Background Notes: Croatia

The Croats are believed to be a purely Slavic people who migrated from Ukraine, although newer theories hold they may have been nomadic Sarmatians. The Croats settled in present-day Croatia in the 6th century. They were Christianized in the 9th century, but preserved autonomy from Rome until the 1000s. The first King of Croatia, Tomislav, was crowned in 925, having created a sizeable state, including most of Croatia, Slavonia, Dalmatia, and Bosnia and Herzegovina. The state was destroyed by attacks from Bulgarians, Byzantines, Venetians, and Magyars. The 1102 pacta conventa recognized a common king for Croatia and Hungary. The two crowns would remain connected until the end of World War I.

After the 1526 Battle of Mohacs, the Hungarian dynasty was extinguished, and Croatian nobility elected the Austrian Ferdinand Habsburg king. During the next 200 years, the Ottoman Empire was a constant threat, and the Military Frontier was created in 1578, an area carved out of Croatia and ruled directly from Vienna. Austria encouraged settlement of Germans, Hungarians, Serbs, and other Slavs in the Military Frontier, creating an ethnic patchwork. The Ottoman Empire was driven out of Hungary and Croatia by the 1700s, and Austria brought the empire under central control.

As Austrians pushed germanization and Hungarians magyarization, Croatian nationalism emerged. The Croatian national revival began in the 1830s with the Illyrian Movement. By the 1840s, the movement had moved from cultural goals to resisting Hungarian political demands. In 1868, Croatia was given domestic autonomy, but the governor was appointed by Hungary. Croatian leadership divided between proponents of a South Slav union and supporters of a Greater Croatia. Croatian and Serbian parties began to cooperate in 1905, with the Croato-Serb Coalition.

Shortly before the end of World War I, on October 29, 1918, the Croatian Parliament proclaimed Croatia's administrative relations with Austria and Hungary void. The Kingdom of Serbs, Croats, and Slovenes was created December 1. The Croats were not happy with rule from Belgrade by a Serbian king, however. Croatia gained autonomy in 1939, but the Axis powers dismantled Yugoslavia in 1941. The Croatian radical-right Ustase was brought from Italy and installed as the government of the Independent State of Croatia. Antifascist and communist Croats joined Tito's Partisans.

Croatia became part of the Federal Republic of Yugoslavia in 1945. Decentralization in 1965 led to a resurgence of nationalism in the Croatian spring of 1970-71. In 1980, after Tito's death, political and economic difficulties mounted. The federal government began to crumble. Inflation soared, and reforms failed. In 1990, the Croatian Democratic Union won the first free postwar elections on a platform of nationalism, anticommunism, and privatization.

Conflict between Serbs and Croats in Croatia escalated, and 1 month after Croatia declared independence June 25, 1991, a civil war fueled by Serbian invasion broke out in Krajina. January 1992 brought a UN-sponsored cease-fire, but hostilities resumed the next year when Croatia fought to regain territory taken by Serbs. A second cease-fire was enacted in May 1993, and Croatia and Yugoslavia signed a joint declaration the next January. In September 1993, however, the Croatian Army led an offensive against the Serb-held "Republic of Krajina." A third cease-fire was signed in March 1994, but it was broken the next May when Croatian forces again attempted to reclaim lost territory. In early August, Croatian forces recaptured Krajina with a major offensive, and some 150,000 Serbs fled the region, many to Serb-held areas in Bosnia and Herzegovina.

Croatian politics will be dominated by the legislative elections that will occur at the end of this year. The ruling party, the Croatian Democratic Union (HDZ), has experienced a drop in its popularity, as evidenced by recent election polls. This has prompted President Franjo Tudjman to revive national issues. A period of political uncertainty may ensue as a result of HDZ's struggle to hold onto power. They have begun to tighten their reigns on the media and sow division among the opposition. Foreign relations could suffer as the HDZ targets the West in an attempt to reawaken nationalist feelings. This may be especially evident as the U.S. continues to put pressure on Croatia to accelerate the return of Serb refugees.

The President of the Republic of Croatia is the head of state and is elected by popular vote for a 5-year term. A president may not serve more than two terms. The presidency is strong, with an extensive veto. He also may issue decrees with the force of law. He appoints the prime minister and the cabinet, a council of ministers that is proposed by the prime minister. The president is the commander in chief of the armed forces. The next presidential election will be held February 7, 2000.

The Croatian legislature is the Sabor (Parliament), a bicameral body consisting of a Chamber of Deputies and a Chamber of Zupanije (counties). The Chamber of Deputies can have between 100 and 160 deputies, and the Chamber of Counties has 63 members (3 from each county). All representatives are elected for 4-year terms. The last parliamentary elections were held January 3, 2000. The Chambers meet in public sessions twice a year -- January 15 to June 30 and 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; calling referenda; carrying out elections, appointments, and relief of office; supervising the work of the Government of Croatia and other holders of public powers responsible to the Sabor; and granting amnesty. Decisions are made based on a majority vote if more than half of the Chamber is present, except in cases of national rights and constitutional issues.

The Supreme Court of the Republic of Croatia is the highest court. Court hearings are open, and judgments are made publicly, except in issues of privacy of the accused. Judges are appointed for life. The High Judiciary Council of the Republic appoints judges. It is a body consisting of a president and 14 members proposed by the Chamber of Counties and elected by the Chamber of Deputies for 8-year terms.

The Constitutional Court of the Republic of Croatia decides on the constitutionality of laws and has the right to repeal a law it finds unconstitutional. It also can impeach the president. The body is made up of 11 judges proposed by the Chamber of Counties and elected by the Chamber of Deputies for 8-year terms. The president of the Constitutional Court is elected by the court for a 4-year term.

The country is composed of 21 counties (zupanijas). Three representatives from each county are elected to the Chamber of Zupanije.

Croatia's military consists of five branches: ground forces, naval forces, air and air defense forces, frontier guard, and home guard. Total active duty members of the armed forces number 56,180, including about 33,500 conscripts. Terms of service are 10 months. Reserves number 220,000. The Croatian military budget was approximately $1.1 billion in 1997 (a little more than 5% of GDP).

President Franjo Tudjman died December 10, 1999. A new government will be elected and installed by mid-february 2000.
Prime Minister -- Zlatko Matesa
Foreign Minister -- Mate Granic
Ambassador to the United States -- Miomir Zuzul
Ambassador to the United Nations -- Ivan Simonovic

The U.S. embassy is located at 2343 Massachusetts Ave. NW, Washington, DC 20008; Tel: 202-588-5899; Fax: 202-588-8936. Consulates are located in Cleveland, Los Angeles, New York.

In an economy traditionally based on agriculture and livestock, peasants comprised more than half of the Croatian population until after World War II. Pre-1945 industrialization was slow and centered on textile mills, sawmills, brickyards, and food-processing plants. Rapid industrialization and diversification occurred after World War II. Decentralization came in 1965, allowing growth of certain sectors, like the tourist industry. Profits from Croatian industry were used to develop poorer regions in the former Yugoslavia. This, coupled with austerity programs and hyperinflation in the 1980s, led to discontent in both Croatia and Slovenia that fueled the independence movement.

Privatization under the new Croatian Government had barely begun when war broke out. As a result of the Croatian war of independence, the economic infrastructure sustained massive damage in the period 1991-92.

In 1999, GDP growth has slowed after a period of expansion, and Croatia is facing a recession. This is due mainly to weak consumer demand and a decrease in industrial production.

Inflation and unemployment are rising, and the kuna has fallen, prompting the national bank to tighten fiscal policy. A new banking law passed in December 1998 will give the central bank more control over Croatia's 53 remaining commercial banks. Croatia is dependent on international debt to finance the deficit. A recently issued EURO-denominated bond was well received, selling $300 million, which will help offset economic losses from the Kosovo crisis. Despite the successful value-added tax program, planned privatization of state controlled businesses, and a revised budget with a 7% across that board cut in spending, the government still projects a $200 million deficit for 1999.

Low inflation and currency stability have been the main economic achievements of the Croatian Democratic Union (HDZ). Structural reform has been lagging, however, and problems of payment arrears and a lack of banking supervision continue. The upcoming elections may take HDZ focus off of economic policy. The party has promised two salary increases to public-sector employees before the end of the year which will increase the fiscal deficit.

Croatian foreign policy has focused on gaining access to European and transatlantic institutions, maintaining good relations with its neighbors, and securing close ties with the United States. Relations with the U.S. and the European Union (EU) focus on implementation of the Dayton Accords, Erdut Agreement, ethnic reconciliation, nondiscriminatory facilitation of the return of refugees and displaced persons, and democratization. Croatia has had an uneven record in these areas since 1996, inhibiting its relations with the U.S. and Europe. Improvement in these areas will be necessary to advance Croatia's prospects for further Euro-Atlantic integration.

Progress in the areas of Dayton, Erdut, and refugee returns were evident in 1998, but progress was slow and requires intensive international engagement. Thus far, refugee returns have accelerated in 1999. However, unsatisfactory performance, in 1998, in implementing broader democratic reforms still raises questions about the ruling party's commitment to basic democratic principles and norms. Areas that are of concern today include restrictions on freedom of speech, one-party control of public TV and radio, repression of independent media, unfair electoral regulations, a judiciary that is not fully independent, and lack of human and civil rights protection.

Relations with neighboring states have normalized somewhat since the breakup of Yugoslavia. Work has begun -- bilaterally and within the new Stability Pact for Southeastern Europe -- on political and economic cooperation in the region. Outstanding issues with neighboring countries include border disputes with Bosnia and Herzegovina, Slovenia, and Montenegro.

U.S. support to Croatia comes through the Southeastern European Economic Development Program (SEED). In 1998, SEED funding in Croatia totaled $23.25 million. More than half of that money was used to fund programs encouraging sustainable returns of refugees and displaced persons. About one-third of the assistance was used for democratization efforts, and another 5% funded financial sector restructuring.

Croatia declared its independence from the Federal Republic of Yugoslavia on June 25, 1991. The United States opposed the unilateral secession of Croatia and Slovenia, fearing it would lead to war. War broke out between Croatia and the Yugoslav People's Army in the fall of 1991. The European Union recognized Croatia several months later--on January 15, 1992. Largescale fighting ended later that month under a peace plan brokered by former U.S. Secretary of State Cyrus Vance.

Official relations between the United States and Croatia began on April 7, 1992, when the U.S. recognized Croatia, along with Slovenia and Bosnia-Herzegovina, the last of the major powers to do so. There was little substance to the relationship at first. Diplomatic relations were not established until August of 1992, and the first U.S. Ambassador to Croatia, Peter Galbraith, did not arrive until June 1993. The U.S. played a supporting role to the European-led peace process in the early 1990s.

The situation changed dramatically by 1997. The U.S. took the lead in negotiating and implementing the peaceful reintegration of Croatia's Danubian region (including Krajina, Eastern Slavonia, Baranja, and Western Sirmium). The U.S. and Croatian Governments were in close contact at all levels in an attempt to find a peaceful solution to the region's problems.

Lack of early U.S. involvement had upset Croats, but intense U.S. involvement in the implementation of the Dayton and Erdut Agreements led Croatians to complain of too much pressure. The U.S. has, however, continued to vigorously insist upon fulfillment of the terms of the agreements on all sides.

U.S. policy in Croatia and the area has centered on promoting the territorial integrity of existing states, the possibility for all refugees and displaced persons to return home, freedom from discrimination on ethnic or religious grounds, the sanctity of private property, and tolerance for democratic dissent. In February 1998, the U.S. presented a Partnership for Peace "road map" outlining specific areas where improved performance was needed. The road map highlights Dayton implementation, democratization, and refugee returns and reconciliation as the main points on which progress must be made. Working to achieve these goals can pave the way to full integration of Croatia into Western political, security, and economic structures.