Croatia: From isolation to EU membership

Vesna Pusic, Croatia's foreign minister, is fond of pointing out that when Croatia joins the European Union on 1 July, 2013 the accession process will have taken 12 years and four months.

The EU that Croatia will join is not the same as the one it was at the beginning of the process. But Croatia, too, is a very different place from the one it was before.

"We used the process to build our own institutions and stabilise our state," says Ms Pusic.

Ms Pusic is right, but for many Croats her words seem rather abstract.

Croatia's economy is in recession effectively for the fifth year. Unemployment is rising: it was 13.4% in 2008 and this year is expected to hit 20.4%. Its population is ageing and shrinking.

Huge transformation

In 1991 Croatia's population was 4.7 million. Now it is less than 4.3 million, and that is not just because so many of Croatia's Serbs left in the 1990s.

Croats are angry. They distrust their leaders and see a small number of people who made fortunes over the last two decades while life has become increasingly tough for ordinary people.

And yet Croatia is a country which has undergone huge transformations since independence in 1991. The fact is, says Gerald Knaus, the head of the European Stability Initiative think-tank, that today, Croatia is dealing with the same, regular problems as its Central European neighbours - such as an ageing population and economic problems "and that in itself is a success".

In 1995, parts of Croatia remained devastated in the wake of the Croatian war, which had pitted it against the Yugoslav army, and against Croatian Serbs who, as Croatia left Yugoslavia, attempted to secede from Croatia.

Croatia under President Franjo Tudjman, who had led it to independence, also attempted to divide neighbouring Bosnia-Hercegovina and dreamed of creating a Greater Croatia.

Tudjman was not just a nationalist but an authoritarian leader. By the time of his death in 1999 the country was internationally isolated. With the exception of the leaders of a few neighbouring countries, the president of Turkey was the only foreign statesman to show up to his funeral.

The army and the intelligence services were not under full civilian control and operated more or less as a state within a state. Corruption at the top was rampant. Now, says Gerald Knaus, Croatia's transformation looks "inevitable" - but it was not always so.

It was a leadership with vision that changed Croatia.

The most profound changes began when Ivo Sanader became prime minister in 2003. He had won the leadership of Tudjman's party, the Croatian Democratic Union (HDZ), but he was to radically change its orientation.

Former Croatian PM Ivo Sanader's government reforms ultimately led to his own downfall.

Under Mr Sanader, the son of a plumber, Croatia joined Nato and began serious work on EU accession. The security services were also brought under control. Moves, already begun under the previous government, to cut off support for Bosnian Croat organisations, were consolidated. These measures made it clear to them that their state was Bosnia, not Croatia.

Under Mr Sanader the country began co-operating fully with the UN's Yugoslav war crimes tribunal in The Hague and, much to the fury of nationalists, provided the intelligence that led to the arrest of the fugitive General Ante Gotovina - who was subsequently, recently, acquitted.

Mr Sanader also brought Serbs with political credibility and clout into his government, something unimaginable in the Tudjman years.

Imprisoned

Administrative obstructions, which had prevented Croatian Serbs from returning to areas they had fled during the Croatian army's retaking of Serb-held areas in 1995, were largely lifted.

Many others contributed to the transformation of Croatia into a more normal country. President Ivo Josipovic, for example, made several important gestures of reconciliation towards both Serbs and Muslim Bosniaks.

One of the great ironies of the Sanader years is that the changes that he helped oversee and which were part of the EU accession process, were to lead to his downfall and imprisonment.

Corruption flourished anew at the top under Mr Sanader but in 2010 he was arrested and last year convicted for corruption. He is still on trial facing further charges.

Putting such a powerful man in prison would have been unimaginable a decade ago. Many other top people have gone to prison too.

Ines Sabalic, a Croatian correspondent in Brussels who has followed every step of her country's EU accession process, likes to joke that for Croats "anti-corruption campaigns became the new nationalism."

At the turn of the millennium Croatia was still a post-war country. Today that is no longer the case.

Over the past decade all manner of ties have been restored with fellow ex-Yugoslav states. Bosnia, for example, is the second biggest market for Croatian exports after Italy. Many Croatian companies have invested in Serbia.

'It's the economy stupid'

The biggest single challenge of the next few years is creating jobs and the conditions for economic growth.

Croatia has much neglected agricultural potential. Its biggest single asset is its stunning coastline and last year the country had its best tourist season ever.

It almost certainly received a boost however from turmoil in the Arab world with some deciding that it was a safer bet than Tunisia or a visit to the pyramids.

With 17.4% of Croatia's population over the age of 64, Croatia's ageing population and the impact that has on everything from pensions to creativity is a huge problem for the future.

The Croatian economy, although not part of the eurozone, is completely integrated into it, which means that not everything is in Croatian hands. Its largest market is Italy, which has been hit badly by the crisis. Overall, more than 60% of Croatia's exports go to the EU.

In the short run, Croats will see few changes on the day they join the EU. But the process of joining has already transformed the country. Now a new chapter will begin which will demand fresh thinking to tackle the economic morass.

Twenty years ago the issue was securing a nascent Croatian state. Now the issues are more mundane and can be summed up in the famous 1992 Clinton-era dictum: "It's the economy stupid."