Ivo Sanader, Ph.D., The Prime Minister of the Republic of Croatia (2008)
Five Stars Croatia Issue 3 — April 01, 2008.

Looking at today’s Croatia, we are witnesses to everyday progress and numerous deeds that have been carried out since the recognition of our independence that happened not so long ago. The recognition of Croatia as an independent state by twelve Member States of the European Union and many other European and non-European countries sixteen years ago proved to be of major importance, not only for the newborn country, but for the history of Europe as well.

During those times when Croatia was still at war and every person was trying to help the defense of our country, the unity of Croatian citizens made it possible for our country to ward off attacks and earn international recognition. Next to winning the war, the international recognition of Croatia was the formal start of a new chapter in Croatia's history, now as an independent international entity. Determined to defend their independence and freedom in the Homeland War that followed the fall of communism in Eastern Europe and continue the building of a society that will, above all, promote each person's freedom, democracy and free market economy, Croatian citizens set out to realize those ideas.

Over the years that followed Croatia progressed, step by step, by being diligent and bold in the realization of its most important national goals. The country succeeded in liberating its occupied territories, partly by launching military operations and partly by negotiating. Today, Croatia is a respected member of the United Nations Organization and the European Council, thus promoting democracy and economic development.

In the neighboring countries of Southeast Europe Croatia started many initiatives for the strengthening of regional cooperation and Croatian citizens contributed to their realization immensely. However, the most encouraging fact is that today new generations are being born, seeking knowledge and developing creativity that will build our country and make living in Croatia dignified. That is the best proof that the Croatian fight for freedom and independence was meaningful and that it truly made it possible for us to contribute to the creation of a united Europe.

Globalization trends are setting off core changes in the world and every citizen in Croatia and the society as a whole feel them. In order to maintain the current growth rate and further develop economy enabling it to cope with fluctuations of other markets successfully, Croatian government will continue to implement reform processes. We will continue to build a reliable society that will act responsibly toward every citizen and the community as a whole.

All Croatian citizens will equally participate in our society's further development and the systematic dialogue between all parties involved: government, business community and civil society. Only that is how we will truly achieve the agreement necessary for Croatia's future development.

The fast development of Croatian economy will set the grounds for its joining the European Union as a developed country and participating in the joint European market as an equal partner. Economically, Croatia is a positive role model to many. Croatian economy is experiencing the most intensive momentum since the international recognition of its independence. This is the period of major and sustainable growth and many statistics and reports bear witness to that. A positive feedback is noticeable in the last report of the European Commission, and the International Monetary Fund noticed Croatia's progress in its last annual report on economic movements in Europe and Croatia. I would especially like to emphasize that in the previous year the economy growth rate reached 6,5% and was followed by a constant salary and pension growth.

In the previous term Intensified economic activity has led to 129 000 new job openings and the unemployment rate was reduced to 8,4%, the lowest level so far. We gained control and put an end to the budget deficit and the growth of the public sector foreign debt, simultaneously facilitating economic growth and awarding more funds for social politics, education, healthcare and retirement funds, and the foreign debt growth slowed down.

Our future goals include the raising of competitiveness of all branches of economy, the development of efficient institutions, persistent implementation of development projects and insisting on education and knowledge. That way our country's economic strength and the standard of living will increase. The equable development of all parts of the country is the leading thought of all our projects and the realization of fundamental goals of our economic policy - the economic growth rate of 7% and a drop in the ILO unemployment rate to 7% - means that we will leverage the accelerated growth of all our counties, bearing in mind the specific economic and social needs each of them has.

After our successful completion of stage one during the last term when we established order in state finances and reduced the budget deficit and our public sector foreign debt, in the following period we will additionally raise our economy's productiveness and competitiveness and continue the development of domestic financial market, thus creating better conditions in order to decrease our private sector foreign debt.

There will be no budget deficit, because that is the only way to deal with the foreign debt issue and defend the stability of the Croatian kuna. Croatia will be the most dynamic economy in the region providing its citizens with the standard of living that will gradually, but undoubtedly, reach the European level. It must be emphasized that Croatia is the leader as regards the private ownership of residential real property in the overall state real property fund - 92% of our citizens own real property and that is their greatest capital.

Our citizens must know and feel that their capital is safe and that they can, owing to the realization of our economic and tax policy, enjoy its value. The balanced economic policy and actions we have been taking in the economic field so far resulted in the overall trust visible in the constant growth in the foreign direct investment inflow. In order to simplify business operations, government has reduced taxes by abolishing the dividend tax and the HITRO.hr service lowered the costs of starting a business and prompted the communication with state administration bodies. By founding 289 entrepreneurial zones, we have provided quality business environment and the construction of infrastructure has secured simpler and cheaper flow of goods, thus opening new business opportunities for entrepreneurs in all regions. In this term we will take even more decisive efforts to strengthen the positive business climate and competitiveness of our economy.

We will not impose new taxes on legal or physical persons, because new taxes are incompatible with the raising of competitiveness and business cost reduction. We will complete the construction of entrepreneurial zones and increase their number to 400, finish the process of privatization and establish investment funds to which we will transfer state-owned shares in companies and real properties, so they could be listed on the market, continue the reducing of business costs by widening electronic accessibility of public services, open new electronic communication channels between the general public and the executive in order to reach European standards, and we will enhance cluster development to raise the production and export efficiency.

Our infrastructural development is clearly visible in all parts of the country and it is important to mention that, unlike in the past, we have succeeded in the realization of major infrastructural projects without detriment to the budget. In the following period the new government will continue the uniform infrastructural development of the whole country.

Modern infrastructure will be of use to all regions in Croatia. We go forward in the construction of roads, railroads, waterways, water supply and gasification. We continue with the construction of a motorway to link Ploče and Dubrovnik and the full profile Rijeka-Zagreb motorway. The Istrian Epsilon will become a motorway. In the light of new global market trends we will give special attention to the energy sector of Croatia, taking into account our long-term need for secure and sufficient energy sources, in order to strengthen Croatia's self-sufficiency.

We stand firm in our conviction that tourism, agriculture, regional development, education and small and medium-sized enterprises are Croatian advantages in the framework of global and European economy, therefore Croatian government will be active in supporting the identified economic branches. We will especially accent tourism development for tourism is one of the key economic branches in Croatia and, consequently, one of its most important export products.

Tourism is currently the strategic branch of Croatia's economy and an industry characterized by constant growth; the number of tourist stays, new employments in the tourist sector and overall profit are growing. In state's projected budget for 2008, Croatian government secured 233,2 million kunas for the development of tourism and the promotion of small and medium-sized tourism-related businesses which is a 48,8% increase compared to last year. All herein stated, as well as the fact that in this term the Ministry of Tourism was founded as a separate body, shows government commitment to the maximum realization of our tourist potentials and other supporting industries.

We will use this momentum to take our tourism a step further and work on the development of elite tourism of supreme quality and include, up until now, insufficiently used continental area of Croatia in the process. The promotion of continental tourism will be largely supported by the constantly growing eco-agricultural production - an industry Croatia is already active in as a globally competitive partner. The integral tourist offer of "blue" and "green" Croatia will provide the maximum quality and a unique and diversified offer that will further strengthen the tourist identity of Croatia.

Through incentive programs for small and medium-sized businesses the construction of 500 new family hotels that will produce 5 000 new employment opportunities only in the respective segment of tourist offer is planned. Moreover, with our agritourism support program we will make preconditions for the development of 300 new tourist farms, which is a significant step in the dynamic development of rural areas and in the prevention of village depopulation. In addition to other measures, in the following period government will make a master plan for the development of coastal and continental tourism, simultaneously defining the types, amenities and spatial and temporal distribution of new tourist capacities.

The enactment of the Golf Law will establish the preconditions for the Golf Program implementation, which is one of the strategic elements in the development of Croatian tourism. Our plan also includes the implementation of a nautical tourism strategy, as well as the creation of a systematic and wholesome solution to the nautical tourism development issue.

I believe that the sea in one of Croatia's greatest strategic values as its natural treasure, historical and cultural heritage, economic potential, social value, as well as its strategic advantage in international relations. The Adriatic Sea and maritime policy are the focus of government policy and my personal efforts. By establishing the jurisdiction of the executive and individual ministries, I, as the Prime Minister, and Croatian government as a whole, give special attention to the harmonization, coordination and joint planning of the activities of all departments as regards the Croatian marine area promotion, which is the starting point of every visualization of overall development, and the development of economy, culture, tourism and other sectors.

The development and additional incentive to Croatian tourism will especially come from the strong connection between the agricultural and food industry and the tourist sector. Thus, central budget investment into agriculture and rural development in 2008 will increase by 32% compared to last year and amount to approximately 4,1 billion kunas, while regional development and capital investments will record a 67% increase and receive 1,87 billion kunas.

The basis of the agricultural production financing policy will be Croatia's effort invested in the achieving of compliance with the common agricultural policy of the EU. Therefore, in order to accelerate proceedings on the subject-matter of agricultural real property trade, technical amendments and modifications to the Agricultural Real Property Law will be made, as well as the harmonization of Croatian legislation on the protection of autochthonous agricultural and food products with the legislation of the European Union.

We will undertake activities to facilitate investing into traditional crafts in the rural areas and encourage and promote integral and ecological production for Croatia, due to its natural predispositions, can be extremely competitive in that segment on the European and global market. While we are preparing the country for the European Union accession and in order to protect and secure our industries' competitiveness, Croatian government will work on the transformation of other traditional production branches - fishing industry, food production, wood industry, shipbuilding and pharmaceutical industry. By attracting new foreign direct investments and stimulating domestic investments, the upgrading of some production branches will be achieved and new branches like biotechnology, international financial and business services and IT sector will be promoted intensively.

It is our strong belief that in the modern free market economy the role of the public sector is clear - to make favorable conditions for entrepreneurship that takes on business risks, to strengthen institutions and their efficiency in the monitoring of economic needs and to provide social justice. Global competitiveness will be achieved through carefully designed production schemes, school system and science reforms, enhancement of innovation and new product development, investing into the production of rare products, incentive measures enabling new markets, the use of comparative advantages of individual branches of Croatian economy and, above all, continuous development of the society and economy based on knowledge.

Realizing the importance of Croatia as a society of knowledge, we are systematically upgrading our education system standards. We will provide all Croatian citizens with high school education and be persistent in the implementation of the Bologna Process in order to create the system of college and university education suitable for the needs of economy and equal to the quality of education system in developed countries, and government will continue to facilitate the return of Croatian scientists, especially young ones, from abroad. Government will continue investing into research and development and strengthening connections between the academic community and economy.

Two Croatia's most important international political goals are full membership in the European Union and the North Atlantic Treaty Organization (NATO). Croatia, as a non-permanent member of the UN Security Council as of January 1, 2008, represents the factor of stability in the region and continually performs activities aiming to join the two integrations.

We are implementing necessary reforms and adjustments rapidly in order to be invited into the EU and NATO, at the same time realizing Croatia's interests and fulfilling its citizens' wish for the current and future generations in Croatia to live in peace, security, economic progress and in the community of free democratic states and nationalities that share the same values: peace, freedom, justice and the rule of law. The both processes represent the basis of Croatia's responsible attitude toward its duties as a new member of the UN Security Council. The achievement of those two goals will be the realization of the most important national and government interest and a milestone in Croatia's history. We implement policy that will provide the country with permanent peace, stability, safety and cooperation in the region with other countries that are following their own paths, while sharing the same goals.

We will close the negotiations for joining the EU in the first half of 2009 and we expect that we will become a Member State of the EU soon. There should not be any skepticism or distrust, because the executive is determined to execute all requested reforms by the end of this year. That includes the most important reform of the system of justice and public administration and the efficient eradication of corruption will create prerequisites for the efficient functioning of the entire public sector. The fact is that the reforms will continue after Croatia joins the EU and that all fields of economy will not be liberalized immediately, but we will contract interim deadlines with the EU and use European funds for the adjustment. It has been proven though the experience of all new EU member states that the benefits of full membership enabled faster development and secured a better living standard to their citizens.

The European Union is not only a liberalized market, but much more. Especially to small and medium-sized states the EU provides a framework for the development at the same time protecting the environment and interests of consumers and workers.

We are positive that Croatia will join the EU soon and conversations with European leaders in which they express their full support to Croatia's reforms prove that we are on the right path. Croatia will receive an invitation to join NATO in April at the sitting of the NATO Parliamentary Assembly in Bucharest. Therefore we will intensify activities in informing Croatian citizens about all aspects of that membership. Croatia has already formed the NATO Membership State Committee headed by the presidents of the state, government and parliament, which launched a new phase of communication with citizens explaining today's NATO.

The most recent opinion pools show that 67% of Croatian citizens are in favor of joining NATO. Let us not disregard our many actions by which we managed to show that after Croatia joins NATO our families will not have to send children to war zones; professional soldiers will participate on voluntary basis. In addition, people understand that NATO is not merely a military alliance but an alliance of states sharing common values, such as freedom, democracy, human rights, rule of law, free market...

The support to our policy is obvious from our recent election success. The Croatian Democratic Community is the only political party that unambiguously emphasized Croatia's joining the EU and NATO in its program, and the result of the election clearly shows where the majority of Croatian citizens stand on the issue. That fact alone suggests that the Croatian people have chosen NATO membership. Therefore, I am convinced that all Croatian citizens will be satisfied with our accomplishments: the invitation from NATO in the April of 2008, and the fact that we will have finished our negotiations with the EU by the summer of 2009. Both processes will be the basis of Croatia's responsible behavior as the new member of the UN Security Council. In its foreign policy government will actively contribute to the UN system reform and continue supporting peace and security in the world by participating in peacekeeping missions and being active in the fight against international terrorism and new global challenges.

The Republic of Croatia has a special interest in the matter of permanent security and stability in the Southeast Europe, thus it is active in the strengthening of bilateral relations within the Southeast European Cooperation Process, actions of the Regional Cooperation Council and transferring experience and knowledge acquired in the EU negotiations. Special emphasis must be put on the protection and caring for Croatian minority communities in foreign countries, especially in our neighborhood.

We wish to promote their interests and build on their achievements in economy, culture, science and other areas through mutual interaction and cooperation. The key is the saying that emphasizes that we have inherited Croatia from our ancestors, but I always add that we have also borrowed it from our children and generations that are yet to come. Therefore our responsibility is even greater. Croatian culture is an important feature of Croatian identity - it determines who we are by forming our knowledge, our point of view and communication with others.

Croatian national heritage is the fundamental determinant of our national being that enabled us to preserve national identity over the turbulent centuries of our history, The preservation of national heritage is a pledge to our future and the guarantee of our uniqueness and national identity within the EU.

We are making an effort to leave Croatia to our children as a well-organized state of firm democratic principles strongly embedded in its core, with greater tolerance, mutual understanding and appreciation. We will do everything within our power to realize our citizens' wishes - the EU and NATO membership - by creating the European Croatia, a land of stability, prosperity and economic development.