Boris Divjak, Author, Boris Divjak, Senior Fellow, Adriatic Institute for Public Policy

OPINIONS

EU Accession: Has the time come to let Croatia in?

Unlike all other candidate countries, Croatia has never had a feasible EU accession strategy - the one that specifies a desired accession date and the timeline to it, with the exact milestones and the accomplished objectives by each one. Instead of driving the process, Cratia has been driven by the string of events, mostly internal, on its way to Brussels.

This lack of vision and direction gives the sense of desperate attempts to subordinate Zagreb to Brussels as soon as possible, as the national government has no ideas how to govern the country. Thus, Brussels was to become the next ‘B' in line to rule Croatia - following Budapest, Vienna (Beč), Berlin and Belgrade. The desperate attempts to get Croatia under Brussels, without an appropriate internal feasibility study on what benefits vs. costs this will result in, have created a common sense of uncertainty, lack of information and finally - resistance to the EU membership throughout the country. The sole responsibility for such a poor public perception of the EU rests with the Government of Croatia that has completely mismanaged the process. Finally, a concept that the EU membership will itself take care of the accumulated problems is ultimately wrong.

Ideal date for the Serbian accession is 2016, case of Turkey

Several think tanks, gathered around the cause of EU accession in Serbia in the immediate post-Milosevic days, submitted a thorough study to the Djindjic government stressing that the ideal date for the Serbian accession is 2016. In 2000 that seemed like an eternity away and sounded rather pessimistic to the public. However, carefully elaborated, with a range of adjustment targets set for the various aspects of the economy, judiciary etc., this was a reasonable path to follow that would ensure a number of ‘wins' in the sixteen years, a properly prepared economy that would not be further depressed once it integrates in the huge, highly competitive market, and a strategy on how to apply and best use the accession funds. Serbia remains on target, despite the very painful progress, additionally hardened by the global economic crisis.

Another interesting example is Turkey. The difference being that its candidate status was obtained in 1999, but to date there are no clear signals from the EU on when it may complete the negotiations and become a full member. However, Turkey has developed a different growth strategy that does not rely on a specific date of entry to the EU and utilises national wealth and human and natural potential to stimulate economic growth. That strategy appears to be very fruitful and came specifically to light when Turkey weathered the economic crisis comparatively well, recovering swiftly and resuming its strong growth.

Croatia never had a strategy

Croatia never had a strategy. Its highly political drives were of personal commitment nature and the accession process seemed to depend more on the external perception and lobbying capacities of individuals such as Ivo Sanader or more recently Jadranka Kosor, than any systemic measures the country was introducing. Sadly, the accession process never resulted inter alia in the dates for termination of severe subsidies, implementation of the rule of law (specifically property related), including establishing appropriate anti-corruption safeguards. Croatia continues to provide well over a billion kunas just to shipyards annually, breaching competition provisions, so dear to the EU, without a clear political statement when and how this will be revised. Property is being sporadically returned, again with solutions coming more from the local level and based on individual judicial efforts, rather than as part of a national approach to the issue of returnees and civil rights - which leaves a minor coalition partner apparently capturing the government agenda, instead of adopting a systemic solution driven by the government. Finally, corruption is on the rise, as perceived by 57% of population, while only 10% believe that its level is dropping . In addition to a complete directionless economic policy (if one can speak of a policy, rather than fire-fighting), Croatia is driven by a myriad of personal agendas and interests and ruling party pursuits, rather than a structured, planned and closely followed accession agenda.

Comparing Croatia with Turkey and Macedonia

Comparing Croatia to the other two candidates : Turkey and Macedonia, as well other two regional comparators: Serbia, not yet a candidate; and Slovenia, the only ex-Yugoslav member state of EU, striking differences come to light. The macroeconomic indicators demonstrate its critical weaknesses: a huge foreign debt which has reached 100% of the country's GDP (compared to 45% of Turkey, 59% of Macedonia or 74% of Serbia); the unemployment rate of 19.3% (compared to 12.4% of Turkey or 10.6% of Slovenia); and GDP real growth rate of -1.4% (compared to 7.3% of Turkey, 1.5% of Macedonia or 1.8% of Serbia) . The lack of sustainable growth strategy is further demonstrated by the fact that the economic growth is impossible to forecast and that the country remains highly dependent on further external borrowing, including the recent release of Croatian bonds in the foreign markets only to pay the interest accrued on the external debt. The inability of the Government to address public sector's spending and introduce austerity social and subsidy package takes Croatia one step closer to economic uncertainty and potential default in servicing the debt and one step away from the integrated EU market, which by now is on the growth path again.

Critical governance problems

Moreover, comparing Croatia to the stated group of countries reveals other critical governance problems: economic freedom of Croatia is rated 61.1 on the scale from 0 (repressed) to 100 (free), thus flirting with the level at which it is branded mostly unfree (countries marked 50-60). Its comparators are doing better: Macedonia - 66, Slovenia - 64.6 and Turkey - 64.2 . A similar investment climate index of Doing Business ranks Croatia only 84th of 183 countries surveyed in 2011, with the others being significantly ahead of it: Macedonia - 38th, Slovenia - 42nd, Turkey - 65th and Serbia trailing somewhat behind - 89th . These indicators point not only to the lack of development vision, but also to a suppressed entrepreneurial climate, lack of options for growth of the private sector and a lingering pro-communist concept of the national economy, where the private entrepreneurs are still perceived as thieves and only the government is capable of running the economy (further supported by the continuous interventions and subsidies to the state-owned companies).

Heavily taxed, fragile and small private sector

Such climate only supports unpredictability, lack of regulatory clarity and thus mounting bureaucracy and corruption, subsidised by the heavily taxed, fragile and small private sector that must endure all the poor management of the public resources and transfer of national wealth to the ruling cronies. It comes as little surprise that an average Croatian manager must spend 10.9% of their time dealing with the government bureaucracy (above the comparatively poor regional average of 10%, or Slovenia's reasonable 7.3%) . Correspondingly, the corruption perception index of Croatia remains at the low 4.1 out of the possible 10, overtaken by Turkey's 4.4 and Slovenia's 6.4 . Hand in hand with the escalating corruption comes control of media, where Croatia's stand has also not improved - the freedom of press index ranks it ‘partly free' with the score of 40, overtaken by Serbia's 35 and Slovenia's ‘free' score of 25 , which only mirrors the situation in the public broadcasting system in Zagreb, and individual or crony pressure exercised against some outlets, and their ability to inform the public justly.

Achieving effective corruption control

Effective corruption control, transparent governance of public sector and establishment of the rule of law therefore appear to be the key priority in Croatia. This, however, cannot be achieved only through individual indictments and arrests of the corruption-chain middlemen. It calls for systemic measures and establishment of a system of national integrity with a strong pillar of law enforcement and judiciary. The Croatian public clearly articulates its demands, when it spells out judiciary as being the most corrupt of the institutions giving it the highest national opinion poll score of 4.1 out of 5 (5 being most corrupt and 1 least), where no other institution emerges as a clear anti-corruption champion and judiciary marginally leads political parties and legislature in being most corrupt . At the same time, Croatian public remains misinformed by its Government on the accession process, with the executive lack of vision ill-justified by the demanding accession conditions. As a result, somewhat influenced by the partly free media, the citizens conclude that the EU treats Croatia unfavourably vis-a-vis the accession demands set, (in a recent poll, 63% think the EU is unjust and only 24% support the EU's negotiation stance on Croatia ) and the support for the EU accession continues to be comparatively low.

Government's vassal approach

The EU accession is not going to be soft on Croatia, particularly following a poorly managed process with Bulgaria and Romania earlier. It will also not be soft, given that the other candidate countries are doing better in many respects than Croatia, yet are not being considered for imminent membership. The Croatian public should not be misled by the Government's vassal approach, driven by the complete lack of vision and strategy, into thinking that subordination to Brussels will remove all the problems and grant Croatia with the needed financial resources to restore a quasi-communist order. Exactly the opposite - Croatia's still uncertain membership date will translate into further hardships and a common sharing of the burden created by the current and previous poor leaderships and nonexistence of economic growth strategies. Night is darkest before the dawn, but the Croatian dawn is still very far off. The EU rules cannot be bent, despite the popular view that the beauty of Croatian coast will make Europe turn a blind eye to its economic disaster. However, in the absence of any government's sense of direction, these rules may actually help Croatia transform into a better place and in reverse order, obtain a government accountable to its people, capable of conceptualising a sound framework for growth.