CROATIA

Republic of Croatia

Republika Hrvatska

CAPITAL: Zagreb

FLAG: Red, white, and blue horizontal bands with the Croatian coat of arms (red and white checkered).

ANTHEM: Lijepa Nasa Domovina.

MONETARY UNIT: The Croatian kuna (HrK was introduced in 1994, consisting of 100 lipa. HrK1 = $0.16892 (or $1 = HrK5.92) as of 2005.

WEIGHTS AND MEASURES: The metric system is the legal standard.

HOLIDAYS: New Year's Day, 1 January; Epiphany, 6 January; Labor Day, 1 May; Republic Day, 30 May; National Holiday, 22 June; Assumption, 15 August; Christmas, 25–26 December.

TIME: 7 pm = noon GMT.

LOCATION, SIZE, AND EXTENT

Croatia is located in southeastern Europe. Comparatively, the area occupied by Croatia is slightly smaller than the state of West Virginia with a total area of 56,542 sq km (21,831 sq mi). Croatia shares boundaries with Slovenia on the w, Hungary on the n, Serbia on the e, Bosnia and Herzegovina on the s and e, and the Adriatic Sea on the w, and has a total boundary length of 8,020 km (4.983 mi), including 5,835 km (3,626 mi) of coastline. Croatia's capital city, Zagreb, is located in the northern part of the country. Croatia's territory includes 1,185 nearby islands in the Adriatic Sea, of which only 66 are inhabited.

TOPOGRAPHY

The topography of Croatia is geographically diverse, with flat plains along the Hungarian border, as well as low mountains and highlands near the Adriatic coast. The country is generally divided into three main geographic zones: the Pannonian and Peri-Pannonian Plains in the east and northwest, the central hills and mountains, and the Adriatic coast. Approximately 24% of Croatia's land is arable. Croatia's natural resources include: oil, some coal, bauxite, low-grade iron ore, calcium, natural asphalt, silica, mica, clays, and salt. Croatia's natural environment experiences effects from frequent earthquakes, air pollution from metallurgical plants, coastal pollution from industrial and domestic waste, and forest damage.

CLIMATE

Croatia's climate in the lowlands features hot, dry summers and cold winters. In Zagreb, the average annual temperature is 12°c (53°f) with average highs of 2°c (35°f) in January and 27°c (80°f) in July. In the mountains, summers are cool and winters cold and snowy. Along the coast, the climate is Mediterranean with mild winters and dry summers. In Split, the average annual temperature is 17°c (62°f). Annual average precipitation is about 94 cm (37 in).

FLORA AND FAUNA

The region's climate has given Croatia a wealth of diverse flora and fauna. Ferns, flowers, mosses, and common trees populate the landscape. Along the Adriatic Sea there are subtropical plants. Native animals include deer, brown bears, rabbits, fox, and wild boars. As of 2002, there were at least 76 species of mammals, 224 species of birds, and over 4,200 species of plants throughout the country.

ENVIRONMENT

Air pollution (from metallurgical plant emissions) and deforestation are inland environmental problems. In 1996 industrial carbon dioxide emissions totaled 17.5 million metric tons. In 2000, total emissions were at 19.6 million metric tons. Coastal water systems have been damaged by industrial and domestic waste. All of Croatia's urban dwellers have access to safe drinking water. Environmental management is becoming more decentralized, thereby empowering city and municipal administrations to determine environmental policy. Croatia's 195 protected areas cover 421,000 hectares (1,040,000 acres), or 7.5% of the country's natural areas. The Plitvice Lakes National Park is a natural UNESCO World Heritage Site. There are four Ramsar wetland sites. In 2000, about 31% of the total land area was forested.

According to a 2006 report issued by the International Union for Conservation of Nature and Natural Resources (IUCN), threatened species included 7 types of mammals, 9 species of birds, 1 type of reptiles, 2 species of amphibians, 27 species of fish, and 11 species of invertebrates. Endangered species include the Atlantic sturgeon, slender-billed curlew, and the Mediterranean monk seal.

POPULATION

The population of Croatia in 2005 was estimated by the United Nations (UN) at 4,438,000, which placed it at number 117 in population among the 193 nations of the world. In 2005, approximately 16% of the population was over 65 years of age, with another 17% of the population under 15 years of age. There were 93 males for every 100 females in the country. According to the UN, the annual population rate of change for 2005–10 was expected to be -0.3%, a rate the government viewed as too low. The projected population for the year 2025 was 4,318,000. The population density was 78 per sq km (203 per sq mi).

The UN estimated that 56% of the population lived in urban areas in 2005, and that urban areas were growing at an annual rate of 0.50%. The capital city, Zagreb, is by far the largest city in the country. It had a population of 688,000 in 2005. Other cities and their estimated populations include Split, 265,000; Rijeka, 206,000; and Osijek, 165,000.

MIGRATION

In the early 1990s, some 160,000 people living in Croatia fled to neighboring countries to escape ethnic conflict, with another 120,000 fleeing to countries abroad. Total returns to Croatia as of February 2000 numbered over 112,000, including 36,000 Croatian Serbs who repatriated from Serbia and Montenegro. Also, nearly 74,000 internally displaced people had returned to their homes within Croatia. In February 2000, an estimated 250,000 Croatian Serb refugees were still registered in Serbia and Montenegro and Bosnia and Herzegovina. Of these, more than 25,000 had applied for return under the government's Return Programme. The total number of migrants living in Croatia in 2000 was 425,000. In 2004, the United Nations High Commissioner for Refugees (UNHCR) was assisting some 23,744 people in Croatia: 3,663 refugees, 7,468 returnees, and over 12,500 internally displaced people. In addition, there were 852 voluntary repatriations to Bosnia and Herzegovina and 6,616 to Serbia and Montenegro. In 2004, an estimated 200 Croatians sought asylum in Ireland and Sweden. The net migration rate in 2005 was estimated at 1.58 migrants per 1,000 population. The government views the emigration level as too high.

ETHNIC GROUPS

As of the 2001 census, Croats make up about 89.6% of the population and Serbs account for 4.5%. The remainder include Bosniaks, Hungarians, Slovenians, Czechs, and Roma.

LANGUAGES

Serbo-Croatian is the native language and is used by 96% of the populace. Since 1991, Croats have insisted that their tongue (now called Croat) is distinctive. The spoken language is basically the same, but Serbs use the Cyrillic alphabet and Croats the Roman alphabet. The Croatian alphabet has the special consonants č, ć, š, ž, dj, dž, and nj, representing sounds provided by the Cyrillic alphabet. The remaining 4% of the population speak various other languages, including Italian, Hungarian, Czech, Slovak, and German.

RELIGIONS

Christianity was introduced into the area in the 7th century. Under the Yugoslav Socialist Republic, churches—Roman Catholic in particular—experienced repression by the state. This moderated in 1966, when an agreement with the Vatican recognized a religious role for the clergy. The latest estimates recorded a Roman Catholic population of 85%, with 6% Orthodox Christians, and 1% Muslims. Less than 1% were Jewish and about 4% belong to other faiths, including the Church of Jesus Christ of Latter-day Saints, Jehovah's Witnesses, Greek Catholic, Pentecostal, Hare Krishna, Baptist, Seventh-Day Adventist, and the Church of Christ. About 2% of the population are atheists. The Orthodox are primarily Serbs; other minority religions can be found mostly in urban areas. No formal restrictions are placed on religious groups, and all are free to conduct public services and run social and charitable institutions.

The constitution provides for freedom of conscience and religion and this right is generally respected in practice. Though there is no official state religion, the Roman Catholic Church, the Serbian Orthodox Church, the Islamic community, and several smaller Christian denominations have signed agreements with the government through which they qualify for state support. A 2003 Regulation on Forms and Maintaining Records of Religious Communities in Croatia requires all religious organizations to register with the government in order to receive legal status under the Law on Religious Communities.

TRANSPORTATION

Croatia's railroads consist of two main routes. An east–west route originating in Serbia nearly parallels the Sava before reaching Zagreb and continuing on to Slovenia and Hungary. The north–south route connects the coastal cities of Split and Rijeka to Zagreb. Another railway connects Dubrovnik to Bosnia and Herzegovina. As of 2004, there were 2,726 km (1,694 mi) of standard gauge railroad line. However, some parts remain inoperative or out of use due to territorial disputes. Highways totaled 28,588 km (17,782 mi) in 2003, of which 24,186 km (15,044 mi) were paved roads, including 583 km (363 mi) of expressways. As of 2003, there were 1,293,400 passenger cars and 143,100 commercial vehicles registered for use.

Rijeka, Split, and Kardeljevo (Ploce) are the main seaports along the Adriatic. There are 785 km (488 mi) of perennially navigable inland waters. Vukovar, Osijek, Sisak, and Vinkovci are the principal inland ports. In 2005, Croatia had 73 ships of at least 1,000 GRT, for a total capacity of 750,579 GRT.

Croatia had an estimated 68 airports in 2004. As of 2005 a total of 23 had paved runways, and there was one heliport. Principal airports include Dubrovnik, Split, and Pleso at Zagreb. In 2003, about 1.267 million passengers were carried on scheduled domestic and international flights.

HISTORY

Origins through the Middle Ages

Slavic tribes penetrated slowly but persistently into the Balkan area beginning in the 5th century. Their migration, and that of the Serbians, occurred upon the invitation of the Byzantine emperor Heraclius I (r. 610–641) in 626, to repel the destructive inroads of the Avars. A coalition of Byzantine and Croat forces succeeded in forcing the Avars out of Dalmatia first, and then from the remainder of Illirycum and the lands between the Drava and Sava rivers. The Croats settled on the lands that they had freed from the Avars and established their own organized units that included indigenous Slavic tribes.

By the year 1000, Venice, having defeated the Croatian fleet, controlled the entire Adriatic coast. The coastal cities, while welcoming the Italian cultural influence of Venice, feared potential Venetian domination over their trading interests with the enormous Balkan hinterland. Thus Dubrovnik (formerly called Ragusa), with its growing fleet, preferred to remain tied to the more distant Byzantine Empire.

Zvonimir, son-in-law of the Hungarian king Bela I, was crowned king of Croatia in 1075. Zvonimir died around 1089 without an heir, leaving his widow with the throne, but the nobles opposed her rule because of her Hungarian ancestry. The king of Hungary intervened to protect his sister's interests (and his own) by occupying Pannonian Croatia. The area was recovered in 1095 by Peter Svacic from Knin (1093–97). Peter, the last independent king of Croatia, was killed in battle in 1096 by King Koloman of Hungary, who then conquered Croatia. After concluding a nonaggression pact with Venice, which had retained control of the coastal islands and cities, the Croats rebelled and drove the Hungarian forces back to the Drava River frontier between Croatia and Hungary.

Royal Union with Hungary

In 1102, Koloman regrouped and attacked Croatia. He stopped at the Drava River, however, where he invited the nobles representing the 12 Croatian tribes to a conference. They worked out the so-called Pacta Conventa, an agreement on a personal royal union between Hungary and Croatia (including Slavonia and Dalmatia). The overall administration of the state would be by a "ban" (viceroy) appointed by the king, while regional and local administration were to stay in the hands of the Croatian nobles. This legal arrangement, with some practical modifications, remained the basis of the Hungarian-Croatian personal royal union and relationship until 1918.

Internal warfare among Croatia's nobility weakened its overall ability to resist attack from Venice. In 1377, Tvrtko (1353–1390) proclaimed himself king of the Serbs, Bosnia, and the Croatian coast. Venice was defeated in 1385, and was forced to surrender all rights to the coastal cities all the way to Durazzo in today's Albania. Dubrovnik also gained its independence from Venice, recognizing the sovereignty of the Hungarian-Croatian king.

Defense against the Turks

By the mid-15th century the threat from both the Turks and Venice was growing more ominous, leading King Sigismund to establish three military defense regions in 1432. As these defensive regions were further developed, they attracted new, mostly Serbian, settlers/fighters who became the strong Serbian minority population in Croatia. The Ottoman threat brought about the appointment of Vladislav Jagiellon, the king of Poland, as king of Hungary and Croatia in 1440. Vladislav was succeeded in 1445 by Ladislas, son of Albert of Hapsburg, and therefore king of both Austria and Hungary/Croatia. Since Ladislas was a minor, John Hunyadi, a brilliant general, was appointed regent. Hunyadi had to protect the throne from the counts of Celje, who, in 1453, also claimed the title of ban of Croatia. Ulrich, one of the counts of Celje, fell victim to Hunyadi's assassins at the defense of Belgrade from the Turks in 1456. This murder was avenged by King Ladislas V, who had Hunyadi executed in 1456.

After 1520, the Turks began effective rule over some Croatian territory. In 1522, the Croatian nobility asked Austrian archduke Ferdinand of the Hapsburgs to help defend Croatia against the Turks, but by 1526, the Turks had conquered Eastern Slavonia and had advanced north into Hungary. On 29 August 1526, in a massive battle at Mohacs, the Turks defeated the Hungarian and Croatian forces, killing King Louis. By 1528, the Ottomans held the southern part of Croatia, and by 1541 had conquered Budapest. Dubrovnik, on the other hand, had accepted the Ottoman suzerainty in 1483, keeping its autonomy through its extensive trade with the Turkish empire. Most coastal towns were under the protection of Venice, with its good trade relations with the Turks.

In 1526, after King Louis's death at Mohacs, Ferdinand of Hapsburg was elected king of Hungary and Croatia. The Hapsburg rulers began to encroach on the rights of Croats by turning the throne from a traditionally elected position into a hereditary one, and by allocating Croatian lands as fiefs to their supporters, turning the Croatian peasants from free men into serfs.

King Ferdinand III (r.1637–1657) consolidated Hungary and Croatia under Hapsburg rule. Under Ferdinand's son, Leopold I (who in 1658 had also become the German emperor), the status of Hungary and Croatia continued to deteriorate. All power was centralized in the hands of the king/emperor and his court. Leopold tried to emulate the absolutist model practiced by Louis XIV of France. The Turkish offensives of 1663 were successfully repelled by the Croatian brothers Nicholas and Peter Zrinski. Following the defeat of the Turks at Saint Gotthard in western Hungary in 1664, Leopold I unilaterally concluded a 20-year peace treaty with the Turks based essentially on the prewar situation.

The Peace of Vasvar proved to the Hungarians and Croats that the Hapsburg court was not interested in fighting the Turks for Hungary and Croatia. This situation led to a conspiracy by the Zrinski brothers and key Hungarian nobles against the Hapsburg Court. But the Turks warned the Hapsburgs of the conspiracy, and Peter Zrinski and his coconspirator Francis Frankopan were executed on 30 April 1671 (Nicholas Zrinski had died in 1664). Leopold I suspended for 10 years the office of the Croatian ban.

The last king of the male Hapsburg line was Charles III (r.1711–1740). In 1722, during his reign the Hungarian parliament agreed to extend the Hapsburg hereditary right to its female line (Charles had no son), something already agreed to by the Croatian parliament in 1712. At the same time the Hungarians obtained a legal guarantee on the indivisibility of the realm of the Crown of Saint Stephen, which included Croatia. Charles was thus followed by his daughter Maria Teresa (r.1740–1780) who, by decree, divided Croatia into regions headed by her appointees. Joseph II, her son, emancipated the serfs, tried to improve education, tried to impose the German language as a unifying force, closed monasteries in an attempt to control the Roman Catholic Church, and decreed religious toleration. In the 1788 war against the Turks, Joseph II suffered a devastating defeat; he died two years later.

Leopold II, Joseph II's brother, succeeded him, and recognized Hungary and Croatia as kingdoms with separate constitutions. Hungarian replaced Latin as the official language of the Hungarian parliament. Hungarians then began trying to establish the Hungarian language in Croatia, Slavonia, and Dalmatia, thus initiating a hundred-year struggle of the Croats to preserve their identity.

Napoleon and the Spring of Nations

With the peace treaty of Campoformio ending the war against Napoleon in 1797, Austria obtained the territories of the Venice Republic, including the Adriatic coast as far as Kotor. In 1806, Napoleon seized Dubrovnik, and in 1809 he obtained control of Slovenian and Croatian territories and created his Illyrian Provinces. The French regime levied heavy taxes and conscription into Napoleon's armies. With Napoleon's defeat, all of Dalmatia reverted back to direct Austrian administration until the end of World War I in 1918.

In 1825, Francis I called the Hungarian parliament into session and the Hungarians resumed their pressure to introduce the Hungarian language into Croatian schools. Ljudevit Gaj became the leader of the movement calling for the reassertion of the independent Kingdom of Croatia and advocated the introduction of "Illyrian" (Croatian) as the official language to replace Latin. A member of the Illyrian movement, Count Janko Draškovic, also promoted the idea of reorganizing the Hapsburg lands into a federation of political units with coequal rights. The Croatian parliament then nullified the previous agreement on using Hungarian, and made Croatian the official language of parliament. In 1840, the Croatian Sabor voted for the introduction of Croatian as the language of instruction in all Croatian schools and at the Zagreb Academy.

The struggle over the Croatian language and national identity brought about the establishment of the first political parties in Croatia. The Croatian-Hungarian Party supported a continued Croat-Hungarian commonwealth. The Illyrian Party advocated an independent kingdom of Croatia comprising all the Croatian lands including Bosnia and Herzegovina. The Austrian government banned the term "Illyrian" and the name of the Illyrian party of Ljudevit Gaj and Draskovic was changed to the National Party.

At the next session of the Hungarian parliament in 1843, the Croatian delegation walked out when not permitted to use Latin instead of Hungarian. The Croatian National Party submitted to the emperor its demands to reestablish an independent government of Croatia, elevate the Zagreb Academy to university status, and raise the Zagreb bishopric to the archbishopric rank. The lines were thus drawn between the Hungarian and Croatian nationalists. This situation came to a head in 1848 when great unrest and revolts developed in Austria and Hungary.

Autonomy or Independence

Francis Joseph I (r.1848–1916) ascended to the Hapsburg throne on 2 December 1848 and ruled for a long time, favoring the Hungarians against the Croats. Croatian parties had split between the pro-Hungarian union and those advocating Croatian independence based on ancient state rights. The latter evolved into the "Yugoslav" (South Slavic Unity) movement led by Bishop Josip Juraj Strossmayer and the "Pravaši" movement for total Croatian independence led by Ante Starcevic. Austria and Hungary resolved their problems by agreeing on the "dual monarchy" concept. The Hungarian half of the dual monarchy consisted of Hungary, Transylvania, Croatia, Slavonia, and Dalmatia. A ban would be appointed by the emperor-king of Hungary upon the recommendation of the Hungarian premier, who would usually nominate a Hungarian noble. Croatia-Slavonia-Dalmatia was recognized as a nation with its own territory, the Croatian language was allowed, and it was granted political autonomy in internal affairs. But in reality, the Hungarians dominated the political and economic life of Croatia.

Yugoslavism

In the 1870s, Ivan Mazuranic was appointed ban of Croatia. He implemented general administrative reform and a modern system of education. The Sabor instituted a supreme court and a complete judicial system. The 1878 Congress of Berlin allowed Austria's military occupation and administration of Bosnia and Herzegovina and the Sandzak area (lost by the Turks after their defeat by Russia in 1877). The Croatian Sabor then requested the annexation of those areas, but Austria and Hungary refused. Croatia and Serbia were deeply disappointed, and Serbia began supporting terrorist activities against the Austrians. In 1881, the military region was joined to Croatia, thus increasing the size of its Serbian Orthodox population. This offered the Hungarian ban Khuen Hedervary the opportunity to play Serbs against Croats in order to prevent their joint front. The relations between Croats and Serbs continued to deteriorate.

By 1893, there was a united Croatian opposition that called for equality with Hungary, the unification of all Croatian lands, and which invited the Slovenes to join Croatia in the formation of a new state within the framework of the Hapsburg monarchy. This united opposition took the name of Croatian Party of Right ("Stranka Prava"). National unification, however, had strong opposition from powerful forces: the Hungarians with their Great Hungary Drive; the Serbs, who wanted to annex Bosnia and Herzegovina into Serbia; the Italians, claiming Istria, Rijeka, and Dalmatia; and the Austrians, and their Pan-Germanic partners.

Croats and Serbs formed a Croat-Serbian coalition, winning a simple majority in the 1908 Croatian parliamentary elections, followed by the Party of Right and the Peasant Party, led by the brothers Anthony and Stephen Radic. Also in 1908, the direct annexation of Bosnia and Herzegovina by Austria took place. The Party of Right and the Peasant Party supported the annexation, hoping that the next step would be Bosnia and Herzegovina's incorporation into a unified Croatia. Serbia, conversely, was enraged by the annexation. Assassination attempts increased and led to the assassination of Archduke Ferdinand and his wife in Sarajevo on 28 June 1914. These tragedies followed the Serbian victories and territorial expansion in the wake of the 1912 and 1913 Balkan wars.

The idea of a separate state uniting the South Slavic nations ("Yugoslavism") grew stronger during World War I (1918–18). An emigré "Yugoslav Committee" was formed and worked for the unification of the South Slavs with the Kingdom of Serbia. In 1917, an agreement was reached on the formation of a "Kingdom of Serbs, Croats, and Slovenes" upon the defeat of Austro-Hungary.

Royal Yugoslavia

The unification of Croatia and the new "Kingdom of Serbs, Croats, and Slovenes" on 1 December 1918 was flawed by the inability to work out an acceptable compromise between the Serbs and Croat-Slovenes. The National Council for all Slavs of former Austro-Hungary was formed on 12 October 1918 in Zagreb (Croatia) and was chaired by Monsignor Anton Korošec, head of the Slovenian People's Party. On 29 October 1918, the National Council proclaimed the formation of a new, separate state of Slovenes, Croats, and Serbs of the former Austro-Hungary. The Zagreb Council intended to negotiate a federal type of union between the new state and the Kingdom of Serbia that would preserve the respective national autonomies of the Slovenes, Croats, and Serbs. Monsignor Korošec had negotiated a similar agreement in principle with Serbian prime minister Nikola Pašic in Geneva, but the Serbian government reneged on it. While Korošec was detained in Geneva, a delegation of the National Council went to Belgrade and submitted to Serbia a declaration expressing the will to unite with the Kingdom of Serbia, and Serbia readily agreed. On 1 December 1918, Prince Alexander of Serbia declared the unification of the "Kingdom of Serbs, Croats, and Slovenes."

The provisional assembly convened in 1918, with the addition to the Serbian parliament of representatives from the other south Slavic historical regions, while the Croatian Sabor was deprived of its authority. The elections to the Constituent Assembly were held on 28 November 1920 but the 50-member delegation of the Croatian Republican Peasant Party refused to participate. The new Vidovdan Constitution was adopted on 28 June 1921 by a "simple majority" vote of 223 to 35, with 111 abstentions in the absence of the Croatian delegation with 50 votes.

The period between 1921 and 1929 saw a sequence of 23 governments, a parliament without both the Croatian delegation's 50 votes and the Communist Party's 58 votes (it continued its work underground). This situation assured control to the Serbian majority, but it was not possible to govern the new country effectively without the participation of the Croats, the second-largest nation.

Finally, in 1925, Prime Minister Pašic invited Stjepan Radic, head of the Croatian Peasant Party, to form a government with him. However, not much was accomplished and Pašic died just a few years later. On 20 June 1928 Radic was shot in parliament by a Serbian deputy and died the next month. Riots broke out as a result of his assassination.

Dr. Vlatko Macek, the new Croatian Peasant Party leader, declared that "there is no longer a constitution, but only king and people." A coalition government under Prime Minister Monsignor Anton Korošec, head of the Slovene People's Party, lasted only until December 1928. King Alexander dissolved the parliament on 6 January 1929, abolished the 1921 constitution, and established his own personal dictatorship as a temporary arrangement.

At first, most people accepted King Alexander's dictatorship as a necessity, which gave the country an opportunity to focus on building its economy from the foundation of postwar reconstruction. Royal decrees established penalties of death or 20 years in prison for terrorism, sedition, or Communist activities. All elected local councils and traditional political parties were dissolved. Freedom of the press was severely constrained and government permission was required for any kind of association. All power was centralized and exercised by the king through a council of ministers accountable only to him.

On 3 October 1929, the country was renamed the Kingdom of Yugoslavia, and the terroritorial regions (banovinas) were named after rivers to emphasize the king's opposition to national names. One of the consequences of the dictatorship and its harsh measures against political opposition and cultural nationalism was the emigration of some political opponents, among them some of the top leadership of the Croatian Peasant Party and the leader of the Ustaša movement, Ante Pavelic.

The new constitution, initiated by King Alexander on 3 September 1931, was in theory a return to civil liberties and freedoms of association, assembly, and expression. But in reality, all such freedoms were limited by the king's decrees that remained in force. Parliament was to consist of two houses with a council of ministers still accountable directly to the king. The Croatian opposition grew stronger, and in the winter of 1932, their Zagreb Manifesto called for the removal of Serbian hegemony, and for popular sovereignty. In reaction, the regime interned or imprisoned political opponents. Croatia was seething with rebellion, and the three-year prison sentence for opposition leader Macek would have sparked an open revolt, were it not for the danger of Fascist Italy's intervention.

The worldwide economic depression hit Yugoslavia hard in 1932. Opposition continued to grow to the king's dictatorship, which had not proffered any solutions to the so-called Croatian question. In late 1934, the king planned to release Macek from prison, reintroduce a real parliamentary system, and try to reach some compromise between Serbs and Croats. Unfortunately, King Alexander was assassinated in Marseille on 9 October 1934 by agents of the Ustaša group, which was trained in terrorism in Hungary with Mussolini's support. Prince Paul, King Alexander's cousin, headed the interim government, releasing Macek and other political leaders, but otherwise continuing the royal dictatorship. On 5 May 1935, the elections for a new parliament were so shamefully improper that a boycott of parliament began. Prince Paul consulted with Macek, and a new government of reconstruction was formed by Milan Stojadinovic. The new government initiated serious discussions with Macek on a limited autonomous Croatian entity that would be empowered on all matters except the armed forces, foreign affairs, state finance, customs, foreign trade, posts, and telegraphs.

Since 1937, the thorniest issue discussed had been the makeup of the federal units. Serbs wanted to unite with Macedonia, Vojvodina, and Montenegro. Croatia wanted Dalmatia and a part of Vojvodina. Slovenia was recognized as a separate unit, but Bosnia and Herzegovina posed a real problem, with both Croats and Serbs claiming ownership over a land that contained a substantial minority of Bosnian Muslims. Meanwhile, intense trade relations with Germany and friendlier relations with Italy were bringing Yugoslavia closer to those countries. Adolph Hitler's annexation of Austria and Czechoslovakia in 1938 made it imperative that Yugoslavia resolve its internal problem before Hitler and Mussolini attempted to destabilize and conquer Yugoslavia.

Stojadinovic resigned, and Prince Paul appointed Dragiša Cvetkovic as prime minister, charging him with the task of reaching a formal agreement with the Croatian opposition. The agreement was concluded on 26 August 1939. Macek became the new vicepremier, a territorial region of Croatia was established that included Dalmatia and western Herzegovina, and the traditional Sabor of Croatia was revived. But autonomy for Croatia was not received well by most of Serbia. Concerned with the status of Serbs in Croatia, Serbia was anxious to incorporate most of Bosnia and Herzegovina. Even less satisfied was the extreme Croatian nationalist Ustaša movement, whose goal was an independent greater Croatia inclusive of Bosnia and Herzegovina. For the Ustaša, this goal was to be achieved by any means and at any cost, including violence and support from foreign powers. Tensions between the extremes of the failed Yugoslavia had seemingly reached the boiling point.

World War II

Meanwhile, the clouds of World War II had gathered with Italy's takeover of Albania and its war with Greece, and Hitler's agreement with Stalin followed by his attack on Poland in the fall of 1939, resulting in its partitioning. Hungary, Romania, and Bulgaria had joined the Axis powers and England and France had entered the war against Germany and Italy. With the fall of France in 1940, Hitler decided to assist Mussolini in his war with Greece through Bulgaria, and therefore needed Yugoslavia to join the Axis so Germany would be assured of ample food and raw materials.

The Yugoslav Government had limited choices—either accept the possibility of immediate attack by Germany, or join the Axis, with Hitler's assurance that no German troops would pass through Yugoslavia towards Greece. The regent was aware of Yugoslavia's weak defense capabilities and the inability of the Allies to assist Yugoslavia against the Axis powers, despite security agreements with Britain and France. Yugoslavia signed a treaty with Hitler on 26 March 1941 and on 27 March a coup d'etat by Serbian military officers forced the regent to abdicate. The military declared Prince Peter the new king, and formed a government with General Dušan Simovic as premier and Macek as vice-premier. The new government tried to temporize and placate Hitler, who was enraged by the deep anti-German feeling of the Yugoslav people who shouted in demonstrations, "Bolje rat nego pact" (Better war than the pact). Feeling betrayed, Hitler unleashed the German fury on Yugoslavia on 6 April 1941 by bombing Belgrade and other centers without any warning or formal declaration of war.

The war was over in 11 days, with the surrender signed by the Yugoslav Army Command while the Yugoslav government (with young King Peter II) fled the country for allied territory and settled in London. Yugoslavia was partitioned among Germany, Italy, Hungary, Bulgaria, and Italian-occupied Albania, while Montenegro, under Italian occupation, was to be restored as a separate kingdom. Croatia was set up as an independent kingdom with an Italian prince to be crowned Tomislav II. Ante Pavelic was installed by the Italians and Germans as head of independent Croatia (after Macek had declined Hitler's offer). Croatia was forced to cede part of Dalmatia, with most of its islands and the Boka Kotorska area, to Italy. In exchange, Croatia was given Bosnia and Herzegovina and the Srijem region up to Belgrade.

On 10 April 1941, the "resurrection of our independent State of Croatia" was proclaimed in Zagreb by Slavko Kvaternik for Ante Pavelic, who was still in Italy with some 600 of his Ustaše. With Pavelic's arrival in Zagreb five days later, the Ustaša regime was established, with new laws that expressed the basic Ustaša tenets of a purely Croatian state viewed as the bulwark of Western civilization against the Byzantine Serbs. Slavko Kvaternik explained how a pure Croatia would be built—by forcing one-third of the Serbs to leave Croatia, one-third to convert to Catholicism, and one-third to be exterminated. Soon Ustaša bands initiated a bloody orgy of mass murders of Serbs unfortunate enough not to have converted or left Croatia on time. The enormity of such criminal behavior shocked even the conscience of German commanders, but Pavelic had Hitler's personal support for such actions which resulted in the loss of lives of hundreds of thousands of Serbs in Croatia and Bosnia and Herzegovina. In addition, the Ustaša regime organized extermination camps, the most notorious one at Jasenovac where Serbs, Jews, Gypsies, and other opponents were massacred in large numbers. The Serbs reacted by forming their own resistance groups ("Cetniks") or by joining with the Communist-led partisan resistance, and thus struck back at the Ustaša in a terrible fratricidal war encouraged by the Germans and Italians.

The Ustaša regime organized its armed forces into the Domobrani, its Ustaša shock troops, and the local gendarmerie. Its attempt at organizing the Croatian people in the fascist mode failed, however. Most Croats remained faithful to the Croatian Peasant Party Democratic principles, or joined the Partisan movement led by Josip Broz-Tito that offered a federal political program. With respect to Bosnia and Herzegovina, the Ustaša regime never attained real control. The continuous fighting generated by Cetniks and Partisans fighting one another while being pursued by the Ustaša, the Germans, and the Italians made it impossible for the Ustaša to dominate. Most Croats rejected (and deeply resented) the trappings of an imported Fascist mystique and the abuse of their Catholic faith as a cover or justification for the systematic slaughter of their Serbian neighbors.

By the spring of 1942, the Ustaša regime began to retreat from its policy and practice of extermination of Serbs. But the terrible harm was done, and one consequence was the deep split between the Serbian members and their Croatian colleagues within the cabinet of the Yugoslav government-in-exile. The Serbs held the entire Croatian nation accountable for the Ustaša massacres, and reneged on the 1939 agreement establishing the Croatian Banovina as the basis for a federative reorganization in a postwar Yugoslavia. This discord made the Yugoslav government-in-exile incapable of offering any kind of leadership to the people in occupied Yugoslavia. The fortunes of war and diplomacy favored the Communist Partisans—after Italy's surrender in September 1943, it handed over to the Partisans armaments and supplies from some 10 Italian divisions. More and more Croats left their homeguard, and even some Ustaša units, to join the Partisans. Some Ustaša leaders, on the other hand, conspired against Pavelic in order to negotiate with the allies for recognition of the "independent" state of Croatia. But they were caught and executed in the summer of 1944.

With the entry of Soviet armies into Yugoslav territory in October 1944, the Communist Partisans swept over Yugoslavia in pursuit of the retreating German forces. Pavelic and his followers, along with the Croatian homeguard units, moved north to Austria at the beginning of May 1945 to escape from the Partisan forces and their retaliation. The Partisans took over Croatia, launching terrible retaliation in the form of summary executions, people's court sentences, and large scale massacres, carried out in secret, of entire homeguard and other Ustaša units.

Communist Yugoslavia

Such was the background for the formation of the second Yugoslavia led by Tito as a Federative People's Republic of five nations—Slovenia, Croatia, Serbia, Macedonia, Montenegro—with Bosnia and Herzegovina as a buffer area with its mix of Serbs, Muslims, and Croats. The problem of large Hungarian and Muslim Albanian populations in Serbia was solved by creating the autonomous regions of Vojvodina (Hungarian minority) and Kosovo (Muslim Albanian majority) that assured their political and cultural development. Tito attempted a balancing act to satisfy most of the nationality issues that were still unresolved from the first Yugoslavia, and decades of ethnic and religious conflict.

In pre-1941 Yugoslavia, Serbs had enjoyed a controlling role. After 1945 the numerically stronger Serbs had lost the Macedonian area they considered Southern Serbia, lost the opportunity to incorporate Montenegro into Serbia, and had lost direct control over both the Hungarian minority in Vojvodina and Muslim Albanians of Kosovo, which had been viewed as the cradle of the Serbian nation since the Middle Ages. They could no longer incorporate into Serbia the large Serbian-populated areas of Bosnia, and had not obtained an autonomous region for the large minority of Serbian population within the Croatian Republic. The Croats—while gaining back from Hungary the Medjumurje area and from Italy the cities of Rijeka (Fiume), Zadar (Zara), some Dalmatian islands, and the Istrian Peninsula—had lost the Srijem area to Serbia, and Bosnia and Herzegovina. In addition, the Croats were confronted with a deeply resentful Serbian population that became ever more pervasive in public administrative and security positions.

The official position of the Marxist Yugoslav regime was that national rivalries and conflicting interests would gradually diminish through their sublimation into a new Socialist order. Without capitalism, nationalism was supposed to wither away. Therefore, in the name of unity and brotherhood, nationalistic expression of concern was prohibited, and repressed by the dictatorial and centralized regime of the League of Yugoslav Communists acting through the Socialist Alliance as its mass front organization. After a short postwar coalition government, the elections of 11 November 1945, boycotted by the non-communist coalition parties, gave the communist People's Front 90% of the votes. A constituent assembly met on 29 November, abolished the monarchy, and established the Federative People's Republic of Yugoslavia. In January 1946, a new constitution was adopted, based on the 1936 Soviet constitution.

The Communist Party of Yugoslavia took over total control of the country and instituted a regime of terror through its secret police. To destroy the bourgeoisie, property was confiscated, and the intelligentsia were declared "enemies of the people," to be executed or imprisoned. Large enterprises were nationalized, and forced-labor camps were formed. The church and religion were persecuted, properties confiscated, religious instruction and organizations banned, and education used for Communist indoctrination. The media was forced into complete service to the totalitarian regime, and education was denied to "enemies of the people."

The expulsion of Yugoslavia from the Soviet-dominated Cominform Group in 1948, engineered by Soviet leader Joseph Stalin, was actually a blessing for Yugoslavia. Yugoslavia's "road to Socialism" evolved quickly in response to Stalin's pressures and Yugoslavia's need to perform a balancing act between the North Atlantic Treaty Organization (NATO) and the Soviet bloc. Tito also pushed the nationalization of the economy through a policy of forced industrialization supported by the collectivization of agriculture.

By the 1950s, Yugoslavia had initiated the development of what would become its internal trademark: self-management of enterprises through workers' councils and local decision-making as the road to Marx's "withering away of the state." Following the failure of the first five-year plan (1947–51), the second five-year plan (1957–61) was completed in four years by relying on the well-established self-management system. Economic targets were set from the local to the republic level and then coordinated by a federal planning institute to meet an overall national economic strategy. This system supported a period of very rapid industrial growth in the 1950s. But a high consumption rate encouraged a volume of imports financed by foreign loans that exceeded exports. In addition, inefficient and low productivity industries were kept in place through public subsidies, cheap credit, and other artificial protective measures, leading to a serious crisis by 1961. Reforms were necessary and, by 1965, market socialism was introduced with laws that abolished most price controls and halved import duties while withdrawing export subsidies. The agricultural reform of 1945–46 limited private ownership to a maximum of 35 hectares (85 acres). The limited free market (after the initial forced delivery of quotas to the state at very low prices) had to be abandoned because of resistance by the peasants. The actual collectivization efforts were initiated in 1949 using welfare benefits and lower taxes as incentives, along with direct coercion. But collectivization had to be abandoned by 1958 simply because its inefficiency and low productivity could not support the concentrated effort of industrial development.

The government relaxed its restrictions to allow labor migration, particularly large from Croatia to West Germany, where workers were needed for its thriving economy. Foreign investment was encouraged (up to 49%) in joint enterprises, and barriers to the movement of people and exchange of ideas were largely removed. The role of trade unions continued to include transmission of instructions from government to workers, allocation of perks, the education/training of workers, monitoring of legislation, and overall protection of the self-management system. Strikes were legally allowed, but the 1958 miners' strike in Trbovlje, Slovenia, was not publicly acknowledged and was suppressed. After 1958, strikes were tolerated as an indication of problems to be resolved.

After the split from the Cominform, Yugoslavia began also to develop a foreign policy independent of the Soviet Union. By mid-1949, Yugoslavia ceased its support of the Greek Communists in their civil war against the then-Royalist government of Greece. In October 1949, Yugoslavia was elected to one of the nonpermanent seats on the UN Security Council and openly condemned Communist-supported North Korea's aggression towards South Korea. Following Nikita Khrushchev's 1956 denunciation of Stalin, Tito intensified his work on developing the movement of nonaligned "third world" nations. This would become Yugoslavia's external trademark, in cooperation with Nehru of India, Nasser of Egypt, and others. With the September 1961 Belgrade summit conference of nonaligned nations, Tito became the recognized leader of the movement. The nonaligned position served Tito's Yugoslavia well by allowing Tito to draw on economic and political support from the Western powers while neutralizing aggressive behavior from the Soviet bloc.

While Tito had acquiesced, reluctantly, to the 1956 Soviet invasion of Hungary for fear of political chaos and its liberalizing impact on Yugoslavia, he condemned the Soviet invasion of Dubcek's Czechoslovakia in 1968, as did Romania's Ceausescu, both fearing their countries might be the next in line for "corrective" action by the Red Army and the Warsaw Pact. Just before his death on 4 May 1980, Tito also condemned the Soviet invasion of Afghanistan. Yugoslavia actively participated in the 1975 Helsinki Conference and Agreements, and the first 1977–78 review conference that took place in Belgrade, even though Yugoslavia's one-party Communist regime perpetrated and condoned numerous human rights violations.

The debates of the 1960s led to a closer scrutiny of the Communist experiment. The 1967 Declaration in Zagreb, claiming a Croatian linguistic and literary tradition separate from the Serbian one, undermined the validity of the "Serb-Croatian" language and a unified Yugoslavian linguistic heritage. Also, Kosovo Albanians and Montenegrins, along with Slovenes and Croats, began to assert their national rights as superior to the right of the Yugoslavian federation. The eighth congress of the League of Communists of Yugoslavia (LCY) in December 1964 acknowledged that ethnic prejudice and antagonism existed in socialist Yugoslavia, and that Yugoslavia's nations were disintegrating into a socialist Yugoslavism. Thus the republic, based on individual nations, became an advocate of a strong federalism that devolved and decentralized authority from the federal to the republic level. Yugoslav Socialist Patriotism was defined as a feeling for both national identity and for the overall socialist self-management framework of Yugoslavia, despite the signs of a deeply divided country.

As the Royal Yugoslavism had failed in its assimilative efforts, so did the Socialist Yugoslavism fail to overcome the forces of nationalism. In the case of Croatia, there were several key factors sustaining the attraction to its national identity: more than a thousand years of its historical development, the carefully nurtured tradition of Croatian statehood, a location bridging central Europe and the Balkan area, an identification with Western European civilization, and the Catholic religion with the traditional role of Catholic priests (even under the persecutions by the Communist regime). In addition, Croatia had a well-developed and productive economy with a standard of living superior to most other areas of the Yugoslav Federation other than Slovenia. This generated a growing resentment against the forced subsidizing by Croatia and Slovenia of less developed areas, and for the buildup of the Yugoslav Army. Finally, the increased political and economic autonomy enjoyed by the Republic of Croatia after the 1974 constitution and particularly following Tito's death in 1980, added impetus to the growing Croatian nationalism.

Croatian Spring

The liberal bloc (Slovenia, Croatia, Macedonia, Vojvodina) prevailed over the conservative group, and the reforms of 1965 did away with central investment planning and political factories. The positions of the two blocs hardened into a national-liberal coalition that viewed the conservative, centrist group led by Serbia as the Greater Serbian attempt at majority domination. The devolution of power in economic decision making, spearheaded by the Slovenes, assisted in the federalization of the League of Communists of Yugoslavia as a league of quasi-sovereign republican parties. Under strong prodding from the Croats, the party agreed in 1970 to the principle of unanimity for decision making. In practice, this meant each republic had veto power. However, the concentration of economic resources in Serbian hands continued, with Belgrade banks controlling half of total credits and some 80% of foreign credits. Fear of Serbian political and cultural domination continued, particularly with respect to Croatian language sensitivities aroused by the use of the Serbian version of Serbo-Croatian as the norm, with the Croatian version as a deviation.

The language controversy thus exacerbated the economic and political tensions between Serbs and Croats, spilling easily into ethnic confrontations. To the conservative centrists the devolution of power to the republic level meant the subordination of the broad Yugoslav and Socialist interests to the narrow nationalist interest of national majorities. With the Croat League of Communists taking the liberal position in 1970, nationalism was rehabilitated. Thus the "Croatian Spring" bloomed and impacted all the other republics of Yugoslavia. Meanwhile, through a series of constitutional amendments in 1967–68 that limited federal power in favor of republics and autonomous provinces, the federal government came to be viewed by liberals as an inter-republican problem-solving mechanism bordering on a confederalist arrangement. A network of inter-republican committees established by mid-1971 proved to be very efficient, resolving a large number of difficult issues in a short time. The coalition of liberals and nationalists in Croatia, however, also generated sharp condemnation in Serbia, where its own brand of nationalism grew stronger, but as part of a conservative-centrist alliance. Thus, the liberal/federalist versus conservative/centrist conflict became entangled in the rising nationalism within each opposing bloc.

Particularly difficult were the situations in Croatia and Serbia because of their minorities issues. Serbs in Croatia sided with the Croat conservatives and sought a constitutional amendment guaranteeing their own national identity and rights. In the process, the Serbs challenged the sovereignty of the Croatian nation. The conservatives prevailed, and the amendment declared that "the Socialist Republic of Croatia (was) the national state of the Croatian nation, the state of the Serbian nation in Croatia, and the state of the nationalities inhabiting it."

Meanwhile, Slovenia, not burdened by large minorities, developed in a liberal and nationalist direction. This fostered an incipient separatist sentiment opposed by both the liberal and conservative party wings. Led by Stane Kavcic, head of the Slovenian Government, the liberal wing gained as much political local latitude from the federal level as possible during the "Slovenian Spring" of the early 1970s. By the summer of 1971, the Serbian Party leadership was pressuring President Tito to put an end to what was in their view the dangerous development of Croatian nationalism. While Tito wavered because of his support for the balancing system of autonomous republic units, the situation quickly reached critical proportions. Croat nationalists, complaining about discrimination against Croats in Bosnia and Herzegovina, demanded the incorporation of western Herzegovina into Croatia. Serbia countered by claiming southeastern Herzegovina for itself. Croats also advanced demands for a larger share of their foreign currency earnings, the issuance of their own currency, their own national bank that would directly negotiate foreign loans, the printing of Croatian postage stamps, to a Croatian Army, to recognition of the Croatian Sabor as the highest Croatian political body and, finally, to Croatian secession and complete independence.

Confronted with such intensive agitation, the liberal Croatian Party leadership could not back down and did not restrain the public demands nor the widespread university students' strike of November 1971. This situation caused the loss of support from the liberal party wings of Slovenia and even Macedonia. Tito intervened, condemning the Croatian liberal leadership on 1 December 1971, while supporting the conservative wing. The liberal leadership group resigned on 12 December 1971. When Croatian students demonstrated and demanded an independent Croatia, the Yugoslav Army was ready to move in if necessary. A wholesale purge of the party liberals followed with tens of thousands expelled. Key functionaries lost their positions, several thousands were imprisoned (including Franjo Tudjman who later became president of independent Croatia), and leading Croatian nationalist organizations and their publications were closed. On 8 May 1972 the Croatian Party also expelled its liberal wing leaders and the purge of nationalists continued through 1973.

However, the issues and sentiments raised during the "Slovene and Croat Springs" of 1969–71 did not disappear. Tito and the conservatives were forced to satisfy nominally some demands, and the 1974 Constitution was an attempt to resolve the strained inter-republican relations as each republic pursued its own interests over and above any conceivable overall Yugoslav interest. The repression of liberal-nationalist Croats was accompanied by the growing influence of the Serbian element in the Croatian Party (24% in 1980) and police force (majority). This influence contributed to the ongoing persecution and imprisonments of Croatian nationalists into the 1980s. Tito's widespread purges of the "Croatian Spring" movement's leadership and participants in 1971 had repressed the reawakened Croatian nationalism, but could not eliminate it. Croatian elites had realized the disadvantages of the Croatian situation and expressed it in 1970–71 through the only channel then available—the Communist Party of Croatia and its liberal wing. With the purges, this wing became officially silent in order to survive, but remained active under the surface, hoping for its turn. This came with the 1974 constitution and its devolution of power to the republic level, and was helped along by the growing role of the Catholic church in Croatia. The Catholic church, as the only openly organized opposition force in the country, became the outspoken defender of Croatian nationalism. As a result, Catholic leaders and priests were subjected to persecution and furious attacks by the government.

Yugoslavia—a House Divided

After Tito's death in 1980, relations between the Croatian majority and the Serbian minority became strained. Tito had set up a rotating presidency in which the leaders of each of the six republics and two autonomous regions of Serbia would have the Yugoslavian presidency for one year at a time. Unfortunately, the Serbian president that first held the office was not recognized by the Croats. Demands for autonomy by the half million Serbs in Croatia were brushed aside by the Croats, who pointed out the absence of such autonomy for Croats in Vojvodina and Bosnia and Herzegovina. Thus the conservatives' control of the League of Communist of Croatia between 1972 and 1987 could not prevent the resurfacing of the Croat question, which led in a few years to Croatia's disassociation from Yugoslavia and to war.

As the Communist parties of the various republics kept losing in membership and control, the clamoring for multiparty elections became irresistible. The first such elections were held on 8 April 1990 in Slovenia where a coalition of non-Communist parties (Demos) won, and formed the first non-Communist Government since 1945. In Croatia, the Croatian Democratic Union (HDZ) under the leadership of Dr. Franjo Tudjman, had worked illegally since 1989 and had developed an effective network of offices throughout Croatia and in Vojvodina and Bosnia and Herzegovina. The HDZ had also established its branches abroad from where, particularly in the United States, it received substantial financial support. Thus, in the elections of late April-early May 1990 the Croatian Democratic Union was able to obtain an overwhelming victory with 205 of 356 seats won and a majority in each of the three chambers of the Croatian Assembly. In the most important Socio-Political Chamber, Dr. Tudjman's party won 54 of the 80 seats, with the Communists and their allies obtaining only 26 seats. On 30 May 1990, Dr. Tudjman was elected president of Croatia with 281 of 331 votes and Stjepan Mesic became prime minister. Krajina Serbs voted either for the former Communists or for their new Serbian Democratic Party (SNS) led by Jovan Raškovic. The Serbian Democratic Party gained five delegates to the parliament and became the main voice of the Serbs in Croatia.

The overwhelming victory of Dr. Tudjman's party made the Serbs very uncomfortable. Their traditional desire for closer political ties to Serbia proper, the prospect of losing their overrepresentation (and jobs) in the Croatian Republic's administration, and fear of the repetition of the World War II Ustaša-directed persecutions and massacres of Serbs made them an easy and eager audience for Slobodan Miloševic's policy and tactics of unifying all Serbian lands to Serbia proper. Tensions between Croats and Serbs increased when Tudjman proposed constitutional amendments in June 1990 defining Croatia as the Sovereign State of the Croats and other nations and national minorities without specifically mentioning the Serbs of Croatia. The Serbs feared they would be left unprotected in an independent Croatia and therefore strongly supported Miloševic's centralist policies. This fear, and the anti-Croatian propaganda from Belgrade that claimed the revival of the Ustaša, and called upon Serbs to defend themselves, caused Jovan Raškovic to reject the invitation from Tudjman to join the new government as its deputy prime minister. Instead, Raškovic ended the participation in legislative activities of the five Serbian Democratic Party deputies. At the end of August 1990, a new Serbian National Council adopted a "Declaration on the Sovereignty and Autonomy of the Serbian People" implying the need for cultural autonomy for the Serbs if Croatia were to remain a member of the Yugoslav Federation, but claiming political autonomy for the Serbs if Croatia were to secede from the Yugoslav Federation. A referendum held on 18 August 1990 by Serbs in Croatia gave unanimous support to their "Declaration on Sovereignty" as the foundation for the further development of their Knin Republic—as their council of Serbian-majority communes was called, from the name of the Dalmatian city of Knin where it was based.

The Tudjman government refrained from taking any action against the Knin Republic in order to avoid any reason for interference by the Yugoslav Army. But Tudjman made very clear that territorial autonomy for the Serbs was out of the question. When in December 1990 Croatia proclaimed its sovereignty and promulgated its new constitution, the Serbs of Croatia established a "Serbian Autonomous Region," immediately invalidated by the constitutional court of Croatia. Then in February 1991, Croatia and Slovenia declared invalid all federal laws regarding the two republics. On 28 February, the Krajina Serbs declared their autonomy in response to Croatia's call for disassociation from the Yugoslav Federation. Violence spread in many places with clashes between the Serbian paramilitary and special Croatian police units with Yugoslav Army units ordered to intervene. The Yugoslav Army was also used in Serbia in March 1991 to aid Serbian authorities against large Serbian opposition demonstrations in Belgrade. The sight of Yugoslav tanks in the streets of Belgrade, with two dead and some 90 wounded, signaled the decision of the Yugoslav Army to defend Yugoslavia's borders and oppose interethnic clashes that could lead to a civil war. Clearly the Serbian leadership and the Yugoslav Army top command (mostly Serbian) had cemented their alliance, with the goal of preserving Yugoslavia as a centralized state through pressuring Slovenia and Croatia into disarming their territorial defense units and by threatening forceful intervention in case of their refusal. But Slovenia and Croatia continued to buy arms for their defense forces, and to proclaim their intentions to gain independence.

At the end of March 1991, there were again bloody armed clashes between the Krajina Serbs and Croatian police, and again the Yugoslav Army intervened around the Plitvice National Park, an area the Serbs wanted to join to their Knin Republic. For President Tudjman this Serbian action was the last straw—Croatia had been patient for eight months, but could wait no longer. The overall determination of Serbia to maintain a unitary Yugoslavia hardened, as did the determination of Slovenia and Croatia to attain their full independence. This caused the Yugoslav Army leadership to support Serbia and Slobodan Miloševic, who had made his position clear by the spring of 1991 on the potential unilateral separation of Slovenia, Croatia, and Bosnia and Herzegovina. Since there was no substantial Serbian population in Slovenia, its disassociation did not present a real problem for Miloševic. However, separation by Croatia and Bosnia and Herzegovina would necessitate border revisions in order to allow for lands with Serbian populations to be joined to Serbia.

Independence

A last effort to avoid Yugoslavia's disintegration was made by Bosnia and Herzegovina and Macedonia with their 3 June 1991 compromise proposal to form a Community of Yugoslav Republics whereby national defense, foreign policy, and a common market would be administered centrally while all other areas—other than armed forces and diplomatic representation—would fall into the jurisdiction of the member states. But it was already too late. Serbia opposed the federal nature of the proposal and this left an opening for the establishment of separate armed forces. In addition, Miloševic and the Yugoslav Army had already committed to the support of the Serbs' revolt in Croatia. In any case, both Miloševic and Tudjman were past the state of salvaging Yugoslavia. They met in Split on 12 June 1991 to discuss how to divide Bosnia and Herzegovina into ethnic cantons.

The federal government of Yugoslavia ceased to exist when its last president (Stjepan Mesic, Croatia's future president) and prime minister (Ante Markovic), both Croatian, resigned on 5 December 1991. Both Croatia and Slovenia reaffirmed their decision to disassociate from federal Yugoslavia after a three-month moratorium, in the Brioni Declaration of 7 July 1991. The European Community held a conference on Yugoslavia, chaired by Lord Carrington, where a series of unsuccessful cease-fires was negotiated for Croatia. The conference also attempted to negotiate new arrangements based on the premise that the Yugoslav Federation no longer existed, a position strongly rejected by Serbia, who viewed with great suspicion Germany's support for the independence of Slovenia and Croatia. Germany granted recognition to Slovenia and Croatia on 18 December 1991, while other European community members and the United States followed suit. The European community continued its efforts to stop the killing and destruction in Croatia, along with the UN special envoy, Cyrus Vance, who was able to conclude a peace accord on 3 January 1992 calling for a major UN peacekeeping force in Croatia. Part of the accord was also an agreement by the Serbian side to hand over to the UN units their heavy weapons and to allow the return to their homes of thousands of refugees. The international community stood firmly in support of the preservation of Yugoslavia. The United States and the European community had indicated that they would refuse to recognize the independence of Slovenia and Croatia if they unilaterally seceded. At the same time, Slovenia and Croatia defined their separation as a disassociation by sovereign nations, and declared their independence on 25 June 1991. Miloševic was prepared to let Slovenia go, but Croatia still held around 600,000 ethnic Serbs. Miloševic knew that a military attack on a member republic would deal a mortal blow to both the idea and the reality of a "Yugoslavia" in any form. Thus, following the Yugoslav Army's attack on Slovenia on 27 June 1991, Miloševic used the Yugoslav Army and its superior capabilities toward the goal of establishing the Serbian autonomous region of Krajina in Croatia. Increased fighting from July 1991 caused the tremendous destruction of entire cities (for example, Vukovar) and large-scale damage to medieval Dubrovnik. Croatia had been arming since 1990 with the financial aid of émigrés, and thus withstood fighting over a seven-month period, suffering some 10,000 deaths, 30,000 wounded, over 14,000 missing and lost to the Krajina Serbs (and to the Yugoslav Army). Croatia also lost about one-third of its territory—from Slavonia to the west and around the border with Bosnia and south to northern Dalmatia.

By late 1992, rebel Serbs controlled about one-third of Croatia's territory. In 1993, the Krajina Serbs voted to integrate with Serbs in Bosnia and Serbia. Although the Croatian government and the Krajina Serbs agreed to a cease-fire in March 1994, further talks disintegrated. This portion of land was strategically important to Croatia because it held the land routes to the Dalmatian coast (supporting the once-thriving tourist industry), the country's petroleum resources, and the access route from Zagreb into Slavonia. Also in 1994, the Croatian government agreed to give up its plan to partition Bosnia with Serbia. In return for US political support (which included military training and equipment), Croatia began cooperating with the Bosnian Muslims and recognized the sovereignty of Bosnia and Herzegovina.

In May 1995, the Croatian Army—in a mission it called "Operation Storm"—quickly occupied western Slavonia, and by August 1995, the Krajina region was under Croatian control. International reaction to the military mission was mild, and was largely judged as vindication for earlier Serb aggression. An estimated 200,000 Serbs fled from the region their ancestors had occupied for 200 years. Before the Croatian Army could move into eastern Slavonia, the government halted the mission, upon insistence by the United States. The cessation of the Croatian military campaign before it reached eastern Slavonia probably prevented a future round of revenge killings.

Eastern Slavonia was then put under UN control, with a force of about 5,500 military and police peacekeepers. With the signing of a basic agreement between the Croatian government and the Eastern Slavonia Serbs at the Dayton Peace Accords in Dayton, Ohio, in 1995, the UN had the support to establish the UN Transitional Administration for Eastern Slavonia (UNTAES) on 15 January 1996. The UNTAES established a Transitional Police Force, in which Serb and Croat police forces jointly administered the region, in order to prepare the area for reversion to Croatian control in July 1997. On 15 January 1998, any Serbs remaining in eastern Slavonia became Croatian citizens. Also, the Serbs that fled Croatia for fear of persecution were invited back into the country on 26 June 1998, when the Croatian parliament adopted the Croatian government's Return Program.

The 1997 elections that supported the reigning President Tudjman and his HDZ party were considered "fundamentally flawed." The tight grip that Tudjman kept on the Croatian nation through control of the media, police, and judicial system were considered not only undemocratic, but unconstitutional. In 1999, President Tudjman announced that "National issues are more important than democracy," alienating many Croatians and concerning international observers. Tudjman cooperated with some requests of the International Criminal Tribunal for the Former Yugoslavia (ICTY), but refused to comply with others, especially the insistence on field investigations into the military operations of the 1990s. The ruling party agreed in 1999 to hold new parliamentary elections in January 2000, but these were scheduled too late for Tudjman to organize his resistance. He died on 10 December 1999, and Speaker of Parliament Vlatko Pavletic assumed interim power. On 18 February 2000, Stjepan Mesic was elected president of Croatia, signaling a new era in Croatian history that promised to be more European and more peaceful. In February 2005, Mesic was elected for a second term, with 66% of the vote, over his main contender—Jadranka Kosor.

The parliamentary elections held in early 2000 resulted in an end to the rule of the HDZ party, which won only 46 of 151 seats in the House of Representatives; Social Democratic Party (SDP) leader Ivica Racan led a center-left coalition government as prime minister. Constitutional reforms later that year reduced the powers exercised by the president, and replaced the semi-presidential system of government with a parliamentary one. In 2001, parliament approved a constitutional amendment abolishing its upper house, the House of Counties. The HDZ branded the government's move as politically motivated, as it controlled the upper house, and had been able to delay reform-minded legislation.

In November 2003, the parliamentary elections were won by the HDZ, which took 66 out of 152 seats in the House of Representatives. The SDP got only 34 seats, while other parties, and representatives, had to settle for 10 seats or less. Ivo Sanader, the leader of HDZ, was invited by president Mesic to form a government. Subsequently, the parliament gave its consent, and Sanader was appointed prime minister with 88 votes in favor. Sanader promised his party underwent major changes since the death of Tudjman, and pledged to uphold democracy and the rule of law. He is a strong supporter of EU and NATO membership.

In September 2001, the ICTY indicted Miloševic for war crimes and crimes against humanity committed in the war in Croatia. He went on trial in The Hague in February 2002. However, in September 2002, under pressure from nationalists, the Croatian government declined to turn over to the Hague tribunal former Army chief-of-staff Janko Bobetko, indicted for war crimes. In March 2003, former Maj. Gen. Mirko Norac was sentenced in a Croatian court to 12 years in prison for orchestrating the killings of Serb civilians in 1991. He was the most senior Croatian Army officer to be convicted for war crimes in a Croatian court. Norac had given himself up to Croatian authorities in March 2001 on the understanding that he would not be extradited to the ICTY.

In February 2003, Croatia submitted its application for membership to the EU; it concluded its Stabilization and Association Agreement (SAA) with the EU in May 2001. In October 2005, the EU gave Croatia the green light for the continuation of accession talks although some of its deemed war criminals were still at large. Croatia is also an aspirant for NATO membership.

GOVERNMENT

Croatia is a democratic republic with a president and parliamentary system of government. The parliament of Croatia, formed on 30 May 1990, adopted a new constitution on 22 December 1990. The executive authority is held by the president, elected for five years, and a government cabinet headed by the prime minister. Constitutional reforms in 2000 significantly reduced the powers exercised by the president. However, the president remains the supreme commander of the armed forces, and participates in foreign and national security policy decision-making. The constitutional court assures legality. In October 2005, the president was Stjepan Mesic, and the prime minister was Ivo Sanader.

In March 2001, amendments to the constitution abolished the upper house of parliament (House of Counties) in what had been a bicameral legislature (also including the lower house, or House of Representatives). The unicameral parliament, known as the Sabor (Assembly), has up to 160 members elected for four-year terms. In 2005 there were 140 domestic representatives, 8 representatives for the minorities, and 4 Diaspora representatives.

The threshold that parties must cross for representation in parliament is 5% of the turnout in each of the 10 electoral districts. Croatian citizens that live outside the country's borders are counted in a distinct electoral unit, and their votes are weight directly against the number of domestic votes to determine the number of parliamentary seats the Diaspora will receive. (To vote, one must be 18 or older, or 16 if employed.) The prime minister is nominated by the president, in line with the balance of power in the Assembly. Domestic policy-making is the responsibility of parliament.

POLITICAL PARTIES

In the presidential elections of May 1997, Tudjman, founder of the Christian Democratic Union (HDZ) in 1988, won a second term as president of Croatia, with 61.2% of the vote. International monitors, however, condemned the elections as seriously biased in favor of the incumbent. Zdravko Tomac of the socialist Social Democrat Party won 21.1% of the vote, and Vlado Gotovac of the moderate Social Liberal Party received 17.7%. After the death of Tudjman at the end of 1999, presidential elections were held in January and February 2000. Thirteen candidates successfully registered for the election. Stjepan Mesic of the Croatian People's Party (HNS), supported by the Croatian Peasant Party (HSS)/Istrian Democratic Sabor (IDS)/LS liberal coalition, defeated rival Drazen Budiša of the Social Democratic Party (SDP)/Croatian Social Liberal Party (HSLS) coalition, 41.1% to 27.7% in the first round, with Croatian Democratic Union (HDZ) candidate Mate Granic gaining 22.5% of the vote, and 56% to 44% in the second round of the ballot. Mesic won in 17 out of 21 counties. Voter turnout in round one was 63% and 61% in round two. Mesic was voted in, for a second term, in 2005. He had the support of eight political parties and defeated his main contender—Jadranka Kosor—in the second round of the elections, with 66% of the popular vote.

In the parliamentary elections held 23 November 2003, HDZ garnered 66 seats in the House of the Representatives; the SDP won 34; the HSS and HNS both won 10; the HSP (the Croatian Party of Rights) won 8; the IDS won 4; Libra, HSU (the Croatian Party of Pensioners), and SDSS (Independent Democratic Serb Party), all won 3; while 11 seats went to others. The HDZ formed a minority government coalition with DC (Democratic Center), HSLS, HSU, and SDSS. The leader of HDZ, Ivo Sanader, became the new prime minister.

LOCAL GOVERNMENT

Local government in Croatia consists of municipalities that are grouped into 20 counties and 1 city. Citizens are guaranteed the right to local self-government with competencies to decide on matters, needs, and interest of local relevance. Counties consist of areas determined by history, transportation, and other economic factors. The 20 counties are: Zagreb, Kradina-Zagorje, Sisacko-Moslavacka, Karlovac, Varazdin, Koprivnica-Krizevci, Bjelovar-Bilogora, Hrvatsko Primorje-Gorski Kotar, Lika-Senj, Virovitica-Podravina, Pozega-Slavonija, Slavonski Brod-Posavina, Zadar-Knin, Osijek-Baranja, Šibenik, Vukovar-Srijem, Dalmatia-Split, Istria, Dubrovnik-Neretva, Medjimurje; and the City of Zagreb.

The mayor of Zagreb is elected by the city assembly and is approved by the president. In the local elections of 2001, tens of thousands of candidates contested 566 councils and assemblies at the municipal, town, county, and Zagreb City levels. (There are approximately 440 municipalities and 120 towns in Croatia). A total of 3.8 million voters were registered for the elections. The local election results roughly mirrored those of the parliamentary elections of 2000. However, in the May 2005 local elections voter turn out was estimated to be lower than 35%, with the SDP prevailing in the bigger cities—Zagreb, Split, and Rijeka. HDZ's popularity decreased dramatically since the parliamentary elections in 2003—the party garnered only about 16% of the local vote, mostly in rural areas and small towns.

JUDICIAL SYSTEM

The judicial system is comprised of municipal and county courts, a Supreme Court, an Administrative Court, and a Constitutional Court. A High Judicial Council (made up of 11 members serving eight-year terms) appoints judges and public prosecutors. The judicial system, supervised by the justice and administration ministry, remains subject to ethnic bias and political influence, especially at the local level. Judges are prohibited constitutionally from being members of any political party.

A commercial court system handles all commercial and contractual disputes. The Supreme Court judges are appointed for an eight-year term by the Judicial Council. The Constitutional Court has 13 judges (11 prior to March 2001) who are also elected in the same manner. The military court system was abolished in November 1996. The constitution prohibits the arbitrary interference with privacy, family, home or correspondence, but these freedoms are not always protected by the government.

ARMED FORCES

The armed forces of Croatia are restricted by the Dayton Peace Accords. In 2005 the number of active armed forces personnel totaled 20,800 with 108,200 reservists. The Army had 14,050 active personnel, followed by the Navy with 2,500 and the Air Force with 2,300. The Army had 291 main battle tanks, 104 armored infantry fighting vehicles, 53 armored personnel carriers, and 1,452 artillery pieces. The Navy's principal units included one tactical submarine, two corvettes, five patrol/coastal vessels, five amphibious landing craft, and seventeen logistics/support vessels. The Air Force had 27 combat capable aircraft, including 20 fighters and 9 attack helicopters. Croatia also had a paramilitary force of 10,000 armed police. Croatia as of 2005 was involved in 12 foreign countries or regions as part of NATO and UN military and peacekeeping missions. Croatia's military budget in 2005 was $626 million.

INTERNATIONAL COOPERATION

Croatia was admitted to the United Nations on 22 May 1992; it is part of the ECE and serves on several specialized agencies, such as the FAO IAEA, ICAO, IMF, UNESCO, UNIDO, WHO, and the World Bank. The nation was admitted to the WTO on 30 November 2000. Croatia is a member of the OSCE, the Council of Europe, the Central European Initiative, Euro-Atlantic Partnership Council, and the European Bank for Reconstruction and Development. The nation is a candidate for membership in the European Union. Croatia participates in the NATO Partnership for Peace and the Adriatic Charter, and sits as an observer in the OAS.

Croatia is an observer in the Nonaligned Movement and is part of the Organization for the Prohibition of Chemical Weapons The UN sent peacekeeping troops to Croatia in the spring of 1992 to mediate an ongoing civil war in the region. In environmental cooperation, Croatia is part of the Basel Convention, Conventions on Biological Diversity and Air Pollution, Ramsar, CITES, the London Convention, the Montréal Protocol, MARPOL, the Nuclear Test Ban Treaty, and the UN Conventions on the Law of the Sea, Climate Change and Desertification.

ECONOMY

Before the dissolution of the Yugoslav SFR, Croatia was its second-most prosperous and industrialized area (after Slovenia). Per capita output in Croatia was comparable to that of Portugal and about 33% above the Yugoslav average. Croatia's economic problems were largely inherited from a legacy of Communist mismanagement and a bloated foreign debt. More recently, fighting caused massive infrastructure and industrial damage to bridges, power lines, factories, buildings, and houses. Croatia's economy also had to grapple with a large population of refugees and internally displaced persons. As a result of the war and loss in output capacity, GDP fell by more than 40%.

Yet while the economy has stabilized in recent years, Croatia continues to suffer from structural problems. Under the late President Franjo Tudjman, the Croatian government regularly bailed out failing banks and businesses, regardless of their survivability. This practice needs to be stopped and industry restructured if Croatia is to progress on the path of market reforms. Although unemployment remains high and the country has a growing trade deficit, Croatia in the early 2000s experienced a growth in tourism and an increase in remittances and investment from expatriate Croats. Many small and medium-sized businesses have been privatized, and even larger state-owned industries were in the process of being restructured in 2002, such as shipbuilding. In October 2001, the government signed a Stabilization and Association Agreement with the EU, which moves the country in the direction of integration with the EU. Croatia joined the WTO in 2000. Major growth sectors are energy, tourism, construction, transportation, and telecommunications.

In 2002, the GDP growth rate reached a peak at 5.2%, falling in subsequent years at 4.3% (2003), and 3.7% (2004); for 2005, it was expected to fall even further at 3.1%. The inflation has dropped substantially since 2000, and has stabilized at around 2%. Unemployment, although on a downward path, remained a problem in 2004, at 18.7%. Despite recent moderate economic performance, Croatia's prospects for the future appeared positive. In January 2005, presidential elections were held, and the coalition government started negotiations for EU entry, with the expected accession date being set for 2009 or 2010. A number of privatizations were to be completed by that date, and the government was to prove that Croatia stood as a politically stable and trustworthy country.

INCOME

The US Central Intelligence Agency (CIA) reports that in 2005 Croatia's gross domestic product (GDP) was estimated at $53.3 billion. The CIA defines GDP as the value of all final goods and services produced within a nation in a given year and computed on the basis of purchasing power parity (PPP) rather than value as measured on the basis of the rate of exchange based on current dollars. The per capita GDP was estimated at $11,600. The annual growth rate of GDP was estimated at 3.2%. The average inflation rate in 2002 was 3.2%. It was estimated that agriculture accounted for 7% of GDP, industry 32.8%, and services 62.2% in 2005.

According to the World Bank, in 2003 remittances from citizens working abroad totaled $1.069 billion or about $241 per capita and accounted for approximately 3.7% of GDP. Foreign aid receipts amounted to $121 million or about $27 per capita and accounted for approximately 0.4% of the gross national income (GNI).

The World Bank reports that in 2003 household consumption in Croatia totaled $16.91 billion or about $3,805 per capita based on a GDP of $28.8 billion, measured in current dollars rather than PPP. Household consumption includes expenditures of individuals, households, and nongovernmental organizations on goods and services, excluding purchases of dwellings. It was estimated that for the period 1990 to 2003 household consumption grew at an average annual rate of 3.4%. In 2001 it was estimated that approximately 24% of household consumption was spent on food, 18% on fuel, 4% on health care, and 3% on education. It was estimated that in 2003 about 11% of the population had incomes below the poverty line.

LABOR

In 2005, there were an estimated 1.7 million persons in Croatia's labor force. As of 2004, employment by sector was as follows: industry 32.8%; agriculture, 2.7%; and 64.5% in the services sector. In 2004, the official unemployment rate was placed at 18.7%. However, labor force surveys indicated that unemployment was at an estimated 14%.

All workers, except the military and police, may form and join unions of their own choosing without prior authorization. Generally, unions were independent of political parties and of the government. About 64% of the workforce was unionized in 2005. The right to strike and bargain collectively is protected by law, although there are restrictions and limitations. Nonpayment of wages continues to be a serious problem.

National minimum wage standards are in place, but are insufficient in providing a worker and family with a decent living standard. The minimum wage was set at $308 per month as of 2005. In 2002 the standard workweek was shortened from 42 to 40 hours. Workers are also entitled to a 30-minute break every day, one day off every seven days, and a minimum of eighteen days paid vacation per year. The minimum working age is 15 and this is generally enforced. In addition, workers under the age of 18 are prohibited from working overtime, at night or under hazardous conditions. There are also occupational safety and health standards, but these are not routinely respected.

AGRICULTURE

An estimated 1,588,000 hectares (3,924,000 acres), or 28.4% of total land, was arable in 2002. About 2.7% of the economically active population was engaged in agriculture in 2004; in 2005 it accounted for about 7% of GDP.

The civil war reduced agricultural output in the years immediately following the breakup of the Yugoslav SFR. Production of 2004 major crops included (in thousands of tons): wheat, 840; corn, 2,200; sugar beets, 1,000; grapes, 350; apples, 58; and plums, 30. Total production of cereals fell from 3,179,000 tons in 1997 to 2,355,000 in 2004. Plums are used in the production of slivovitz, a type of plum brandy.

ANIMAL HUSBANDRY

About 28% of the total land area consists of pastures. In 2004, there were 1,489,000 pigs, 466,000 cattle, 721,000 sheep, 93,000 goats, 10,000 horses, and 10,235,000 chickens. That year, 140,686 tons of meat were produced, including 70,000 tons of pork, 35,500 tons of poultry, 23,000 tons of beef, and 1,800 tons of mutton. Milk production in 2004 totaled 768,500 tons; eggs, 45,700 tons; and cheese, 23,935 tons. Cattle breeding accounts for about 50% of agriculture's contribution to the GDP.

FISHING

With a mainland coastline of 1,778 km (1,105 mi) and island coastlines totaling 4,012 km (2,493 mi) on the Adriatic, Croatia is suited to the development of marine fishing. However, Croatia lacks adequate fishing vessels as well as the infrastructure to transport and process seafood. The total catch in 2003 was 19,946 tons, of which 98% was from marine waters. Sardine is the principal saltwater species caught; carp is the most common freshwater species. Croatia's annual catch has declined steadily due to overfishing for a variety of species. However, fish farming has resulted in an overproduction of freshwater species and a decline in prices. Aquaculture produced 7,605 tons of fish in 2003.

FORESTRY

About 32% of the total area was forest or woodland in 2000. Croatia supplies small but good quality oak and beech; the wood industry has traditionally been oriented to the Italian market (accounting for over 35% of exports), and suffered damages during the civil war. Total roundwood production in 2003 was 3.8 million cu m (136 million cu ft), with exports of 560,000 cu m (19.8 million cu ft). Croatian exports of hardwood lumber typically consist of 50% beech, 30% oak, and 6% ash. Panels and veneer are also exported and Croatia is starting to increase the output of value-added products such as veneer sheets, plywood, and particle board. Total exports of wood products amounted to $274.9 million in 2003. The forestry sector along with the whole of Croatian industry is also attempting to produce in accordance with European standards and develop standardized contracts.

MINING

Aside from petroleum, the chief minerals industry, Croatia produced small quantities of ferrous and nonferrous metals and industrial minerals, mainly for domestic needs. In 2003, the mining and quarrying sector saw production increase by about 15% from 2002. Cement output in 2003 was up 8% from 2002. The production of clays, lime, nitrogen, pumice, stone, and sand and gravel satisfied most of Croatia's demand for construction materials; the importance of industrial minerals was expected to grow with continued postwar reconstruction. Mineral production in 2003 included cement, 3.654 million tons; salt, processed at Pag Island, 31,281 metric tons; bentonite, 13,568 metric tons; crude gypsum, 166,000 metric tons; and quartz, quartzite, and glass sand, 237,141 metric tons. Bauxite production dropped to zero in 2003, from 1,500 tons in 1996. Prior to the breakup of Yugoslavia, Croatia was the federation's chief producer of natural gas and petroleum, and a leading producer of iron and steel. The minerals sector was heavily hurt by the 1991–92 war, which damaged facilities, affected the market for raw materials, and disrupted normal commercial activities; the outlook remained captive to political and social stabilization in the region.

ENERGY AND POWER

Croatia's electric power generating capacity totaled 3.595 million kW in 2002, of which 2.076 million kW was hydroelectric and 1.519 kW conventional thermal sources. Although for that same year, a total of 11.755 billion kWh was produced, of which 6.443 billion kWh came from conventional thermal fuel sources and 5.311 billion kWh came from hydropower, consumption of electricity outstripped output, at 14.453 billion kWh, thus requiring Croatia to import 3.927 billion kWh in that year.

As of 1 January 2004, Croatia had proven oil reserves of 75 million barrels. In 2002 estimated oil production totaled 22,000 barrels per day. As with electricity, Croatia's demand for oil outstripped its output in that year. Consumption that year totaled an estimated 91,000 barrels daily, thus forcing Croatia to rely on imports to make up the difference. Imports in 2002 were estimated at 69,000 barrels per day.

Croatia, as of 1 January 2004, had proven natural gas reserves totaling 0.87 trillion cu ft. In 2001 production of natural gas was estimated at 62 billion cu ft, while consumption came to 100 billion cu ft. As a result, Croatia imported an estimated 38 billion cu ft of natural gas in 2001.

Although Croatia has recoverable coal reserves in 2001 of 43 million short tons, there was no known production. Thus to meet its need for coal, all the coal consumed in 2001, 0.88 million short tons, was imported.

INDUSTRY

Light industry, especially for the production of consumer goods, was more advanced in Croatia than in the other republics of the former Yugoslav SFR. Croatia's main manufacturing industries include chemicals and plastics, machine tools, fabricated metal products, electronics, pig iron and rolled steel products, aluminum processing, paper and wood products (including furniture), building materials (including cement), textiles, shipbuilding, petroleum and petroleum refining, and food processing and beverages.

The collapse of Yugoslavia and the hostilities following Croatia's declaration of independence in 1991 damaged industrial production. Manufacturing employed about 335,000 people in 1995. The textile and clothing industry accounted for about 11% of total industrial output in 1995; the food industry, 17%. Industrial production increased 3.7% in 1998 and accounted for 24% of GDP. Industrial production increased to 33% of GDP in 2002. There is a need for reconstruction of basic infrastructure and housing, which should provide increased activity in the construction sector. The government was pursuing privatization of state-owned enterprises; the sale of INA, the national oil and gas company (which was expected to be completed by 2002) was finalized in 2003.

Although industry is an important part of the Croatian economy, in 2004 it performed sub par—the industrial production growth rate was only 2.7%, as compared to the 3.7% GDP growth rate. Still, it made 30.8% of the Croatian economy, and employed 32.8% of the labor force; agriculture participated with 7% to the overall GDP, and employed 2.7% of the working people; services came in first with 62.2% and 64.5% respectively. Croatia has to increase the privatization pace of state-owned companies if it is to accede to the EU by 2009/2010.

SCIENCE AND TECHNOLOGY

The Croatian Academy of Sciences and Arts (founded in 1866 and headquartered in Zagreb) has sections devoted to mathematical sciences and physics, natural sciences, and medical sciences. The country also had, as of 1996, 13 medical, scientific, and technical research institutes. The Museum of Natural Sciences (founded in 1924) is located in Split and the Croatian Natural History Museum (founded in 1846) and the Technical Museum (founded in 1954) are in Zagreb. The universities of Zagreb (founded in 1669), Osijek (founded in 1975), Rijeka (founded in 1973), and Split (founded in 1974) offer degrees in basic and applied science. In 1987–97, science and engineering students accounted for 30% of university enrollment.

As of 2002, Croatia had 1,920 researchers and 444 technicians per million people engaged in research and development (R&D). In 2002, Croatian R&D expenditures totaled $519.726 million, or 1.14% of GDP. High technology exports that year were valued at $432 million, accounting for 12% of the country's manufactured exports. R&D spending for the year 2000 (the latest year for which there is spending breakdown data) came mostly from the government, accounting for 54.2% of R&D spending. Business accounted for 44.2%, with foreign sources accounting for the rest.

DOMESTIC TRADE

Domestic trade occurs mainly between urban industry and rural agriculture. Civil strife and economic recessions in the past decade have severely weakened the domestic economy. The government has looked toward foreign investments to boost the economy. Privatization and anticorruption programs are likely to attract such foreign investments. A boost in the tourism industry has also aided the economy. As of 2002, about 58% of the GDP was contributed by the services sector.

Normal working hours for public offices are 8:30 am to 5:00 pm, Monday through Friday. Banks are typically open from 7:00 am to 7:00 pm, Monday through Friday, and from 7:00 am until noon on Saturdays. During the week, shops are open from 7:00 am to 8:00 pm, and from 7:00 am until 3:00 pm on Saturdays. Summer holidays may translate into closed businesses during the months of July and August.

FOREIGN TRADE

Ships are Croatia's major export (13.6% of exports), while other commodities fall close behind, including refined petroleum products (8.1%), polymers (2.9%), men's outerwear (3.4%), and women's outerwear (2.6%). Croatia's diverse export market also includes various chemicals, foodstuff, and raw materials.

In 2004, exports reached $7.8 billion (FOB—Free on Board), but were more than doubled by imports at $16.7 billion (FOB). Croatia mainly exports transport equipment, textiles, chemicals, foodstuffs, and fuels, and its most important export partners are Italy (which received 23% of Croatia's total exports), Bosnia and Herzegovina (13.4%), Germany (11.4%), Austria (9.6%), and Slovenia (7.6%). The most important import commodities were machinery, transport and electrical equipment, chemicals, fuels and lubricants, and foodstuffs, and they mainly came from Italy (17.1%), Germany (15.5%), Russia (7.3%), Slovenia (7.1%), Austria (6.9%), and France (4.4%).

BALANCE OF PAYMENTS

Before the civil war, Croatia led the Yugoslav SFR in worker remittances, as thousands of Croats held factory jobs in Germany and elsewhere. In order to provide a framework for economic recovery, the government organized the Ministry for Reconstruction, which plans to rebuild war-damaged regions and infrastructure for tourism, which could bring in much needed foreign currency. Croatia had almost no foreign exchange reserves in 1991, but by the beginning of 1996 the National Bank of Croatia reported $1,386 million in foreign exchange reserves.

Croatia's balance of payments situation has been helped by tourism receipts, but its strong export sectors registered declines in the early 2000s. In 2000, Croatia's main exports were ships and boats, petroleum products, and textiles and apparel. The textiles and apparel sectors were faced with competition from low-wage countries, and in wood product exports, Croatian producers compete with lower-priced Southeast Asian products. Croatian farmers state they are unable to compete with subsidized farm products in the EU. The food processing and chemical industries have been losing their markets due to their inability to produce competitively priced goods of high quality.

The US Central Intelligence Agency (CIA) reported that in 2002 the purchasing power parity of Croatia's exports was $5.1 billion while imports totaled $9.7 billion resulting in a trade deficit of $4.6 billion.

The International Monetary Fund (IMF) reported that in 2001 Croatia had exports of goods totaling $4.75 billion and imports totaling $8.76 billion. The services credit totaled $4.87 billion and debit $1.94 billion.

Exports of goods and services totaled $17.8 billion in 2004, up from $14.9 billion in 2003. Imports grew from $17.2 billion in 2003, to $20.2 billion in 2004. The resource balance was relatively stable over this time period, slightly depreciating from -$2.3 billion in 2003, to -$2.4 billion in 2004. A reverse trend was registered for the current account balance, which improved from - $2.1 billion in 2003, to -$1.6 billion in 2004. The national reserves (including gold) were $8.2 billion in 2003, covering less than 6 months of imports; by 2004, they increased to $8.8 billion.

BANKING AND SECURITIES

The National Bank of Croatia was founded in 1992. It has the responsibility of issuing currency and regulating the commercial banking sector. The Croatian dinar was issued 23 December 1991, and was replaced in 1994 by the kuna.

Commercial banks in Croatia include: Dalmatinska Banka, Zadar (1957), Dubrovačka Banka, Dubrovnik (1990), Slavonska Banka, Samobor (1873), Istarska Banka, Pula, and Osijek (1990). As of February 1996 Croatia had 57 banks. In 1995, Raiffeisenbank Austria d.d. Zagreb began operating in Croatia as the first bank with 100% foreign capital.

Bad lending practices, whereby banks willingly lend to local companies regardless of creditworthiness, has plagued the Croatian banking sector. Many Croatian banks remained in crisis into 2000. Since independence, a total of 15 Croatian banks have gone bankrupt.

The Croatian Bank for Reconstruction and Development (HBOR) was established in 1992 as a 100% government-owned institution, with the tasks of financing reconstruction and development and promoting exports through credits and credit guarantees. The International Monetary Fund reports that in 2001, currency and demand deposits—an aggregate commonly known as M1—were equal to $2.8 billion. In that same year, M2—an aggregate equal to M1 plus savings deposits, small time deposits, and money market mutual funds—was $12.7 billion. The money market rate, the rate at which financial institutions lend to one another in the short term, was 3.9%. The discount rate, the interest rate at which the central bank lends to financial institutions in the short term, was 5.9%.

The Zagreb Stock Exchange (ZSE) started operations in 1991. However, out of the entire portfolio of the Croatian Privatization Fund only 2% was privatized through the exchange. The introduction of the new Privatization Act in 1996 was expected to increase the role of the stock exchange, as was the adoption of an Investment Funds Act and a Securities Act. The Securities Law regulates the public offer of securities, legal entities who are authorized to conduct business with securities, securities transactions, prohibitions regarding businesses with securities, and the protection of investors. As of 2004, a total of 145 companies were listed on the ZSE, which had a capitalization of $10.959 billion. In 2004, the CROBEX rose 32.1% to 1,565.8.

INSURANCE

The Insurance Companies Supervision Directorate grants approvals for insurance companies' operations and supervises the operations of insurance companies doing business in Croatia. Insurance companies may be established by domestic or foreign entities and may be formed as a joint-stock, mutual, private, or public company. Pension funds (divided between employees, self-employed and independent farmers) controlled substantial financial assets in Croatia as of 1997. In 2003, direct premiums written totaled $905 million, of which nonlife premiums accounted for $704 million. In 2002, the country's top nonlife insurer was Croatia, with $304.2 million in gross nonlife premiums written. The top life insurer, that same year was Grawe, with $33 million in gross life premiums written.

PUBLIC FINANCE

The fiscal year follows the calendar year. The IMF and World Bank have granted Croatia $192 million and $100 million, respectively, to repair economic imbalances from war and to curb hyperinflation. The EBRD has approved financial support totaling $230 million for infrastructure, telecommunications, and energy

projects which otherwise would be unobtainable by the Croatian government.

The US Central Intelligence Agency (CIA) estimated that in 2005 Croatia's central government took in revenues of approximately $17.6 billion and had expenditures of $19.3 billion. Revenues minus expenditures totaled approximately -$1.6 billion. Public debt in 2005 amounted to 52.1% of GDP. Total external debt was $29.28 billion.

The International Monetary Fund (IMF) reported that in 2001, the most recent year for which it had data, central government revenues were HrK65,484 million and expenditures were HrK73,796 million. The value of revenues was us$7,852 million and expenditures us$8,848 million, based on an exchange rate for 2001 of us$1 = HrK8.340 as reported by the IMF. Government outlays by function were as follows: general public services, 9.4%; defense, 5.3%; public order and safety, 5.6%; economic affairs, 8.1%; housing and community amenities, 3.5%; health, 16.0%; recreation, culture, and religion, 1.3%; education, 8.0%; and social protection, 42.8%.

TAXATION

In December 2000 the government adopted a package of tax laws including the General Tax Law, the Law on Tax Advising, the Law on Corporate Profit Tax, and the Income Tax Law. In general, the new laws reduced some rates, but widened the tax base. The corporate profits tax was reduced from 35% to 20%. Reduced corporate tax rates of 5%, 10% and 15% are available for companies locating in "special care areas" (62 municipalities and towns deemed to be undeveloped) and in the Vukovar area. The corporate tax rate is also reduced for larger new investments: 7% for investments of at least HrK10 million (about $1.56 million); 3% for investments of at least HrK20 million (about $3.12 million); and 0% on investments over HrK60 million (about $9.3 million). Companies operating in one of Croatia's 12 free trade zones (FTZs) pay half the standard corporate tax rate (10%) or 0% if their investment is more that HrK1 million (about $156,000). There is no separate foreign investment law in Croatia, so branches of foreign companies are taxed the same as domestic companies, though only on profits made in Croatia. There is also a municipal firm tax of up to HrK2,000 (about $312).

Changes to the Personal Income Tax (PIT) Law, effective 1 January 2003, increased the number of PIT tax brackets from four to five (counting the personal allowance tax free amount), increasing slightly the bands for the lower rates, but introducing a new highest rate of 45%. The new rates were 0% up to about $2,609 a year (using $1 = HrK6.9); 15% for the next increment of income up to $5,217 a year; 25% on the next increment to $11,740 a year; 35% on the next increment to $39,364 a year; and 45% on income above $36,522 a year. Croatians are taxed on their worldwide income while foreigners pay only on income realized in Croatia. Deductions from taxable income are allowed for medical and housing expenses. There is a 15% withholding tax on dividend, interest and royalty income. Local surcharges on state income taxes range from up to 10% in small municipalities to up to 30% in Zagreb. The inheritance and gift tax is 5%, and there is a 5% real property transaction tax. Property taxes are assessed locally.

The employee's contribution to social security is 20%. By the pension reform legislation effective as of 1 January 2002, 15% goes to the national pension fund and 5% to new private pension funds. The new pension system is mandatory for workers under 40 as of 1 January 2002, and optional for workers 40 to 50 years old. Workers over 50 continue to contribute all 20% to the national pension fund. As of January 2003, the cap on social security contributions by an employee was set at $54,620 per year. The employers' contributions to social security, amounting to 17.2%, go for health and unemployment insurance: 15% for general health insurance, 0.5% for work-related accident insurance, and 1.7% for unemployment insurance.

The main indirect taxes in Croatia are the value-added tax (VAT), with a flat rate of 22%, and excise taxes. Specified goods and services, such as those from banks and insurance companies, are exempt from the VAT (0% rate). Slot machines are taxed at about $14.50 per month, while winnings from games of chance are subject to the 22% VAT. Per-unit excise taxes are assessed on petroleum products, tobacco, beer, alcoholic drinks, coffee, and nonalcoholic drinks. Luxury goods carry a 30% excise. Producers and importers of vehicles (cars, motorbikes, boats and airplanes) pay excise taxes, while buyers of used vehicles pay a sales tax. Auto insurance premiums are taxed at 15%, for liability insurance, and 10%, for comprehensive insurance. There are local consumption taxes on alcoholic drinks up to 3%.

CUSTOMS AND DUTIES

The Customs Law, Law on Customs Tariffs, and Law on Customs Services were implemented in 1991. Croatia adopted all of the international tariffs and protection agreements ratified by the former Yugoslav SFR that did not contravene Croatia's constitution. The customs system was considerably changed in 1996 with a new customs law that harmonized the system with that of the European Union. In 2000, customs laws were revamped yet again to allow the government to change tariff rates annually. Customs duties range mainly from 0–18%. The average tariff for industrial goods is 5% and for agricultural goods 27%. In 1996, goods such as raw materials, semifinished goods, spare parts, supplies used for repairing war damage, and the household possessions of returning Croatian refugees were exempted from customs duty and subject only to an administrative charge of 1%. The Customs Tariff lists all the goods specified and grouped into a system of 11 sections and 97 chapters with remarks on each chapter to simplify the customs declaration procedure.

Croatia has free trade agreements with Bosnia and Herzegovina, Hungary, Macedonia, and Slovenia, and has an Association Agreement with the European Union.

FOREIGN INVESTMENT

Attracting foreign investment is a key goal of the comprehensive strategy for long-term development, "Croatia in the 21st Century," adopted 21 June 2001 with an aim of becoming a fully integrated member of the European Union. The day before, the bilateral investment treaty (BIT) with the United States entered into force. Croatia does not have a separate foreign investment law, so foreign firms generally receive national treatment under the 1995 Company Law. The Law on Free Trade Zones (FTZs) was adopted in June 1996. Companies making infrastructure investments of at least $125,000 are eligible for a five-year tax holiday, while others (except those in retail trade, which are excluded from FTZs) pay half Croatia's corporate income tax rate (10% instead of 20%). Exported goods are fully exempt from custom duties and taxes. The government has designated 12 FTZ locations. The Croatian constitution states that rights acquired through capital investments cannot be withdrawn by law or any legal act and it also insures free repatriation of profits and capital upon disinvestment.

From 1993 to 2000, total foreign investment in Croatia totaled $4.68 billion, about 24% from the United States and 24% from Germany. Most foreign direct investment (FDI) has come through the privatization of government-owned assets and most has been directed to trade, services, banking, and telecommunications, rather than industry. The inflow of FDI was $0.55 billion in 1997, $1 billion in 1998, and peaked at $1.6 billion in 1999, due largely to the sale of 35% of the state telecommunications company, Hrvatske Telekomunikacye (HT), to Deutsche Telekom (DT) for $830 million. In 2000, FDI inflow fell back to $1.1 billion, then recovered to almost $1.5 billion in 2001 due to the sale of another 16% of HT to DT for $422 million, giving DT a 51% majority ownership. In 2002, FDI fell back to $900 million.

In foreign portfolio investment, as of 31 December 2001, US investors held $734 million of Croatia securities, $255 million in equity shares in Croatian companies, and $479 million in long-term debt securities. Outward investment by Croatian firms from 1993 through the first quarter of 2001 totaled $413 million, 39% going to Poland and 28% to Bosnia and Herzegovina.

The total stock of FDI that entered into Croatia between 1993 and 2003 was $10.1 billion, averaging around $1 billion per year. In the first three quarters of 2004, $877 million was invested in Croatia, which appeared to be down significantly over 2003, when total FDI amounted to $1.7 billion. Most of these investments went to telecommunications (20.9%), banking (19.6%), pharmaceuticals (11.3%), and petroleum production (7.8%). The largest investors were Austria (with 25.7% of total foreign capital inflows), Germany (20.7%), and the United States (14.7%).

Croatia's performance in terms of FDI inflow has been average if compared to other countries in Central and Eastern Europe. Most foreign capital was used for acquiring state-owned enterprises (or shares in those), and less was used for greenfield investments. The situation was expected to change in future years though, as the political system in the country has become more stable, and the government was gearing up for the EU accession.

ECONOMIC DEVELOPMENT

In October 1993, the government adopted an ambitious three-phase program intended to stabilize the economy through fiscal stabilization, currency reform, and accelerated privatization. The plan, however, relies upon cooperation with international financial organizations.

Economic development has been closely tied with privatization. By 1995, the process of ownership transformation had been fully completed by 2,554 companies. There were 221 companies that had the two Croatian Pension Funds and Croatian Privatization Funds (CPF) as majority owners, and 1,225 companies having the same funds as minority owners. The CPF is legally obliged to offer the shares of its portfolio for sale at auction, and as a rule sells its shares through the Zagreb Stock Exchange. Continued liberalization is expected by the reformist government of Ivica Racan, who aimed in 2003 to speed Croatia's anticipated membership in the European Union. The national insurance, oil, and gas companies were planned to be privatized during 2002–03. Croatia is a member of the IMF, IBRD, and EBRD (as one of the Yugoslav SFR's successor states). Upon the outbreak of conflict in Yugoslavia, the United States suspended all benefits to Yugoslavia under the General System of Preferences, but benefits under this program were subsequently extended on 11 September 1992 to all the former Yugoslav SFR republics except Serbia and Montenegro. Despite the economic adversity, foreign investors have been keen to identify business opportunities in Croatia's relatively stable economy.

In February 2003, Croatia negotiated a 14-month, $146-million Stand-By Arrangement with the IMF to support the government's economic and financial program. Strong domestic demand and business and government investment contributed to a 5% real gross domestic product (GDP) growth in the first nine months of 2002, compared to 3.8% in 2001. The government deficit declined in 2002, and inflation fell. The currency remained stable as well. The public debt rose, however, to 57.5% of GDP at the end of 2002, up from 55% at the end of 2001. This general economic success was due in part to a good tourist season, and a large highway construction program, in addition to increased private consumption and rising investment.

Croatia's economic performance was weaker in 2003 and 2004, partly due to a relatively unattractive investment climate. Croatia has failed to attract major greenfield investments which would have renewed its economic base, and would have created more dynamism in the market. Red tape, corruption, and problems posed by domestic companies, have also kept a lot of investors away. Nonetheless, the country boasts an educated workforce, a stable government, equality under the law, and the prospects of joining both the EU and NATO—all factors that make it a very attractive market, with great future potential.

SOCIAL DEVELOPMENT

The effects of the 1991 war, the great refugee burden, the disruptions of the Bosnian war, the absence of significant international aid, and other factors combined to strain the country's social fabric and economy. In 1993, the average standard of living stood at less than 50% of its level before 1991. Over 400,000 Croats were displaced by the war and its aftermath.

Croatia's first pension laws date back to 1922, with most recent changes in 2003. The law provides for a dual system of a social system and mandatory private insurance. Health and maternity benefits, workers' compensation, unemployment coverage, and family allowances are also provided. Retirement is set at age 63 for men and age 58 for women.

Women hold lower paying positions in the work force than men even though gender discrimination is prohibited by law. Also, women are more likely to be unemployed. Rape and spousal rape are grossly underreported, and there are only four women's shelters. Domestic abuse rose considerably in 2004, with 50% more cases registered. The weak economic situation, the aftermath and uncertainty from the war, and alcohol abuse are considered aggravating factors.

The constitution states that all persons shall enjoy all rights and freedoms, regardless of race, color, sex, language, religions, political opinion, national origin, property, birth, education or social status. However, ethnic tensions continue. Muslims and Serbs in Croatia face considerable discrimination. Arbitrary detention and torture, abuse of detainees, and other human rights violations continue. The Roma population also suffers discrimination.

HEALTH

Croatia is in the process of improving health care since the war years in the 1990s. Life expectancy in 2005 was 74.45 and infant mortality rate per 1,000 live births was 6.84. The overall mortality rate was 11 per 1,000 people.

Croatia had 84 hospitals in 1997, including both general and tertiary care facilities. The country is known for its spas, where patients receive preventive and rehabilitative care that makes use of spring water and other natural resources, as well as such treatments as massage. As of 2004, there were an estimated 237 physicians, 499 nurses, 68 dentists, 50 pharmacists, and 34 midwives per 100,000 people. Approximately 95% of the population had access to safe drinking water and 100% had adequate sanitation.

Immunization rates for children under the age of one were as follows: tuberculosis, 98%; diphtheria, pertussis, and tetanus, 92%; measles, 93%; and polio, 92%. In 1999, the incidence of tuberculosis was 61 per 100,000 people.

The HIV/AIDS prevalence was 0.10 per 100 adults in 2003. As of 2004, there were approximately 200 people living with HIV/AIDS in the country. There were an estimated 10 deaths from AIDS in 2003.

HOUSING

After years of war, the country is just beginning the process of rebuilding not only homes for the thousands who were displaced by the conflict, but industries, businesses, and civic buildings as well. As of the mid-1990s, nearly 800,000 displaced persons and refugees from Bosnia and occupied Croat territories were in Croatia, of whom approximately 640,000 have found temporary housing with families in Croatia. By 1997, thousands of refugees (mostly from Eastern Slavonia) still remained housed in coastal hotels.

According to the 2001 census, there were a total of 1,877,126 dwellings in the nation; about 1,660,649 dwellings were for permanent residents. Most dwellings had between two to four rooms. About 70,817 dwellings had been built since 1996. There were about 1,455,116 households representing 4,272,590 people. Most households had between two to four members.

As of 2001, the government has implemented a Welfare Supported Housing Construction Program to assist low-income families unable to purchase apartments.

EDUCATION

Education at the elementary level is free and compulsory for children between the ages of 6 and 15 years. Primary education covers an eight-year course of study. Secondary education covers a four-year course of study in one of three tracks: grammar schools, technical and vocational schools, and art schools. The academic year runs from October to June. The primary language of instruction is Croatian.

In 2001, about 38% of children between the ages of three and six were enrolled in some type of preschool program. Primary school enrollment in 2003 was estimated at about 89% of age-eligible students. The same year, secondary school enrollment was about 87% of age-eligible students. It is estimated that about 95.5% of all students complete their primary education. The student-to-teacher ratio for primary school was at about 18:1 in 2003. The ratio for secondary school was about 11:1.

In higher education, there are five universities: University of Osijek (founded in 1975), University of Rijeka (founded in 1973), University of Split (founded in 1974), University of Zadar, and University of Zagreb (founded in 1669). There are also 7 polytechnic schools and 17 professional schools. In 2003, about 39% of the tertiary age population were enrolled in some type of higher education program. The adult literacy rate for 2004 was estimated at about 98.1%, with 99.3% for men and 97.1% for women.

As of 2003, public expenditure on education was estimated at 4.5% of GDP, or 10% of total government expenditures.

LIBRARIES AND MUSEUMS

The National and University Library of Croatia in Zagreb (founded in 1606) had 2.5 million volumes in 2002. The Zagreb public library holds close to 300,000 volumes. In 1995, the country reported having 232 public libraries with a combined collection of 4.6 million volumes. The Information and Documentation Centre and Library of the Institute for International Relations is also in Zagreb, with holdings that include books, periodicals and journals, and official documents from various countries and in a variety of languages. The Croatia Library Association was founded in 1940.

Major museums in Zagreb include the Historical Museum of Croatia, Strossmeyer's Gallery of Old Masters, and the Gallery of Modern Art. Other major cultural centers include Split, which houses the Museum of Croatian Medieval Archeology, and Dubrovnik, with the Natural Sciences Museum among others. In all, the country boasts over 100 museums.

MEDIA

In 2003, there were an estimated 417 mainline telephones for every 1,000 people. The same year, there were approximately 584 mobile phones in use for every 1,000 people.

Government controlled Croatian Radio-Television (Hrvatska Radiotelevizija) has charge of all broadcasting. In 1999, Croatian Radio ran 16 AM and 98 FM stations with 5 shortwave options. In 1995, there were 36 television stations. It has been estimated that 80% of the population relies on the government-sponsored television news program, Dnevnik, for national news. Independent local stations can only cover about 65% of the country's territory. In 2003, there were an estimated 330 radios for every 1,000 people; the number of televisions was not available in the same survey. In 2003, there were 173.8 personal computers for every 1,000 people and 232 of every 1,000 people had access to the Internet. There were 146 secure Internet servers in the country in 2004.

In 1995, there were nine daily newspapers with a combined circulation of over 400 million, and 563 nondailies (including over 60 weeklies); there were about 400 periodicals. As of 2002, the major dailies included Vecernji List (circulation 200,000), published in Zagreb, and Novi List (60,000), published in Rijeka, as well as the sports daily Sportske Novosti (55,000), published in Zagreb. In 1994, there were some 2,600 book titles published.

In October 1996, a comprehensive Law on Public Information was passed in Parliament with general support from all parties to regulate the media. In general, government influence on media through state ownership of most print and electronic media outlets restricts constitutionally-provided freedoms of speech and press.

ORGANIZATIONS

In 1852, the Chamber of Commerce and Crafts was first organized in Zagreb. In 1990, the Croatian Chamber of the Economy (CCE) was established as the authentic representative of the Croatian economy. The CCE consists of 20 county chambers and promotes trade and commerce in world markets along with the Association of Independent Businesses and the Zagreb Trade Fair.

Since 1994, over 30 professional organizations have been founded in the CCE. A number of organizations promoting research and education in various medical and scientific fields have also formed, including the Croatia Medical Association. The Rudjer Boskovic Institute is a national organization that conducts research and educational programs for the natural sciences. The Croatian Academy of Sciences and Arts has been active since 1861. The Croatian Physical Society formed in 1990.

There are many sports associations throughout the country, including the general Croatian Athletic Federation and a chapter of the Special Olympics. Youth organizations include the umbrella organization of the Croatian National Youth Council (NSMH), the Croatian Club for the United Nations (CCUN), and the Junior Chamber of Croatia (JCC), as well as scouting programs. Among many national women's organizations are the Croatian Association of University Women the Women's Infoteka, and Be Active, Be Emancipated (BABE).

There are national chapters of the Red Cross Society and Amnesty International.

TOURISM, TRAVEL, AND RECREATION

Tourist attractions include visits to Dubrovnik and Split to enjoy the climate, scenery, and excellent swimming from April to October. Beautiful historic churches and ancient palaces can be found in the major cities. The many nudist camps and casinos are also popular attractions.

Approximately 3,086,506 foreign visitors arrived in Croatia in 2003. That year the average length of stay was five nights. There were 77,113 hotel rooms with 193,538 beds and a 27% occupancy rate. Tourism expenditure receipts totaled $6.5 billion.

In 2003, the US Department of State estimated the daily cost of staying in Zagreb at $220.

FAMOUS CROATS

Dr. Franjo Tudjman was president of Croatia from May 1990 until his death in 1999. Stjepan Mesić (b.1934) has been president since 2000. Nikica Valentić, Ivica Račan, and Ivo Sanader have all served as prime minister in recent years. Two Nobel prize winners have come from Croatia, both chemists: Lavoslav Ružička (1887–1976) and Vladimir Prelog (1906–98).

Josip Broz-Tito (1892–1980) was the leader of Communist Yugoslavia for many years after World War II. In 1948, he led his country away from the Communist bloc formed by the Soviet Union. Tito served in the Red Army during the Russian Civil War and led the Yugoslav resistance movement during World War II.

There are several internationally known figures in literature and the arts: Ivan Gundulic (1589–1638) wrote about the Italian influences in Croatia in Dubravka. Count Ivo Vojnović (1857–1929) is best known for A Trilogy of Dubrovnik. Miroslav Krleya (1857–1981) captured the concerns of prerevolutionary Yugoslavia in his trilogy of the Glembay family (1928–32) and in novels like Return of Philip Latinovicz (1932) and Banners (1963).

Double-agent Duško Popov (1912–1981), who worked during World War II, was the model for Ian Fleming's James Bond. The wartime figure, Andrija Artukovic (1899–1988), known as "Butcher of the Balkans" for his activities in support of Germany, is from Croatia. Religious leader Franjo Seper (1884–1981) was born in Croatia, as was inventor Nikola Tesla (1856–1943). Musician Artur Radzinski (1894–1958) became conductor of the New York Philharmonic in 1943 and of the Chicago Symphony in 1947. Zinka Kumc Milanov (1906–1989) was a dramatic opera soprano with the New York Metropolitan Opera in the 1950s and 1960s. Mathilde Mallinger (1847–1920) was a famous Croatian soprano who performed with Berlin Opera from 1869–1882.

DEPENDENCIES

Croatia has no territories or colonies.

BIBLIOGRAPHY

Ceriani, Conatella. Croatia. New York: DK Publishing, 2003.

Frucht, Richard (ed.). Eastern Europe: An Introduction to the People, Lands, and Culture. Santa Barbara, Calif.: ABC-CLIO, 2005.

Glenny, Michael. The Fall of Yugoslavia: The Third Balkan War. New York: Penguin, 1992.

Malovic, Stjepan. The People, Press, and Politics of Croatia. Westport, Conn.: Praeger, 2001.

McElrath, Karen (ed.). HIV and AIDS: A Global View. Westport, Conn.: Greenwood Press, 2002.

Stallaerts, Robert. Historical Dictionary of the Republic of Croatia. Lanham, Md.: Scarecrow, 2003.

Terterov, Marat and Visnja Bojanic, (eds.). Doing Business with Croatia. 2nd ed. Sterling, Va.: Kogan Page, 2004.

CROATIA

Major City:
Zagreb

Other Cities:
Dubrovnik, Karlovac, Osijek, Pula, Rijeka, Split, Zadar

EDITOR'S NOTE

This chapter was adapted from the Department of State Post Report 1999 for Croatia. Supplemental material has been added to increase coverage of minor cities, facts have been updated, and some material has been condensed. Readers are encouraged to visit the Department of State's web site at http://travel.state.gov/ for the most recent information available on travel to this country.

INTRODUCTION

Croatia, located in the middle of Europe, declared independence from Communist Yugoslavia in 1991, making it one of Europe's youngest nations. The capital, Zagreb, has all the characteristics of a historic and modern central European city.

MAJOR CITY

Zagreb

Zagreb, a city of some 1 million people, is the political, cultural, scientific, industrial, and commercial center of Croatia. The city is located between the green hillsides of Medvednica in the north and the Sava River in the south. Sljeme (3,354 feet) is a mountain park on the north part of town. It is easily accessible from the city by public transportation. It has many hiking trails and during the winter some skiing is possible if there is enough snow. Zagreb is an ancient trading center with an old European look to it. Narrow streets slip between the walls of former houses of 18th-century nobility, and gardens bloom in the center. In the spring and summer the streets are lined with outside cafes that are always full of people enjoying coffee or a beer. In the winter, poorly maintained houses and buildings combine with gray skies and fog to give it a drab and gloomy look.

Medieval Zagreb developed from the 11th-13th centuries in the twin towns of "Kaptol" and "Gradec." In "Kaptol" the oldest part of town, is found the cathedral Sveti Stjepan, the Bishop's Palace, and remains of the towers from an 11th century fortress. On an adjoining hill of the upper city called "Gradec," there are the ancient city gates, St. Mark's Church (which sports a distinctive multicolored tiled roof), several museums, the Parliament building, and other government offices. Kaptol was the seat of the diocese, but Gradec was the free royal city. They often fought one another, particularly during the 15th and 16th centuries.

In the late 19th century, the city spread out onto the flat area between the hills and river. Since WWII extensive high-rise construction has occurred in "New Zagreb" across the Sava to the south. Fortunately, the city weathered the chaotic period that followed Yugoslavia's breakup without sustaining much damage.

Utilities

All quarters have central heating and hot water. Window-unit air-conditioners are installed in some properties' bedrooms. Most cooking is by electric range oven, but a few units have gas ranges. Standard electric power is 220v, 50 cycles. Receptacles are standard mainland European-type with 2 round prongs.

Transformers are not readily available in Croatia, but Aviano AFB, Italy, sometimes has them in stock. Adapter plugs can be found at most U.S. military bases and travel stores in the U.S. Bring transformers, or dual-voltage, or 220v appliances, since transformers are limited in quantity. (Note that 110v/60Hz appliances such as record players, clocks, etc., often will not operate correctly even when used with a transformer unless other adjustments are made. These adjustments usually must be performed by a trained technician and can be expensive.) A power surge regulator is recommended for personal computers.

Food

Zagreb's food supply has improved in the last couple of years in terms of quality and variety. Many fruit and vegetable markets in town sell varied and fresh selections. Several new large supermarkets with parking areas have opened recently. It is becoming possible to find fruits and vegetables that are not in season, but prices are high. Generally, fruits and vegetables do not require extra sanitation procedures, such as soaking them in iodine.

Around or near the market there are places in which to buy meat. Pork and chicken are particularly good, and cold cuts with prices comparable to those in the U.S. are sold. There is a variety of dairy products. Cheese and yogurt are good and inexpensive. Fresh and long-life milk is available.

Local bread is delicious and inexpensive, but no preservatives are used, so you must buy it daily.

Some supermarkets offer what you would normally find in a small supermarket in the U.S., but with a much smaller selection of brands. Some imported products from Germany and Italy are available regularly. Numerous small neighborhood stores sell mainstays-milk, eggs, flour, juice, etc. The selection is always subject to change, and the assortment can be bewildering at times! You'll probably find one within walking distance of your home.

Zagreb has one very complete spice shop in town. Anyone fond of a particular cuisine should bring spices and be ready to substitute.

For the most part, everything is available. Nonetheless, many Croatians shop in Austria, Italy, and Hungary because they believe products are cheaper and of a better quality than in Croatia.

Local specialties will please your palate. Croatia's Dalmatian coast excels in seafood, including scampi and shellfish. A Zagreb specialty that sticks to your ribs is "strukli," a type of cheese strudel. Homemade Slavonian "kulen," a paprika-flavored salami, is widely available. Croatia is also famous for its plum brandies ("sljivovica"), herbal brandies ("travarica"), cognacs ("vinjak "), and liqueurs such as maraschino, a cherry liqueur made in Zadar. Italian-style espresso coffee is popular, as are Ozujsko and Karlovacko beers ("pivos"). Several good ice cream parlors in Zagreb make their own gelato-style flavors.

Clothing

Although some good-quality clothing is available, prices are generally much higher than those in the U.S, and fabrics generally don't hold up too well.

Men: Most entertaining is informal (coat and tie). Seasonal clothing needs are similar to those of New York or Washington, D.C. Zagreb has several very nice, but expensive, tie shops with designs which incorporate ancient Croatian motifs and symbols.

Women: Professional dresses are the normal dress for women. Women's suits, dress pants, and knitwear are practical and often worn to lunches, receptions, and cocktail parties.

Children: Bring a supply of children's clothes. Snowsuits, heavy jackets, coats, hats, mittens, ski pants, and warm boots are necessary for winter when temperatures dip below freezing and snow and ice can linger on the ground for weeks at a time. For summer, bring clothes for sports such as tennis and swimming. Temperatures reach the 90°F range in summer, so bring shorts and T-shirts. Bring special items like Halloween costumes, soccer cleats, ballet shoes, etc., with you.

Supplies & Services

Local stores seldom stock U.S. products, but several Croatian brands of shampoo, laundry detergent, lip balm, creams, and cleaning supplies are satisfactory and reasonably priced. In general, although you can find most anything you need here, it will be more expensive, and the shopping is not efficient, as parking is always difficult downtown and shops often run out of products on a weekly basis. High-quality brand-name cosmetics and toiletries locally will cost almost three times the U.S. price.

An English-language bookstore sells some children's books and cassettes, but most parents subscribe to children's book clubs or order books from catalogs. Parents of children at the American School of Zagreb can order books from the Scholastic Book Club every 2 months or so.

Tailors, dressmakers, and cobblers are available locally and offer excellent service at fair prices. Cloth is available at bargain prices, and all you need is a picture from a catalog, and most clothing items can be duplicated. Local dry cleaners, beauty and barbershops, radio and small electronics repair shops, and other service facilities are adequate and reasonably priced. Such beauty treatments as facials, waxing, and pedicures are available by appointment. Photo developing is quite expensive here, so many people send film to the U.S. (Mystic Photo) for developing through the mail, but the drawback is that it takes weeks to get your pictures.

Domestic Help

Domestic help is available. Many English-speaking young university students in Zagreb like to babysit. The average wage for childcare is $4-$5 a hour.

If you plan to bring a domestic employee, the Government of Croatia requires the individual to be declared through the local police (Department for Foreigners). If domestic help is employed full time (40 hours a week), your total gross monthly expenses would be about: Maid, from $800-$1,000; cook, $1,200-$1,400; driver, $1,000-$1,200; gardener, $1,000-$1,200.

The employee is responsible to report and to pay social security contributions and personal income tax.

The employer is responsible for: Signing a written contract (to include effective date, brief job description, expiration date, probationary period, annual leave, notice period, salary and benefits, work schedule); Ensuring secure working conditions (the employer is responsible for work injuries and damages as a result of working conditions that are not in accordance with Croatian regulations); Providing at least 18 working days of annual leave each calendar year; Providing maternity leave from 6 months to 1 year (compensation during maternity leave is paid with Croatian Social Security Funds); Paying for sick leave for a period of up to 42 calendar days (an authorized physician's approval is necessary); and Providing a separation notice in writing giving 2 weeks' notice if employed for less than 1 year, 1 month's notice if employed 1 year with the same employer, and 2 months' notice if employed 2 years with the same employer, etc.

If employees are employed from time to time, or just a few hours/week, there is no employer-employee relationship, and employees are paid hourly. Hourly rates vary.

Religious Activities

Zagreb is predominantly Roman Catholic, but the Serbian-Orthodox, Lutheran, Baptist, Church of Christ, Seventh-day Adventist, Mormon, Moslem, and Jewish faiths are represented. Although there is no Rabbi, Jewish services are held in the Community Center on Friday evenings.

A small English-speaking Catholic group says regular Sunday Mass and offers a First Communion and CCD program for children. A Baptist Church offers a service with translation into English.

Education

The Department of State partially supports the American School of Zagreb (ASZ), founded in 1966, but most income is through tuition. It is a private, nonprofit school that provides complete coeducational and nonsectarian instruction (from kindergarten through grade 8) based on a U.S. curriculum, principles, and standards for children of Americans and foreigners temporarily living in Zagreb. ASZ is not legally recognized by the Croatian Government. Although not incorporated with any state in the U.S., it is fully accredited by the Middle States Association of Schools and is a member of the European Council of International Schools.

ASZ is governed by a school board. The board has the authority to develop policy and to make regulations for the conduct of school business and to administer school affairs. The school occupies a private home for the lower school (kindergarten through grade 4) and two apartments next door for the upper school (grades 5 to 8) in a nice neighborhood in the north hills of Zagreb. The school has nine classrooms, a library, a computer laboratory, an art room, and three workrooms. The school has no athletic facilities, so students go to a local gym twice a week for physical education. Enrollment during the 1997-98 school year was about 90 children. School usually opens the first week of September and dismisses the second week in June, with vacations comparable to those ordinarily observed in the U.S. (Christmas and spring break).

Children who are 5 years old by October 31 of the year of entrance are eligible to enroll in kindergarten, which runs for the full school day (8:15 am to 2:30 pm).

The school has witnessed incredible growth in the last few years, and a new facility is being sought in Zagreb.

The curriculum is that of the U.S. general academic, public schools. Instruction is in English. English-as-a-Second Language instruction is offered to students with limited English proficiency. Special education programs are not available. The foreign-language program includes German and French. Croatian is not taught at the school.

The children take the ITBS (Iowa) test annually.

For preschoolers there are privately owned playschools for children ages 2-5 (potty-training is necessary). There are several English-speaking preschools as well as a newly opened French preschool and Montessori School. The preschools generally run from 9 a.m. to 1 p.m., but for working parents, some have hours until 4 p.m. Costs range from $100-$250 a month, depending on the program.

Special Educational Opportunities

Mirogoj, Zagreb's main cemetery, is a beautiful place to take a walk. Built in 1876 in the Renaissance style, the cemetery walls look almost like a fortress. Inside there are quiet wooded walking paths. It's interesting to see how burial places have been arranged according to religion. All Saint's Day is a fascinating time to visit the cemetery and see the thousands of burning candles and bunches of flowers placed on the graves of loved ones.

Extracurricular activities for children include karate, Tae Kwon Do, ice skating, tennis, swimming, piano, guitar, ballet and modern dance, and soccer. Costs for children to participate with a private instructor, or in a club, are comparable to, or less than, U.S. prices. Private tutoring in various languages is also available.

Sports

Zagreb has a variety of recreational facilities. The following sports are popular: skiing, ice hockey, hunting, water polo, handball, basketball, tennis, soccer, and sailing. For swimming, Zagreb has several indoor/outdoor swimming pools with lap lanes, diving platforms, and baby pools. There are many private tennis clubs. The cost to play once a week is about $150 a year. Indoor courts are available in winter. At Maksimir Park, tennis courts can be rented for $4 an hour. Squash courts are available at certain clubs and can be rented by the hour.

Basketball is popular in Zagreb, and from October to April games take place at the Cibona Centar. On Saturday afternoons soccer games are held at the Maksimir Stadium.

Yoga and aerobics classes are available in Zagreb through health clubs and private lessons.

Outdoor sports possibilities in Zagreb during winter are limited to skiing, horseback riding, skating, and sledding. Sledding is very popular in hilly Zagreb and its many parks. There are many natural hot springs (Toplice) with indoor/out-door swimming facilities. Skiing in Sljeme is popular and easily accessible; however, most people drive to Slovenia, Italy, or Austria to ski. There are excellent downhill and cross-country trails for experts and beginners. Several ice-skating rinks offer skates to rent and children's lessons.

Foreigners in Croatia can hunt deer, birds, etc., as guests of Croatians. Without such an invitation, you must belong to a hunting club. Fishing licenses cost 40 kuna a day.

On Croatia's Dalmatian coast, sailing, wind surfing, and other water sports are very popular. Scuba diving certification is available in Zagreb. The rugged islands off Croatia's mountainous coast from Istria to Dubrovnik provide a yachting paradise. The channels are deep, and the winds are steady. Of the some 39 modern marinas dotting the coast, the Adriatic Croatia International Club (ACI) operates 19 of them. Yacht rentals can be arranged. You can hire a "bare boat" (no crew) for your party and set out on your own (you must prove your competence), or join a "flotilla" of yachts sailing along a fixed route. Crewed yacht charters are also available. All charters are for at least 1 week. Prices range fromUS $1,350 to US $5,375 a week, depending on the type of yacht, plusUS$100 a day for the skipper.

Sea kayaking is popular around the Kornati Islands. There are package tours available.

Touring and Outdoor Activities

Pleasant excursions can be taken within the city of Zagreb and the surrounding areas. The hills and wooded areas around Zagreb are great for weekend walks and picnics. The Germans built and donated a particularly nice children's playground to Zagreb in Odranska, but otherwise children's playground equipment is substandard and does not conform to international safety standards. Good hiking trails go up to Medvedgrad, a medieval fortress on the southwestern part of Mount Medvednica, above western Zagreb. It was built in the mid-13th century to protect Zagreb from Tartar attacks. It has been partly restored. You can enjoy good hiking trails up and down Sljeme Mountain-and a cable car to ride-in case you get tired! There is also a paved road running to the top of Sljeme from Zagreb for those who want to drive.

Maksimir is Zagreb's largest and most beautiful park. The park has a zoo, several artificial lakes, and nice areas for biking and walking. Jarun is a lake with water slides, bike riding areas, picnic barbecue areas, and swimming. The Botanical Gardens were planted over a century ago and boast a wide variety of alpine and Mediterranean plants.

Though it may seem a strange destination, Mirogoj, Zagreb's main cemetery, is a beautiful place to take a walk. Built in 1876 in the neo-Renaissance style, the cemetery walls look almost like a fortress. Inside there are quiet wooded walking paths. It's interesting to see how the burial places have been arranged according to religion. All Saints' Day is a fascinating time to visit the cemetery and see the thousands of burning candles and bunches of flowers placed on the graves of loved ones.

There are nice "day trips" within a few hours' drive of Zagreb. Zagorje is a region north of Zagreb known for its rolling hills, vineyards, orchards, small villages, streams, ancient castles, spas, and health resorts. Of Zagorje's castles, Trakoscan, Miljana, and Veliki Tabor are the most beautiful. The scenery is reminiscent of West Virginia's Appalachian region in the U.S. In Zagorje, Varazdin is a pleasant little town with a few Baroque churches and a medieval castle that now contains the municipal museum.

Risnjak National Park at Crni Lug, between Zagreb and Rijeka, is a good hiking area in the summer. There's a small park-operated hotel at Crni Lug with rooms at US$20 per person. It's a 9-km, 2½-hour-climb from the park entrance at Bijela Vodica to Veliki Risnjak.

Kurnrovec is the birthplace of Josip Tito. His house was built in 1860 in the center of town. Today, it is a memorial museum with furniture and household implements from the time of Tito's childhood. Around Tito's house about 30 village houses and farm buildings from the turn-of-the-century have been preserved. They were restored and reconstructed to form the Staro Selo (Old Village).

Samobor is a small town west of Zagreb with a tradition in crafts and inn keeping. It's a nice area for fishing, swimming, and Carnival festivities. Many people enjoy shopping in a crystal factory there.

Krapina is a small town situated in Zagorje only 50 km from Zagreb. Krapina became famous in 1899, when the remains of an early human settlement 30,00040,000 years old were discovered at this site. Today, an archeological park features sculptures of early humans and animals. The Plitvice Lakes National Park occupies 195 km of forests, lakes, and meadows. There are hiking trails along the waterfalls and lakes. The color of the lakes depends on the plankton density-they range from a dark blue to a strikingly bright emerald color. The park, established in 1929, is on UNESCO's World Heritage List. It is a nice day trip, or the hotel is reasonable if you wish to stay longer.

The Adriatic coast is famous for its Mediterranean landscapes and climate. Istria, the peninsula just south of Trieste, Italy, offers many lovely weekend getaways (4-5 hour-drive from Zagreb). Porec, even after the fall of Rome, remained important as a center of early Christianity, with a bishop and a famous Basilica. There are many places to swim in the clear water by the old town. Rovinj is an active fishing port with a large Italian community. Its high peninsula is topped by the 57-meter high tower of St. Euphemia Cathedral. The 13 green offshore islands of the Rovinj Archipelago offer pleasant, varied views. The cobbled, inclined streets in the old town are where local artists sell their works. Each year in mid-August Rovinj's painters stage a big open-air art show. Pula is a large commercial harbor. The old town has many well-preserved Roman ruins such as the first-century AD Roman amphitheater overlooking the harbor. The rocky-wooded peninsulas overlooking the Adriatic waters are dotted with resort hotels and campgrounds. Brijuni is a fascinating group of islands. Each year from 1949 until his death in 1980, Marshal Tito spent 6 months at his summer residences on Brijuni.

Brijuni is a national park with some 680 species of plants, including many exotic subtropical species planted at Tito's request. In Brijuni, visitors can see Tito's three palaces, the luxury hotels where his guests once stayed, St. German Church-now a gallery of copies of medieval frescoes-and an exhibit of Tito photos.

The Gulf of Kvarner is also a nice part of the coast for weekend getaways (a 3-4 hour-drive). South of Rijeka, between the Istrian Peninsula and the Croatian mainland, are many islands, including Krk, Cres, and Pag. Many people frequent Opatija, once a fashionable bathing resort of the Hapsburg elite until WW I. Many grand old hotels remain from this time, and the promenade along the water affords a fine view. A massive concrete arch bridge links Island Krk to the mainland. It has many tourist hotels and many medieval churches and walls built in the 12th-15th centuries. Medieval Rab was an outpost of Venice for hundreds of years until the Austrians took over in the 19th century. Tall church towers rise above the red-roofed mass of houses on Rab's high peninsula. Places to stay in Istria range from private rooms for as little as $30/night to hotels that can cost up to $150/ night. Prices vary according to the time of year (May-September is high season). Most of the nearly 100 campgrounds along the Croatian coast operate from mid-May to September only.

Dalmatia is Croatia's most famous vacation area. Historical relics abound in towns like Zadar, Trogir, Split, Hvar, Korcula, and Dubrovnik. These towns are framed by a striking natural beauty of barren slopes, green valleys, and clear water. A warm current flowing north up the coast keeps the climate mild. You can swim in the sea right up until the end of September. Unfortunately, Dalmatia was not spared the damages of the former Yugoslavia's civil war, and many historic sights suffered shelling. Although most damages have been repaired, many hotels and restaurants are still closed because of fewer tourists. On the bright side, Dalmatia is not as crowded or expensive as it was before the war. The drive from Zagreb to Dubrovnik takes longer than 9 hours and the winding, two-lane coastal highway is scenic, but slow going, especially if you're behind trucks and buses. Daily flights from Zagreb to Dubrovnik cost about $100 one way but prices vary according to the time of year. There are ferries from Rijeka and Split to Dubrovnik as well.

Croatia's oldest tour company is the Atlas Travel Agency. Its "adventure" tours feature bird watching, canoeing, caving, cycling, diving, fishing, hiking, riding, sailing, sea kayaking, and white-water rafting in both Croatia and Slovenia.

Zagreb is accessible to Italy, Slovenia, Austria, and Germany. Ljubljana (a 2-hour drive from Zagreb) is near the mountain and lake resort district. Lake Bled is a resort area, which features an excellent golf course as well as the full range of winter sports. Trieste, Italy, and Graze, Austria, are favorite shopping towns-both about 2-3 hours' drive from Zagreb. Budapest and Vienna are about 5-6 hours' drive away. Venice is 4 hours' drive away. From Zagreb it is easy to explore and enjoy other European cities.

Entertainment

Zagreb's cultural life is rich: operas, concerts, chamber music, ballet, and theater are presented regularly. A monthly guide to events and performances in Zagreb is published by the Tourist Association, and copies can be obtained from the Tourist Information Center on the main square Trg Ban Jelacica. The guide is packed with useful information on museums, galleries, sports and recreational activities, restaurants, entertainment, etc.

Opera season runs from September to April and offers a wide variety of German, Italian, and Croatian operas, usually sung in their original languages.

Numerous concerts by orchestras and chamber music groups are presented throughout the year. Stage plays are performed in many theaters, but most theater is presented in Croatian.

The Zagreb Puppet Theater for children (of all ages) presents shows in Croatian, but for English speakers the stories are often familiar, such as "The Three Little Pigs," or "Hansel & Gretel."

Movie theaters (kinos) are popular around Zagreb and show feature films from all over the world-many of them recent U.S. films. Admission fees are low. Most cinemas show films in the original language with Croatian subtitles.

Zagreb has discos, casinos, and nightclubs as well. The B.P. Club is the best known jazz club in town. It is run by Bosko Petrovic, one of Croatia's best known jazz artists. Dance clubs such as Saloon and Kulusic are popular among the younger set.

In Croatia there are different types of restaurants: Restaurants, which offer international cuisine; Gostionica, which serves regional Croatian cuisine, i.e., dalmatinska; Bistro, which serves sandwiches, pizza, and snacks; Cafe Bar, which serves drinks and coffee only; and Slaticarna, which serves cakes, pastries, and baked goods.

Dining in the local restaurants is a popular pastime. Zagreb is full of small cafes where you can order drinks, pizza, or ice cream. In summer and fall, tables are set up out-doors, providing some relief from the ever-present haze of cigarette smoke indoors. McDonald's opened its first restaurant in Zagreb last year, and the chain is spreading around town, including a drive-in at one. Ethnic restaurants are becoming more popular. There are newly opened Chinese, Turkish, Indian, Mexican, and Italian restaurants in town. Many Zagreb restaurants offer similar menus, with roasted and grilled pork and lamb, also some veal and beef as the mainstay specialties. Prices at several good restaurants range in price from $20-$40 per person. Eating out in Zagreb at a nice restaurant is not a child-friendly experience. Home delivery of fast food is not available, but a few pizza and Chinese places offer takeout.

Social Activities

The American community in Zagreb is small. In addition to U.S. employees and their families at the Embassy, you can meet other U.S. citizens who work for humanitarian relief organizations, the American School, the UN, as missionaries, American citizens married to Croatians, and journalists.

A friendly and active international community exists in Zagreb. Frequent social events revolve around the various embassies represented here, but no one has special facilities. The American School of Zagreb has annual picnics and holiday parties for families as well as spring and Christmas programs which the children present for parents.

The International Women's Club (IWC) is open to wives of business and diplomatic personnel, as well as Croatians. The IWC sponsors tennis, yoga classes, nights at the opera, a mother and toddler group, and language groups. The IWC also supports many charities. Their major fund raising event is the annual Christmas bazaar. Monthly meetings are held to exchange news and views over coffee.

The active chapter of the "Hash House Harriers" gathers for a run and barbecue every month or so. The Harriers, founded originally by British diplomats in Kuala Lumpur, are popular all over the world.

OTHER CITIES

DUBROVNIK , established by the Greeks in the seventh century and virtually independent through its long history, is a lovely seaport on the Adriatic, and a major Croatian resort. Arts and literature flourished in Dubrovnik during medieval times. Traces of its early architecture remain—parts of the original city walls; a historic palace; the customs house and the mint; and several monasteries, one of which housed an ancient apothecary. Dubrovnik's independence ended when Napoleon took the city in 1808 and made it part of the Illyrian provinces. It was assigned to Austria from 1815 until 1918, the year it was claimed by Yugoslavia. Today, Dubrovnik's residents annually play host to thousands of European tourists who come to enjoy the climate and beauty of the Dalmatian coast. Swimming is excellent from April to October. At an annual festival, held in mid-summer, operas, ballets, and plays are presented in the city's palaces, squares, and fortifications. An excellent view of the city is found at the summit of Mount Srdj, which is reached by cable car. During Croatia's 1991 civil war, Dubrovnik was shelled by Yugoslav Federal Army tanks, artillery battalions, and gunboats. Many ancient buildings, monuments, and hotels were heavily damaged or destroyed.

The city of KARLOVAC , located 33 miles (53 kilometers) southwest of Zagreb, is situated at the confluence of the Korana and Kopa Rivers. During the 16th and 17th centuries, the city was unsuccessfully attacked several times by the Turks. A fortress, built in the 16th century, still stands today as a reminder of Karlovac's past. Karlovac is one of Croatia's important industrial centers. Industries in the city produce chemicals, footwear, and wool. The city is linked by rail with Zagreb and serves as a transit point for wine, grain, and timber. Karlovac is also the home of Croatia's oldest public library.

The industrial city of OSIJEK lies along the banks of the Drava River in eastern Croatia. A fortress dominates the upper, or old, town, while the lower is the city's commercial and industrial heart. Textiles, tanneries, and manufacturing provide employment for Osijek's residents. The nearby town of Borovo has a large footwear factory, as well as a rubber-producing plant. Osijek received heavy damage during the Croatian civil war after Serbian forces shelled and besieged the city.

Considerable Roman remains can be found in the Croatian port city of PULA , which is situated on the Istrian peninsula in northwestern Croatia. Located about 50 miles south of Trieste, Italy, Pula is a naval base and shipbuilding center. Historically, the city was established in 178 B.C. as a Roman military and naval base. It has been destroyed and rebuilt many times and has seen the passing armies of the Byzantines, Franks, and Venetians. Pula became part of Austria via the 1797 Peace of Campoformio, part of Italy via the Treaty of St. Germain in 1919, and was assigned to Yugoslavia in 1947. Roman remains include the Temple of Diana; a triumphal arch; and a three-tiered amphitheater with 72 arches that seats 23,000 people. Roman and Byzantine mosaics may be found in Pula's archeological museum. Pula is also the site of many medieval churches and old palaces. Several beautiful, sandy beaches also attract tourists. The city is an important economic and industrial center. Industries in Pula produce textiles, glass, cement, and machinery.

RIJEKA , a seaport in northwestern Croatia, was known to the Italians as Fiume during the years of domination by that country after World War I. Early in its history, the city was part of the Byzantine Empire, later came under the domination of Croatian dukes and, in succeeding years, passed to Austria, France, and Hungary. Italy, which had occupied the city in 1918, left the Paris Peace Conference the next year in a dispute over the area. Rijeka became a free city-state in 1920 in the Treaty of Rapallo, but fascist troops overthrew its government, and the city was divided—Rijeka (or Fiume) went to Italy, and the Suo Barros, to Yugoslavia. It was not until 1947 that the two parts were reunited in a formal transfer to the latter country. The old section of Rijeka has buildings dating from the Renaissance and Baroque periods. Numerous museums, art galleries, theaters, and a library are located in the city. Rijeka is an important port and a departure point for cruises along Croatia's Adriatic coast. Several major industries are located in Rijeka, among them are oil refining and shipbuilding.

SPLIT is an important Croatian commercial center on the Adriatic. Its superb location on the Dalmatian coast has made it one of Croatia's leading resorts, with modern beaches and good hotels. Split's history began in the seventh century, when residents of the nearby colony of Salona fled from Avar invaders and took refuge at the palace of Diocletian, a Roman emperor of earlier centuries. A new settlement, Spalatum (now Split) grew within the palace walls. For hundreds of years, the town existed under a succession of rulers—Byzantine, Venetian, and Austrian—until it was claimed in 1918 by Yugoslavia. During World War II, the city was occupied by German troops. Some ruins of the destroyed colony of Salona are still found close by. Split itself has numerous monuments and a cathedral of note, once the mausoleum of Diocletian. Split is a major cultural center, with a number of museums and art galleries. One gallery honors Jan Mestrovic, one of Croatia's greatest sculptors. There are frequent presentations of opera, concerts, and ballet. Five miles northeast of Split are the ruins of Salona, a major Roman port.

The city of ZADAR is situated on Croatia's Adriatic coast. Zadar was founded in the ninth century and today is an important cultural and economic center. Cultural activities in the city are centered around museums, theater, and art galleries. Zadar has many historical buildings and monuments that are of interest to visitors. The historic sites include the remains of a Roman forum, an Arch of Triumph built in honor of the Roman emperor Trajan, a ninth-century church (St. Donat), a thirteenth-century cathedral (St. Anastasia), a Franciscan church and monastery, and many medieval churches. During the summer, St. Donat's hold classical music concerts. Zadar is the home of several industries and is noted for the production of Maraska cherry liqueur. Other industries in Zadar manufacture rope, cotton and synthetic textiles, leather, processed fish, cigarettes, and plastics.

COUNTRY PROFILE

Geography and Climate

Croatia is situated at the intersection between central Europe and the Balkans. Croatia covers 56,500 square kilometers (21,829 square miles) of mainland and somewhat less than 32,000 square kilometers (12,316 square miles) of sea. The Adriatic coastline, which includes 1,185 islands, islets, and reefs, is 5,740 kilometers (3,566 miles) long and famed for its clear waters. 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 about the size of West Virginia. It is bordered by Slovenia to the north, Hungary to the northeast, Serbia to the east, Bosnia and Herzegovina to the south, and Montenegro to the southeast. Croatia's geography is diverse with its rocky coastline, densely wooded mountains, plains, lakes, and rolling hills. In an effort to preserve its environment, Croatia maintains seven national parks.

Zagreb's climate is predominately continental, with hot and dry summers and cold winters. Rainy weather, with accompanying fog and smog, is common in the fall from October through December. In winter, from December to March, snowfalls can be frequent, occasionally heavy, and temperatures sometimes fall below zero. The sun may not appear for weeks on end. Mean minimum and maximum temperatures are 20 °F-38 °F in January; 60 °F-81 °F in July. On the coast, the climate is typically Mediterranean with long, hot summers and moderate winters.

Population

According to the State Statistics Bureau 1995 estimate, Croatia's population is 4.78 million. The population of Zagreb is 930,550. There has been no census since 1991 because of the war in the former Yugoslavia. However the last census split the population as follows: 3.7 million Croatians, 580,000 Serbs, 43,500 Moslems, and 113,000 others (Slovenes, Italians, Czechs, Albanians, Montenegrins, Gypsies, and Macedonians). Some 2.3 million ethnic Croats live abroad, including almost 1.5 million in the U.S. Pittsburgh and Buenos Aires have the largest Croatian communities outside Europe.

Roman Catholics account for 77% of the population. The Serbian-Orthodox represent 11%, Moslem 1.1%, and 633 Jews (0.01%). The remainder includes Greek Catholics, Protestants, and others. Croatian is a South-Slavic language. Before 1991, both Croatian and Serbian were considered dialects of Serbo-Croatian. However, since the war this term is no longer used. Croatian uses Roman script and spelling is phonetic. Because

Croatia was historically part of the Austro-Hungarian Empire, German is the most commonly spoken second language in Croatia. Many people in Istria understand Italian, and English is widely spoken among the youth in Zagreb.

Public Institutions

Croatia first emerged as a nation-state in 925 A.D. and later became a semi autonomous province of Hungary, a status that lasted until the collapse of the Austro-Hungarian Empire following World War I. In the intervening years, Croatia faced wave after wave of would-be conquerors, principally from the Venetian and Ottoman Empires.

With the defeat of the Austro-Hungarian empire in WW I, Croatia became part of the Kingdom of Serbs, Croats, and Slovenes (called Yugoslavia after 1929) with a centralized government in the Serbian capital Belgrade. In 1939, an administrative reorganization granted Croatia some regional autonomy.

After the German invasion of Yugoslavia in March 1941, a puppet government dominated by the fascist Ustasa movement was set up in Croatia and Bosnia-Herzegovina under the leadership of Ante Pavelic. Pavelic proclaimed the Independent State of Croatia (NDH). The Ustasa launched an extermination campaign that surpassed even that of the Nazis in scale, murdering perhaps as many as 350,000 ethnic Serbs, Jews, and Gypsies and Croats who disagreed with the regime.

At the end of WWII, Croatia became one of six federal republics of the new socialist Yugoslavia, under the control of the Communist and former partisan leader Josip Broz-Tito. Tito's ruthlessness and political skill built a union which, despite unresolved underlying ethnic conflicts, lasted until well after his death.

In 1989, with political changes sweeping Eastern Europe, many Croats felt the time had come to end more than four decades of Communist rule and attain complete autonomy. In the April 1990 free elections, Franjo Tudjman's Croatian Democratic Union (Hrvatska Demokratska Zajednica) easily defeated the old Communist Party. On May 30, the new Croatian Parliament was formally established, and on December 22, 1990, a new Croatian Constitution was promulgated.

On June 25, 1991, Croatia declared independence from Yugoslavia. The Serb minority opposed its secession and started a rebellion, backed by the Serbian-led Yugoslav army. During 6 months of fighting in Croatia, 10,000 people died, hundreds of thousands fled, and tens of thousands of homes were destroyed. By January 1992, when a U.N. cease-fire was agreed to, one-third of Croatia was under the control of the Serbs, who proclaimed their own republic of Krajina comprising three enclaves.

Croatia was formally recognized by the European Community (now European Union) on January 15, 1992. The U.S. recognized the new nation on April 7, 1992. Croatia became a U.N. member in May 1992. In August 1992, Tudjman was elected President and his HDZ party won an absolute majority in the Lower House of Parliament.

In two blitz offensives in May and August 1995, the Croatian army reconquered the largest chunks of the Krajina, prompting an exodus of Serbs. In November 1995, Zagreb agreed to peacefully reintegrate the last Serb enclave of Eastern Slavonia (located along the Danube River border with Serbia). According to the Erdut Agreement, reintegration was projected in 1998. Until that time, a transitional U.N. administration is present. In December 1995, Croatia signed the Dayton Peace Agreement, committing itself to a permanent cease-fire and the return of all refugees.

The Government in Croatia is divided among three branches: executive (President and Cabinet), legislative (Parliament), and judicial. The supreme executive power in Croatia is the President. The current President was reelected in June 1997 for a second 5-year term. The President appoints the Prime Minister and other members of the government. All executive appointments require confirmation by the Chamber of Representatives. The ruling HDZ party continued to dominate by winning the October 1995 elections for Parliament's lower house and the April 1997 vote for the upper house of Parliament and local administrative bodies.

The Parliament, the highest legislative body, consists of two Chambers: The Chamber of Representatives and the Chamber of Provinces. Legislation mandates that national minorities be represented in Parliament.

The following political parties in Croatia are represented in Parliament: Croatian Democratic Union (HDZ) Croatian Social Liberal Party (HSLS) Croatian People's Party (FINS)

Croatian Peasant's Party (HSS)

Social Democratic Party of Croatia (SDP) Croatian Party of Right (HSP)

Istrian Democratic Parliament (IDS) Serbian National Party (SNS)

Croatian Independent Democrats (FIND) Croatian Christian Democratic Union (HKDU)

Croatian Independent Democratic (FIND) Action of Social Democrats (ASH) Independent Serb Democratic Party (SDSS)

Slavonia-Baranja Party (SBHS)

The Chamber of Representatives nominates and confirms the 15 members of the Supreme Court, Croatia's highest judicial body.

Arts, Science, and Education

Croatia has 219 museums, galleries, and museum collections, as well as 60 ecclesiastical and numerous private collections. There are 659 specialists, curators, restorers and researchers who oversee about five million objects in 1,100 various collections, a treasury of the cultural and natural heritage of Croatia.

The Mimara, one of Zagreb's most prominent museums, contains the works of Rafael, Rubens, Velazquez, Goya, Rembrandt, Hals, Degas, and Pissaro. The Mimara has 42 exhibition halls and a multimedia center. The diverse collection also contains large sections of glassware, sculpture, and oriental art. The Stross-mayer Gallery houses many of the Old Master works such as Botticelli, Bellini, Tintoretto, Veronese, and El Greco. The Archeological Museum contains one of Europe's richest numismatic collections including some 260,000 samples of old coins, medals, medallions, and decorations. There are also Roman stone monuments dating back to the period from the first to the fourth centuries B.C. The Ethnographic Museum has collections of Croatian folk costumes, delicate pieces of lace from the Island of Pag, gold embroidered scarves from Slavonia, and the jewelry of Konavle. Also popular in Zagreb are the Museum of Contemporary Art and the Croatian Museum of Naive Art.

The works of Croatia's most famous sculptors, Antun Augustincic and Ivan Mestrovic, are renowned beyond Croatia's borders. Mestrovic's works can be seen all around Croatia. His sculpture and architecture display a powerful classical style he learned from Rodin. His Zagreb studio and his retirement home in Split have been turned into galleries displaying his work. Croatian naive art has also gained an international reputation. The most celebrated painters in the naive style are Ivan and Josip Generalic, Ivan Vecenaj, Mijo Kovacic, and Ivan Rabuzin. The newly opened "Cudo Hrvatske Naive" exhibits and sells naive art. It also organizes exhibitions of Croatian naive artists abroad.

Zagreb has 20 theaters, the oldest of which is the Croatian National Theater, founded more than a century ago and built in the neo-Baroque style. Culture was heavily subsidized by the Communists, and admission to operas, ballets, and concerts is still reasonable. Season opera tickets in Zagreb (October-May) can be purchased for $15-$60. Operas are presented in their original languages, though the quality of performances is hit and miss. Visiting opera companies from the region perform as well. Zagreb has a popular children's puppet theater. Most theater is performed in Croatian. The Vatroslav Lisinski Concert Hall is the favorite place to hear the Zagreb Philharmonic Orchestra and various holiday musical concerts. Among those who started their artistic careers in Zagreb and went on to achieve international fame are pianist No Pogorelic, opera diva Ruza Pospis-Baldani, and conductor Vjekoslav Sutej.

Croatian folk music has had many influences. The kolo, a lovely Slavic round dance in which men and women alternate in the circle, is accompanied by Gypsy style violinists or players of the tambura, a three-or five-string mandolin popular throughout Croatia. The measured guitar playing or rhythmic accordions of Dalmatia have a gentle Italian air. The Croatian folkloric ensemble "Lado" perform lively Mediterranean dance rhythms and sing folk songs with haunting voices.

Zagreb hosts many international cultural events such as the International Folklore Festival, International Competition of Young Conductors, International Jazz Fair, Musical Biennial Zagreb, International Festival of Avant-garde Theaters, International Festival of Puppet Theaters, and the International Garden Exhibition. During summer many coastal cities stage international festivals such as the Dubrovnik Summer Festival, the Split Summer Festival, and Zadar Music Evenings.

Zagreb is a university center-home to some 40 graduate and undergraduate schools and over 80,000 students. Its first secular school was founded in the mid-14th century. The first secondary school was established at the beginning of the 16th century, and the university opened its doors in the second half of the same century. Zagreb University is one of the oldest universities in Europe. The roots of higher education began with the establishment of the Jesuit Gymnasium in 1632 to teach moral theology. Thirty years later, in 1662, the Academy for Philosophy was introduced. In 1669, Emperor Leopold granted the school the right to award doctorates. The cities of Split, Zadar, Osijek, and Rijeka also have universities.

Croatia has about 2,000 libraries: 160 rank as scientific libraries, 4 of which are university libraries. The University of Zagreb Library is also considered the National Library. There are 91 faculty libraries, 60 libraries attached to research institutes, and 1 central library (attached to the Croatian Academy of Arts and Sciences).

The Academy of Arts and Sciences was founded in 1860. Zagreb has the following cultural institutes:

The French Institute has a library and reading room. CD's and videos can be borrowed. Cultural activities include theater, films, dance, lectures, and concerts.

The American Embassy's Peace Memorial Library, open to everyone, has more than 6,000 books by American authors and 200 magazines and journals in its stacks. A reference librarian is on staff. The Austrian Cultural Institute sponsors such activities as concerts, exhibitions, seminars, lectures, and courses for preschoolers in German. The British Council has a large selection of books, periodicals, reviews, and videos. The Council promotes cultural, educational, and technical cooperation between Britain and other countries.

The Italian Cultural Institute in Zagreb has various cultural activities including films, concerts, shows, literary meetings, scholarships, and research assistance for students.

The Goethe Institute has a large public library with books, magazines, newspapers, CD's, and videos.

Commerce and Industry

The former Communist government of Yugoslavia emphasized heavy industry, especially in aluminum, chemicals, petroleum and shipbuilding. Today, Croatia is the world's third-largest shipbuilder, with most of the output from the shipyards of Pula, Rijeka, and Split intended for export. The following industries are centered in Zagreb and surrounding areas: chemical, machine tool manufacture, electrical engineering, and textiles. About 80% of Croatia's petroleum comes from local oil wells. Most of the wells in the former Yugoslavia were in Croatia, north and east of Zagreb. In the past, one-third of Croatia's national income has come from tourism, but in 1991 and 1992 Croatia received few visitors on account of the war. By 1993 Germans, Austrians, and some Italians had returned to Istria, but Dalmatia has had a slower recovery.

The collectivization of agriculture just after WW II failed and private farmers with small plots continue to work most of the land. The interior plains produce fruit, vegetables, and grains (especially corn and wheat), while olives and grapes are cultivated along the coast.

Croatia is negotiating admission to the World Trade Organization and the Central European Free Trade Organization (CEFTA) with member countries. It is also one of several post-Communist countries seeking to become part of the European Union. Three international rating agencies gave Croatia investment grade ratings of BBB-and-equivalent in January 1997. Standard and Poor's placed it just behind Poland and ahead of Slovakia and Greece.

Since independence, Croatia has had to completely reorient its trade after the loss of markets in the southern regions of former Yugoslavia. In 1992 Italy, Germany, and Slovenia together accounted for well over 50% of Croatia's imports and exports. The average wage decreased during the war to US$125 a month. Most Croats only manage to make ends meet because they still receive subsidized housing, health care, education, etc., and many hold down two or three jobs. Relatives abroad send money home and much of the rural population grows its own food. Others have savings from the good years before 1991.

An austerity program introduced in 1993 curbed inflation, which was running at 3 8% a month. In 1996 it was 3.5%. Although the inflation rate has stabilized, prices are noticeably increasing and are comparable with costs in large, urban U.S. areas. The IMF estimates GDP rose by 5% in 1996. In 1995 industry accounted for 20% of GDP, public sector services 24%, agriculture 11%, trade 9%, and tourism 4%-5%. Unemployment in 1997 was high at 16.6%.

Croatia is in the intermediate phase of the implementation of a complete economic reform program under agreement with the IMF. This 3-year program, to last until the end of 1999, worked to achieve an economic growth level with low inflation (3%-4% annually), maintain a stable exchange rate and low budget deficit, implement basic and structural reforms, and ensure an adequate social security network. There are detailed studies about the development of payment transactions and the introduction of high-liability systems to increase surveillance over bank bonds. Croatia decided it would not take up the second and third branches of this $486 million 3-year loan agreed by the IMF earlier this year.

U.S. policy supports strengthening bilateral economic ties particularly business relations. Croatia is included in the Generalized System of Preferences. The Overseas Private Investment Corporation covers political and war risk for U.S. firms investing in Croatia. Croatia is a member of the International Monetary Fund, IBRD, and EBRD and is seeking to be a party to the General Agreement on Tariffs and Trade (GATT). The U.S. Business Council for Southeastern Europe (formerly the U.S.-Yugoslav Economic Council) and its Croatian counterpart, the Croatian Chamber of Commerce, work to stimulate economic cooperation and to develop further business opportunities. Croatia signed an agreement for a $5 million PL-480 Title I loan for the purchase of U.S. sunflower seed oil in 1997. Bilateral agreements on investment and double taxation were also concluded in 1997. Throughout the war, U.S. trade and investment in Croatia was minimal, although it is increasing.

In May 1994, Croatia replaced its currency, the dinar, with the kuna, which takes its name from the marten, an animal whose pelt served as a means of exchange in the Middle Ages.

Transportation

Automobiles

The large car rental chains represented in Croatia are Avis, Budget, Euro car, and Hertz. Independent local companies are often less expensive than the international chains. At all agencies, the cheapest car is the Renault 4 and prices begin around US$125 a day plus US$0.20 per km (100 km minimum), or US$300 to US$350 a week with unlimited km. Full collision insurance is US$8 a day extra and theft insurance is another US$8 a day. Add 20% tax to all charges.

Local

Public transportation is cheap and reliable with trams and buses leaving every 30 minutes from stops all around the city and surrounding hills. Taxis are available at taxi stands throughout the city, or may be ordered by phone. Taxis are safe, but quite expensive with meters that begin at

US$1.25 and ring up US$0.65 a kilometer. Rates are higher after 10 pin and on Sunday. For convenience, bring your own transportation. Although local transportation is readily available, it is usually very crowded, especially during rush hour.

Roads throughout Croatia are narrow-certainly not as wide as by Western standards-and parking is often tight in Zagreb, so consider a mid-to compact sized vehicle. Roads are in fair shape and are maintained and cleaned regularly. Of course, there are still numerous potholes to be avoided. Main roads are plowed in winter, but secondary and side roads are not always cleared. The hills and twisting roads outside the center of Zagreb are often treacherous in bad weather. Bring snow tires for your car. Croatians drive more recklessly than the average American, so defensive driving is a must. Motorists must also pay special attention to the trams (streetcars).

Since independence, Croatia has seen increasing numbers of cars. Now, roads toward the coast on weekends and in major cities experience heavy congestion on weekends and during rush hour. Primary roads are generally adequate, but most have only one lane in each direction, including roads to and from the coast. If you travel through former conflict areas, stay on paved roads to reduce the risk of encountering leftover mines. Emergency road help and information may be reached by dialing 987. For additional road condition and safety information, contact the Croatian Automobile Association (HAK) at telephone (385) (1) 455-4433.

Regional

From the main railway station there are daily international lines for Munich, Vienna, Venice, Budapest, Paris, Geneva, Graz, and Moscow. There are daily international bus lines to: Graz, Munich, Stuttgart, Frankfurt, Dortmund, Cologne, Zurich, and Barcs. Twice weekly buses leave for Berlin and Istanbul.

Zagreb Airport is located in the village Pleso, 17 kilometers from the center of the city, about a 25-minute drive. Airlines servicing Zagreb include Croatia Airlines, KLM, Lufthansa, Pan Avia, Swissair, Aeroflot, Air France, Austrian Airlines, Air Canada, and British Airways. Croatia Airlines has flights from Zagreb to Amsterdam (1 hour and 45 minutes), Berlin (2 hours and 15 minutes), Brussels (2 hours and 30 minutes), Budapest, Copenhagen (1 hour and 40 minutes), Dusseldorf, Frankfurt (1 hour and 30 minutes), Hamburg, London (2 hours and 10 minutes), Madrid, Manchester, Moscow (3 hours and 15 minutes), Munich, Paris (1 hour and 50 minutes), Prague, Rome (2 hours and 30 minutes), Skopje, Stuttgart, Tirana, Vienna (1 hour), and Zurich (1 hour and 15 minutes).

Communications

Telephone and Telegraph

Telephone service in Zagreb is good and reliable. Personal e-mail and Internet accounts can be established with America On-line or the Croatian telephone company. Expect to pay higher user rates than you would in the U.S. Long-distance calls to the U.S. are expensive (two to three times higher than calls placed from the U.S.) but relatively inexpensive to continental Europe. International operators can be accessed directly for AT&T, MCI, and SPRINT. The Croatian Post Office's telegram service is inexpensive and reliable.

Radio and TV

Broadcasting in Croatia is dominated by Croatian Radio and Television (HRT). Croatia passed legislation on private TV and radio stations in July 1994 and has begun granting licenses and frequencies for local and regional radio and television. Several small local radio stations emerged after independence. State-controlled HRT broadcasts daily on three television channels and three radio channels. HRT radio programs reach more than 96% of the population. TV programs reach 93% of the population. The prominent, semi-independent station, OTV Youth Television, reaches only the greater Zagreb area.

Croatian radio broadcasts are similar in format to Western European stations lectures and talk shows-and the music is largely Western. The stations are diverse, playing classical, pop (Top 40), and jazz music. European "club techno" music is popular with Croatia's youth. Croatian radio broadcasts the news in English every day at 8 am, 10 am, 2 pm, and 11 pm. Various radio stations are accessible on the Astra Satellite (19.2 degrees E), such as Virgin (UK), SKY (Holland), BBC 1-5, Radio France International, and America One (NPR).

American TV (NTSC) is incompatible with the local Croatian transmission system (PAL). A PAL TV or a multisystem TV with PAL capacity is necessary if you want to view Croatian/European TV Three Croatian channels show a lot of American movies and sitcoms with subtitles. Most employees purchase a satellite dish. A 1½-2-meter dish will bring most anything you would desire to view such as: NBC Super Channel, CNN, SKY, TNT, MTV, etc.

It is a good idea to have a multisystem VCR, as many new video stores opening in Zagreb have a decent selection of movies.

Newspapers, Magazines, and Technical Journals

Foreign newspapers and magazines can be found at newspaper kiosks all around the center of Zagreb. The International Herald Tribune, international editions of American and European news periodicals such as Time, Newsweek, or Paris Match, are available. Daily newspapers and some reviews can be read in the reading rooms of the various cultural centers and libraries in town. Permanent foreign media bureaus in Zagreb include the New York Times, Associated Press, AFP and Reuters. There are also stringers and visiting correspondents for various bureaus.

There are three national and three regional dailies in Croatia: Vjesnik (Zagreb), government; Vecernji list (Zagreb), government; Novi list (Rijeka), private; Slobodna Dalmaciia (Split), private; Glas Slavoniie (Osijek), private; and La Voce Del Popolo (Rijeka), private; with a combined circulation of 375,000. The print media is under severe scrutiny by the government, which owns the majority shares of two of the three largest national news dailies. The Croatian news agency HINA serves all dailies. Popular weeklies include the tabloids Globus and Feral Tribune. Several weeklies and monthlies contain serious coverage of political, financial, and cultural events.

A new English-language bookstore in the center of Zagreb sells paperbacks, technical and educational materials, children's books, and computer software, all at considerably higher prices than in the U.S. Recent books in English on the war in Croatia and maps are widely available. Magazine subscriptions from the U.S. by mail are more economical, and the selection of books is much greater through a book-buying service on the internet or a book club/catalog.

Health and Medicine

Community Health

The public water supply is considered safe in all major cities in Croatia. Naturally carbonated mineral water ("mineralna voda") is customarily sold in restaurants and stores. Sterilized long-life milk is available and has a shelf-life of 6 months. Fresh milk spoils quickly. Raw fruits and vegetables are of good quality, plentiful in season, and safe to eat using washing precautions normally followed in the U.S. Fish, meats, and poultry should be cooked well. Sewage and garbage disposal is adequate.

Preventive Measures

Travelers should have their shot records up to date and be immunized against tick-borne encephalitis. A flu shot is also recommended before winter. Sinus and respiratory ailments are aggravated by wintertime smog, and springtime provokes allergy problems.

NOTES FOR TRAVELERS

Passage, Customs & Duties

A passport is required for travel to Croatia. A visa is not required for U.S. passport holders for tourist or business trips of less than 90 days. Visas are required for all other types of stays and must be obtained prior to arrival in the country. Unless the traveler is staying at a hotel, all foreign citizens must register with the local police within 48 hours of arrival. Failure to register is a misdemeanor offense: some Americans have been fined and/or expelled as a result of their failure to register. Additional information on entry requirements may be obtained from the Embassy of Croatia at 2343 Massachusetts Ave., N.W., Washington, D.C. 20008, tel. (202) 588-5899 or from the Croatian consulates in New York City, Cleveland, Chicago or Los Angeles. Overseas, inquiries may be made at the nearest Croatian embassy or consulate. The Internet home page of the Croatian Embassy in Washington is http://www.croatiaemb.org.

U.S. citizens are encouraged to register at the U.S. Embassy and obtain updated information on travel and security within Croatia. The U.S. Embassy in Zagreb is located at Andrije Hebranga 2, tel. (385)(1) 455-5500, Internet home page: http://www.usembassy.hr. On weekends, holidays, and after hours, an Embassy duty officer can be reached at tel. (385)(1) 455-5281 or (385)(91)455-2384.

Special Information

Relatively speaking, Croatia has a low crime rate, and violent crime is rare. Many people can be seen walking on the streets and riding public transportation after dark. Foreigners do not appear to be singled out; however, as in many cities, displays of wealth increase chances of becoming the victim of a pickpocket or mugger. Such crimes are more likely to occur in bus or railroad stations. There have been several incidents of petty crime in residences, and car theft is on the rise (Note: Most of the cars which have been stolen are 4 x 4 utility-type vehicles). Restrictions on movements exist within Croatia and precautions must be taken in areas of instability.

In 1995, Croatian Government forces recaptured territory formerly controlled by rebel Serb forces. This area includes Western Slavonia and the Krajina Region. Although you can travel there, considerable risk of bodily harm caused by mines and unexploded ordnance continues to exist. The Dayton and Erdut Peace Accords ended fighting and reduced regional tensions. The remaining formerly Serb-held area of Eastern Slavonia is currently under UN administration. The region will be reintegrated into Croatia gradually. There continues to be isolated incidents of civil unrest, and you cannot enter the UN-administered part of Eastern Slavonia without prior UN authorization.

LOCAL HOLIDAYS

Jan. 1… New Year's Day

Jan. 6… Epiphany

Mar/Apr.…Easter^*

Mar/Apr.…Easter Monday^*

May 1… Labor Day

May 30… Croatian State Day

June 22…Croatian Uprising Day

Aug. 5…Homeland Thanksgiving Day

Aug. 15…Assumption Day

Nov. 1… All Saints' Day

Dec. 25… Christmas Day

Dec. 26… St. Stephen's Day

^*variable

RECOMMENDED READING

The following titles are provided as a general indication of the material published on this country:

Dedijer, Vladimir. The Yugoslav Auschwitz & the Vatican: The Croation Massacre of the Serbs During WWII. Translated by Harvey Kendall. Buffallo, NY: Prometheus Books, 10992.

Eastern Europe and the Commonwealth of Independent States, 1992. London: Europa Publications, Ltd., 1992.

CROATIA

Republic of Croatia

Republika Hrvatska

COUNTRY OVERVIEW

LOCATION AND SIZE.

The Republic of Croatia is located in southeastern Europe, with a long coastline on the Adriatic Sea to the south, and borders with Slovenia and Hungary to the north, and Yugoslavia and Bosnia and Herzegovina to the east. It has an area of 56,538 square kilometers (21,829 square miles), approximately the size of West Virginia. The country's coastline stretches for 5,790 kilometers (3,598 miles), and consists of 1,778 kilometers (1,104 miles) of mainland coastline and 4,012 kilometers (2,493 miles) of island coastline. The capital, Zagreb, is located in the northwestern corner of the country. Other major cities include Osijek, Pula, Rijeka, Zadar, Split, and Dubrovnik.

POPULATION.

Croatia's population has been gradually decreasing since its 1990 figure of 4,508,347 and, according to CIA World Factbook statistics, in July 2000 the figure stood at 4,282,216. However, the year 2000 saw a slight increase, with the birth rate, at 12.82 per 1,000, higher than the death rate (11.51 per 1,000). If this trend continues, a projected population growth rate of only 0.93 percent will not dramatically change the size of Croatia's population in the foreseeable future. By the year 2010 it is estimated to reach 4,697,548.

With 76.5 percent of its inhabitants Roman Catholics, Croatia is predominantly a Roman Catholic country. Although the majority of the population is Croatian, other ethnic groups include Serbs, Bosnian Muslims, Hungarians, Slovenians, and Czechs. Approximately 18 percent of the population is under 15, about 67 percent is aged between 15 and 64, and the remaining 18 percent is over the age of 65. According to 1997 figures, the majority of people (56.5 percent) reside in urban areas, showing a significant increase from the 1975 figure of 45.1 percent. By the year 2015, urban dwellers are expected to number 64.4 percent of the population. Although population density is only 83.5 people per square kilometer (216 per square mile), the population is not evenly dispersed. Almost a quarter of Croatians reside in the capital city of Zagreb and its suburbs, while many of the country's islands and rural areas are very sparsely populated by mostly elderly inhabitants.

Like several other European countries, Croatia is experiencing the problem of very slow population growth. The government recognizes the problem but has done very little to address it.

OVERVIEW OF ECONOMY

Prior to World War II, peasants comprised more than half of Croatia's population and the country's economy was based largely on agriculture and livestock. Croatia's northern region is rich in agricultural soil and has been exploited for those purposes since ancient times. The coastal regions are not as lush but have a perfect combination of climate and soil for growing grapes, olives, and citrus fruit. Industrialization took place afterWorld War II when Croatia became a part of the Socialist Federal Republic of Yugoslavia. During this time, the economy diversified, industry and trade grew rapidly, and tourism developed swiftly. Since Croatia and Slovenia were the most developed of the Yugoslavian republics, profits from their industries were used to develop poorer regions of the federation. This factor, together with hyper- inflation in the 1980s and austerity programs imposed by the federal government, led to both Croatia and Slovenia opting for independence from the Yugoslav federation at the beginning of the 1990s. Croatia's bid for independence was met with military force by the Yugoslavian government, unleashing a war that lasted from 1991 to 1995.

Prior to 1991, Croatia was part of a socialist -dominated country. Since then, it has been going through a transition from state-controlled economy to free-market system , but the conflict with Yugoslavia had a devastating effect on its economic infrastructure . During the war, parts of the country were destroyed or damaged. Many people became refugees, forced to rely on assistance from the state, while a large portion of the state budget was used for defense. The cost of material damage caused by the war was estimated at US$27 billion, more than the country's 2000 gross domestic product (GDP) of US$24.9 billion. The war also brought a substantial reduction in trade between Croatia and the former Yugoslav republics, and caused difficulties in competing in European markets. Croatian tourism, a very important contributor to the country's GDP, suffered disastrously, as did trade and industry.

At the end of the war, Croatia began a slow process of economic rehabilitation. The structure of the Croatian economy is currently similar to that of a developed western economy, with services accounting for 71 percent of the GDP, industry for approximately 19 percent, and agriculture for 10 percent.

The country's major economic sectors are tourism and trade. Croatia has a beautiful coastline and many national parks, which attracted hundreds of thousands of annual visitors before the war. After the war ended in 1995, tourism revenues steadily increased, approaching the pre-war levels. In terms of trade, Croatia's major export industries include chemical products, textiles, shipbuilding, food processing, and pharmaceuticals. Agricultural production does not satisfy domestic needs, and food products comprise a significant part of the country's imports. Other imports include machinery and transport equipment, chemical products, and fuel.

The total foreign debt of Croatia stood at US$8.3 billion in 1998. Although the debt has been growing since 1991, the rate of increase has been much slower than the increase in government revenues. In 1991 the debt accounted for 12.3 percent of the government revenue, but by 1996 this figure had fallen to 8.4 percent. More than half the debt was to private creditors such as large banks and businesses, while the balance was in outstanding loans from the International Monetary Fund (IMF), the World Bank, and the European Bank for Reconstruction and Development.

European Union countries have contributed nearly US$1 billion to reconstruction efforts in Croatia since 1991. Some of the aid went to assist over 600,000 displaced people and 250,000 Bosnian refugees. The country received co-finance for most major projects from 3 sources: the World Bank, the European Bank for Reconstruction and Development, and Hermes Kreditversicherungs, known as Hermes. Hermes is a consortium of a private insurance company and a quasi-public company which provides credit insurance on behalf of the German government. Projects financed by these sources have included post-war reconstruction of infrastructure, support for the health sector, and improvements in the financial, enterprise, and agricultural sectors.

Foreign direct investment (FDI) has played a significant role in Croatia's banking sector and its pharmaceutical industry. According to CEEBICnet Market Research, current FDI in Croatia exceeds US$3.6 billion, most of it invested in mixed ownership enterprises, those owned jointly by foreign and local entities. Major investors have come from Germany, Austria, Italy, the United States, and the Netherlands.

Although the private sector has grown since Croatian independence, the country still has a fairly undeveloped enterprise sector consisting of small and mediumsize operations. Between 1996 and 1999 employment in these businesses remained static due to a poor business environment, high taxation, and difficulties in obtaining appropriate financing for expansion.

POLITICS, GOVERNMENT, AND TAXATION

Croatia is a parliamentary democracy consisting of executive, legislative, and judicial branches. The executive branch consists of the president and the Council of Ministers. The president, who is the head of state and commander-in-chief of the armed forces, is elected by popular vote to a 5-year term of office and may serve a maximum of 2 terms. The president appoints the prime minister and the cabinet, as well as the Council of Ministers, whose members are proposed by the prime minister. The Croatian legislature is the parliament (Sabor), which consists of a Chamber of Deputies and a Chamber of Counties (Zupanije), all of whose members are elected to a 4-year terms. The first chamber has between 100 and 160 deputies and the second 68 members.

The judicial branch of the government consists of the Constitutional and Supreme courts. The Constitutional Court makes decisions on the constitutionality of laws and has the power to repeal a law and to impeach the president. It consists of 11 judges elected for 8-year terms by the Chamber of Deputies at the proposal of the Chamber of Counties. The Supreme Court holds open hearings and makes its judgements publicly. Its judges are appointed for life.

During its first 8 years of independence Croatia was ruled by the Croatian Democratic Party (HDZ) and its president, Dr. Franjo Tudjman, who remained head of state until his death in 1999. During this time the government was preoccupied with the war and was slow to privatize state-owned enterprises and attract foreign investment. The ruling HDZ party has occasionally, for political purposes, supported trade legislation that has benefited certain industries and economic sectors. After the elections in 2000, a coalition of 2 parties, the Social Democratic Party (SDP) and the Croatian Social Liberal Party (HSLS), came to power. The new government— led by President Stjepan Mesic and Prime Minister Ivica Racan—is dedicated to economic and social reform but, by the end of 2001, had not been in power long enough to show significant results.

As a former socialist country, Croatia is battling against the legacy of strong state control over the economy. This control had some positive results, such as a significant post-war reconstruction effort launched by the government which, due to the lack of domestic capital, relied mainly on foreign borrowing. On the down side, however, it was very difficult for the private sector to expand or compete in a state-dominated economy; the government frequently exploited important positions in industry for political gain, which prohibited the private sector from entering the field.

Croatia generates government revenue through a wide range of taxation measures and is one of the most highly taxed countries in Central Europe. Heavy taxation has slowed the growth of the private sector and contributed to the rise of an informal economy whose interactions are not subject to taxation. Personal income tax paid on individual earnings ranges from 20 to 35 percent and value-added tax (VAT), paid on domestic sales and on most imports, is fixed at 22 percent. An import duty , levied on goods and services, is paid by the importer, while there are further taxes payable on property transactions, inheritance and gifts, tobacco and alcohol, and motor vehicles.

In 1993 the government launched a relatively successful economic program to stabilize prices and the exchange rate , which slowed inflation to approximately 3 percent by 1995. Since then, inflation has increased slowly by approximately 0.5 percent to 1 percent per year. At the same time, the government's continuing high rate of taxes and military expenditure to finance the war hindered the recovery process. During the first few years of the economic stabilization program, the currency remained stable, partly due to improvement in the economic climate, but largely because the central bank artificially maintained this stability.

The government established a Privatization Fund (CPF) to oversee transfer of state-owned enterprises to private hands. The privatization process used several methods, including the sale of company shares to employees at a discount, a system whereby vouchers are distributed for use in place of cash to bid for shares in companies undergoing privatization and to award compensation for property that had been taken away by the communist regime. These measures, however, were not very successful. They proved easy to abuse and led to many cases of corruption. Privatization of utilities and the country's main oil producer has been slow, as these are considered strategically valuable enterprises by many in the ruling party.

Croatia's ratio of pensioners (retired workers collecting government benefits) to workers is very high and puts a heavy burden on the economy. To ease this burden, the government, with help from the World Bank, introduced pension reforms. A 3-band pension system was approved but, by 2001, had not yet been implemented. This system will keep part of the monthly retirement contribution in government funds, while a portion will go into a privately managed fund.

The new government elected in 2000 managed to make a significant impact on speeding up privatization of the banking and telecommunications sectors, and in late November 2000, Croatia became the 139th member of the World Trade Organization.

INFRASTRUCTURE, POWER, AND COMMUNICATIONS

Judged by Eastern European standards Croatia has a comparatively developed infrastructure. In 1998, the country had 23,497 kilometers (14,601 miles) of paved highways, but only 330 kilometers (205 miles) of these were 4-lane expressways. Since the country suffered significant war damage between 1991 and 1995, it received loans from the World Bank and the European Bank for Reconstruction and Development to improve roads, railroads, the electricity and water supply network, and air-traffic control. The government is strongly committed to these efforts, and many of these projects, including the building of 1,600 kilometers (994 miles) of 4-lane highway, are under way.

There are 8 main airports in Croatia (Zagreb, Split, Zadar, Dubrovnik, Osijek, Pula, Rijeka, and Brac) serviced

by major airline companies. Croatian seaports include Rijeka, Pula, Sibenik, Split, Ploce, and Dubrovnik, all of which are located on the Adriatic Sea. Transportation between these seaports and many islands is currently provided by only one company, Jadrolinija. The railway network extends for 2,699 kilometers (1,677 miles) but does not meet the country's needs. Plans to improve the railway system do exist, but carrying them out is not considered a priority.

Tourism is one of Croatia's main sources of revenue. Transportation facilities for tourists (a developed network of roads, railroads, and airports) plays an important role in making the tourist industry efficient. Since the majority of tourists arrive in Croatia by road, construction of highways has the highest priority. In addition, the country's odd "boomerang" shape requires excellent roads in order to link its northern, central and southern areas. If all these requirements are to be met, the country must provide a more modern and extensive highway and railroad system.

Croatia's demand for electricity is mostly satisfied by domestic production, while 10 to 20 percent is covered by imports. The country produces most of its electricity from fossil fuel and hydroelectric plants. A small portion comes from the nuclear plant Krsko, which Croatia shares with neighboring Slovenia.

Telecommunications services in Croatia are modern, although they lag behind those of Western Europe and the United States. Telephone service is provided by Croatian Telecom (HT), which has invested heavily in improving telecommunications. According to the CIA World Factbook there were 1.488 million telephone lines in use in 1997 and, although some domestic lines are still analog, they are being replaced by digital technology with a capacity of 2,200,000 telephone lines. The international telephone service is completely digital, and its main switch is located in Zagreb. A project is under way to install fiber-optic cables throughout the country and connect them with Slovenia. Currently there are 220,000 kilometers of fiber-optic cables connecting 4 main Croatian cities and 35 countries.

There are approximately 200,000 Internet users in the country, and, according to CEEBInet Market Research, Croatia had 5 Internet service providers in 2000. The 2000 World Development Indicators state that, in 1995, there were 272 television sets per 1000 people and 36 television broadcast stations.

ECONOMIC SECTORS

Being a small country, Croatia contributes relatively little to worldwide production in each of its 3 sectors. The country's economy is based on services, dominated by tourism and manufacturing, with international trade also an important contributor to the economy. The 5 years of war were mostly responsible for the country's poor economic performance, and post-war recovery has proceeded slowly. Other factors that limit economic growth are an inadequate legal structure and bureaucratic red tape, both of which restrict business activity; a slow privatization process; a poorly developed banking sector; and insufficient highway infrastructure. Some of these problems, such as privatization and highway construction, are being addressed, but it will take time for projects to be completed and for their effects to be felt.

Prior to the 1990s Croatia, and especially its beautiful Dalmatian coast, was a popular vacation spot for many Europeans, but with the eruption of war in 1991, tourism was decimated. Since the end of the conflict in 1995 the sector has seen a slow but steady recovery. Tourism was an important element in the services sector and contributed 71 percent to the GDP in 1999.

Agricultural production has been in decline since 1992, averaging about 60 percent of pre-war levels. Again, the war contributed heavily to the disruption of agriculture, but 1998 brought severe heat and drought, which caused disease and further hindered crop growth. By 1999 agriculture contributed just 10 percent to the GDP.

Industrial production declined sharply during the war years. Some of the worst fighting and destruction took place in areas where industry was located. During the war, this sector produced only a half of what it had in peacetime. Since 1996, industrial production has been experiencing growth, but certain industries tend to do better than others. The most successful are those, such as the food and beverage industry and manufacturing of chemicals and chemical products, that underwent restructuring as a result of privatization. One of the most important companies headquartered in Croatia is the Croatian pharmaceutical giant, Pliva, whose shares are traded on the Zagreb and London stock exchanges. Major foreign companies who have a significant presence in the country are Swedish Ericsson (telecommunications), Austrian Hofmann & Pankl Bet (mineral processing), Swiss Soc. Suisse de Cim. Port. (cement production), Dutch Grassette Nederland (maritime services), Austrian Messer Griesheim (industrial gasses) and the U.S. Coca-Cola Export Corp. (beverages). All told, industry contributed 19 percent of the GDP in 1999.

AGRICULTURE

Agriculture, fishing, and forestry accounted for about 10 percent of the total GDP of Croatia in 1999, but they are nevertheless important to the overall economy. According to the Croatian Bureau of Statistics, these sectors combined to employ over 33,000 people and produce earnings of approximately US$1.4 billion per year. Croatia is fortunate not to have experienced the environmental damage from mass industrial development that characterizes its Eastern European counterparts. Environmental concerns do exist, but they do not have a heavy impact on agriculture, forestry, and fishing.

Croatia's geographical diversity led to different patterns of livelihood and culture. As a result, agriculture varies throughout the country's regions, influenced by regional climate. Agriculturally rich lowlands located in Croatia's northern part are dominated by the cultivation of wheat, corn and sunflower crops, while viti-culture (the cultivation of grapes), fruit-growing, and olive-farming are popular in the coastal region, with pasture land common in the mountainous areas. Most agricultural land is privately owned, and the large cooperatives created during the communist era are being privatized and restructured. Croatian agricultural production is dominated by small farms. The EIU Country Profile for 2000 states that in 1991 almost 70 percent of farms were 3 hectares or less, with only 5.6 percent larger than 8 hectares.

The war had a devastating effect on Croatian agriculture, changing the country from an exporter of agricultural products to a net importer. After the war, government efforts to boost agricultural production created positive results, increasing production of wheat, improving agricultural machinery, and increasing the number of cattle. In 1999, combined earnings from agriculture, hunting, and forestry equaled US$1.39 billion. Aside from wheat, fruits, olives, and grapes, the agricultural sector also produces corn, sugar beets, seed, alfalfa, clover, livestock. and dairy products.

FORESTRY.

The exploitation and management of forests in Croatia is carried out by a public company. Since one-third of the country is covered by forests, this industry is very important for the economy. In 1996 Croatia received a loan from the World Bank for replanting and protecting forests along the coast in order to stimulate tourism.

FISHING.

Both war and over-fishing of the waters has had a negative impact on fishing, which is a traditional Croatian industry. The catch decreased from 40,000 metric tons in 1989 to just over 15,000 metric tons in 1995, and the sector's earnings decreased from US$32 million in 1996 to US$22 million in 1999. Current employment in the fishing industry stands at only 1,100.

INDUSTRY

MANUFACTURING.

In the early 1990s total industrial output declined, partly due to the war but also because of the collapse in trade among Eastern European countries. During this time, Croatia lost a large share of its Yugoslav markets when the Yugoslav federation fell apart. After the war, industrial output began to recover, but major restructuring of industry and more investment is still necessary in order to increase efficiency. Due to a high unemployment rate of over 20 percent, the government is reluctant to worsen the situation by laying off industry workers.

Key industries in Croatia include textiles, chemicals, pharmaceuticals, and petrochemicals. The textile industry is especially well-developed and includes over 400 enterprises, the majority of which are engaged in cooperative activities with foreign manufacturers. In 1998, all of the key industries combined employed over 400,000 people and earned more than US$3 billion from exports. In the same year, the total export revenue across all sectors was approximately US$4.5 billion.

Two important heavy industries are ship building and metal products. Both were subsidized by the government during the war because of their strategic importance, but it remains unclear as to whether this subsidy continues. Growth of the construction sector has seen substantial expansion with the need for mass building and reconstruction caused by the war, and the government has been leading the building program and looking for international aid. The value of construction projects rose from almost US$1 billion in 1995 to over US$1.4 billion in 1997. During the same period, the number of employees in the sector rose from 23,600 to 29,500. This sector has drawn interest from international investors, such as the United Kingdom's RMC International Cement, which bought a majority stake in Croatia's largest cement producer, Dalmacijacement.

ELECTRICITY.

Production in this sector has been increasing but is not able to keep up with the country's increasing demand. Currently, between 10 and 20 percent of the demand is satisfied by imports, but plans by the Croatian Electricity Board (HEP) are under way to build additional plants and renovate existing ones. The electricity sector, together with oil, gas, and water supply, employs almost 26,000 people, accounting for 2 percent of the total workforce .

OIL AND GAS.

This sector has experienced substantial difficulties, both because of the war and the slowness in privatizing Croatia's only energy company, INA. By 1995 the production of oil and natural gas fell to 73 percent of pre-war levels. In 1999, Croatia extracted over 1.2 million metric tons of oil and over 1.5 million cubic meters of natural gas, representing a decrease in production over previous years. The country's oil and gas reserves are located southeast of Zagreb, along the border with Hungary and along the Adriatic coast. As of December 1998, Croatia's oil and natural gas reserves were estimated at 15 million metric tons and 35 million cubic meters respectively. The country's demand for extra gas supply is satisfied by imports from Russia, but projects have begun with foreign investors to develop new gas fields. These are expected to produce enough to export gas to other countries in Eastern Europe.

SERVICES

TOURISM.

Tourism is of major importance in a services sector that accounts for over 70 percent of the GDP. Croatia is not only rich in natural beauty and history but enjoys a very low crime rate and a reputation as a safe destination. These factors have made it a favorite vacation spot for many Europeans and Americans, but tourism was heavily affected by the war, and the revenue it currently generates has not yet regained pre-war levels. A year after the war started, this sector earned only half a billion U.S. dollars. As the stability returned to the region, earnings from tourism gradually increased, reaching US$3.5 billion in 2000. During the 1990s, the country not only suffered from war devastation, but little was done to develop and restructure the tourism sector. This work started in 2000 when privatization of hotels and businesses was speeded up and tourism expenditure increased.

The improvement in political stability towards the end of the 1990s brought an increase in the number of tourists visiting the country. In 1998, the Croatian Bureau of Statistics recorded over 31 million overnight stays, which was 3 times as much as the 1992 figure. This number, however, still does not compare to the pre-war years, such as 1989 when more than 61 million overnight stays were registered.

Currently, Croatia has a total capacity of 725,000 beds, almost 95 percent of which are located in the coastal region. It also has 43 marinas, 17 of which are open year-round, but many of these are in dire need of reconstruction and better management.

TRANSPORT.

Croatia is situated along major routes linking South Central Europe with the world, and its transport services are of major importance to the country's well-being. During the war, one-third of the country was occupied by enemy forces, causing disruption to main traffic links between different areas and a substantial increase in transportation costs. Since the war, greater regional stability has improved the situation, and the construction of a highway that will connect the country's southern region with its northern areas and the rest of Europe will greatly contribute to expansion and further improvement of service. According to the Croatian Bureau of Statistics, transport, storage, and communication employed over 83,000 people in 1999 and earned more than US$1.6 billion in the same year.

INTERNATIONAL TRADE

International trade is a significant part of the country's economy, accounting for between 6 percent and 8 percent of the GDP in the last decade. In 1999, imports totaled US$7.8 billion, against exports of US$4.3 billion. The country experienced a sharp fall in trade during the war when commerce with the country's main trading partners, namely the republics of former Yugoslavia, substantially decreased. Since then, the country reoriented the trade sector towards Western and East Central Europe. As a result, in 1999 only a quarter of Croatia's exports went to the former Yugoslav republics and only 10 percent of imports came from these countries. Due to this new trend and extensive subcontracting in the textile and leather industries, Croatia's main trading partners currently are Germany, Italy, and Slovenia. Other trading partners include Bosnia and Herzegovina, Austria, France, and Russia. Even though trade has experienced growth, revenues from Croatian exports account for less than 2 percent of total European exports and import revenues for less than 3 percent of Europe's total. At the end of the war, the trade imbalance increased as the country's

imports substantially outstripped its exports. High labor and production costs, as well as high taxes, which make Croatian products more expensive than imports, have contributed to this trend.

The largest percentage of Croatia's exports went to the following countries in 1999: Italy (18 percent), Germany (15.7), Bosnia and Herzegovina (12.8 percent), Slovenia (10.6 percent), and Austria (6.2 percent). Some of these countries are also major sources of Croatia's imports, with Germany accounting for 18.5 percent, Italy 15.9 percent, Russia 8.6 percent, Slovenia 7.9 percent, and Austria 7.1 percent. Croatia's exports include chemical products, clothing, footwear, raw materials (wood, textiles, fertilizers), fuels (petroleum and gas), food products, beverages, and tobacco. Imports include machinery, transport, and electrical equipment, chemicals, fuels and lubricants, food products, clothing, and footwear.

MONEY

The Croatian currency, established in 1991, has experienced a slight depreciation (decline in value) since it was launched. The National Bank of Croatia uses the euro as a reference currency; therefore, the recent depreciation of the euro against the U.S. dollar had the same effect on the exchange rate between the kuna and the U.S. dollar. In 1995, US$1 equaled 5.230 kuna, while at the end of 2000, the exchange rate jumped to 8.320 kuna to US$1. According to the Quarterly Economic Report of Germany's Commerzbank, this situation is likely to change by 2002 when US$1 will equal 7.88 kuna.

There are many reasons for the depreciation of the kuna, among them deficits in the pension system, the slow rate of privatization, and compensations paid to depositors of bankrupted banks. The ratio of pensioners to the employed increased from 0.65 in 1998 to 0.95 in 2000. This statistic means that for almost every retired person there is only 1 person employed in Croatia. One external factor that influenced a drop in the kuna exchange rate was the recent increase in energy prices.

Croatian monetary policy and supervision of the commercial banking sector is managed by the National Bank of Croatia (the central bank). Although there are over 50 banks operating in Croatia, more than 70 percent of the overall assets of the banking system belong to the 6 largest. Most of these, and some of the medium-sized banking institutions, are indirectly owned by the government, which holds large proportions of shares in these operations through government-controlled companies. There are several representative offices of foreign banks operating in Croatia.

A large portion (approximately 75 percent) of the total assets of the Croatian banking system are immobilized, which is to say they are not generating returns. Such assets consist of state bonds, public debt, ownership in companies that yield no dividends, and investments that are unlikely to produce returns. This is the main reason for high real interest rates for long term loans, which are 25 to 30 percent per year. The government is committed to restructuring the most problematic banks and has received a pledge of US$100 million from the World Bank to assist in solving this problem.

The Zagreb Stock Exchange is the only stock exchange operating in Croatia. It originated in 1918 but was abolished by the communist regime in 1945. Almost half a century later, after Croatia became independent in 1991, the stock exchange was revived by 25 banks and insurance companies as a non-governmental, non-profit-making institution. The ZST is fairly small, and there are only a few privatized firms that trade on it.

POVERTY AND WEALTH

Until 1991 Croatia was part of a socialist-governed country whose system and ideology did not allow great disparity between rich and poor. Those who benefited most from the system and were better off than the majority, were the senior functionaries of the ruling Communist Party. They lived in pleasant, state-owned apartments, drove good cars, and earned relatively high salaries. The poor generally lived in underdeveloped rural areas of the country, were badly educated, and were not politically active.

Since Croatian independence in 1991 and a move to the free-market system, social conditions have changed, to the benefit of some and the disadvantage of others. Inadequate progress towards privatization and the appointment of political favorites to influential positions brought corresponding wealth to the few, although the free-market system has also rewarded a number of skilled or enterprising Croatians. Those groups dependent on the government for their survival suffered as a result of the changing economic system and suffered further from the social and economic impact of the war. These disadvantaged groups include pensioners and the privileged prewar middle class who later found themselves impoverished by changes in the country.

The poor of Croatia tend to be concentrated among the uneducated and the elderly. The United Nations Development Program 's 1999 Human Development Report states that in 1997 the average pension was less than half of the average salary. Pension payments are often months late, and the elderly have to rely on other means for survival, such as help from relatives. Retired people represent one-fifth of the total population, and as the ratio of pensioners to workers increases, the pension system is becoming overburdened.

The Croatian education system is almost entirely state-run and is very good. Close to 100 percent of children are enrolled in primary schools, and almost 70 percent attend secondary school. As a result, literacy rates are high (99 percent for men and 96 percent for women) and similar to those of other Eastern European countries and the industrial countries. The children of both the poor and the rich attend the same elementary schools, but although the vast majority of the poor are literate as a result of primary school education, they tend to drop out of the education system early. If they do pursue secondary education, they usually attend vocational high schools and few go to college. University education is not very expensive, but the number of scholarships and stipends that would help the poor are limited, and their numbers lag behind those of other East Central European countries. Insufficient education prevents the poor from competing for jobs that would earn them a better living, thus locking them into poverty.

The state maintains the country's health care system, although a small private sector does exist. A shortage of resources for the health sector has caused problems in recent years (only 6.7 percent of GDP goes towards health expenses), including a failure in targeting the needs of the poor, but most of the population does have basic health coverage. Since the price of food and clothes is high relative to average salaries, poor people spend most or all of their income on basic necessities. They tend to have weak and monotonous diets and although the majority have housing, they often find it difficult to pay for utilities or maintenance of their homes. Those households whose monetary income falls below 350 kunas per month (approximately US$55) qualify for the social assistance program. This monetary allowance equals 15 percent of average salary and, at this level, covers only a quarter of the expenses of poor households.

Even though Croatia has experienced significant social changes in recent years, differences between the rich and poor are not as vast as in Western economies. They are, however, greater than in other Eastern European countries.

WORKING CONDITIONS

Croatia's transition to the free-market economy began significantly to change the structure and level of employment in the country. During the socialist era, over three-quarters of the labor force of more than 2 million was employed in the public sector and by large, state-run enterprises. Unemployment was kept artificially low (approximately 9 percent in 1990) by over-employment and the creation of unnecessary jobs. During this period emigration was encouraged, and many people left the country to work abroad, contributing to low unemployment. A small private sector did exist under socialism, employing only 13 percent of the labor force in 1990.

With the arrival of the privatization process, new businesses opened and private sector employment increased to 45 percent. At the same time, employment in state-owned firms and the public sector fell to 36 percent of the labor force. Unemployment ceased to be regulated, and privatization and competition from more efficient businesses resulted in massive layoffs and early retirements. By 1998, 17 percent of 1.6 million people in the Croatian labor force were out of work. In order to ease the effects of high unemployment, the government pursued a policy of early retirement which, in turn, strained the pension system since there were far fewer people contributing to the fund than those seeking its benefits. Many pensioners received smaller pensions than they should have and were pushed into poverty.

The country's labor laws set regulations for a 42-hour work week, a 30-minute daily break, and a minimum 24-hour rest period during the week. Eighteen days of vacation are standard and time-and-a half is required to be paid for overtime. Most unions were able to negotiate a 40-hour workweek. The average salary after deductions such as taxes and contributions in 1998 was 3039 kuna, then equivalent to US$425. Over a half of gross salary (salary before deductions) goes to the government and various funds such as health care and pensions. The highest salaries are paid by the financial sector, which employs the smallest number of people. Those working in wholesale and retail trade, fishing, and mining average the lowest salaries. The average net salary is not enough to provide a decent standard of living for an average family. For this reason, most people supplement their income with self-employed activities, work in the informal sectors, or earn income from property such as rents and leases, in-kind income, or help from relatives living abroad. There is also a barter system for the exchange of goods and services, and those who can grow fruit and vegetables on small plots or in their gardens for personal consumption. In March 1999 the government signed an agreement which established a minimum wage of 1500 kuna (approximately US$211). Unemployment benefits also exist and currently assist almost 17 percent of the unemployed.

Croatia has a much higher level of job protection than other European countries. These regulations protect workers' job stability, but are costly to employers. For example, the law on termination of employment requires an advance notice of up to 6 months and, in certain instances, the approval of the workers' council. This makes labor costs much more expensive than in other countries whose economies are in transition and prevents the creation of new jobs. The regulations slow down the process of hiring new employees and make it difficult to offer part-time work. The government also regulates health and safety standards, which are implemented by the Ministry of Health.

Child labor has not been a problem in Croatia, while discrimination against women in the labor force is common if not prevalent. On average, women still earn less than men and share a higher percentage of unemployment than men (57.3 percent of women were unemployed in 1997 compared to 43.1 percent of men). Over half of the female workforce is employed in the service sector.

A large portion of Croatia's labor force is skilled and/or highly educated. In 1999, for example, out of 320,000 (33.7 percent) unemployed, over 30 percent consisted of skilled and highly skilled workers and about 7 percent were people with college or university degrees. Unemployment is highest among the young and is rising, and poor job prospects have driven many to seek work in other countries. Since 1990, the number of unemployed people under 30 years of age increased by 25,000. Since young people are generally most mobile, they tend to be the first to emigrate. Because of demand in other countries for a high profile labor force, many skilled and educated unemployed Croatians have been filling those positions. As a result, Croatia has been experiencing a serious brain drain since the 1990s.

COUNTRY HISTORY AND ECONOMIC DEVELOPMENT

600. Croatians begin settling in the area of present-day Croatia.

679. The first international treaty is signed between Croatian Duke Borko and Pope Agathur.

810-23. Duke Ljudevit Posavski establishes a powerful state in what is present-day northern Croatia.

925. Tomislav, the unifier of the territories of Pannonia, Croatia, Dalmatia, Bosnia, and Herzegovina, is crowned the first Croatian king.

1102. After the death of Petar Svacic, the last Croatian king, Croatia enters into a union with Hungary.

1527. By the decision of the Croatian Assembly, Ferdinand of the Hapsburg dynasty is elected to the Croatian throne; massive migrations of Croatians (especially to Burhenland, Austria, and Molise, Italy) begin.

1815. After a short period under the rule of the French emperor Napoleon, almost the entire territory of present-day Croatia becomes a part of the Austrian Hapsburg monarchy.

1847. Parliament adopts Croatian as the country's official language, replacing Latin.

1848. Ban (Viceroy) Josip Jelacic defends Croatia against Hungarian attempts to occupy the country and unites all the Croatian provinces. Serfdom is abolished.

1903. Anti-Hungarian and anti-Austrian riots erupt, causing some 50,000 Croatians to leave for the United States.

1918. After the downfall of the Austro-Hungarian Empire in World War I, Croatia becomes part of the Kingdom of Serbs, Croats, and Slovenes, later proclaimed Yugoslavia.

1941. German and Italian forces occupy Yugoslavia during World War II and dismantle the country; a pro-Nazi government is installed in Croatia. The country becomes a German puppet state resisted by Croatian anti-fascists led by Josip Broz Tito.

1945. After World War II, the Federated Socialist Republic of Yugoslavia is proclaimed, consisting of 6 republics, including Croatia. Marshal Tito is made president and holds office until his death in 1980. Yugoslavia is aligned with the Soviet Union until 1990.

1990. The first multi-party elections since World War II take place in Croatia and are won by the CroatianDemocratic Union. The Croatian Assembly elects Dr. Franjo Tudjman as the first president.

1991. Croatia proclaims independence from Yugoslavia. A Serbian rebellion starts in Krajina, supported by the Yugoslav National Army from Belgrade and resulting in the occupation of one-third of Croatian territory.

1992. Croatian independence is recognized by the world and the Republic of Croatia becomes a member of the United Nations.

1995. Croatia recaptures Krajina from the Serbs, and the war in Croatia officially ends.

1998. The last Serb-occupied region of Croatia, located in its eastern part which includes the city of Vukovar, is peacefully integrated into the country.

2000. Croatia becomes a member of the World Trade Organization.

FUTURE TRENDS

For Croatia the 1990s were difficult and traumatic. The country experienced war devastation, population displacement, and turbulent political change, all of which contributed to its ruined economy. As the 21st century gets under way, Croatia faces serious and urgent challenges in improving its economic situation. The country needs to make major policy reforms. Improved administration of business activity—including cutting red tape, offering tax incentives to stimulate business growth, and completing the privatization process—must be implemented. Reform is also necessary to increase the effectiveness of the health and pension systems. Improvement of the banking sector is another key factor in easing the path of such reforms. A firm commitment to these reforms would send a positive signal to foreign investors and act as an encouragement to international aid in financing reform. If these challenges are met and international investment acquired, Croatia could implement programs for sustained economic growth, thus achieving a higher standard of living for its people and full integration into the rest of Europe.

Successful restructuring is possible and realistic since the country possesses the necessary infrastructure and expertise. Its location and its promising economic opportunities are attractive to investors. What is desperately needed is decisive action by the government, which needs to grasp the necessity for economic reforms and to begin their implementation without delay; delay would serve only to burden the economy with more costly adjustments in the future. Without reform, growth will not be possible, unemployment will remain high, the banking system weak, and the economy will not recover.

DEPENDENCIES

Croatia has no territories or colonies.

BIBLIOGRAPHY

Bencic, Damjan. "Services Market Opportunities in Croatia." CEEBICnet Market Research. <http://www.mac.doc.gov/eebic/countryr/CROATIA/CrServices.htm>. Accessed January 2001.

Commerzbank. Emerging Europe Economic Research: Quarterly Economic Report, 4Q00. Frankfurt, Germany: Commerzbank, 2000.

Croatian Bureau of Statistics. <http://www.dzs.hr/Eng/ouraddress.htm>. Accessed September 2001.

Croatian Bureau of Statistics. Statisticki ljetopis 2000: Statistical Yearbook. Zagreb, Croatia: Croatian Bureau of Statistics, 2000.

EBRD Transition Report 1999. European Bank for Reconstruction and Development, 1999.

Economist Intelligence Unit. Country Profile: Croatia. London: Economist Intelligence Unit Ltd, 2001.

International Monetary Fund. "Republic of Croatia and the IMF." International Monetary Fund. <http://www.imf.org/external/country/HRV/index.htm>. Accessed September 2001.

U.S. Central Intelligence Agency. World Factbook 2001. <http://www.odci.gov/cia/publications/factbook/index.html>. Accessed September 2001.

U.S. State Department, Bureau of European Affairs. Background Notes: Croatia. <http://www.state.gov.www/background_notes/croatia_0001_bgn.html>. Accessed September 2001.

World Bank Group. "Croatia." The World Bank Group. <http://www.worldbank.org>. Accessed January 2001.

The Zagreb Stock Exchange. <http://www.zse.hr>. AccessedSeptember 2001.

—Katarina Deletis

CAPITAL:

Zagreb.

MONETARY UNIT:

Croatian Kuna (HrK). One kuna equals 100 lipas. There are coins of 1, 5, 10, 20, and 50 lipas and 1, 2 and 5 kuna. There are notes of 5, 10, 20, 50, 100, 200, 500, 1000, and 2000 kunas.

CHIEF EXPORTS:

Textiles, chemicals, foodstuffs, fuels.

CHIEF IMPORTS:

Machinery, transport and electrical equipment, chemicals, fuels and lubricants, foodstuffs.

GROSS DOMESTIC PRODUCT:

US$24.9 billion (purchasing power parity, 2000 est.).

BALANCE OF TRADE:

Exports: US$4.3 billion (f.o.b., 1999). Imports: US$7.8 billion (c.i.f., 1999).

Croatia

History & Background

The Republic of Croatia (in Croatian, Republika Hrvatska or Hrvatska for short) is a constitutional parliamentary democracy in the Balkan region of southeastern Europe. Bordered by the Adriatic Sea to the west, Slovenia and Hungary to the north, and Serbia to the east, Croatia forms the northern and western borders of Bosnia and Herzegovina. At its extreme southern-most tip, Croatia is contiguous with Montenegro for 25 kilometers. Croatia measures 56,538 square kilometers and is slightly smaller than the U.S. state of West Virginia. The country has a diverse terrain, with flat plains along its northern border with Hungary and low mountains and highlands forming its western coastline and islands in the Adriatic. Croatia also has a varied climate, ranging from continental, with hot summers and dry winters in the inland portions of the country, to Mediterranean, with mild winters and dry summers along the coast.

Croatia had a population of about 4.3 million people in July 2000. Croatia's ethnic composition was 78.1 percent Croat, 12.2 percent Serb, 0.9 percent Muslim, 0.5 percent Hungarian, and 0.5 percent Slovene, and less than half a percent Czech, Albanian, Montenegrin, and Roma each in 1991 (the last year estimates were taken before the war that enveloped Croatia from 1991 until 1995). About 6.6 percent of the population in 1991 belonged to other ethnic groups, considered themselves "Yugoslavs," or were of unidentified ethnicity. Croatia's population was 76.5 percent Roman Catholic, 11.1 percent Orthodox, 1.2 percent Muslim, and 0.4 percent Protestant. The religious affiliation of 10.8 percent of the population was other, none, or unidentified.

Approximately 57 percent of Croats lived in urban areas in 1999. The rural population density was 132.9 persons per square kilometer in 1998. In 1999, approximately 99 percent of adult men 15 years of age or older and approximately 97 percent of adult women were literate (i.e., able to read and write). The population of Croatia was growing at a rate of only 0.93 percent in the year 2000. The total fertility rate was 1.94 in 2000, with approximately 18 percent of Croatia's population was 14 years old or younger, two-thirds of the population was between 15 and 64 years of age, and about 15 percent was 65 or older. In 2000 Croatia had an infant-mortality rate of 7.35 per 1000 live births, significantly lower than the rate for the European/Central Asian region as a whole; the under five years child mortality rate was 9 per 1000. The life expectancy at birth for Croatians in 2000 was 73.67 years (70.04 years for men and 77.51 years for women—a considerable gender disparity in favor of women).

Croatia's GDP was US$20.4 million in 1999 with a real growth rate of zero percent. For the first half of 2000, the economic growth rate was more promising, with the rate of growth estimated as 2.5 percent of the GDP. Croatia's annual per capita income that year was about US$4,490, which was more than twice the per-capita income for the European/Central Asian region and just a few hundred dollars lower than the upper middle income average. However, unemployment in Croatia was measured at 22.4 percent at the end of 2000.

Croatia required an infusion of US$87 million in international development disbursements from the World Bank in 1999 to help the country recover from four years of war (1991-1995) and to assist in transforming Croatia's state-controlled, centralized economy of preindependence days to a liberal market-based economy. In the 1990s the World Bank committed US$762 million to Croatia for at least 15 development and reconstruction projects. During the 1990s Croatia received US$99 million from the United States through SEED Act funding, not including significant amounts of humanitarian assistance provided through other programs and nearly US$1,566 million from the European Union. The economic situation of the late 1990s stood in stark contrast to Croatia's previous economic prosperity before the Balkans wars of the 1990s.

Just before its independence from the Socialist Federal Republic of Yugoslavia on June 25, 1991, Croatia was the second richest country in the former Yugoslavia. It was second only to Slovenia, which declared independence from Yugoslavia at the same time. One of the six republics that together constituted Yugoslavia for most of the twentieth century, Croatia held a referendum in May 1991 during which 94 percent of the voters opted for independence. The official separation from Yugoslavia on 25 June 1991 was quickly followed by Serb aggression to attempt to bring the country back under Serbian control. This resulted in four years of brutal war from 1991 until 1995, during which ethnic Serbs, and to a lesser extent Croats and Bosnian Muslims (Bosniacs), waged genocidal war on each other. Early into the war Croatia formed a pact with Bosnia-Herzegovina to try to halt the crushing blows of the Serb army as Serbia, the most-powerful state in the former Yugoslavia, attempted to subdue Croatia and in the process wiped out thousands of ethnic Croats and created enormous refugee flows. With the Dayton Accords of 1995 and the end of the war in Bosnia-Herzegovina, Croatia was able to slowly rebuild its economic and social structures. Its political system dramatically transformed. By the mid-1990s Croatia had become a fledgling democracy, joining the ranks of Eastern and Central Europe's "transitional countries."

Constitutional & Legal Foundations

The Republic of Croatia is a parliamentary democracy with a strong presidency. The Croatian government's basic purposes and structures were established by the Constitution of December 22, 1990. The Croatian legal system is a civil law system. All Croatians, women and men alike, are eligible to vote at age 18; 16- and 17-year-olds are also eligible to vote if they are employed. Croatia's democratically elected chief executive and head of state, the president, is elected to a five year term of office. The executive branch of the Croatian government also includes the prime minister, who is appointed by the president and must be confirmed by the House of Representatives. The prime minister also recommends other ministers to the president for appointment to the executive branch. Early in the year 2000, Ivica Racan was chosen as Prime Minister. Since February 2000 the President of the Republic of Croatia has been Stjepan Mesic, a member of the Croatian People's party (HNS).

At the national level the Croatian legislative branch consists of a bicameral Assembly, or Sabor, composed of the House of Counties (Zupanijski Dom ) with 68 members (63 elected by popular vote and 5 appointed by the president) who serve 4 year terms and the House of Representatives (Zastupnicki Dom ) with 151 members also elected to 4 year terms. The third branch of Croatia's national government is the judicial branch, consisting of the Supreme Court whose judges are appointed to eight year terms by the Judicial Council of the Republic and the Constitutional Court with eight judges similarly appointed. The Judicial Council of the Republic is elected by Croatia's House of Representatives. Croatian regional affairs are administered through a system involving 20 counties (Zupanijski ), though the national government continued to operate in a fairly centralized fashion and to exert significant control over administrative affairs throughout the country in the year 2000.

International human rights organizations and agencies such as Human Rights Watch and the Bureau of Democracy, Human Rights, and Labor of the U.S. Department of State praised many of the steps Croatia took in 2000 to promote human rights and further democratize the country. For example, in February 2000 at the start of the new national administration under President Mesic and Prime Minister Racan, the government announced its intentions to make US$55 million available to assist in the resettlement and reintegration of 16,500 Croatian Serb refugees who had fled their homes in 1995 when Croatian government troops attacked rebel Serbs—an operation later subjected to consideration by the International War Crimes Tribunal for the former Yugoslavia (ICTY) in the Hague. Croatia also announced its support of the ICTY in 2000 and made significant legislative reforms to strengthen the country's protection of minorities and the privacy and free expression of its citizens. A new government body was appointed in 2000 to oversee the return of refugees, replacing the previous problematic Commission on Return, to enable the more effective return of Croatian Serbs who had taken refuge in Republika Srpska.

However, continuing problems in Croatia during the year 2000 of discrimination against ethnic Serbs, particularly regarding property rights, had not yet been effectively addressed by the end of the year; crimes of ethnic violence against Serbs also occurred in 2000. Croatia's Roma population of 30,000 to 40,000 people also faced continuing problems with the general population and Croatian authorities. Many Roma lacked access to education and employment opportunities, unfairly prevented from receiving state assistance and housing, met obstacles as they sought Croatian citizenship, and found themselves the targets of racist abuse with inadequate government protection. Discrimination and violence against women continued to be prevalent in Croatia in 2000.

Concerning its participation in regional and international organizations and conferences, Croatia has a better record. Croatia became a member of the World Bank and the International Development Association in 1993 but received no loans until 1995 when the security situation in the country had improved. Croatia is well linked to many international bodies and activities such as those associated with the United Nations, the European Union, the Organisation for Security and Co-operation in Europe, the Council of Europe, and NATO's Partnershipfor-Peace program and has received development aid and post-war recovery assistance from numerous nongovernmental, international organizations. Croatia's chief trading partners are Germany, Italy, Slovenia, Bosnia and Herzegovina, and Austria.

The legal basis for Croatia's education system rests in the Constitution of 1990 and various laws and measures passed since the country declared independence in 1991. Higher education is organized according to the principles laid out in the Higher Education Act of 1996 and through the recommendations of the Council of Europe's Legislative Reform Program. The transformation of the general education system in Croatia has been slower in coming. Although several attempts were made in the 1990s by government commissions and public actors to assess and reform the overly rigid, bureaucratic, authoritarian education system left over from when Croatia was part of Yugoslavia, by the end of the decade none of the proposals discussed had crystallized into an approved action plan. By June 2000 the Education Council of the Croatian government's Ministry of Education and Sports had drawn upon some of the proposed reforms made since 1985 and prepared a comprehensive set of recommendations for the country's entire education system at all levels and was inviting the public to formally review and comment on their proposal. The anticipated timetable for reviewing the proposal, making further recommendations to the Ministry and to the government as a whole, and advancing the proposal to the national Assembly went as follows: 1) Between mid-June and mid-September 2000 the proposal was to be reviewed by a full range of civil-society actors—schools, teachers' associations, professional nongovernmental organizations, employers' associations, business organizations, political parties, religious communities, and individuals—who would be invited to develop their own proposals and comments in writing for submission to the Council for consideration; 2) From mid-September until the end of October a working group appointed by the Education Council was to gather and review the above submissions and pass them along with their own comments to the Council as a whole, which by October 30, 2000, was to have completed discussions on what it had received; and 3) After the Education Council had adopted and passed along its recommendations on proposed education reforms to the government of the Republic of Croatia, the government was to decide whether to forward the material to the National Assembly for debate. Along the way, various government commissions would be engaged to review and prepare documentation and plans related to the proposed reforms.

The reform efforts begun in the year 2000 to accomplish the above evaluation of the entire school system and to propose a new, comprehensive package of recommendations in line with European standards was both nationally essential and strategically wise from an international perspective. Croatia was well aware that reforming its education system would bring better economic, political, and social relations with other European states and simultaneously facilitate transfers of students, professors, researchers, and funds between Croatia and the wealthier countries of Europe. European educational standards have become ever more important to the transitional countries in Eastern and Central Europe as they sought to improve their antiquated, often overly bureaucratic systems inherited from political predecessors of the socialist era. Not only would reforms in Croatia bring the education system up to the par with the European countries with which Croatia was doing business, but the reforms would also improve the likelihood that Croatia one day could be integrated into the European Union or at least made a more-valuable trading partner whose educated citizens would be welcomed as qualified employees for European jobs.

The essence of Croatia's official stance toward education is captured in a simple statement included in the government's program for 2000-2004 and cited by Minister of Education and Sports Vladimir Strugar in his presentation to the public of a Ministry proposal to fully transform the country's educational system: "Upbringing and education are development priorities of strategic importance for the overall development of Croatian society. . . ." Croatia's underlying philosophy of education is reflected in a speech presented by Bozidan Pugelnik, Minister of Education and Sports in 1998, at a UN-sponsored conference for government ministers in charge of youth-related issues held in August 1998. As Pugelnik remarked:

We believe that for the development of policy for young people, the active participation of young people is a condition sine qua non, based upon the following:

• Strengthening democratic societies,
• Peaceful resolution of problems within each individual country and among the nations of the world,
• Strengthening democratic societies,
• Peaceful resolution of problems within each individual country and among the nations of the world,
• Strengthening awareness of the equality among nations, sexes, races, religions, i.e., the strengthening of multiculturalism,
• Strengthening awareness of environmental protection,
• Facilitating access to education, health care, employment and a general improvement of living conditions for young people, especially for the neglected groups,

in order to begin the attempt to provide young people with an opportunity for a better future.

Educational System—Overview

The educational experience of most students in Croatia was severely disrupted by war in the early 1990s. As of 2001, thousands of refugees who had left Croatia during the warfare of the 1990s had yet to be resettled, and those who had returned often were housed in temporary quarters away from their original home communities. Regular school attendance was thus especially hard for some children and youth even where schools had been rebuilt and classes restarted shortly after the Dayton Accords were signed in 1995. Consequently, some measures of educational enrollments, attainment levels, literacy rates, and other school-related statistics for the 1990s are fairly imprecise or nonexistent. Certain knowledge gaps exist regarding the status of education in Croatia in the 1990s, making a full evaluation of the country's educational situation at the start of the new millennium somewhat difficult to achieve.

Nonetheless, in June 2000 a number of solid recommendations were being advanced to reform the education system in Croatia. However, they had not yet been acted upon, due to the need for public debate in the policy-formulation process. In the proposal drafted by the Government Ministry's Council of Education, the Council had identified several major flaws in the education system, the remedy of which could vastly improve the country's schools. The partial catalogue of deficiencies included the following: 1) a lack of democratic relations and procedures in the schools; 2) an atmosphere predominantly authoritarian and conservative; 3) overly rigid scheduling of the school day; 4) inflexible rules for placing and promoting students; 5) dualistic secondary education uncharacteristic of European systems; 6) denying opportunities to higher education to about half the secondary-school population; 7) an inconsistent and formalistic grading system; 8) over-centralization in educational administration; 9) lack of recognition of parents' rights and obligations; 10) poor-quality and inadequate physical facilities and equipment; 11) few private schooling alternatives; 12) little entrepreneurial activity supporting education; 13) fragmentation among the parts of the education system; 14) arts schools poorly coordinated with other schools; 15) formalistic and unmotivating methods of evaluating teachers; 16) a lack of professional teaching publications and pedagogical literature understandable by or useful to most teachers; 17) and poor management of the education system, schools, and classes. Interestingly, the evaluation contained in the June 2000 proposal underscored that the above problems had little to do with the fault of the teachers in the system. The Education Council carefully noted that teachers in Croatia "for some incomprehensible reason, have been systematically belittled, financially discriminated against and professionally thwarted and restricted, while the entire education system was run in a manner totally out of synch with European tradition and experience" (Council 7). The rampant problems in Croatia's education system were especially surprising considering that Croatian schools and culture are centuries old, including at the university level. The first university in the country was established by Dominican priests in Zadar in 1396 as the Universitas Jadertina, the General University. According to the Ministry of Science and Technology, the government arm formally in charge of higher education in Croatia in 2001, Universitas Jadertina had conferred the "degrees of Master of Science and Doctor of Science and was thus equal in status to the other eminent European universities of the time."

In 1991, approximately 29 percent of Croatia's population was of school age or between the ages of 3 and 24. The gross enrollment rate for basic education, the first 8 years of free, compulsory schooling for students generally between the ages of 6 and 14, was 89 percent in 1996. Twelve years of public schooling was the expected norm in Croatia in 1995, although attendance was compulsory for only eight years. Croat was the first language of instruction used in Croatian public schools in the year 2000.

In June 2000 the Education Council of the Ministry of Education and Sports made several recommendations to bring the country's education system into better alignment with European and UNESCO-approved international standards. The Council suggested adding a year of compulsory preschool education for all children between the ages of five and six beginning in 2010. Additionally, the Council recommended making nine years of basic education compulsory and divided into three phases: a Junior phase where students would be taught in forms (classes); an Intermediary phase where students would be taught in a combination of forms and subjects; and a Senior phase where students would be taught subjects by specialized teachers. Two, three, four, or five years of secondary schooling, depending on the course of study chosen by the student, would follow this nine-year pattern of elementary schooling. The overall goal of the reforms recommended by the Council was to make schools in Croatia capable of delivering education that would fulfill one basic requirement: making high-quality education available to all. As the Council noted, "A fundamental human right and a democratic prerequisite for equality among the young generation is the same educational (pedagogic) standard and quality of upbringing as the most important condition for social promotion and professional success" (Council 40).

The need to develop new textbooks, teaching approaches, educational programs, and course curricula sensitive to the needs of all of Croatia's people, including ethnic minorities, was highlighted in the Education Council's proposal for school reforms in June 2000. Similarly, providing students with the means to develop knowledge and skills in information and communications technology (ICT) has been a goal of education reformers in recent years. With the strengthening of the economy in the first few years of the 2000 decade and the improvement of education likely to come about through reforms initiated by the Croatian government in the year 2000, new programs in ICT were likely to be added to schools to qualify students for high-technology employment. In 1999 the number of personal computers in Croatia was 67 per 10,000 persons. This was more than triple the number of computers just two years earlier (22 per 10,000 in 1997). The new reforms for Croatia's schools in the 2000 decade surely would upgrade student knowledge and functionality in educational technology. This was evidenced by the Education Council's recommendation of a compulsory "national curriculum" that would develop in each student 18 areas of literacy, with "information technology" the third literacy area in the Council's proposed list, just after "alphabetical" literacy and literacy identified as "mathematical, suited to the use of technical aids."

Croatia's government clearly recognizes the important role education plays in the country's socioeconomic and political development. In the June 2000 education reforms proposal, the Education Council pointed out, "Any country in today's day and age desirous of achieving high economic growth must ensure that a high percentage of its population acquires secondary education." Two key international donors collaborating with the Croatian government and Croatian educators from the mid-1990s on were the European Training Foundation of the European Union, which supported vocational education and training, including staff development, organizational strengthening, and curricular reform, and the Soros funded Open Society Institute, which implemented the Network Step by Step Program to encourage more child-centered teaching in preprimary and primary schools, ensure greater cooperation among parents, teachers, and educational faculty, and promote the equitable integration of Roma children and children with disabilities in the schools.

Preprimary & Primary Education

Although kindergarten in Croatia was still optional at the turn of the millennium, approximately 31 percent of children of preschool age in Croatia were enrolled in preschool education programs in 1996. In the year 2000 primary school gross enrollment rates were 94 percent for boys and 97 percent for girls; the corresponding net enrollment rates were 93 percent for boys and 96 percent for girls. Girls had represented 49 percent of total enrollments in primary education in 1995. That same year, only 1 percent of primary students were enrolled in private education programs. In the mid-1990s about 98 percent of primary students (measured as percent of cohort) reached grade 5.

Secondary Education

In 1995, approximately 51 percent of students enrolled at the secondary level were girls. The student to teacher ratio was 15:1 for secondary level education in 1995. Only 1 percent of secondary enrollments that year were in private schools. In 1996 only 18.7 percent of Croatia's 15- to 18-year-olds were enrolled in general upper secondary education; 57.1 percent of that age group was enrolled in vocational and technical upper secondary education. Consequently, the overall upper secondary enrollment rate in 1996 was 75.8 percent. Thus, three-fourths of all upper secondary students were taking vocational and technical courses of study while one-fourth were enrolled in general education programming. Gross enrollment ratios at the secondary level were 81 percent for boys and 83 percent for girls at the end of the millennium.

Higher Education

In 2001 Croatia had four universities—the Universities of Zagreb, Rijeka, Split, and Osijek—which together encompassed 55 faculties, four arts academies, three university departments, and one additional universityoperated course of study. Professional education was provided through seven polytechnics, six independent schools of professional higher education, one teachers' academy, and eight teachers' schools of professional higher education. Higher education institutions in the 2000-2001 academic year employed 1,133 full professors and 801 associate professors.

The Zagreb area had the highest number of students in tertiary education in 2001: 33,889 students in university programs and 14,640 students in professional studies, which was 58 percent of all tertiary students in Croatia. In the mid-1990s about 28 percent of the age-relevant population in Croatia was enrolled in higher education. Just 8 percent of Croatia's population over age 25 held a higher education diploma in 1995, but by 1996 approximately 17 percent of 18- to 22-year-olds were enrolled in tertiary studies.

Of the 84,088 students enrolled in higher education institutions in the country in the 2000-2001 academic year, 59,230 were following university courses of study at least 4 years in length that led to a Bachelor's degree while 24,858 students were enrolled in professional studies programs of at least 2 years that led to an Associate's degree. Of the students enrolled in Croatian universities in 1997, approximately 25 percent concentrated in the humanities, approximately 42 percent in the social and behavioral sciences, a little more than 2 percent in the natural sciences, about 9 percent in medicine, approximately 47 percent in engineering, and more than 10 percent in other fields. The Ministry of Science and Technology, whose responsibilities have included administrative oversight of the universities and professional training in Croatia, anticipated implementing the European credit transfer system early in the 2000 decade to facilitate transfers of Croatian students and other European students between each other's higher education programs.

Administration, Finance, & Educational Research

As already noted, the Ministry of Education and Sports has had primary responsibility for making and implementing educational policy in Croatia's preschools, primary, and secondary schools, with the Ministry of Science and Technology administering Croatia's higher education system. Attached to these ministries are a number of councils and commissions charged with specific tasks in administrative oversight, policy direction, or program implementation and management. For example, the National Council for Higher Education is an independent body of 18 members nominated by the Rectors' Conference and higher education institutions and appointed by the national parliament to carry out quality assessments and evaluations of the higher education system. The National Scientific Research Council also is an independent body whose tasks include preparing the National Scientific Research Program for Croatia. The country's educational system was still highly centralized in the year 2000, though proposals were under discussion to bring administrative authority closer to the local level. In 1997 Croatia's total public expenditures on education amounted to about 3 percent of the GDP.

Besides the government ministries and other formal bodies charged with planning, implementing, and evaluating educational policy in Croatia, nongovernmental associations, community organizations, and private individuals became increasingly involved in the development of educational policy and the provision of learning opportunities to students in the years after the Balkans wars. The National Federation of the Young People in Croatia, for example, was an umbrella organization of 20 associations in 1998 and had observer status in the European Youth Forum. Teachers' associations also provided their input. Likewise, local community organizations and more informal groupings of parents and community members became more involved in developing and implementing school programs in Croatia from the mid-1990s on. For example, the Step by Step Program, begun by the international nongovernmental Open Society Institute in 1994 with funding from the Soros Foundation, has encouraged individuals and groups in local communities to come together to plan programs fostering the development of children's problem-solving skills, more democratic decision-making in schools, and greater respect for ethnic minorities. As Croatians continue to decentralize their government and participate more in public decisionmaking, additional opportunities undoubtedly will emerge where students and their parents, along with educators and other interested members of local communities, will work more closely together to develop the education programs that suit them best.

Nonformal Education

A well-developed system of adult education appeared to be lacking in Croatia in the year 2000. At the same time, recommendations were being considered to tie professional training, including training at the secondary level, more closely to the labor market. Reforming secondary schools so that a full range of education and training programs, including continuing education, could be provided for students was one practical solution suggested by the Council on Education. The possibility of using distance education as a means of teaching more of Croatia's young learners, university students, and adults also was indicated in the Council's June 2000 proposal, which included the suggestion that "correspondence courses through the Internet" could be a viable option for training skilled professionals. Croatia had 4 Internet service providers in 1999 and approximately 26 Internet hosts for every 10,000 people. In 1997 there were 1.2 million televisions and 1.5 million radios, all of which also could be used for educational purposes.

Summary

The people of the Republic of Croatia have faced many challenges in the years since the Dayton Accords of 1995 brought the war involving Croatia to a halt. Significant progress had been made by the year 2000 in planning for the thorough transformation of an educational system long outdated and ripe for improvement. With an upturn in the national economy by early 2000 and the political shift that occurred in February 2000, Croatia seemed ready to begin the formidable task of restructuring its education system and improving its methods of training not only students but also teachers, administrators, and other adults. Most government officials closely involved with the plans for education reform realized the magnitude of the work that lay before them, but Croatia's Minister of Education and Sports in June 2000 may have best summed up the broad significance and basic requirements of the changes to be made. In his foreword to the proposal of education reforms prepared by the Ministry's Council of Education for public discussion and official debate, Minister Vladimir Strugar astutely observed:

The building of a multi-party, pluralistic and democratic society, a return to re-embracement of authentic moral and cultural values, values of work and entrepreneurship, respect for private property, respect of laws and recognition of personal differences, as well as a whole range of other characteristics within the contemporary European school—while at the same time retaining all those elements specific to Croatia—is an ambitious task which can be realized only through good organization and with well motivated teachers.

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—Barbara Lakeberg Dridi

Croatia

Compiled from the May 2007 Background Note and supplemented with additional information from the State Department and the editors of this volume. See the introduction to this set for explanatory notes.

Official Name

Republic of Croatia

PROFILE

Geography

Area: 56,542 sq. km. land area (slightly smaller than West Virginia), 31,067 sq. km. coastal sea area.

Cities: (2002 est.) Capital—Zagreb (779,145). Others—Split (188,694), Rijeka (144,043), Osijek (114,616).

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: (July 2005 est.) 4,495,904.

Growth rate: (2005 est.) −0.02%.

Ethnic groups: Croat 89.6%, Serb 4.5%, other 5.9% (including Bosniak,Hungarian, Slovene, Czech, and Roma) (2001 census).

Religions: Catholic 87.8%, Orthodox4.4%, Slavic Muslim 1.28%, others 6.52%.

Languages: Croatian (South Slavic language, using the Roman script).

Health: (2005 est.) Life expectancy—malmale 70.79 years; female 78.31 years. Infant mortality rate—6.84 deaths/ 1,000 live births.

Government

Type: Parliamentary democracy.

Constitution: Adopted December 22, 1990.

Independence (from Yugoslavia) June 25, 1991.

Government branches: Executive—president (chief of state), prime minister (head of government), cabinet of ministers. Legislative—uni cameral Parliament or Sabor. Judicial—three-tiered system.

Suffrage: Universal at 18.

Political parties: (represented in Parliament) Croatian Democratic Union (HDZ), Social Democratic Party of Croatia (SDP), Croatian People's Party-Liberal Democrats (HNS), Croatian Peasant Party (HSS), Croatian Party of Rights (HSP), Istrian Democratic Assembly (IDS), Croatian Social Liberal Party (HSLS), Independent Democratic Serb Party (SDSS), Croatian Party of Pensioners (HSU), Croatian Democratic Alliance of Slavonia and Baranja (HDSSB), Democratic Center (DC), Slavonia-Baranja Croatian Party (SBHS), Democratic Union of Medjimurje (MDS), Primorje-Gorski Kotar Alliance (PGS).

Economy

Real GDP growth: (2006) 4.8%.

Inflation rate: (2006) 3.2%.

Unemployment rate: (International Labor Organization method, 2006) 11.8%.

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 Serbia, Montenegro, Bosnia and 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.

PEOPLE AND 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 century, 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 (born Josip Broz).

After the death of Tito and with the fall of communism throughout eastern Europe, the Yugoslav federation began to unravel. 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 United Nations mediated a cease-fire in January 1992, but hostilities resumed the next year when Croatia fought to regain one-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 Dir-mium 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 coalition government and President in early 2000, brought significant changes to Croatia. The government, under the leadership of then-Prime Minister Racan, progressed in implementation of the Dayton Peace Accords, regional cooperation, refugee returns, national reconciliation, and democratization. On November 23, 2003, national elections were held for Parliament. The current government, headed by Prime Minister Ivo Sanader, took office in December 2003. The Sanader government has made membership for Croatia in the European Union and in NATO its top priorities. Elections for Parliament are not expected again until November 2007. Presidential elections were held in January 2005. President Mesic was reelected to a second term in office, defeating Croatian Democratic Union (HDZ) candidate Jadranka Kosor in two rounds of balloting. President Mesic was inaugurated for a second term on February 18, 2005. Presidential elections will next be held in January 2010.

GOVERNMENT AND POLITICAL CONDITIONS

The Croatian Parliament, also known as the Sabor, 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 152 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—Social Democratic Party of Croatia (SDP), Croatian Social Liberal Party (HSLS), Croatian Peasant Party (HSS), Istrian Democratic Assembly (IDS), Liberal Party (LS), and Croatian People's Party (HNS). The IDS left the coalition in June 2001. In July 2002, the HSLS left the coalition, after which it split into two parties, Libra and the HSLS. Libra remained in the coalition. As a result of the parliamentary elections in November 2003, the HDZ formed a government in coalition with the Pensioners Party (HSU), Croatian Social Liberal Party (HSLS), and all ethnic minority representatives in the Sabor.

Stjepan Mesic was reelected President in February 2005. 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 minister 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.

HDZ President Ivo Sanader assumed the office of Prime Minister in December 2003. 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.

After the resignation of Miomir Zuzul, Kolinda Grabar-Kitarovic became Foreign Minister on February 17, 2005. The Ministries of Foreign

Affairs and European Integration were merged under her leadership. In addition, Damir Polancec was named Deputy Prime Minister for Economic Affairs, and Neven Ljubicic replaced Andrija Hebrang as Minister of Health. In February 2006, Ana Lovrin was named Minister of Justice.

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

Last Updated: 2/1/2008

President: Stjepan MESIC

Prime Minister: Ivo SANADER

Dep. Prime Min.: Jadranka KOSOR

Dep. Prime Min.: Damir POLANEC

Min. of Agriculture, Forestry, & Water Management: Petar COBANKOVIC

Min. of Culture: Bozo BISKUPIC

Min. of Defense: Berislav RONCEVIC

Min. of Economy, Labor, & Entrepreneurship: Branko VUKELIC

Min. of Environmental Protection, Physical Planning, & Construction: Marina Matulovic DROPULIC

Min. of Family, Veterans Affairs, &Intergenerational Solidarity: Jadranka KOSOR

Min. of Finance: Ivan SUKER

Min. of Foreign Affairs & European Integration: Kolinda Grabar-KITAROVIC

Min. of Health: Neven LJUBICIC

Min. of the Interioir: Marijan MLINARIC

Min. of Justice: Ana LOVRIN

Min. of Science, Education, & Sport: Dragan PRIMORAC

Min. of the Sea, Tourism, Transport, & Development: Bozidar KALMETA

Governor, National Bank of Croatia: Zeljko ROHATINSKI

Ambassador to the US: Neven JURICA

Permanent Representative to the UN, New York:

Croatia maintains an embassy in the United States at 2343 Massachusetts Avenue NW, Washington DC, 20008-2853, tel. (202) 588-5899, fax: (202) 588-8936. Consulates General of the Republic of Croatia are located in New York City, Chicago, and Los Angeles. Honorary consulates are located in St. Paul, New Orleans, Seattle, Pittsburgh, and Kansas City.

ECONOMY

Following World War II, rapid industrialization and diversification occurred within Croatia. Decentralization came in 1965, allowing growth of certain sectors, particularly 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%. With the end of the war in 1995, tourism and Croatia's economy recovered moderately. However, corruption, cronyism, and a general lack of transparency stymied meaningful economic reform, as well as much-needed foreign investment.

Croatia's economy turned the corner in 2000 as tourism rebounded. The economy expanded by 5.6% in 2002, stimulated by a credit boom led by newly privatized and foreign-capitalized banks, some capital investment (most importantly road construction), further growth in tourism, and gains by small and medium-sized private enterprises. These trends have continued, with credit growth fueling strong demand in construction and services, resulting in 4.8% GDP growth in 2006. Unemployment, although still high, began a steady decline over this period that has continued to the present day. Croatia has also benefited from macroeconomic stability over the past several years with a stable exchange rate, low inflation, and shrinking government deficits. The start of European Union accession talks in 2005 and the prospect of NATO membership have also helped to attract higher levels of foreign investment.

Despite these gains, however, substantial challenges remain, particularly in reforming the judicial system and reducing corruption. The privatization process, begun in the 1990s, has been unsteady, largely as a result of public mistrust engendered when many state-owned companies were sold to the politically well-connected at below-market prices. The government sold three large metals plants in early 2007, but the Croatian state still controls a significant part of the economy, with government spending accounting for as much as 40% of GDP. Some large, state-owned industries, such as the country's shipyards, continue to rely on government subsidies, crowding out investment in education and technology needed to ensure the economy' long-term competitiveness.

FOREIGN RELATIONS

Croatia is in the midst of pursuing a policy of greater Euro-Atlantic integration. In October 2001, Croatia and the European Union (EU) signed a Stabilization and Association Agreement. In February 2003 Croatia formally presented its EU membership application, and in April 2004 the European Commission agreed to open EU accession negotiations with Croatia. The opening of talks was delayed in March 2005 when the EU decided that Croatia was not fully cooperating with the International Criminal Tribunal for the Former Yugoslavia (ICTY), but talks finally got underway in October 2005, after the ICTY's Chief Prosecutor, Carla del Ponte confirmed that Croatia was fully cooperating.

In December 2005 General Ante Gotovina, indicted by the ICTY for war crimes and a fugitive since 2002, was arrested by Spanish authorities in the Canary Islands, partially as a result of intelligence information provided by the Croatian Government. Since the arrest and transfer of Gotovina to The Hague in late 2005, Croatia continues to cooperate fully with the ICTY.

Croatia was admitted on May 25, 2000 into the Partnership for Peace program—which was designed by North Atlantic Treaty Organization (NATO) member states in 1994 to strengthen Euro-Atlantic security—and, in May 2002, was welcomed into NATO's Membership Action Program, a key step toward NATO membership. On May 2, 2003, the United States joined Croatia, Albania, and Macedonia to sign the Adriatic Charter, in which the three NATO aspirants pledged their commitment to NATO values and their cooperative efforts to further their collective NATO aspirations. The United States continues to work with the aspirants, collectively as well as bilaterally, as they continue with their necessary reforms for eventual consideration for NATO membership.

Croatia has been a member of the United Nations since 1992, and contributes troops to 10 UN operations including those in Haitii, Cyprus, Georgia, Sierra Leone, Ethiopia and Eritrea, and Kashmir. Since 2003, Croatia has sent a military police unit to support the International Stabilization Assistance Force in Afghanistan. Croatia is a member of the World Trade Organization and the Central European Free Trade Organization.

While Croatia has made progress on dealing with a number of post-conflict issues, the status of refugees displaced during the 1991–95 war and resolution of border disputes with Slovenia remain key issues influencing Croatia' relations with its neighbors and the international community.

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 United States 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 United States has given more than $13.4 million since 1998 in humanitarian demining assistance. Croatia hopes to remove an estimated one million remaining mines by 2010. The United States 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. Croatia is scheduled to graduate from the SEED program in 2008.

Principal U.S. Embassy Officials

Last Updated: 2/19/2008

ZAGREB (E) Thomasa Jeffersona 2, Zagreb 10010, 385-1-661-2200, Fax 385-1-661-2373, Workweek: Mon-Fri 8:00am-16:30pm, Website: http://zagreb.usembassy.gov.

TRAVEL

Consular Information Sheet

January 16, 2008

Country Description: Croatia is an increasingly well-developed nation in the process of accession to the EU. Facilities for tourism are available throughout the country, and the Adriatic coast is an increasingly popular tourist destination.

Entry Requirements: A passport is required for travel to Croatia. A visa is not required for U.S. passport holders for tourist or business trips of fewer than 90 days within a six-month period. All foreign citizens must register with the local police within 24 hours of arrival and inform the office about any change in their address. Registration of foreign visitors staying in hotels or accommodations rented through an accommodation company is done automatically by the hotelier or accommodation company. Failure to register is a misdemeanor offense; some Americans have been fined as a result of their failure to register. U.S. citizens already in Croatia who wish to remain in Croatia for more than 90 days must obtain a temporary residence permit from the local police having jurisdiction over their place of residence in Croatia.

With their residency application, applicants will need to provide a copy of their birth and marriage certificates (obtained within 90 days before application) and a police report authenticated for use abroad from their state of residence in the U.S. or from the country where they permanently reside. All documents should have an “apostille” stamp certifying their authenticity. Information regarding apostilles and authentication of documents is available at http://travel.state.gov/law.

If an extension of the approved temporary stay is needed, the request should be submitted no later than 30 days in advance of the last day of authorized stay. For more information on obtaining residence or work permits, please see http://www.usembassy.hr/acs/entry.htm.

For further information on entry requirements for Croatia, including information regarding requirements for residency and work permits, travelers may contact the Embassy of Croatia at 2343 Massachusetts Avenue NW, Washington, DC 20008, tel. (202) 588-5899, the Croatian Consulates in New York City, Chicago, and Los Angeles or the Croatian Ministry of Internal Affairs/Office for Foreigners, tel. (385) (1) 4563-111 or http://www.mup.hr and http://www.mvpei.hr Visit the Embassy of Croatia web site at www.croatiaemb.org for the most current information.

Safety and Security: Although hostilities in all parts of the country ended in 1995, de-mining of areas along former confrontation lines is not complete. It is estimated that de-mining operations will continue at least until 2010. Mine-affected areas are well-marked with the Croatian-language warning signs using the international symbol for mines. Travelers in former conflict areas, including Eastern Slavonija, Brodsko-Posavska county, Karlovac county, areas around Zadar, and in more remote areas of the Plitvice Lakes National Park should exercise caution and not stray from known safe roads and areas. Mine clearance work may lead to the closure of roads in former conflict areas. For more information about mine-affected areas and de-mining operations in Croatia, please see the Croatian Mine Action Center's web site at www.hcr.hr/en/minskaSituacija.asp.

For the latest security information, Americans traveling abroad should regularly monitor the Department of State, Bureau of Consular Affairs' web site at http://travel.state.gov, where the current Travel Warnings and Travel Alerts, as well as the Worldwide Caution, can be found. Up-to-date information on safety and security can also be obtained by calling 1-888-407-4747 toll free in the U.S., or for callers outside the U.S. and Canada, a regular toll-line at 1-202-501-4444.

Crime: Croatia has a relatively low crime rate, and violent crime is rare. Foreigners do not appear to be singled out. However, in tandem with increased numbers of American tourists visiting Croatia, the Embassy is receiving increased reports of thefts. Travelers are advised to safeguard their belongings in public areas, especially in bus or railroad stations, airports and on public transportation. As in many countries, outward displays of wealth may increase a traveler's chances of being targeted by thieves.

While violent crime is rare, there have been isolated attacks targeted at specific persons or property, which may have been racially motivated or prompted by lingering ethnic tensions from Croatia's war for independence.

Additionally, American citizens are cautioned to be mindful that Croatia is predominantly Catholic and, in some regions, quite conservative. Behavior that may be generally acceptable by American standards may offend local sensitivities and be met with hostility and, in a few cases, even violence.

American citizens are urged to be cautious when frequenting so called “gentlemen's clubs.” A few such establishments have presented foreign patrons with grossly inflated bar bills, sometimes in the thousands of dollars, and threatened those customers who refuse to pay.

Information for Victims of Crime: The loss or theft abroad of a U.S. passport should be reported immediately to the local police and the nearest U.S. Embassy or Consulate. If you are the victim of a crime while overseas, in addition to reporting to local police, please contact the nearest U.S. Embassy or Consulate for assistance. The Embassy/Consulate staff can, for example, assist you to find appropriate medical care, contact family members or friends and explain how funds could be transferred. Although the investigation and prosecution of the crime is solely the responsibility of local authorities, consular officers can help you to understand the local criminal justice process and to find an attorney if needed.

Medical Facilities and Health Information: Health facilities in Croatia, although generally of western caliber, are under severe budgetary strains. Some medicines are in short supply in public hospitals and clinics. The number of private medical and dental practitioners is substantial, and private pharmacies stock a variety of medicines not readily available through public health facilities. Croatian health care facilities, doctors and hospitals may expect immediate cash payment for health services and generally will not accept credit cards. Tick-borne encephalitis, a disease preventable with a three-shot vaccination series, is found throughout inland Croatia but is not prevalent along the coast. Travelers to Croatia may obtain a list of English-speaking physicians and dentists at the Embassy's web site at www.usembassy.hr/acs/medical.htm or by calling: (385) (1) 661-2376 during working hours, or (385) (1) 661-2400 after working hours. Ambulance services can be reached by dialing 94. Ambulance services are effective; however, response times may be longer to more isolated areas.

Information on vaccinations and other health precautions, such as safe food and water precautions and insect bite protection, may be obtained from the Centers for Disease Control and Prevention's hotline for international travelers at 1-877-FYI-TRIP (1-877-394-8747) or via the CDC's web site at http://wwwn.cdc.gov/travel. For information about outbreaks of infectious diseases abroad, consult the World Health Organization's (WHO) web site at http://www.who.int/en. Further health information for travelers is available at http://www.who.int/ith/en.

Medical Insurance: The Department of State strongly urges Americans to consult with their medical insurance company prior to traveling abroad to confirm whether their policy applies overseas and whether it will cover emergency expenses such as a medical evacuation. Americans who plan to stay in Croatia for more than 90 days may be required by Croatian authorities to pay into the Croatian health insurance system for the period of their stay in Croatia, regardless of whether they hold private American insurance or not.

Traffic Safety and Road Conditions: While in a foreign country, U.S. citizens may encounter road conditions that differ significantly from those in the United States. The information below concerning Croatia is provided for general reference only, and may not be totally accurate in a particular location or circumstance.

Road conditions and maintenance in Croatia vary widely. Two modern highways linking Zagreb with Rijeka and Split opened in 2004. Construction is complete between Zagreb and Split and Zagreb and Rijeka, but work is still ongoing between Split and Dubrovnik; This work may cause delays and road closures. Additionally, there are stretches of highway, with average travel speeds up to 130km/hour, which are still only on lane in each direction. Opposing traffic may not be separated by a divider. Highway tolls are higher than in the United States. Primary roads, including roads along the coast, are generally adequate, but most have only one lane in each direction. Coastal roads are narrow and congested, and tend to be slippery when wet. Rock slides are also possible on roads along the coast as well as through the mountain regions of Lika and Gorski Kotar. There is heavy congestion on major routes on weekends (towards the coast, for example) and in major cities during rush hours. Congestion on coastal routes, at border crossings and at tunnels is especially heavy in the summer months. Drivers should be prepared for sudden slowdowns when approaching tunnels at any time of year. Drivers tend to be aggressive in Croatia. Passing on curves or in oncoming lanes is common on highways and poses a higher risk of accidents. Drivers traveling though former conflict areas should stay on paved roads to reduce the risk of encountering unmarked mines and unexploded ordnance left over from the 1991–1995 war. In Zagreb, motorists and pedestrians alike should also pay special attention to trams (streetcars), which in downtown areas may travel at a high rate of speed through the narrow, congested streets.

Right turns on red lights are strictly forbidden in Croatia, unless an additional green light (in the shape of an arrow) allows it. At unmarked intersections, right of way is always to the vehicle entering from the right. The use of front seat belts is obligatory and passengers in vehicles equipped with rear seat belts are required to use them. Special seats are required for infants, and children under age 12 may not sit in the front seat of an automobile. The use of a cellular phone while operating a motor vehicle is prohibited unless the driver is using a hands-free device. Cars must have headlights on while in operation.

Croatia has adopted a policy of zero tolerance to driving under the influence of alcohol. It is illegal for a driver to have blood alcohol level greater than 0.00. Police routinely spot-check motorists for drinking and driving and will administer breath-analyzer tests at even the most minor accident. Drivers who refuse to submit to a breath-analyzer are automatically presumed to have admitted to driving while intoxicated. In case of accidents resulting in death or serious injury, Croatian law requires police to take blood samples to test blood alcohol levels.

Within Croatia, emergency road help and information may be reached by dialing 987, a service of the Croatian Automobile Association (HAK), staffed by English speaking operators. The police can be reached by dialing 92 and the ambulance service by dialing 94. Additional road condition and safety information may be obtained from HAK at tel. (385-1) 464-0800 ext. 0 (English speaking operators available 24 hours), or (385-1) 455-4433 or (385-1) 661-1999, or via their web site, www.hak.hr. During the tourist season, traffic information in English is also available at 98.5 FM on Croatian radio thirty minutes past the hour between 6:30 a.m. and 8:30 p.m.

According to Croatian law, U.S. citizens in Croatia for tourism or business may use a U.S. driver's license for up to three months. U.S. citizens in Croatia with an approved extended tourist visa or permit for permanent residence may continue to use a U.S. driver's license for up to twelve months, after which a Croatian driver's license must be obtained. Please see http://www.usembassy.hr/acs/driver_license.htm for more information on obtaining a Croatian driver's license. For specific information concerning Croatian driver's permits, vehicle inspection, road tax and mandatory insurance, please contact the Croatian National Tourist Office, 350 Fifth Avenue, Suite 4003, New York, NY 10118; phone 1-800-829-4416 or 212-278-8672; fax 212-279-8683.

In cases of traffic accidents involving a foreign-registered vehicle, the investigating police officer on the scene is required to issue a vehicle damage certificate to the owner of the foreign-registered vehicle. This certificate is necessary to cross the state border. Upon written request, the police station in the area where the accident occurred will issue a Traffic Accident Investigation Record. For further information, please visit http://www.mup.hr/1266.aspx.

For travelers arriving by private marine craft, please refer to the nautical information and regulations available at www.mmtpr.hr.

Aviation Safety Oversight: As there is no direct commercial air service to the United States by Croatian carriers, the U.S. Federal Aviation Administration (FAA) has not assessed the Government of Croatia's Civil Aviation Authority for compliance with International Civil Aviation Organization (ICAO) aviation safety standards for oversight of Croatia's air carrier operations. For more information, travelers may visit the FAA's web site at http://www.faa.gov.

Special Circumstances: With numerous automated teller machines and ever-wider acceptance of credit cards in Croatia, traveler's checks are accepted less frequently or exchanged at an unfavorable rate. Western Union money transfer is available. For information on money transfers, call (385)(1) 4839-166 or fax (385)(1) 4839-122.

Recreational Boating: The Government of Croatia adopted a law (effective January 1, 2006) requiring all recreational skippers chartering Croatian flagged vessels to have a certificate of competence. Under the law, the Ministry of Sea, Tourism and Transport will only recognize licenses issued by national authorities of other states. As no such national licensing regime exists in the U.S., Americans wishing to charter and pilot a Croatian-flagged vessel may be required to pass a certification test at the Ministry in Zagreb or a designated harbormaster's office on the coast.

Tourists can be certified in Croatia at harbormasters' offices in Pula, Rijeka, Senj, Zadar, Sibenik, Split, Ploce and Dubrovnik, as well as at the Ministry in Zagreb. Candidates need to contact the harbormaster's office or the Ministry to schedule the test. Please note that the test will be administered only to groups, so individuals may need to wait until a sufficient number of interested applicants apply. The certification costs 850 kuna (roughly $165) and is valid indefinitely. A study guide is available and the test can be taken in Croatian, English, German, and Italian.

Criminal Penalties: While in a foreign country, a U.S. citizen is subject to that country's laws and regulations, which sometimes differ significantly from those in the United States and may not afford the protections available to the individual under U.S. law. Penalties for breaking the law can be more severe than in the United States for similar offenses.

Persons violating Croatian laws, even unknowingly, may be expelled, arrested or imprisoned. Penalties for possession, use, or trafficking in illegal drugs in Croatia are severe, and convicted offenders can expect long jail sentences and heavy fines. Engaging in sexual conduct with children or using or disseminating child pornography in a foreign country is a crime, prosecutable also in the United States.

Children's Issues: For information on international adoption of children and international parental child abduction, see the Office of Children's Issues website at http://travel.state.gov/family.

Registration and Embassy Locations: Americans living or traveling in Croatia are encouraged to register with the U.S. Embassy through the State Department's travel registration web site so that they can obtain updated information on travel and security within Croatia.Americans without Internet access may register directly with the U.S. Embassy. By registering, American citizens make it easier for the Embassy to contact them in case of emergency. The U.S. Embassy in Zagreb is located at ul. Thomasa Jeffersona 2, 10010 Zagreb, tel. (385) (1) 661-2200. The Embassy is located in the southern outskirts of Zagreb near the airport. For emergencies on weekends, holidays and after hours, an embassy duty officer can be reached at tel. (385) (1) 661-2400 or (385) (91) 455-2247.

International Adoption

June 2006

The information in this section has been edited from a report of the State Department Bureau of Consular Affairs, Office of Overseas Citizens Services. For more information, please read the International Adoption section of this book and review current reports online at http://travel.state.gov/family.

Disclaimer: The information in this flyer relating to the legal requirements of specific foreign countries is based on public sources and current understanding. Questions involving foreign and U.S. immigration laws and legal interpretation should be addressed respectively to qualified foreign or U.S. legal counsel.

Please Note: Croatian law gives absolute priority to adoptions by Croatian citizens. While there is nothing in Croatian law that specifically prohibits foreigners from adopting Croatian children, the law stresses that there must be over-whelming justification and exceptionally compelling reasons. The Ministry of Health and Social Welfare must approve such adoptions. Foreign adoption and removal of Croatian children from their homeland is a sensitive subject to Croatian authorities and to the Croatian people. In practice, it is extremely difficult, if not impossible, to obtain this approval, as the government does not consider it beneficial to a child to be uprooted, to lose contact with relatives, or to lose his/her Croatian identity.

The number of prospective parents in Croatia is significantly higher than the number of children available for adoption. There are relatively few adoptable children among the total number of children who are without parental care on a temporary or permanent basis. Traditionally, relatives take in orphan children.

Patterns of Immigration: Please review current reports online at http://travel.state.gov/family.

Adoption Authority: The government office responsible for adoptions in Croatia is the Ministarstvo zdravstva i sociajlne skrbi (Ministry of Health and Social Welfare), the address is Ksaver 200A 14, 10000 Zagreb.

In Croatia, the application for adoption must be submitted to the Centar za socialnu skrb (Center for Social Welfare, equivalent to a U.S. county or municipal social services department). The Center for Social Welfare prepares an adoption case for submisssion to the Ministry, the ultimate authority to approve adoptions by foreigners.

Eligibility Requirements for Adoptive Parents: Adults between the ages of 21 and 35 years old, who are at least eighteen years older than the adopted child, may adopt a child in Croatia. If there are some particularly justified reasons, an adoptive parent may be a person older than 35 years, but the age difference between the adoptive parent and the adopted child may not be greater than 45 years. If the adoptive parents adopt sisters and brothers, half sisters and half brothers, it is enough that one of the adoptive parents meets the age condition for only one of the children.

If the adoptive parents have adopted a child and subsequently wish to adopt the child's sister, brother, half-sister or half-brother, they may adopt such a child without reference to their age. Also, as an exception, an adoptive parent may be a foreigner if this is of particular benefit to the child. If the adoptive parent is a foreigner, the adoption can take place only with the prior approval of the Ministry of Health and Social Welfare. The law makes no distinction between single or married adoptive parents; however, in practice, when a baby is in question, preference is given to married petitioners.

Residency Requirements: Prospective adoptive parents do not have to reside in Croatia during the adoption process, but the Center for Social Welfare should be aware when they are and are not in the country. A Power of Attorney would be required during adoptive parents' absence so that someone can act legally on their behalf.

Time Frame: According to Croatian law, adoptions should be either approved or disapproved within 60 days of receipt of the submission of the completed application to Ministry of Health and Social Welfare.

Adoption Agencies and Attorneys: All adoptions must be approved through the Ministry of Health and Social Welfare, the address is Ksaver 200A, 10000 Zagreb.

The U.S. Embassy Zagreb can provide a list of English-speaking attorneys and court translators in Croatia. Provision of the list is not an endorsement of the attorneys whose contact information is provided. The list can be located at: http://www.usembassy.hr.

Adoption Fees: The Croatian government charges no fee for its role in the adoption process.

Adoption Procedures: Persons who wish to apply to adopt a particular child can do so by directly contacting the Center for Social Welfare of the municipality in which the child resides. If the prospective parents have not identified a particular child, they should contact the Ministry of Health and Social Welfare to ask if any municipal Centers for Social Welfare have a child available for adoption. In both cases, when prospective children have been identified, the next step is for parents to submit the documents listed below to the municipal Centers for Social Welfare.

After reviewing the case, the Center for Social Welfare forwards the application package to the Ministry of Health and Social Welfare with a recommendation as to whether the adoption should proceed. The Ministry then reviews the case and makes a final decision on the adoption within 60 days of receipt.

The Ministry then notifies the Center where the application was filed as of its recommendation and the Center in turn notifies the prospective adoptive parent(s) as to the final decision. The adoption is considered final when the adoptive parents receive the notification from the Center. No court appearance is required for finalization.

Required Documents: There is no specific application form. A request for adoption takes the form of a letter, written by the prospective adoptive parent(s), detailing their circumstances and their desire for adoption, and bearing original signature(s). It can be submitted by mail or through an authorized representative with Power of Attorney. The application must be accompanied by the following documents:

• Certified birth certificate(s) of the prospective parents;
• Certified marriage certificate (if applicable);
• Medical certificate of good health preferably provided by a hospital or general practice clinic rather than a private physician;
• Proof of citizenship (certified copy of a birth certificate, naturalization certificate, or passport);
• Proof of employment in the form of a letter from the parent(s) employer(s) stating their position, length of employment, and salary;
• Criminal Background Check: All prospective parents must submit a U.S. Federal Bureau of Investigation Criminal Justice information Services (CJIS) identification record;
• Federal Income Tax return(s) from the preceding year;
• Home study (social worker's analysis) about the adoptive family and other circumstances of the application, including his or her ability to care for a child.

All original documents and the application letter must be in English and each must be accompanied by a translation in Croatian by an authorized court translator. It is easier and less expensive to have the translations done in Croatia by an authorized court translator rather than in the United States.

The U.S. Embassy in Zagreb can provide a list of court interpreters, but cannot endorse the services or qualifications of anyone on the list www.usembassy.hr. Any official documents (birth certificates, passports, social service reports, home studies, etc) should be certified by an apostille from the designated authority in the United States.

Embassy of the Republic of Croatia
2343 Massachusetts Ave. NW
Washington, DC 20008
Tel: (202) 588-5943
Fax: (202) 588-8937
Internet: http://us.mfa.hr
E-mail: consular@croatiaemb.org

Croatia has consulates in Chicago, Kansas City, Los Angeles, New Orleans, New York, Pittsburgh, Seattle, and St. Paul, Minnesota.

U.S. Immigration Requirements: Prospective adopting parents are strongly encouraged to consult USCIS publication M-249, The Immigration of Adopted and Prospective Adoptive Children, as well as the Department of State publication, International Adoptions.

Please see the International Adoption section of this book for more details and review current reports online at http://travel.state.gov/family.

U.S. Embassy
2 Thomas Jefferson Street
10010 Zagreb, Croatia
Telephone: 385-1-661-2200
Consular Services: 385-1-661-2300
Embassy Hours: 8 AM—4:30 PM

Additional Information: Specific questions about adoption in Croatia may be addressed to the U.S.Embassy in Zagreb, Croatia (385-1-661-2200 or http://www.usembassy.hr/). General questions regarding international adoption may be addressed to the Office of Children's Issues, U.S. Department of State, CA/OCS/CI, SA-29, 4th Floor, 2201 C Street, NW, Washington, D.C. 20520-4818, toll-free Tel: 1-888-407-4747.