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COUNTRY PROFILES


PROFILE

Country Profile

Area: 56,542 sq. km (22,830 sq. miles)
Population: 4.2m ( 2011 census)
Capital City: Zagreb (population: 800,000)
Official Language: Croatian
Religion: It is estimated that about 85% of the population is Roman Catholic. Around 5% of the population is Orthodox and Muslims make up a further 1.3%
Currency: Croatian Kuna (HRK)
Major Political Parties: Social Democratic Party of Croatia (SDP), Croatian Democratic Union (HDZ), Croatian People's Party (HNS), Croatian Democratic Party of Slavonia and Baranja (HDSSB), Croatian Labour Party (Hrvatski Laburisti) Government: Parliamentary Democracy
Head of State: Ivo Josipović
Prime Minister: Zoran Milanović
Foreign Minister: Vesna Pusić
Membership of International Organisations: United Nations, Organisation for Security and Co-operation in Europe, Council of Europe, Regional Cooperation Council, International Monetary Fund, World Bank, World Trade Organisation, European Bank for Reconstruction and Development, Partnership for Peace, NATO. Acceding State to the European Union.

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ECONOMY

Basic Economic Facts (Source: Croatian Ministry of Finance, State Office for Statistics)

GDP: €45.8 billion (2010)
GDP per head: €10,700
Average Monthly salary (gross): €1044
Annual Growth: 0.8% (2012,MoF projection)
Inflation: 2.5% (2012 projected)
Official unemployment: 19% (360,000 people)
Major Industries: Tourism, shipbuilding, agriculture and food processing, cement, chemicals, fertilisers and pharmaceuticals
Exports: €9,576m
Imports: €20,818m
Major trading partners: EU, Bosnia and Herzegovina
Exchange Rate: 9 Kuna/£ (February 2012)
Croatia's economy has experienced a profound transformation since the country gained its independence in 1992. Today, it is a functioning market economy with stable macroeconomic indicators but structural reforms need to be completed and the competitiveness of the local economy needs to be rapidly enhanced.

Until the global economic recession, the economy enjoyed macroeconomic stability with relatively high growth, low inflation, a stable exchange rate and falling unemployment.

The global economic downturn has bitten. Two recessionary years (2009-2010) have been followed by a stagnant 2011.. Public finances have been hit hard: the fiscal deficit in 2011 was 5.6%. Much of the local economy rests on income from tourism, which continues to contribute as much as 20% to GDP. For 2012, the Government is projecting a modest growth of 0.8 % but with uncertainties in the Eurozone (that accounts for over 70% of Croatian trade), the return of negative growth remains a concern.

The key structural reform issues in Croatia remain reducing the size of the public sector, labour market, pensions, health service, state subsidies, and rapid privatisation of the state portfolio. Resolution of these issues would cut the public wage bill and help provide the necessary environment to make Croatia's economy more flexible and competitive.

Croatia is a member of the World Trade Organization (WTO) and the Central European Free Trade Area (CEFTA).

Doing Business in Croatia

The following sectors, in particular, offer excellent opportunities for UK companies:

- Tourism & Leisure
- Ports & Marine
- Education
- Creative & Media
- Security sector
- Food & Drink

Further information on Croatia's economy and investment in Croatia can be found on the UK Trade & Investment Country Profile: Croatia (https://www.uktradeinvest.gov.uk/ukti/croatia">World Trade Organisation (http://www.wto.int/">Croatian National Bank (http://www.hnb.hr/eindex.htm" class="kexternallinkurl)

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HISTORY

Recent History

The roots of Croatia’s traumatic emergence as an independent state in the 1990s date back to the Second World War (and even further). Its more recent history was strongly influenced by Slobodan Milošević, who came to power in the former Yugoslavia in 1989. Slovenia and Croatia, both then federal states within Yugoslavia, became disillusioned with the speed of economic and political reforms under his leadership. By January 1990 they had set themselves on the path to independence.

In 1990 the newly formed Croatian Democratic Union (HDZ) won elections installing Franjo Tuđman as President. On 25 June 1991 Croatia declared independence (alongside Slovenia). Serbia, under Milošević, opposed the independence moves and sent in the Yugoslav army, who fought in cooperation with elements of Croatia’s Serb minority against Croatian forces in a conflict lasting for five years.

In December 1995, President Tuđman signed the General Framework for Peace, better known as the Dayton Agreement. Under the Erdut agreement, eastern Slavonia was put under UN administration and reverted to Croatia in 1998. The war had left 20,000 Croatians dead or missing and seriously damaged the economy. The vast majority (over 250,000) of Croatia’s Serb population had also fled the country. Milošević would later be put on trial in The Hague on war crimes charges.

After 1995, Croatian politics was increasingly dominated by Tudjman’s brand of authoritarian nationalism. Both the economy and Croatia’s international standing suffered. The state was used to restrict media freedoms and promote the interests of those close to the President. Since Tuđman’s death in 1999, the Croatian political and economic landscape has changed dramatically.

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INTERNATIONAL RELATIONS

Croatia's Relations with Neighbours

Since Tuđman's death, subsequent governments have made considerable efforts to normalise Croatia's relations with her neighbours. Leading members of the Croatian Government have regularly stated that they will not use Croatia’s membership of the EU to block the accession of their neighbouring countries in the region. President Josipović also recently signed a non-interference pact with the Presidents of Serbia, Bosnia and Herzegovina and Montenegro. On 21 October 2011, the Croatian parliament adopted a Declaration on Promoting European Values in Southeast Europe stating a firm commitment from Croatia that bilateral issues, such as border issues, must not obstruct the accession of candidate countries to the EU from the beginning of the accession process until the Accession Treaty comes into effect. These efforts underline Croatia’s commitment to regional co-operation.

Croatia's relations with the UK

The UK established diplomatic relations with Croatia on 25 June 1992. Relations have gone from strength to strength since the arrest of General Ante Gotovina and his transfer to the International Criminal Tribunal for the former Yugoslavia (ICTY) in The Hague in December 2005. Croatia’s relations with the UK are currently excellent.

Under this Britain provides both political and practical support to Croatia’s efforts to join the EU, while Croatia commits to play an important and increasingly proactive role in its region and beyond.

Recent Visits

There have been a number of recent meetings in Brussels. The Foreign Secretary and the Minister for Europe each met the Croatian Foreign Minister, Vesna Pusić, in January 2012. In December 2011, the Prime Minister, David Cameron met the then Prime Minister, Jadranka Kosor

Inward

-- 10 June 2011 –Prime Minister, Jadranka Kosor, met Prime Minister, David Cameron.

-- 28 March 2011 - Chief EU Negotiator, Vladimir Drobnjak, met Minister for Europe, David Lidington.

-- December 2010- Foreign Minister, Gordan Jandroković, met Foreign Secretary, William Hague and Minister for Business and Enterprise, Mark Prisk.

-- 21 June 2010 - Minister of State, Davor Božinović, met Minister for Europe, David Lidington.

Outward

-- Lord McNally, Minister of State for Justice, visited Zagreb in February 2012

-- Kenneth Clarke, Secretary of State for Justice, visited Zagreb in April 2011.

-- Bill Rammell, Minister of Defence (Armed Forces), visited Split in September 2009.

-- The European Scrutiny Committee visited Zagreb in June 2009.

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POLITICS

Recent Political Developments

The most recent parliamentary elections were held in Croatia on 4 December 2011. The centre left “Kukuriku” coalition won an overall majority, returning a left of centre administration for the first time since 2003. Zoran Milanović, leader of the SDP, became Prime Minister. Turnout in mainland Croatia was 60%. Big losers were the HDZ who lost around a third of their seats, and the Peasants Party who lost five out of six. The euro-sceptic regional Croatian Democratic Party of Slavonia and Baranja doubled their number of MPs to 6, and the new Croatian Labour Party also won 6. The right wing Croatian Party of Rights lost their sole MP.

Croatia’s current political and economic climate reflects a dramatic change since the 1990s. This started in January 2000, following President Tuđman’s death in 1999, when SDP leader Ivica Račan led a coalition of opposition parties to victory in parliamentary elections. Stjepan Mesić was elected President on 18 February 2000 and re-elected in February 2005. The new government worked to end Croatia’s international isolation and embed democracy. Relations with Croatia’s neighbours and the West improved greatly. Croatia joined the NATO Partnership for Peace (PfP) in 2000, was accepted into NATO’s Membership Action Plan (MAP) in 2002, and became a full member in April 2009. On the EU track Croatia signed a Stabilisation and Association Agreement, the first step towards membership, in October 2001.

The HDZ came to power in November 2003 on a pro-EU and NATO reform ticket, and remained in power for two terms, eight years. During this time Croatia joined NATO (in 2009) and signed an Accession Treaty with the EU (December 2011). Croatia was accepted as a candidate for EU membership in June 2004; the EU opened accession negotiations on 3 October 2005 following an assessment by the then Chief Prosecutor Carla Del Ponte that Croatia was co-operating fully with the International Criminal Tribunal for the former Yugoslavia (ICTY) in The Hague. On 8 December 2005, the Tribunal's last remaining Croatian indictee, General Ante Gotovina, was arrested and subsequently transferred to The Hague for trial on charges of crimes against humanity.

Croatian news websites with text in English

State news agency (http://www.hina.hr)
State television company (http://www.hrt.hr)

Croatia’s EU Accession

Croatia’s foreign policy priority remains securing membership of the European Union (EU). EU accession requires far-reaching domestic reforms to be maintained; these reforms continue to dominate the political landscape.

Croatia formally closed its accession negotiations on 12 July 2011, and signed their Accession Treaty with the EU on 9 December. Following ratification by all 27 EU Member States, Croatia hopes to accede on 1 July 2013. During this interim period Croatia is expected to embed the reforms undertaken to date and to implement any outstanding reform requirements.

On 22 January 2012, Croatia held a referendum on EU accession: the result was over 66% in favour with a turn-out of around 40%.

NATO

Croatia officially became a NATO member on 1 April 2009 and now contributes forces to several missions worldwide, including ISAF in Afghanistan.

United Nations

Croatia has been a member of the United Nations since 1992. It was a non-permanent member of the Security Council for the period 2008-2010. The Croatian army currently participates in 11 UN peacekeeping missions around the world, including Missions in Kashmir, Sierra Leone, and Sudan.

NATO Enlargement (http://www.nato.int/issues/enlargement/index.html)
UN Peacekeeping (http://www.un.org/Depts/dpko/dpko/index.asp)
Enlargement - European Commission (http://ec.europa.eu/enlargement/index_en.htm" class="kexternallinkurl)

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Last Updated: February 2012

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