected President Josipovi\u0107 is expected to form an effective alliance with the prime minister to carry out reforms, which could help achieve the critical mass between the two strongest parties needed to reconcile their differing interests. Although most executive power, particularly regarding economic matters, rests with the Prime Minister, the President controls the armed forces and, together with the government, formulates foreign policy. In addition, he is responsible for the overall functioning of the system of public administration by coordinating and overseeing the work of government agencies.<\/span><\/p>\r\n

<\/span><\/p>\r\n

On the Path to a Gradual Economic Recovery<\/strong><\/span><\/h2>\r\n

Initially, the country was not as severely affected by the crisis thanks to the wise policies of the National Bank of Croatia, which were aimed at limiting credit and external debt. In March, *The Banker* magazine named Governor \u017delko Rogatinski the best central bank governor in Europe and the best central bank governor in the world in 2008. The measures taken by the National Bank helped the economy weather the first wave of the crisis more easily. However, in the first nine months of 2009, GDP fell by nearly 7% compared to the previous year, when the Croatian economy was growing at an annual rate of 5.5%. This occurred after seven years of continuous growth. The decline can be partly attributed to the effects of the global crisis, but it was also the result of the country\u2019s economic weaknesses that had accumulated in previous years. Public consumption and investment declined, in contrast to public spending, which remained high at about 48% of GDP. The country has a large debt burden, with external debt exceeding 80% of GDP. However, despite these negative trends, macroeconomic stability has been maintained. Croatian political analysts predict that a slow economic recovery may begin toward the end of the year.<\/span><\/p>\r\n

The National Bank has warned that it will not be possible to overcome the recession if it is viewed merely as a \u201ctemporary pause\u201d in positive long-term trends of economic growth and development. On the contrary, it should be viewed first and foremost as a warning about the consequences of neglecting the sustainability of economic growth. An effective and targeted approach to solving problems and accelerating reforms is considered a far better solution than relying on the IMF (Rohatynsky, 2009). The government\u2019s first, highly unpopular response to the economic crisis was to cut public sector wages. This was followed by three budget adjustments, which were too modest to close the gap. In the coming period, more substantial budget cuts, increased budget revenues, and a balanced fiscal policy will be crucial. The key challenges remain deeper and faster structural reforms that reduce government intervention in the economy, stimulate employment, and remove administrative barriers in the economy.<\/span><\/p>\r\n

The problems appear to have evolved from \u201cexcessively rapid growth\u201d to \u201ctight credit conditions.\u201d Key political players are focused on mitigating the impact of the global crisis on the country and reducing deficits and imbalances. However, the National Council for Competitiveness warns that decisiveness and speed in implementing structural reforms, further market liberalization, and the creation of a favorable business environment are crucial for improving economic competitiveness. In this regard, Croatia\u2019s global competitiveness has been stagnating or even declining since 2006. In its Global Competitiveness Report for 2008\u20132009, the World Economic Forum ranked Croatia 61st out of 134 countries (compared to 57th in the previous report).<\/span><\/p>\r\n

Nevertheless, despite these economic challenges, Croatia remains the most effective country in Southeast Europe participating in the EU accession process, as well as a regional success story, serving as an anchor of political stability in the region.<\/span><\/p>\r\n

The end of negotiations with the EU is just around the corner<\/strong><\/span><\/h2>\r\n

EU accession negotiations, which began in 2004, fell behind schedule in 2009 when neighboring Slovenia blocked them for nine months, starting in December 2008. The reason for this was a bilateral border dispute over the Bay of Piran. Consequently, the European Commission\u2019s indicative roadmap for completing technical negotiations by the end of 2009 was not met, and attempts to find a solution were largely unsuccessful. It was expected that both countries would find their own way forward. Croatia\u2019s position\u2014that bilateral issues should be resolved separately from the negotiations\u2014was not accepted. Bilateral talks between the prime ministers of Croatia and Slovenia (Kosor and Pahor) led to an agreement on September 11, 2009, regarding ways to resolve the bilateral border dispute. The Croatian-Slovenian arbitration agreement, signed on November 4, laid the foundation for a comprehensive resolution of the border dispute following the completion of the ratification process by the parliaments of both countries. This marked the resumption of negotiations on Croatia\u2019s EU membership.<\/span><\/p>\r\n

By the end of 2009, Croatia had opened 28 of the 35 negotiation chapters, 17 of which were provisionally closed. The remaining five chapters concern competition policy, fisheries, the judiciary and fundamental rights, the environment, and the Common Foreign and Security Policy (CFSP). Three of them are still being blocked by Slovenia. The most challenging chapter appears to be the one on the judiciary and fundamental rights, including the fight against corruption and organized crime. Promoting minority rights\u2014including the return of refugees, the prosecution of war crimes, and providing access to documents for use by the International Criminal Tribunal for the Former Yugoslavia (ICTY)\u2014are key items on the agenda. Another important issue is public administration reform, which involves strengthening procedures and the administrative capacity of relevant institutions, consolidating the civil service, and depoliticizing public administration. Competition policy is also an important area, where the restructuring and privatization of shipyards is slowly approaching its final stage.<\/span><\/p>\r\n

Croatia remains the most effective country in Southeast Europe participating in the EU accession process and a regional success story, serving as an anchor of political stability in the region<\/u><\/strong><\/span><\/p>\r\n

The financial package for Croatia for the first two years of its EU membership was adopted in December, based on the "working assumption" that Croatia would join the EU in January 2012. Similar packages were prepared for the countries that joined the EU during the fifth enlargement. The package covers the first two years of potential EU membership\u2014namely, 2012 and 2013\u2014which are also the last two years of the current seven-year EU Financial Perspective. Croatia will be allocated approximately 3.5 billion euros in EU budget funds. This is significantly more than the current level of pre-accession support, and therefore, the government\u2019s capacity to absorb these funds must be improved. Croatia will be able to access most of these resources through the Cohesion Fund and the Structural Funds, as well as through direct payments to farmers and funds for rural development and fisheries. Finally, according to European Commission estimates, Croatia will contribute 609 million euros to the EU budget in the first year of its EU membership and 647 million euros in 2013. Work on the draft Accession Treaty began in December 2009.<\/span><\/p>\r\n

The recession does not seem to have had a significant impact on the appeal of EU membership for Croatia, given that support for EU accession was never very high, even before the recession began. Support for membership among Croatian citizens is quite low and varies depending on the opinion poll. The fall 2009 Eurobarometer survey showed that only 24% of Croatian citizens support EU membership. Lower support was found only in some of the new EU member states that were hardest hit by the crisis (for example, in Latvia\u201423%). Some Croatian public opinion polls show a more optimistic attitude toward EU membership, although support still does not exceed 50% by much. However, the government will have to make additional efforts to communicate with citizens about EU accession and focus on explaining the benefits of future EU membership. According to the current provisions of the Croatian Constitution (Article 141), EU accession must be approved by a majority of the country\u2019s total electorate in a referendum, which will be very difficult to achieve under current circumstances. Along with other necessary amendments to be made to the Constitution in accordance with the requirements of various chapters of the negotiations, this issue is also being discussed within the country. Work on constitutional amendments began in October 2009, and it is expected that the result will be the establishment of requirements for a referendum on EU membership similar to those that exist in other countries joining the EU.<\/span><\/p>\r\n

The recession does not seem to have had much of an impact on the appeal of EU membership in Croatia, given that support for EU accession was never very high even before the recession began.<\/strong><\/span><\/p>\r\n

In 2009, public attention focused on two key issues affecting Croatia\u2019s accession to the EU. The first was the EU\u2019s ability (or inability) to act as a \u201csoft power\u201d in resolving bilateral disputes between EU member states and accession countries that hinder the negotiation process (for example, Croatia and Slovenia, Turkey and Cyprus, Macedonia and Greece). The second was the institutional transformation of the EU and the ratification of the Treaty of Lisbon. The Treaty\u2019s entry into force paved the way for Croatia and other countries to join the EU. As the first country in line for EU membership, Croatia closely monitored the ratification process, primarily in terms of its potential impact on enlargement.<\/span><\/p>\r\n

The outlook for the conclusion of negotiations with the EU is optimistic. Croatia may complete all chapters by the end of 2010 if the pace of the reform process allows it to meet all remaining benchmarks. The speed of ratification of the Accession Treaty will be another key factor in determining the accession date, which is unlikely to occur before 2012 or early 2013. However, the success of the accession process will ultimately depend on how effectively Croatia implements the reforms.<\/span><\/p>\r\n

References<\/strong><\/span><\/h2>\r\n

Commission of the European Communities. Croatia 2009 Progress Report 2009<\/em>. Brussels, October 14, 2009. SEC(2009) 1333.<\/span><\/p>\r\n

Rohatinski, \u017deljko. Economic Crisis and Monetary Policy<\/em>. Croatian National Bank, 2009. Available at: www.hnb.hr\/govori-intervjui\/govori\/egovor-rohatinski-7-7-2009.pdf<\/a><\/span>.<\/span><\/p>\r\n

Transparency International. Global Corruption Report 2009. Corruption and the Private Sector<\/em>. Cambridge: Cambridge University Press, 2009.<\/span><\/p>\r\n

World Economic Forum. The Global Competitiveness Report 2008\u20132009<\/em>, 2009.<\/span><\/p>\r\n

https:\/\/www.econstor.eu\/bitstream\/10419\/226070\/1\/wiiw-bo-wp-032.pdf<\/a><\/span><\/p>\r\n

<\/span><\/p>\r\n

Ten Years of Croatia's Membership in the European Union<\/strong><\/span><\/h2>\r\n

Ten years ago, on July 1, 2013, the Republic of Croatia became a member of the European Union. Although it is the newest member of the EU, it is one of the countries in Southeast Europe that has made the most progress in the integration process.<\/span><\/p>\r\n

\"\u041f\u0440\u0430\u043f\u043e\u0440<\/span><\/p>\r\n

In 2023, it was admitted to the Schengen Area and the Eurozone, something that Bulgaria and Romania were unable to achieve, even though they had joined the EU several years earlier. EU membership has brought Croatia certain economic benefits, such as stable economic growth, a gradual rise in living standards, and a decline in unemployment. However, poor absorption of EU funds, the inefficiency of state institutions, and structural problems in the national economy have prevented it from fully capitalizing on these opportunities. Moreover, the free movement of people has exacerbated negative demographic trends. Nevertheless, Croatia has benefited to some extent from its EU membership. Thanks to the EU-funded LNG terminal on the island of Krk, it has the opportunity to become a key player in ensuring energy diversification in the region. Croatian officials have successfully used their presence in EU institutions to elevate the issues facing their compatriots living in Bosnia and Herzegovina to the level of transnational debate. However, it appears that Croatia has not been able to fully capitalize on its leverage in the Western Balkans.<\/span><\/p>\r\n

From Euroskeptics to Moderate Euro-Optimists<\/strong><\/span><\/h2>\r\n

Croatia\u2019s integration into the EU began ten years after it gained independence in 1991. To achieve this goal, the country had to be democratized. This process gained momentum after 1999, following the death of President Franjo Tu\u0111man, the architect of the country\u2019s independence and a politician with authoritarian tendencies. Initially, public opinion regarding the country\u2019s potential EU membership was negative. At the root of this Euroscepticism was a reluctance to cede power from the newly formed state. Opponents of EU accession also believed that Croatia was too small to have any real influence on the European stage. In addition, the issue of cooperation with the International Criminal Tribunal for the former Yugoslavia (ICTY)\u2014one of the political conditions for rapprochement with the EU\u2014was highly contentious. The 2011 arrest and conviction by the Hague Tribunal of retired generals Ante Gotovina and Mladen Marka\u010d fueled public discontent, as the public viewed them as national heroes rather than war criminals. That year, only 23% of Croatians expressed support for the country\u2019s integration into the EU.[1] In 2012, the two men were acquitted.<\/span><\/p>\r\n

The escalation of the territorial dispute with Slovenia has fueled Euroskepticism. Slovenia has agreed to allow Croatia to move forward with European integration, contingent on a favorable delimitation of the maritime border between the two countries in the Bay of Piran. Fearing the outcome of the accession referendum, the Croatian government waived the 50 percent voter turnout requirement. Although 66% of citizens ultimately voted in favor of EU accession in 2012, the meager enthusiasm for accession was reflected in voter turnout\u2014only 43%, one of the lowest rates in EU history. However, the Croatian people gradually gained trust in the EU and its institutions, mainly due to disappointment with their own political class. According to a survey conducted in 2013, in the year the country joined the EU, 36% of Slovenians trusted EU institutions, while trust in their own government and unicameral parliament, the Sabor, stood at only 16% and 12%, respectively [2]. In the same survey, conducted ten years later, 52% expressed trust in the EU, while only 23% trusted both the government and the national parliament [3].<\/span><\/p>\r\n

An economy dependent on tourism<\/strong><\/span><\/h2>\r\n

Strong economic performance in the post-accession period, popular EU-funded projects, and successes in joining the eurozone and the Schengen Area (especially compared to Romania and Bulgaria, which remain outside these integration frameworks) likely contributed to the positive assessment of the country\u2019s EU membership.<\/span><\/p>\r\n

However, Croatia has not yet been able to use its accession as a catalyst to overcome the major challenges facing the country, such as low labor productivity, widespread corruption (the country ranks fourth in the EU in terms of perceived corruption levels)[4], a shortage of skilled labor, and emigration.<\/span><\/p>\r\n

\"\"<\/span><\/p>\r\n

Figure 1. Economic growth trends in Croatia compared to other countries in the region.<\/span><\/p>\r\n

Croatia joined the EU while still feeling the effects of the 2008 global financial crisis in the form of a prolonged recession. Access to the single market and EU funds allowed it to return to a path of stable (albeit not very high) growth, which averaged 2\u20133% of GDP between 2015 and 2020. This, in turn, led to an increase in GDP per capita at purchasing power parity relative to the EU average\u2014from 61% in 2013 to 73% in 2022. However, Croatia started from a higher level than many other countries in the region: when it joined the EU, its GDP per capita was already higher (about 10,500 euros) than inEU member states in the region (including Hungary, Poland, Romania, and Bulgaria); in 2022, it stood at 14,500 euros, slightly lower than in Poland. The country grew more slowly than its neighbors Hungary and Poland, but at the same rate as Serbia, which is not an EU member[5] (see Figure 1). The most notable achievement during this period was the decline in the number of unemployed. In 2013, the unemployment rate stood at 17.25%, and by 2022 it had fallen to just 6.75% (one of the best results in the history of independent Croatia; see Figure 2). However, the 10-point decline over this decade is attributable not only to a favorable economic situation but also to negative demographic trends and labor emigration.<\/span><\/p>\r\n

\"\"<\/span><\/p>\r\n

Figure 2. Unemployment Rate in Croatia, 2008\u20132022<\/span><\/p>\r\n

\"\"<\/span><\/p>\r\n

Figure 1. Tourism\u2019s Share of GDP in EU Countries in 2019<\/span><\/p>\r\n

The service sector has been the backbone of the Croatian economy for a decade: it accounts for 74% of the country\u2019s GDP. Industry (including construction) accounts for 23% of GDP, while agriculture accounts for 3%. The main problem is the country\u2019s continued dependence on tourism, which generates 25% of its GDP (see Map 1)[6], making it extremely vulnerable to external factors. For example, Croatia\u2019s GDP fell by 8.5% in 2020 during the COVID-19 pandemic. This is the Croatian version of the so-called \u201cDutch disease\u201d\u2014a strong dependence of the economy on a single, rapidly growing sector. Croatia\u2019s GDP dependence on this sector is much higher than that of European tourism giants such as Spain and Italy. Furthermore, this exacerbates disparities in development, unemployment rates, and living standards between the coastal and inland regions of the country, which the redistribution of budgetary resources has only marginally mitigated. Such a heavy emphasis on tourism development also contributes to the neglect of other economic sectors and the deepening of the country\u2019s deindustrialization, which has led to a negative foreign trade balance (\u201311 billion euros in 2021).<\/span><\/p>\r\n

\"\"<\/span><\/p>\r\n

Map 2. GDP per capita in selected regions of Croatia in 2020<\/span><\/p>\r\n

<\/span><\/p>\r\n

Labor Market Issues and Regional Differences<\/strong><\/span><\/h2>\r\n

According to the Ministry of Tourism and Sports, the shortage of skilled workers is becoming the most pressing problem in this sector[7]. This is primarily due to mass emigration and a low birth rate. According to the latest 2021 census, Croatia has a population of 3.9 million, which is 10% less than in 2011[8]. Demographic trends look even worse than they did during the wars of the 1990s, when 7% of the population left the country. The opportunity to work legally in countries with a higher standard of living (primarily Germany, Austria, and Ireland) is one of the main reasons for mass emigration to the EU, in addition to excessive government bureaucracy, a weak and ineffective judicial system, corruption, and the incompetence of the political elite [9].<\/span><\/p>\r\n

\"\"<\/span><\/p>\r\n

Map 3. Changes in Croatia's Population Based on the 2011 and 2021 Censuses<\/span><\/p>\r\n

Source: Croatian Bureau of Statistics, dzs.gov.hr.<\/span><\/p>\r\n

Data published by the Croatian Bureau of Statistics show that the depopulation process is occurring unevenly. It has mainly affected Slavonia, the flatland region of Croatia located far from the sea (one in five of its residents has left), and to a lesser extent, the more affluent areas along the Adriatic coast and in Zagreb (see Maps 2 and 3). Even in the coastal \u017eupanijas (counties), development is concentrated along the coast, while inland areas remain largely neglected; this is yet another factor encouraging emigration.<\/span><\/p>\r\n

Investments: Attractiveness or Effectiveness?<\/strong><\/span><\/h2>\r\n

The low rate of absorption of EU funds is one of Croatia\u2019s main challenges and one of the barriers preventing it from fully reaping the benefits of EU membership. From 2013 to 2022, the country was set to receive up to 10.7 billion euros from European structural and investment funds, but failed to utilize as much as 46% of the approved funds[10]. According to a report by the European Court of Auditors, Croatia was the country with the lowest absorption rate of ESI Funds between 2014 and 2022[11]. The reasons for this financial inefficiency include ineffective public administration, insufficient cooperation between the public and private sectors, corruption, and irregularities related to public procurement. Croatia began to show somewhat better results after 2019, when Gabriela \u017dalac, who had been accused of involvement in corruption scandals, stepped down from her position as Minister of Regional Development and European Funds [12]. Over the past two years, the country has made significant progress in utilizing EU funds: it is now absorbing up to 72% of the allocated funds [13].<\/span><\/p>\r\n

Croatia\u2019s EU-funded investment successes include a flagship project for the region\u2019s energy diversification and LNG infrastructure. Following Russia\u2019s aggression against Ukraine, the floating terminal on the island of Krk emerged as one of the most important projects for securing an alternative to Russian gas supplies to the region. The plan to build the facility in Omi\u0161alj on the island of Krk was conceived long before Croatia\u2019s accession to the EU, but pressure from Brussels and Washington was needed to bring it to fruition.<\/span><\/p>\r\n

\"\"<\/span><\/p>\r\n

Russian influence in the country and the difficulties of implementing such a large-scale project amid an unstable economic situation were the main reasons for the delay of nearly a decade. The government was also reluctant to fund the project because it could obtain gas from an existing source (until 2021, most of the imported gas did indeed come from Russia). Construction began in 2019 and cost a total of 234 million euros, of which more than 43% came from the EU\u2019s \u201cConnecting Europe\u201d program. The floating LNG terminal finally began operations in January 2021. In its current form, its regasification capacity is 2.9 billion cubic meters per year, but negotiations are underway to increase it to 6.1 billion cubic meters by 2025, which will significantly strengthen Croatia\u2019s role as the region\u2019s energy hub. The expansion of the terminal is important not only in the context of moving away from Russian oil\u2014the government also wants to use this facility to advance its interests in Bosnia and Herzegovina. The Southern Gas Corridor project involves the construction of the first gas pipeline between the two countries, with a capacity of 1.5 billion cubic meters. This gives Sarajevo the opportunity to reduce its dependence on Russian gas, while Croatia gains an important tool for influencing its neighbor.<\/span><\/p>\r\n

\"\"<\/span><\/p>\r\n

The construction of the 2.4-km-long bridge to the Pelje\u0161ac Peninsula is much more controversial in terms of its economic benefits. It was co-financed by the EU and opened to traffic in July 2022 (see Map 4). It connects the enclave around Dubrovnik (separated by a strip of the Bosnian coastline) with the rest of the country. The bridge is Croatia\u2019s largest infrastructure project supported by the EU: its total construction cost was 526 million euros, of which 357 million euros were provided by the EU. The government in Sarajevo sharply criticized the initial plans for the bridge when they were announced in 2005, arguing that it would cut off Bosnia\u2019s only coastal city, Neum, from the open sea[14]. The bridge\u2019s location was changed, but the project was put on hold due to the economic crisis; in 2012, the Social Democratic government of Prime Minister Zoran Milanovi\u0107 (the current president of Croatia) decided to abandon it altogether. It was only after Croatia joined the EU that the investment, dubbed the \u201cproject of generations,\u201d was given new life. The bridge is an example of an extremely expensive yet symbolically important project, as it provides a direct link between two previously separated parts of the country. At the same time, it does little to address the most pressing needs of Croatia\u2019s infrastructure network and makes a negligible contribution to the country\u2019s economic development. Although it certainly provides faster access to Dubrovnik, this city\u2014with a population of just over 40,000\u2014is more of a tourist attraction than a center of industry and innovation. Thus, in practice, the project further deepens the country\u2019s dependence on tourism. The rationale for building this connection has also been undermined by the actions of local politicians who are trying to limit the flow of tourists to the \u201cPearl of the Adriatic.\u201d<\/span><\/p>\r\n

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Map 4. Major EU Investments: LNG Terminal and the Pelje\u0161ac Bridge<\/span><\/p>\r\n

<\/span><\/p>\r\n

The best indicator of integration into the EU<\/strong><\/span><\/p>\r\n

Croatia\u2019s accession to the eurozone and the Schengen Area was an unqualified success for the EU\u2019s newest member state. The adoption of the euro was a priority for current Prime Minister Andrej Plenkovi\u0107 and Croatian National Bank Governor Boris Vuj\u010di\u0107, who touted its benefits to the public. This landmark event took place on January 1, 2023.<\/span><\/p>\r\n

\"\"<\/span><\/p>\r\n

The transition from the kuna to the euro was relatively smooth, as Croatians were already using the single currency (and previously the German mark) in their daily lives, keeping their savings in it, and taking out loans even before their country officially joined the monetary union. About two-thirds of the country\u2019s public debt was denominated in euros.[15] In 2021, EU countries\u2014primarily from the Eurozone, such as Germany, Italy, and Slovenia\u2014accounted for more than 70% of Croatia\u2019s trade. By adopting the single currency, the country achieved greater price stability and reduced currency risk in its trade transactions. Another positive outcome of this move is the growth in foreign investment, which comes primarily from EU member states: Austria, the Netherlands, Germany, Italy, and Luxembourg. The most important sector of the economy has also benefited, as more than half of all tourists come from Eurozone countries. The government in Zagreb hopes that Croatia\u2019s accession to the Eurozone will enhance its political standing within the community, thereby bringing it back on the path to integration.<\/span><\/p>\r\n

To Sarajevo via Berlin<\/strong><\/span><\/h2>\r\n

After the main foreign policy goals of the early 21st century were achieved with accession to NATO (2009) and the EU (2013), over the past decade, Bosnia and Herzegovina has become one of the most important areas of focus for Croatian diplomacy, which has centered on protecting the interests of Croats living there. All authorities in Zagreb have, to this day, emphasized the importance of this issue. Croats, who live primarily in the southwestern part of Bosnia and Herzegovina, do not have their own entity within this federal state [16]. The Croatian government asserts that this means they are not treated on an equal footing with other peoples of Bosnia and Herzegovina (although they make up only 15% of its population) [17]. Accession to the European Union in 2013 gave Croatia the opportunity to play a greater role in the Western Balkans, with a particular focus on Bosnia and Herzegovina. The strength of Croatia\u2019s political influence is evidenced by the fact that Bosnian Croats have long been represented by the Croatian Democratic Community of Bosnia and Herzegovina (HDZ BiH), a branch of the HDZ, which has been in power in Croatia for years.<\/span><\/p>\r\n

Croatia built its status within the EU primarily on the basis of close relations with Germany, which openly supported its statehood on the eve of Yugoslavia\u2019s breakup. Particularly important in this regard are the HDZ\u2019s relations with the German Christian Democrats and its cooperation with them within the European People\u2019s Party. One of the Christian Democrats in the European Parliament is the current High Representative for Bosnia and Herzegovina, Christian Schmidt (who has held this position since August 1, 2021). He previously served as Germany\u2019s Federal Minister of Food and Agriculture and maintained close ties with the government in Zagreb for many years[18]. Schmidt\u2019s acceptance of the Ante Star\u010devi\u0107 Order (a high state honor) from the Prime Minister of Croatia in 2020 sparked significant controversy on the Bosnian political scene. The outrage among Bosnian leaders was compounded by the fact that convicted war criminals had previously been awarded this order. The High Representative, who holds broad powers in Bosnia and Herzegovina, also sparked controversy by introducing a series of changes favoring Croats [19]. From the perspective of the government in Zagreb, Schmidt\u2019s actions were appropriate and placed Bosnian Croats in a more equitable political position. At the same time, his moves strengthened centrifugal forces in Bosnia and Herzegovina and contributed to the deepening of the current institutional crisis, which poses a challenge for Croatia regarding the stability of its neighbor.<\/span><\/p>\r\n

Assessment and Outlook: Unity Above All Else<\/strong><\/span><\/h2>\r\n

Croatia\u2019s first decade of EU membership was a period of moderate but noticeable economic growth. Due to domestic factors such as corruption, institutional weakness, and excessive dependence on a single economic sector, Croatia has been unable to fully realize the potential of its EU accession. The free movement of people within the EU has led to one of Croatia\u2019s biggest problems: emigration and a gradual decline in population. Despite a noticeable convergence in development levels between Croatia and the \u201cold\u201d EU member states, disparities are growing within Croatia itself: between the more prosperous coast and the capital, on the one hand, and the inland (primarily northeastern) part of the country, on the other. Negative demographic trends also pose challenges for tourism, as residents of inland regions (primarily Slavonia) have traditionally catered to crowds of visitors from other countries during the summer seasons. In 2022, a record 18.9 million tourists visited Croatia\u2014five times the country\u2019s total population.<\/span><\/p>\r\n

EU membership increases Croatia\u2019s chances of becoming a regional energy hub. EU support has made it possible to build a floating LNG terminal, the importance of which has grown significantly in light of the war in Ukraine and the shift away from Russian resources. In addition, EU funding will support plans to expand current import capacity and build a new gas pipeline to Slovenia. Gas from the Croatian terminal will help diversify supplies to Austria, Bosnia and Herzegovina, Germany, Slovenia, and Hungary, thereby strengthening Croatia\u2019s position in the region. Croatia is also enhancing its standing in Europe by participating in various regional cooperation frameworks, although this participation has been inconsistent to date. The \u201cThree Seas\u201d Initiative was launched in 2015 at the initiative of the presidents of Poland and Croatia, but Croatia\u2019s involvement in the project has significantly declined since Zoran Milanovi\u0107 succeeded Kolinda Grabar-Kitarovi\u0107 as president. The current president is skeptical of this initiative, fearing that Croatia\u2019s membership in it could lead to a serious deterioration of its relations with Germany.<\/span><\/p>\r\n

Croatia has successfully leveraged its EU membership to advance its own foreign policy goals: the government has succeeded in placing the issue of Croats living in Bosnia and Herzegovina on the agenda of European debates. For Croatia, EU integration also offers advantages in terms of the enlargement process involving the Western Balkan countries. Indeed, three countries located in close proximity to Croatia are seeking to join the EU: Bosnia and Herzegovina, Montenegro, and Serbia. The dispute with Slovenia has shown that the negotiating position of a country that is already an EU member is much stronger. This issue could prove decisive, as Croatia is still grappling with unresolved border disputes, the aftermath of the wars of the 1990s, and the struggle for the status of the Croatian minority in these countries. Nevertheless, any attempts to force these countries to make concessions by threatening to block their accession process could undermine Croatia\u2019s standing in the region once these countries join the EU.<\/span><\/p>\r\n

Paulina Wankiewicz<\/em><\/span><\/p>\r\n

<\/span><\/p>\r\n

Research Fellow<\/span><\/strong><\/span><\/p>\r\n

Central European Department<\/span><\/strong><\/span><\/p>\r\n

[1]<\/sup><\/a> <\/sup><\/span>The survey was conducted by the Mediana agency.\u00a0See D. Butkovi\u0107, <\/sup>\u201cOnly 23% of Croatians Support EU Accession! As Many as 95% Consider the Ruling Unjust<\/a><\/sup><\/span>,\u201d<\/span> Jutarnji, April 16, 2011, jutarnji.hr.<\/sup><\/span><\/p>\r\n

[2]<\/sup><\/a> \u201c<\/sup>Standard Eurobarometer 80 \u2013 Fall 2013<\/sup><\/a><\/span>,\u201d<\/span> The European Commission, December 2013, europa.eu.<\/sup><\/span><\/p>\r\n

[3]<\/sup><\/a> \u201c<\/sup>Standard Eurobarometer 98 \u2013 Winter 2022\u20132023<\/sup><\/a><\/span>,\u201d<\/span> The European Commission, February 2023, europa.eu.<\/sup><\/span><\/p>\r\n

[4]<\/sup><\/a> <\/sup>\u201cCorruption Perceptions Index \u2013 Croatia<\/sup><\/a><\/span>,<\/sup>\u201d <\/sup><\/span>Transparency International, transparency.org.<\/sup><\/span><\/p>\r\n

[5]<\/sup><\/a><\/span> <\/span>See <\/sup>\u201c<\/span><\/sup>Real GDP per capita<\/sup><\/a><\/span>,\u201d<\/span> ec.europa.eu\/eurostat.<\/sup><\/span><\/p>\r\n

[6]<\/sup><\/a><\/span> Data from: <\/sup>\u201cShare of travel and tourism\u2019s total contribution to GDP in European Union member countries (EU 27) and the United Kingdom (UK) in 2019 and 2022<\/sup><\/a><\/span>,\u201d<\/span> Statista, 2023, statista.com.<\/sup><\/span><\/p>\r\n

[7]<\/sup><\/a> \u201c<\/sup>Tourism is more than just a leisure activity; it requires a skilled and qualified workforce<\/sup><\/a><\/span>,\u201d<\/span> The Ministry of Tourism and Sport of Croatia, May 29,<\/em> 2023, <\/em>mint.gov.hr.<\/sup><\/span><\/p>\r\n

[8]<\/sup><\/a> \u201c<\/sup>Popis 2021<\/sup><\/a><\/span>,\u201d<\/span> Croatian Bureau of Statistics, dzs.gov.hr.<\/sup><\/span><\/p>\r\n

[9]<\/sup><\/a><\/span> Z. Gali\u0107, <\/sup>\u201cThe Brain Drain: Inflows, but Also Corruption, and a General Sense of Intolerance in Society\u2026<\/a><\/sup><\/span>,\u201d<\/span> Ideje.hr, November 14, 2019, ideje.hr.<\/sup><\/span><\/p>\r\n

[10]<\/sup><\/a> <\/sup>Report on the Use of European and Structural Funds<\/sup><\/em><\/a><\/span>, The Croatian Parliament, April 2021, via: strukturnifondovi.hr.<\/sup><\/span><\/p>\r\n

[11]<\/sup><\/a> <\/sup><\/span>Introducing the 2021 annual reports of the European Court of Auditors<\/span><\/sup><\/em><\/a> (ECA), eca.europa.eu.<\/sup><\/span><\/p>\r\n

[12]<\/sup><\/a><\/span> The European Public Prosecutor's Office (EPPO) accused the former minister of defrauding the national and EU budgets by purchasing software at an inflated price.\u00a0See <\/sup>\u201c<\/span><\/sup>Four arrested for suspected fraud at the Croatian Ministry of Regional Development and EU Funds<\/sup><\/a><\/span>,\u201d<\/span> November 10, 2021, eppo.europa.eu.<\/sup><\/span><\/p>\r\n

[13]<\/sup><\/a>\u00a0\u201c<\/sup>Croatia Has Accelerated the Absorption of European Union Cohesion Fund Resources; 12 EU Countries Lag Behind Croatia<\/sup><\/a><\/span>,\u201d<\/span><\/sup>
<\/sup>The Ministry for Regional Development and EU Funds, November 3, 2022, razvoj.gov.hr.<\/sup><\/span><\/p>\r\n

[14]<\/span><\/sup><\/a> Under the 1699 Treaty of Karlowitz, the Republic of Dubrovnik ceded a strip of the Adriatic coast, including Neum, to the Ottoman Empire in order to separate itself from the Republic of Venice. The area later became part of Bosnia and Herzegovina.<\/sup><\/span><\/p>\r\n

[15] <\/sup><\/a>Convergence Program of the Republic of Croatia for 2023\u20132025<\/sup><\/em><\/a><\/span>, Ministry of Finance of Croatia, April 2022, available at: commission.europa.eu.<\/sup><\/span><\/p>\r\n

[16]<\/sup><\/a><\/span> Bosnia and Herzegovina is a federal state consisting of two entities: the Republika Srpska and the Federation of Bosnia and Herzegovina. The latter is mainly populated by Croats and Muslims.<\/sup><\/span><\/p>\r\n

[17]<\/span><\/sup><\/a> Bosnia and Herzegovina's most recent population census was conducted in 2013, so the country's current ethnic composition may differ significantly from that presented in this paper.<\/sup><\/span><\/p>\r\n

[18]<\/sup><\/a> <\/sup><\/span>The office was established under the Dayton Agreement. The High Representative for Bosnia and Herzegovina has extensive legislative authority and the power to remove politicians from office in both constituent entities of the country.<\/sup><\/span><\/p>\r\n

[19]<\/sup><\/a><\/span> For example, Schmidt exercised his prerogatives on election night in October 2022, when he pushed through an amendment regarding the composition of the upper house of the Federation of Bosnia and Herzegovina\u2019s parliament. The change granted a privileged position within this entity to politicians from HDZ BiH, the main party of the Bosnian Croats.<\/sup><\/span><\/p>\r\n

<\/span><\/p>\r\n

USEFUL LINKS<\/span><\/strong><\/h2>\r\n

Croatia\u2019s EU Profile<\/span>
https:\/\/european-union.europa.eu\/principles-countries-history\/country-profiles\/croatia_en<\/a><\/span><\/p>\r\n

Croatia joins the Schengen Area and the Eurozone<\/span>
https:\/\/www.orfonline.org\/expert-speak\/croatia-joins-the-schengen-and-eurozone<\/a><\/span><\/p>\r\n

Resolution on the Accession of the Republic of Croatia to the European Union (December 18, 2002)<\/span>
https:\/\/www.sabor.hr\/en\/european-union\/resolution-accession-republic-croatia-european-union-18-december-2002<\/a><\/span><\/p>\r\n

Statement by the Croatian Parliament and the Government of the Republic of Croatia on Joint Actions in the Process of Negotiations on Membership in the European Union (January 19, 2005)<\/span>
https:\/\/www.sabor.hr\/en\/european-union\/statement-croatian-parliament-and-government-republic-croatia-joint-actions-process<\/a><\/span><\/p>\r\n

Croatia's Preparation for EU Accession<\/span>
https:\/\/www.econstor.eu\/bitstream\/10419\/226070\/1\/wiiw-bo-wp-032.pdf<\/a><\/span><\/p>\r\n

Commission Communication to the Council and the European Parliament on the Stabilization and Association Process for the Countries of Southeastern Europe. COM(99) 235. Brussels, May 26, 1999.<\/span><\/p>\r\n

https:\/\/eur-lex.europa.eu\/legal-content\/EN\/TXT\/HTML\/?uri=LEGISSUM:r18003<\/a><\/span><\/p>\r\n

CARDS Program\u2014Preliminary Assessment and Prospects for Introducing Elements of the Pre-Accession Strategy for Croatia. Institute for International Relations. Zagreb, May 2003.<\/span><\/p>\r\n

https:\/\/neighbourhood-enlargement.ec.europa.eu\/system\/files\/2018-12\/croatia_strategy_paper_en.pdf<\/a><\/span><\/p>\r\n

Communication from the Commission \u2013 Opinion on Croatia's Application for EU Membership (2004)<\/span><\/p>\r\n

https:\/\/eur-lex.europa.eu\/legal-content\/EN\/TXT\/HTML\/?uri=CELEX%3A52004DC0257<\/a><\/span><\/p>\r\n

Commission Staff Working Paper. Croatia. Stabilization and Association Report 2003. COM(2003)139 final.<\/span><\/p>\r\n

https:\/\/eur-lex.europa.eu\/LexUriServ\/LexUriServ.do?uri=COM:2003:0139:FIN:EN:PDF<\/a><\/span><\/p>\r\n

Croatian Competitiveness Challenge. Annual Report on Croatian Competitiveness 2002. National Competitiveness Council, June 2003.<\/span><\/p>\r\n

https:\/\/wbc-rti.info\/object\/document\/7280\/attach\/0781_GIK_2004_ENG.pdf<\/a><\/span><\/p>\r\n

https:\/\/www.oecd.org\/countries\/croatia\/35313317.pdf<\/a><\/span><\/p>\r\n

European Bank for Reconstruction and Development (EBRD), (2003). Transition Report 2003: Integration and Regional Cooperation. London: European Commission, DG ECFIN, (2003).<\/span><\/p>\r\n

https:\/\/www.ebrd.com\/downloads\/research\/transition\/TR03.pdf<\/a><\/span><\/p>\r\n

Proposal for a Council Decision Concerning the Signature of the Stabilization and Association Agreement between the European Communities and their Member States and the Republic of Croatia on behalf of the European Community. COM(2001) 371 final. Brussels, July 9, 2001.<\/span><\/p>\r\n

https:\/\/eur-lex.europa.eu\/legal-content\/EN\/TXT\/PDF\/?uri=CELEX:52001PC0371 (01)<\/a><\/span><\/p>\r\n

World Bank. Croatia: Country Economic Memorandum. A Strategy for Growth through European Integration. July 2003.<\/span><\/p>\r\n

https:\/\/documents1.worldbank.org\/curated\/en\/172021468770685773\/text\/254341HR0vol01.txt<\/a><\/span><\/p>\r\n

"The Thessaloniki Agenda for the Western Balkans: Moving Toward European Integration"<\/span><\/p>\r\n

https:\/\/eur-lex.europa.eu\/legal-content\/EN\/TXT\/HTML\/?uri=CELEX%3A52003PC0684<\/a><\/span><\/p>\r\n

<\/p>\r\n

\u00a0<\/p>\r\n\r\n